UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C., 20549


FORM 10-Q


Mark One


   X    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015


         TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the transition period from __________ to __________


Commission file number: 0-49638


ICTV BRANDS INC.

(Exact name of small business issuer as specified in its charter)


Nevada

 

76-0621102

State or other jurisdiction of incorporation or organization

 

IRS Employer Identification No.


489 Devon Park Drive, Suite 315

Wayne, PA 19087

(Address of principal executive offices)


(484) 598-2300

(Issuer's telephone number)


N/A

(Former Name or Former Address, if Changed Since Last Report)


Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  X    No         .


Indicate by check-mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  X    No         .


Indicate by check-mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”,” accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer

         

Accelerated filer

         .

Non-accelerated filer

         (Do not check if a smaller reporting company)

Smaller reporting company

   X    .


Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).

Yes        No  X    


State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of November 9, 2015, the Issuer had 28,027,012 shares of common stock, par value $0.001 per share, issued and outstanding.


Transitional Small Business Disclosure Format (Check one):

Yes        No  X     .





TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION

 

 

 

 

ITEM 1.

FINANCIAL STATEMENTS

4

 

 

 

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

23

 

 

 

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

26

 

 

 

ITEM 4.

CONTROLS AND PROCEDURES

26

 

 

 

PART II - OTHER INFORMATION

 

 

 

 

ITEM 1.

LEGAL PROCEEDINGS

27

 

 

 

ITEM 1A.

RISK FACTORS

27

 

 

 

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

27

 

 

 

ITEM 3.

DEFAULTS ON SENIOR SECURITIES

27

 

 

 

ITEM 4.

MINE SAFETY DISCLOSURES

27

 

 

 

ITEM 5.

OTHER INFORMATION

27

 

 

 

ITEM 6.

EXHIBITS

28

 

 

 

SIGNATURES

29




2




PART I – FINANCIAL INFORMATION


ITEM 1.

FINANCIAL STATEMENTS


Condensed Consolidated Balance Sheets as of September 30, 2015 (unaudited) and December 31, 2014

4

 

 

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2015 and 2014 (unaudited)

5

 

 

Condensed Consolidated Statement of Shareholders’ Equity for the nine months ended September 30, 2015  (unaudited)

6

 

 

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2015 and 2014 (unaudited)

7

 

 

Notes to the Condensed Consolidated Financial Statements

8-22



3




ICTV BRANDS INC. AND SUBSIDIARY


CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF


 

 

September 30,

 

December 31,

 

 

2015

 

2014

 

 

(Unaudited)

 

 

ASSETS

 

 

 

 

CURRENT ASSETS:

 

 

 

 

Cash and cash equivalents

$

875,592

$

1,097,008

Cash held in escrow

 

-

 

547,975

Accounts receivable, net of allowances for returns and doubtful accounts of $114,094 and $316,643, respectively

 

393,663

 

948,014

Inventories, net

 

2,399,974

 

1,978,001

Prepaid expenses and other current assets

 

413,679

 

631,814

Total current assets

 

4,082,908

 

5,202,812

 

 

 

 

 

Furniture and equipment

 

72,008

 

72,008

Less accumulated depreciation

 

(48,415)

 

(42,186)

Furniture and equipment, net

 

23,593

 

29,822

 

 

 

 

 

Total assets

$

4,106,501

$

5,232,634

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

Accounts payable and accrued liabilities

$

1,795,972

$

2,582,936

Severance payable – short-term

 

16,400

 

40,800

Deferred revenue – short-term

 

528,406

 

660,564

Total current liabilities

 

2,340,778

 

3,284,300

 

 

 

 

 

Severance payable – long-term

 

-

 

6,200

Deferred revenue – long-term

 

441,361

 

480,693

Total long-term liabilities

 

441,361

 

486,893

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY:

 

 

 

 

Preferred stock 20,000,000 shares authorized, no shares issued and outstanding

 

-

 

-

Common stock, $0.001 par value, 100,000,000 shares authorized, 24,693,678 and 23,569,399 shares issued and outstanding as of September 30, 2015 and December 31, 2014, respectively

 

14,483

 

13,359

Additional paid-in-capital

 

10,007,943

 

9,340,645

Accumulated deficit

 

(8,698,064)

 

(7,892,563)

 

 

 

 

 

Total shareholders’ equity

 

1,324,362

 

1,461,441

 

 

 

 

 

Total liabilities and shareholders’ equity

$

4,106,501

$

5,232,634


See accompanying notes to condensed consolidated financial statements.



