EMPO Shareholder Communique
Empowered Products, Inc. (EMPO)
3rd Quarter Marks a Renewed Focus on Our Emerging Presence within the Publicly Traded Markets

IN THIS ISSUE
Our Promise to Our Shareholders CLICK HERE

Recent EMPO Press Releases CLICK HERE

EMPO Financial Information CLICK HERE

Our Shareholder's Alliance & Forum CLICK HERE

Empowered Products, Inc. (Stock Symbol: EMPO) is fully committed to keeping our shareholders up to date on company developments via press release, filings, and through our corporate website at www.EmpoweredProducts.com. In this Quarterly Update, our aim is to provide our current and future shareholders with a recap of our most recently completed quarter, financial data from our recent filings, and our Shareholder's Alliance section dedicated to enhanced interaction with our most valued asset -- our loyal customers and shareholders.

Our paramount objective is building value for all EMPO shareholders through fiscally sound policies and strategies that promote escalating product sales and earnings growth. We're also highly committed to elevating our overall profile in the publicly traded markets following our more than 10-year span as a privately held company. To that end, we've embarked on a multifaceted relationship with PR Newswire, which includes the ARC Engagement and Virtual Retail Investor Conference platforms.

PR Newswire's ARC Platform stands for Access, Reach, Connect – and will be in full effect throughout the current fiscal fourth quarter. We're already seeing a huge benefit as a result of our dynamic relationship with PR Newswire, and you can visit our continuously updated ARC page and learn more about the ARC Engagement Platform by selecting the images below. Our elegantly designed ARC page is an interactive meeting place where all those interested in Empowered Products can learn everything they need to know about our company and stock.

Next on our investor-focused agenda is the Virtual Retail Investor Conference hosted by PR Newswire. On November 1st, Empowered Products will be one of 10 select companies showcased in PR Newswire's monthly Virtual Retail Investor Conference. We'd like to extend a personal invitation for you to attend this live presentation in the virtual exhibition hall where you can interact with the EMPO booth and ask questions to our CEO, Scott Fraser.

By the way, if you're unable to be present for the live presentation, there's no need to worry. PR Newswire will be providing all those who pre-register for the event with complete, 24-hour access to the conference for a full 90 days following the November 1st event date. 

Our Promise to Our Shareholders
A Message from Scott Fraser
President & CEO
Empowered Products, Inc.

As president and CEO of Empowered Products, I promise to regard each and every EMPO shareholder as an integral partner in our burgeoning Global Wellness enterprise. Only with your active support and participation can Empowered Products continue to build upon our foundation of mutual success for all EMPO stakeholders.

Over the last few business quarters, Empowered Products has achieved a number of significant milestones, which I believe will set the stage for a very exciting and rewarding 2013 for EMPO shareholders. In early-February, we commenced shipments to Walgreens for five of our Gun-Oil sexual lubricants. In October, we received our first purchase order for PINK and Gun-Oil from Target.com, a division of the Target Corporation.

Our new sales relationship with Target represents a key success in our overall expansion strategy with the major national retail chains. Currently, with CVS, Walgreens, and Target onboard, our continued focus will be on expanding our product scope and shelf-space presence within this high-growth sector. I view our move into the mainstream as a cornerstone of our longer-term growth prospects for both Empowered Products and our EMPO shareholders.  

We're proud to report that our sample-pack distribution program, which we launched in the first quarter of this year, has been a resounding success with over 200,000 customer signups, thus far, at our online venues. We have a near-term goal of reaching 1 million signups, and we believe our mandate of getting PINK and Gun-Oil samples into the hands of consumers will translate to new customers and increased sales going forward.

On the Investor Relations side, we're pleased to report that we will continue to provide our shareholders with updated coverage on our company and stock via our ongoing relationship with PR Newswire. You can view PR Newswire's most recent Factual Stock Report on EMPO by clicking here. In case you missed it, we had the distinct honor and privilege of being one of only a handful of select companies to present at Better Investing's November 8 virtual investor conference - hosted by PR Newswire. You can view a complete replay of our live presentation, which includes a comprehensive slide-show and access to updated investor materials, by registering here.

