BZI Xelr8 Holdings

- Net Sales Show Sequential Increase of 44% Compared to First Quarter - DENVER, Aug. 5 /PRNewswire-FirstCall/ -- XELR8 Holdings, Inc. (AMEX:BZI), a provider of functional foods, beverages and nutritional supplements, announced today its financial results for the three and six months ended June 30, 2008. Financial and operational highlights for second quarter and six months: -- Revenues increased 64% in the quarter and 71% in the six months period -- Gross profit was $1.8 million in the quarter and $3.0 million during the six months period, improvements of 72% and 88% respectively compared to same periods one year ago -- Growth in participants was 10,634 as of June 30, 2008, an 18% increase from Q1 -- Cash and cash equivalents were $2.3 million as of June 30, 2008 Total revenue for the second quarter ended June 30, 2008 was $2.3 million, a 64% increase compared to total revenue of $1.4 million for the second quarter ended June 30, 2007. Gross profit grew to $1.8 million for the three months ended June 30, 2008, up 72% from $1.0 million in the prior year period. Gross margin in the quarter was 77%, an improvement from 74% in the same quarter one year ago, due to increased sales of Bazi, which carries a higher gross margin compared to the legacy products. Net loss for the three months ended June 30, 2008, decreased 30% to $0.61 million, or $(0.04) per share, compared to a loss of $0.88 million, or $(0.06) per share, in the prior year. Total revenue for the six months ended June 30, 2008 was approximately $3.9 million, an increase of 71% compared to total revenue of $2.3 million for the six months period ended June 30, 2007. Gross profit improved to $3.0 million for the six months ended June 30, 2008, up 88% from $1.6 million in the prior year period. Gross margin in the six months period was 77%, an improvement from 70% in the same period one year ago, due to increased sales of Bazi, which carries a higher gross margin compared to the legacy products. Net loss for the six months ended June 30, 2008, decreased 39% to $1.36 million, or $(0.09) per share, compared to a loss of $2.24 million, or $(0.18) per share, in the prior year period. The Company continues to remain well capitalized. As of June 30, 2008, cash and cash equivalents were approximately $2.3 million and the Company continues to be debt free. Net cash used by operating activities was minimal with $0.21 million used during the second quarter and $0.41 used during the six months period. "I am pleased to report another record quarter," said Mr. John Pougnet, Chief Executive Office of XELR8. "During the second quarter the company experienced growth on multiple levels. Most importantly our participants exceeded a key level of 10,000. The number of participants was comprised of a growth in distributors to 6,264 and customers to 4,370, both showing sequential increases of 17% and 18% respectively in comparison to the first quarter figures." Mr. Pougnet continued, "Bazi represented 92% of sales in the second quarter and continues to be a valued product for our distributors. Bazi has proved to be well worth the Company's investment and we are delighted to continually offer incentives and bonuses to our distributors for their attainment of significant sales growth in the product. We believe that recent sales promotions have assisted in our sales growth, including the most recent one: 'XELR8 to a Million'. " "We will continue to invest into the business by offering incentive programs in order to strengthen our distribution network as well as seek ways to expand it. We continue to remain highly focused on attaining profitability and believe we are near our goal of achieving positive cash flow," concluded Mr. Pougnet. There will be a conference call today at 11:00 a.m. ET with the investment community, featuring John Pougnet, Chief Executive Officer of XELR8 Holdings, Inc. Interested parties may participate in the call by dialing 877-407-8293; international callers dial 201-689-8349. In addition, a replay of the conference call will be available approximately two hours after the call has ended. The replay can be accessed at: http://www.xelr8tools.com/Media/ConfCall080508.mp3 and will be archived for 30 days. About XELR8 Holdings, Inc. XELR8 Holdings, Inc. is a provider of nutritional foods and beverages designed to help enhance physical health and overall performance. XELR8 has developed a comprehensive line of nutritional supplements and functional foods designed in systems that are easy to take, simple to understand, and conveniently fit within a lifestyle. These include the Company's Eat/Drink/Snack System; Peak Performance System; and its newest market entry, Bazi(TM), a powerful, concentrated, antioxidant (Vitamins A, C & E) nutritional drink packed with eight different super fruits and berries, including the Chinese jujube plus 12 vitamins and 68 minerals, providing all the daily vitamins and minerals you need in a single, convenient, one-ounce shot. XELR8's commitment to quality, science and research has earned the Company a loyal following of over 350 world-class athletes and an elite list of endorsers, such as 3-time World Series Champion Curt Schilling, five-time Cy Young Award Winner Randy Johnson; Super Bowl Champions Mike Alstott, Lawyer Milloy and Head Coach Mike Shanahan; professional football superstar Cadillac Williams; Olympians Briana Scurry and Caroline Lalive; Stanley Cup Winner Blake Sloan; and PGA Tour Professional Tom Pernice, Jr. XELR8 products are only available through independent distributors located throughout the nation. For more information about XELR8, please visit http://www.xelr8.com/ or http://www.drinkbazi.com/ . Forward-looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including