4




ICTV BRANDS INC. AND SUBSIDIARY


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


 

 

(Unaudited)

 

(Unaudited)

 

 

For the three

months ended

 

For the nine

months ended

 

 

September 30,

2015

 

September 30,

2014

 

September 30,

2015

 

September 30,

2014

 

 

 

 

 

 

 

 

 

NET SALES

$

3,615,880

$

6,048,043

$

19,739,812

$

23,687,603

 

 

 

 

 

 

 

 

 

COST OF SALES

 

1,210,777

 

1,906,756

 

6,223,875

 

6,940,695

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

2,405,103

 

4,141,287

 

13,515,937

 

16,746,908

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

General and administrative

 

1,178,289

 

1,843,469

 

4,248,599

 

5,666,266

Selling and marketing

 

2,048,892

 

2,825,518

 

10,073,169

 

11,953,186

Total operating expenses

 

3,227,181

 

4,668,987

 

14,321,768

 

17,619,452

 

 

 

 

 

 

 

 

 

OPERATING LOSS

 

(822,078)

 

(527,700)

 

(805,831)

 

(872,544)

 

 

 

 

 

 

 

 

 

INTEREST (EXPENSE) INCOME, NET

 

133

 

(1,579)

 

380

 

(6,475)

 

 

 

 

 

 

 

 

 

LOSS BEFORE (BENEFIT FROM) INCOME TAX

 

(821,945)

 

(529,279)

 

(805,451)

 

(879,019)

 

 

 

 

 

 

 

 

 

(BENEFIT FROM) INCOME TAXES

 

-

 

(27,759)

 

50

 

(21,174)

 

 

 

 

 

 

 

 

 

NET LOSS

$

(821,945)

$

(501,520)

$

(805,501)

$

(857,845)

 

 

 

 

 

 

 

 

 

NET LOSS PER SHARE

 

 

 

 

 

 

 

 

BASIC

$

(0.03)

$

(0.02)

$

(0.03)

$

(0.04)

DILUTED

$

(0.03)

$

(0.02)

$

(0.03)

$

(0.04)

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES

 

 

 

 

 

 

 

 

BASIC

 

24,693,678

 

23,183,650

 

24,320,974

 

22,969,630

DILUTED

 

24,693,678

 

23,183,650

 

24,320,974

 

22,969,630

 

 

 

 

 

 

 

 

 


See accompanying notes to condensed consolidated financial statements.



5




ICTV BRANDS INC. AND SUBSIDIARY


CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015


(Unaudited)


 

Common Stock

$0.001 par value

 

Additional Paid-In

 

Accumulated

 

 

 

Shares

 

Amount

 

Capital

 

Deficit

 

Totals

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2015

23,569,399

$

13,359

$

9,340,645

$

(7,892,563)

$

1,461,441

 

 

 

 

 

 

 

 

 

 

Share based compensation

-

 

-

 

464,282

 

-

 

464,282

 

 

 

 

 

 

 

 

 

 

Exercise of warrants

425,000

 

425

 

112,075

 

-

 

112,500

 

 

 

 

 

 

 

 

 

 

Exercise of options

699,279

 

699

 

90,941

 

-

 

91,640

 

 

 

 

 

 

 

 

 

 

Net loss

-

 

-

 

-

 

(805,501)

 

(805,501)

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2015

24,693,678

$

14,483

$

10,007,943

$

(8,698,064)

$

1,324,362


See accompanying notes to condensed consolidated financial statements.




6




ICTV BRANDS INC. AND SUBSIDIARY

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

(Unaudited)


 

 

2015

 

2014

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

Net loss

$

(805,501)

$

(857,845)

Adjustments to reconcile net loss to net cash and cash equivalents (used in) provided by operating activities:

 

 

 

 

Depreciation

 

6,229

 

4,468

Bad debt expense

 

1,168,658

 

1,318,954

Share based compensation

 

485,579

 

949,941

Reduction in tax penalties payable

 

-

 

(85,933)

Change in assets and liabilities

 

 

 

 

Accounts receivable

 

(614,308)

 

(1,106,535)

Inventories

 

(421,973)

 

(438,196)

Prepaid expenses and other current assets

 

196,839

 

(286,978)

Accounts payable and accrued liabilities

 

(786,964)

 

558,041

Severance payable

 

(30,600)

 

(30,600)

Tax penalties payable

 

-

 

(104,067)

Deferred revenue

 

(171,490)

 