We're extremely proud of our company's growing involvement and support for national sex education. Most recently, Empowered Products provided sponsorship to Dr. Justine Marie Shuey's Sex Education Tour as well as The Study Sex College Tour headed by Megan Andelloux. As we continue to increase sales of our PINK and Gun-Oil lines with top retailers such as Walgreens, CVS, and Target, it's vitally important that we continue to support accurate sex education as a means of serving the informational needs of our expanding base of consumers. Educational workshops, which focus on creating a safe and comfortable environment with which to learn about safe sex practices and sexual pleasure, provide forums where we can interact directly with consumers regarding the immense health benefits of our unique product lines.

As we pursue our aggressive growth strategy in the ever changing landscape of the sexual wellness industry, we are well prepared to meet those challenges head on. Genuinely listening to the views and feedback of our loyal consumers has served us well, and we will continue to rely on your input as we head into perhaps our most critical growth-phase as an emerging Global Wellness company.

Thank you for your support - and I pledge to you my steadfast focus on building value for all EMPO shareholders. 

Sincerely, 
Scott Fraser

Recent EMPO Press Releases
EMPO press release excerpts from Q3 2012 & early-Oct

9 October 2012
Target is Empowered Products' Newest National Retailer to Sell PINK® and Gun-Oil®

Empowered Products, Inc. (EMPO) has received its first purchase order from TARGET.com, a division of the Target Corporation, dated 8 October 2012. This initial order includes both PINK and Gun-Oil silicone and water-based personal lubricants as well as the hybrid lubricants, PINK Indulgence and Gun-Oil Loaded. Scott Fraser, president and CEO of Empowered Products, commented, "Our new sales relationship with Target is an important milestone…

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2 October 2012
Empowered Products (EMPO) PINK and Gun-Oil Brands Launch in Walgreens and CVS; Featured on Dr. Oz

Empowered Products (OTC-QB: EMPO) is leading the sexual wellness revolution by taking its PINK® and Gun-Oil® lines of sensual lubricants and libido-enhancing supplements into the mainstream retail sector – most recently with Walgreens and CVS. "Our latest PINK® and Gun-Oil® creations are setting the benchmark for what's possible in the realm of human sensuality!" As a company, Empowered is proud to be a driving force in bringing sexual wellness products into the consumer spotlight…

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20 September 2012
Empowered Products Promotes National Sex Education with PINK® and Gun-Oil® Brands

Empowered Products, Inc. (EMPO), an emerging leader in the high-growth sexual wellness sector through its trademark PINK® and Gun-Oil® brands, is proud to sponsor Dr. Justine Marie Shuey's sex education tour. Dr. Shuey is a Board Certified Sexologist and AASECT Certified Sexuality Educator with a Doctorate in Human Sexuality and a Masters in Human Sexuality Education.  The company also sponsors The Study Sex College Tour run by Megan Andelloux…

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20 August 2012
S&P Report Updates Empowered Products' PINK and Gun-Oil Brands Expansion into Mainstream U.S. Markets

Empowered Products, Inc. (EMPO), an emerging leader in the high-growth sexual wellness sector through its trademark PINK® and GunOil® brands, announces to the investment community that Standard & Poor's Factual Stock Report on EMPO has been updated to include our recent filings and operating results. Scott Fraser, president and CEO of Empowered Products, commented, "I view our continued expansion of both shelf-space and sales of our PINK® and GunOil® brands into national chains and direct to our end consumers as the primary catalyst…

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25 July 2012
Empowered Products Updates Consumer Growth of PINK® and GunOil® brands at Online Investor Resource Page

Empowered Products, Inc. (EMPO), an emerging leader in the high-growth sexual wellness sector through its trademark PINK® and GunOil® brands, is pleased to direct the investment community to its new online investor resource page. Scott Fraser, president and CEO of Empowered Products, commented, "Paramount in our objective of creating value for EMPO shareholders is our commitment to keeping the investment community informed of our latest company developments…

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EMPO Financial Information
Excerpts from our most recently filed Form 10-Q

Three Months Ended June 30, 2012

Revenues for the three months ended June 30, 2012 were approximately $685,000 as compared to approximately $662,000 in the comparable period in 2011. The 3.5% increase in revenue was primarily due to price increases implemented on January 1, 2012. Herbal supplement sales for the period ended June 30, 2012 were approximately $14,000 compared to $0 for the period ended June 30, 2011.