prospects for XELR8's distribution network. Actual results may differ from those discussed in such forward-looking statements. These forward-looking statements include risks and uncertainties that include the Company's ability to attract and retain distributors; changes in demand for the Company's products; changes in the level of operating expenses; changes in general economic conditions that impact consumer behavior and spending; product supply; the availability, amount, and cost of capital for the Company; and the Company's use of such capital. More information about factors that potentially could affect the Company's financial results is included in the Company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-KSB for the year ended December 31, 2007 and all subsequent filings. Certain statements in this release regarding the Company's agreements are in accordance with the guidelines established by the Federal Trade Commission for endorsements in advertising. - Financial Tables to Follow - XELR8 HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS June 30, December 31, 2008 2007 ASSETS (unaudited) Current assets: Cash and cash equivalents $2,263,673 $2,245,858 Accounts receivable, net of allowance for doubtful accounts of $10,130 and $12,231, respectively 2,390 7,460 Inventory, net of allowance for obsolescence of $181,256 and $189,403, respectively 322,478 370,843 Prepaid expenses and other current assets 498,172 329,015 Total current assets 3,086,713 2,953,176 Intangible assets, net 17,345 17,959 Property and equipment, net 57,201 81,405 Total assets $3,161,259 $3,052,540 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $1,283,923 $832,697 Short-term note payable - - Total Liabilities 1,283,923 832,697 Commitments and Contingencies SHAREHOLDERS' EQUITY: Preferred stock, authorized 5,000,000 shares, $.001 par value, none issued or outstanding - - Common stock, authorized 50,000,000 shares, $.001 par value, 15,697,170 and 15,197,170 shares issued and outstanding respectively 15,697 15,197 Additional paid in capital 23,715,986 22,696,657 Accumulated (deficit) (21,854,347) (20,492,011) Total shareholders' equity 1,877,336 2,219,843 Total liabilities and shareholders' equity $3,161,259 $3,052,540 XELR8 HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three and Six Months Ended June 30, 2008 and 2007 For the Three Months Ended For the Six Months Ended June 30, June 30, June 30, June 30, 2008 2007 2008 2007 Net sales $2,276,415 $1,386,395 $3,854,199 $2,255,470 Cost of goods sold 523,482 366,939 883,060 672,531 Gross profit 1,752,933 1,019,456 2,971,139 1,582,939 Operating expenses: Selling and marketing expenses 1,614,161 967,853 2,704,953 1,597,119 General and administrative expenses 752,173 937,289 1,621,058 1,786,810 Research and development expenses 2,087 4,517 2,512 5,130 Depreciation and amortization 11,844 22,497 23,687 34,276 Total operating expenses 2,380,265 1,932,156 4,352,210 3,423,335 Net (loss) from operations (627,332) (912,700) (1,381,071) (1,840,396) Other income (expense) Interest income 14,358 31,917 33,636 35,043 Other expenses - - (13,770) - (Loss) on disposal of asset - - (1,130) - Interest (expense) - - - (439,537) Total other income (expense) 14,358 31,917 18,736 (404,494) Net (loss) $(612,974) $(880,783) $(1,362,335) $(2,244,890) Net (loss) per common share Basic and diluted net (loss) per share $(0.04) $(0.06) $(0.09) $(0.18) Weighted average common shares outstanding, basic and diluted 15,697,170 14,603,763 15,515,851 12,699,948 XELR8 HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended June 30, 2008 and 2007 June 30 June 30 2008 2007 Cash flows from operating activities: Net income (loss) $(1,362,335) $(2,244,890) Adjustments to reconcile Depreciation and amortization 23,687 34,276 Loss on disposal of asset 1,130 - Stock and stock options issued for services 566,856 1,011,132 Expense related to anti-dilution of warrants 13,770 - Interest expense and amortization related to bridge loan financing - 428,889 Change in allowance for doubtful accounts (2,101) 5,629 Change in allowance for inventory obsolescence (8,147) 41,661 Change in allowance for product returns 26,147 30,866 Changes in assets and liabilities: Accounts receivable 7,171 (8,835) Inventory 56,512 16,634 Other current assets (169,157) (17,601) Accounts payable and accrued expenses 425,079 239,415 Net cash (used) by operating activities (421,388) (462,824) Cash flows from investing activities: Proceeds from maturity of investments - - Capital expenditures - (10,408) Net cash (used) by investing activities - (10,408) Cash flows from financing activities: Proceeds from bridge loan financing - 250,000 Repayments of bridge financing - (500,000) Issuance of common stock 439,203 3,632,834 Net cash provided from financing activities 439,203 3,382,834 NET INCREASE (DECREASE) IN CASH 17,815 2,909,602 CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD 2,245,858 76,147 CASH AND CASH EQUIVALENTS, END OF THE PERIOD $2,263,673 $2,985,749 SUPPLEMENTAL CASH FLOW DISCLOSURES Cash paid for interest $- $13,425 Stock issued for satisfaction of accrued compensation expense $- $540,000 Deferred offering costs applied against proceeds from offering $- $25,000 Contacts: John Pougnet, CEO Stephen D. Axelrod, CFA XELR8 Holdings, Inc. Alisa Steinberg (Media) (303) 316-8577 Wolfe Axelrod Weinberger Assoc. LLC (212) 370-4500 DATASOURCE: XELR8 Holdings, Inc. CONTACT: John Pougnet, CEO, XELR8 Holdings, Inc., +1-303-316-8577, ; or Stephen D. Axelrod, CFA, , or Alisa Steinberg (Media), , of Wolfe Axelrod Weinberger Assoc. LLC, +1-212-370-4500 Web site: http://www.xelr8.com/ http://www.drinkbazi.com/

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