Baywood International, Inc. Reports Second Quarter Financial Results

(BUSINESS WIRE) -- Baywood International, Inc. (BYWD) ("Baywood" or the "Company"), a leading nutraceutical company, announced today financial results for its second quarter ending June 30, 2007.

Net Sales Increased 748%
Net sales for the three months ended June 30, 2007 were $3,206,550 compared to $378,205 for the same period last year, an increase of $2,828,345, or 748%. The increase in net sales for the three month period is attributable to our acquisition of Nutritional Specialties, Inc., d/b/a LifeTime(R) ("LifeTime") on April 5, 2007, effective March 30, 2007.

Positive Operating Income
On an operating basis, Baywood reported operating income of $328,603 for the three month period ended June 30, 2007 compared to an operating loss of $(65,427) for the same period last year. Operating income for the three month period was impacted by certain cash expenses including professional fees, offering costs and other charges totaling approximately $80,000 that were incurred relating to the LifeTime acquisition and related financing.

For the three months ended June 30, 2007, Baywood had a net loss of $(462,187), or less than $(0.01) per share based on weighted average shares outstanding of 118,932,900. This compares to a net loss of $(104,591), or less than $(0.01) per share based on weighted average shares outstanding of 41,687,288 for the same period last year. The net loss for the three month period ended June 30, 2007 included non-cash acquisition and financing related charges of $751,674. Due to the timing of the acquisition and the related financing, a majority of these charges were amortized in the second quarter of 2007. We anticipate that the amortization of these charges will decline in the following quarters.

"Our second quarter results reflect the successful foundation we have created to expand the brand awareness and distribution of our products in the marketplace," said Neil Reithinger, President and CEO of Baywood. "Our completion of the acquisition of LifeTime and related financing now allows us to significantly increase the sales and marketing initiatives for our brands, including new products and increased marketing support. We expect these initiatives be accretive to our revenues and cash flows beginning in the fourth quarter of this year. This acquisition has bolstered our balance sheet, expanded our product base from 26 to 370 products and increased our store network from 300 stores to over 2,500 in the U.S. and Canada."

Mr. Reithinger added, "Now that the company is creating additional marketing capacity, we look forward to expanding into new stores by strategically marketing our products, which is essential in enhancing the loyalty of our existing retailers and gaining the support of new retailers."

Financing Completed
The completion of our financing strengthens Baywood's ability to conduct business with major players in the nutraceutical industry, to build upon existing relationships and to create new relationships.
-- Raised $5.4 Million in a preferred stock offering;
-- Raised $2.0 Million in subordinated loans;
-- Raised $2.0 Million in bridge financings;
-- Replaced the $2.0 Million in bridge financings at 12% with a $2.0 Million senior bank term loan at prime plus 2%.

Sales Channel and Product Activity
Target Sales Channel
Our primary sales channel remains the traditional "Natural Foods Store," of which we maintain shelf space in approximately 1/4 of potential stores. New sales programs and marketing initiatives are being developed for launch by the 4th quarter to maximize our potential within this channel. Furthermore, new international distributorships are being negotiated that we expect to close in Europe in that latter part of the 3rd quarter.

New Brand Image
As part of our branding initiatives, each of our new product launches for 2007 will be packaged under a refreshed and revitalized LifeTime(R) brand including a premium quality line for all capsules and tablets and a more robust label design for juices and liquids. These packaging upgrades will be applied to the entire product line along with the introduction of enhanced formulas over the next four quarters, creating a new premium position in the market.

New Product Launches
During the third quarter, five products are scheduled to be launched, including three new additions to our popular liquid product line. Two additional products will be launched early in the 4th quarter. Included in these product launches will be LifeTime's Resveratrol Life Tonic(TM) in liquid form for enhanced bioavailability. The product's powerful antioxidant properties include 300 mg of resveratrol in each one ounce serving, which is equivalent to 1,300 glasses of red wine.

Strengthening the Board - New Directors
We added two new members to our Board of Directors ("Board") effective June 14, 2007, Neil Russell and David Tsiang. In aggregate our Board now consists of five members. The addition of Mr. Russell and Mr. Tsiang to the Board continues the Company's plans to expand the business, institutional investment and market experience for the Company, while expanding the necessary corporate governance expertise necessary as the Company grows in the public markets.
New Divisions
On April 19, 2007, we engaged Bischoff-Hervey Entertainment to expand the distribution of a new line of products into the direct response market, a form of marketing that is designed to generate immediate response directly from consumers for a product or products via television. Since then, we have identified a key spokesperson to develop the specific products and have plans to launch our infomercial in 1st quarter of 2008.
Financial Data

Forward Looking Statements
This release contains forward-looking statements, including statements regarding our production capability, revenue growth and profitability. Actual results may differ from those projected due to a number of risks and uncertainties, including, but not limited to the matters specified in the Company's filings with the Securities and Exchange Commission. These statements are made based upon current expectations that are subject to risk and uncertainty. The Company does not undertake to update forward-looking statements in this news release to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking information. Assumptions and other information that could cause results to differ form those set forth in the forward-looking information can be found in the Company's filing with the Securities and Exchange Commission, including the company's most recent periodic report.

About Baywood:
Baywood International, Inc. (BYWD) is a nutraceutical company specializing in the development, marketing and distribution of its own proprietary brands under the names Baywood PURECHOICE(R), Baywood SOLUTIONS(R) and Complete La Femme(R). The Company's products are distributed through independent and chain health food stores, pharmacies, grocery stores, and other direct-to-consumer channels both internationally and domestically. On April 5, 2007, effective March 30, 2007, the Company acquired, through a wholly-owned subsidiary, substantially all of the assets and related liabilities of Nutritional Specialties, Inc./dba LifeTime(R) or LifeTime(R) Vitamins ("LifeTime"). LifeTime is a nutraceutical company that was established in 1988 and specializes in the development, marketing and distribution of its own brands under the LifeTime(R) name. LifeTime's brands currently consist of approximately 370 products that are sold directly to independent and chain health food stores, pharmacies, natural food stores, and other direct-to-consumer channels across the United States. In addition, LifeTime's products are sold internationally through distributors in Canada, Croatia, Turkey, England, Dubai, Holland, Sweden, Portugal and certain parts of Asia. For more information, call (888) 350-0799, or for more information, visit

This press release may contain forward-looking statements, made in reliance upon Section 21D of the Exchange Act of 1934, which involve known and unknown risks, uncertainties or other factors that could cause actual results to differ materially from the results, performance, or expectations implied by these forward-looking statements. The Company's expectations, among other things, are dependent upon general economic conditions, continued demand for its products, the availability of raw materials, retention of its key management and operating personnel, its ability to integrate the business of LifeTime, need for and availability of additional capital as well as other uncontrollable or unknown factors which are more fully disclosed in the Company's Form 10-KSBs and 10-QSBs on file with the United States Securities and Exchange Commission.

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