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Digital Shelf posts 15% sequential growth in Q3 revenues, narrows losses

Digital Shelf Space (CVE:DSS) (OTCQX: DTSRF) reported Tuesday that revenues continued to grow steadily during the nine months ending September 30, largely on the sales of its popular GSP RUSHFIT DVD home workout series starring Mixed Martial Arts (MMA) welterweight world champion Georges St-Pierre.

Indeed, revenue for the third quarter alone was $669,533 - a 15 percent increase over the previous quarter and a 19 percent boost over the first quarter of 2011.

The company said the growth in the latest quarter was "very encouraging", as the period is traditionally the slowest season for fitness products such as GSP RUSHFIT.

The home workout DVD fitness series has exploded in popularity recently, with Digital Shelf announcing earlier this month that the product has become the number one selling fitness DVD series of all time by a professional athlete, with more than 250,000 copies sold in only the first year of distribution.

The GSP RUSHFIT workout series was designed to appeal to those with an interest in MMA and MMA training methods, for an efficient home fitness workout program, with minimal equipment.

The product uses various MMA conditioning exercises, intense circuit style training and body weight training for fitness consumers to build muscle, cut weight and get in shape.

As of the end of the third quarter, the company's GSP RUSHFIT DVD workout series had been placed in over 4,000 stores across Canada, beating its own initial target of 3,000 stores, and capturing over 80 percent of the key Canadian retail distribution channels available.

The fitness series is now represented in more than 90 countries around the world, through Digital Shelf's global distribution agreement with Northern Response.

In Canada, it is already carried by major retailers including Sears Canada, Zellers, Walmart, Future Shop, National Sports, Sports Experts, Sport Check, Best Buy, and Canadian Tire, and in the US by The Sports Authority and Academy Sports and Outdoors.

Plans for international expansion continue to move forward, said Digital Shelf, with the company anticipating new markets opening up in the next quarter.

For the first nine months of the year, total revenues for Digital Shelf amounted to $1.81 million, versus $6,557 for the same period a year earlier. In addition to product sales directly through the GSP RUSHFIT website (gsprushfit.com), wholesale revenues grew by 26 percent in the third quarter alone, when compared to total wholesale revenues for the previous six months, attributed to the company's partnership with Northern Response.

"We are very pleased with the financial results for our third quarter and for the 9 month period ending September 30, 2011. For us to increase our revenue in the third quarter by 15% over the second quarter and 19% over the first quarter is a very positive sign that GSP RUSHFIT is gaining significant traction in the retail market place," said president and CEO, Jeffrey Sharpe.

"Typically revenues for health and fitness products experience seasonal trends with the first quarter of the calendar year most often generating the largest proportion of annual sales. Retail sell through of GSP RUSHFIT has happened very quickly and is now for sale in over 4000 stores across Canada, as well as is for sale in the US with strategic sporting goods retailers.

"We look forward to expanding our distribution channels internationally and extending our marketing and advertising reach throughout the balance of 2011."

Despite expenses more than doubling on a year-over-year basis for the first nine months of 2011 to $2.26 million, losses narrowed to $416,025, down from a net loss of $1.02 million for the nine-month period in 2010.
For the third quarter, net loss came in at $70,441, down from a loss of $230,028 in the second quarter.

The GSP RUSHFIT DVD series was launched in December of last year. To celebrate the first anniversary of the DVD series, Georges St-Pierre will be in-store to sign autographs for the first 150 fans at the Sports Experts store on St. Catherine Street in Montreal on December 4 at 10:00am ET.

With the fourth and first quarter being the peak season for selling fitness products of this nature, Digital Shelf said in October that it anticipates "increased awareness, consumer demand and ultimately increased Canadian and International retail distribution for GSP RUSHFIT" as a result of the launch of its Direct Response TV campaign in North America.

Digital Shelf Space is an independent producer of home entertainment content and online delivery technology provider to digital retailers, content owners and aggregators.