Cost of revenue primarily consists of costs related to the production or purchase of products for sale. Cost of revenue for the three months ended June 30, 2012 was approximately $409,000 as compared to approximately $323,000 in the comparable period in 2011. The increase in cost of revenues was primarily the result of production costs associated with idle production capacity which resulted in a greater allocation of overhead to expense as opposed to capitalizing these costs to inventory.

For the three months ended June 30, 2012, our gross profit decreased to approximately $277,000, from approximately $339,000 for the three months ended June 30, 2011. During the same period, our gross profit margin decreased to 40.4%, down from 51.3% in the three months ended June 30, 2011. This decrease in our gross profit margin was mainly due to an increase in costs goods produced due to idle production capacity which resulted in a greater allocation of overhead to expense as opposed to capitalizing these costs to inventory.

Selling and distribution expenses for the three months ended June 30, 2012 were approximately $253,000, or approximately 36.9% of revenues, compared to approximately $111,000, or 16.8% of revenues, for the same period in the prior year, an increase of 127.5%. The increase in selling and distribution expenses was primarily the result of direct mail marketing campaigns and the continued development of our online retail store.

General and administrative expenses for the three months ended June 30, 2012 were approximately $280,000, or 40.9% of revenue, compared to approximately $338,000, or 51.0% of revenues, for the same period in the prior year, a 17.0% decrease. The decrease in general and administrative expenses was primarily because of decreased professional fees that were previously associated with becoming a public company as a result of the Merger during the three months ended June 30, 2011.

No expense or benefit from income taxes was recorded in the three months ended June 30, 2012 or 2011 due to our net losses. We do not expect any U.S. federal income taxes to be incurred for the current fiscal year because of available net operating loss carry forwards.
We had a net loss of approximately $262,000 for the three months ended June 30, 2012 compared to a net loss of approximately $120,000 for the three months ended June 30, 2011.

Six Months Ended June 30, 2012

Revenues for the six months ended June 30, 2012 were $1.5 million as compared to $1.4 million in the comparable period in 2011. The 6.3% increase in revenue was primarily caused by the implementation of price increases on January 1, 2012.

Cost of revenue primarily consists of costs related to the production or purchase of products for sale. Cost of revenue for the six months ended June 30, 2012 was approximately $694,000 compared to approximately $837,000 in the comparable period in 2011. The decrease in cost of revenues was primarily the result of a lower volume of products being sold with new higher margins which substantially decreased our costs which was partially offset by higher costs in the second quarter of 2012 due to higher costs associated with idle production capacity which resulted in a greater allocation of overhead to expense as opposed to capitalizing these costs to inventory.

For the six months ended June 30, 2012, our gross profit increased to approximately $807,000, from approximately $575,000 for the six months ended June 30, 2011. During the same period, our gross profit margin increased to 53.8%, up from 40.7% in the six months ended June 30, 2011. This increase in our gross profit margin was mainly due to improved purchasing and procurement practices, as well as price increases on our finished products that were implemented on January 1, 2012.

Selling and distribution expenses for the six months ended June 30, 2012 were approximately $530,000, or 35.3% of revenues, compared to approximately $238,000, or 16.9% of revenues, for the same period in the prior year, an increase of 122.6%. The increase in selling and distribution expenses was primarily the result of direct mail marketing campaigns and the continued development of our online retail store.

General and administrative expenses for the six months ended June 30, 2012 were approximately $519,000 or 34.6% of revenues, compared to approximately $554,000, or 39.3% of revenues, for the same period in the prior year, a 6.3% decrease. The decrease in general and administrative expenses was primarily because of decreased professional fees that were associated with becoming a public company as a result of the Merger during the six months ended June 30, 2011.

No expense or benefit from income taxes was recorded in the six months ended June 30, 2012 or 2011 due to our net losses. We do not expect any U.S. federal or state income taxes to be recorded for the current fiscal year because of available net operating loss carry-forwards.

We had a net loss of approximately $253,000 for the six months ended June 30, 2012 compared with a net loss of approximately $231,000 for the six months ended June 30, 2011.

Liquidity and Capital Resources

We had unrestricted cash and cash equivalents of approximately $247,000 as of June 30, 2012, as compared to $864,000 as of December 31, 2011.

We generally finance our activities through our business operations, with any shortfalls supplemented by our borrowings under a line of credit, contributions from our majority stockholder, or sales of equity securities. We have a line of credit with Wells Fargo Bank providing for borrowings of up to $500,000. As of June 30, 2012, we had borrowings of $459,782 outstanding under this line of credit. This line of credit is secured by our restricted cash balance which amounted to $561,411 at June 30, 2012.

For the six months ended June 30, 2012, net cash used in operating activities was approximately $596,000, as compared to net cash used in operating activities of approximately $116,000 for the comparable period in 2011. The increase in net cash used in operating activities is primarily attributable an increase in our raw materials inventory in anticipation of sales to large drug store chains and pay-downs of our accounts payable and accrued expense balances.

For the six months ended June 30, 2012, net cash used in investing activities was approximately $13,000, as compared to net cash used in investing activities of approximately $36,000 for the comparable period in 2011. The decrease in net cash used in investing activities is primarily attributable to the decrease in payments of fees for trademarks from 2011 levels. Net cash used in financing activities was approximately $9,000 for the six months ended June 30, 2012 as compared to net cash provided by financing activities of approximately $555,000 for the comparable period in 2011. The increase in cash used in financing activities was due to our pay downs of the line of credit.

For the six months ended June 30, 2012 and 2011, our inventory was valued at approximately $1.0 million and $0.5 million respectively. This buildup of inventory was primarily due to an increase of raw material purchases in anticipation of increased sales to national drugstore chains. On February 1, 2012, we commenced product shipments to select Walgreens retail stores through an initial order placed by its national purchasing office in Deerfield, Illinois. We are currently expanding our pursuit of a national and regional drugstore chain presence.

Anticipated cash flows from operations and funds available from our credit facilities, together with cash on hand, will provide sufficient liquidity to meet our working capital needs and planned capital expenditures. Changes in our operating plans, lower than anticipated sales, increased expenses, acquisitions or other events may require us to seek additional debt or equity financing. There can be no guarantee that financing will be available on acceptable terms or at all. Debt financing, if available, could impose additional cash payment obligations and additional covenants and operating restrictions.

For the six months ended June 30, 2012 and 2011, our inventory was valued at approximately $1.0 million and $0.5 million respectively. This buildup of inventory was primarily due to an increase of raw material purchases in anticipation of increased sales to national drugstore chains. On February 1, 2012, we commenced product shipments to select Walgreens retail stores through an initial order placed by its national purchasing office in Deerfield, Illinois. We are currently expanding our pursuit of a national and regional drugstore chain presence.

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Our Shareholders' Alliance & Forum

At Empowered Products, we take great pride in the unique relationship we're building with our ever-expanding base of shareholders and customers. As founder and CEO, I encourage you to become involved in our company's future growth and product launches.

Empowered Products (EMPO) boasts an expanding online presence, which includes www.EmpoweredProducts.com, www.PinkforUs.com, www.GunOil.com, and our EMPO ARC.

We've also launched a brand new Empowered Products YouTube Channel where you can view infomercials and independent video testimonials on our PINK® and Gun-Oil® lines of personal lubricants. We'll be adding to our YouTube Channel in the weeks and months ahead, so be sure to check back often for more tantalizing featurettes. We also invite you to create and submit your own PINK and Gun-Oil videos for possible inclusion on our YouTube Channel.

As part of our budding relationship with PR Newswire, we've been taking full advantage of the rare and exciting opportunity to showcase our PINK® and Gun-Oil® brands in the heart of one of the world's busiest pedestrian intersections – New York's Times Square. According to Travel & Leisure magazine's October 2011 survey, Times Square is the world's most visited tourist attraction, bringing in over 39 million visitors annually – and Empowered Products, with our colorful Walgreens ad, is proud to be a part of the buzz!

  • Market data:
    Symbol: EMPO (OTCBB)
    Last Price: 0.28
    Change: +0.0216 (+8.31%)
    Previous Close: 0.26
    Day's Range: 0.2816 - 0.31
    Volume: 300
    Market Cap: 17.7M
    As of December 18, 2014 22:31 EST