167,735

Net cash (used in) provided by operating activities

 

(973,531)

 

88,985

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

       Purchase of furniture and equipment

 

-

 

(14,119)

   Net cash used in investing activities

 

-

 

(14,119)

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

       Proceeds from exercise of options

 

91,640

 

46,280

   Proceeds from exercise of warrants

 

112,500

 

144,583

   Release of collateral on line of credit

 

500,000

 

-

   Payments on convertible note payable to shareholder

 

-

 

(115,000)

   Net cash provided by financing activities

 

704,140

 

75,863

 

 

 

 

 

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

 

(269,391)

 

150,729

 

 

 

 

 

CASH AND CASH EQUIVALENTS, beginning of the period

 

1,144,983

 

1,433,102

 

 

 

 

 

CASH AND CASH EQUIVALENTS, end of the period

$

875,592

$

1,583,831

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

 

 

 

 

    Taxes paid

$

50

$

6,585

Tax penalties and interest paid

$

-

$

104,067

Interest paid

$

-

$

7,659

Write off of fully depreciated furniture and equipment

$

-

$

30,928

Conversion of shareholder note payable

$

-

$

125,000


See accompanying notes to condensed consolidated financial statements.



7




ICTV BRANDS INC. AND SUBSIDIARY


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 and 2014

(Unaudited)


Note 1 - Organization, Business of the Company and Liquidity


Organization and Nature of Operations


ICTV Brands Inc., (the “Company” or “ICTV”), formerly known as International Commercial Television, Inc., was organized under the laws of the State of Nevada on September 25, 1998.  On July 3, 2014, the Board of Directors of the Company recommended to the shareholders that the Company’s Articles of Incorporation be amended to change the name of the Company to ICTV Brands Inc., which was approved by the holders of a majority of the Company’s outstanding stock and became effective on August 20, 2014.


The Company together with its wholly-owned subsidiary, Better Blocks International Limited (“BBI”), sells various health, wellness and beauty products as well as miscellaneous consumer products through a number of sales channels throughout the United States and internationally. Although our companies are incorporated in Nevada and New Zealand, our operations are currently run from the Wayne, Pennsylvania office.


The Company develops, markets and sells products through a multi-channel distribution strategy, including long-form infomercials which we produce, short-form advertising spots, live home shopping television, specialty outlets, online shopping, and traditional retail stores. We offer primarily health, beauty and wellness products as well as various consumer products, including DermaWand TM , a skin care device that reduces the appearance of fine lines and wrinkles, and helps improve skin tone and texture, DermaVital ® , a professional quality skin care line that effects superior hydration, the CoralActives ® brand of acne treatment and skin cleansing products, and Derma Brilliance ® , a skin care resurfacing device that helps reduce visible signs of aging, Jidue TM , a facial massager device which helps alleviate stress, and Good Planet Super Solution TM , a multi-use cleaning agent.  We acquire the rights to our products that we market primarily via licensing agreements, acquisition and in-house development and sell both domestically and internationally.


The goal of our strategy is to use the brand awareness we create in our infomercials so that we can sell the products featured in our infomercials, along with related families of products, under distinct brand names on both a continuity program model basis and in traditional retail stores. Our goal is to have these families of products sold in the traditional retail environment in shelf-space dedicated to the product category. The Company is presently exploring other devices and consumable product lines currently under licensing agreements.


Note 2 - Summary of significant accounting policies


Basis of Presentation


The unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial statements and within the rules of the Securities and Exchange Commission applicable to interim financial statements and therefore do not include all disclosures that might normally be required for financial statements prepared in accordance with generally accepted accounting principles. The accompanying unaudited condensed consolidated financial statements have been prepared by management without audit and should be read in conjunction with our consolidated financial statements, including the notes thereto, appearing in our Annual Report on Form 10-K for the year ended December 31, 2014. In the opinion of management, all adjustments necessary for a fair presentation of the consolidated financial position, consolidated results of operations and consolidated cash flows, for the periods indicated, have been made. The results of operations for the nine months ended September 30, 2015 are not necessarily indicative of operating results that may be achieved over the course of the full year.


Principles of consolidation


The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary BBI.  All significant inter-company transactions and balances have been eliminated.



8




ICTV BRANDS INC. AND SUBSIDIARY


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015 and 2014

(Unaudited)


Note 2 - Summary of significant accounting policies (continued)


Use of estimates


The preparation of financial statements in conformity with generally accepted accounting principles of the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Management believes that the estimates utilized in preparing its consolidated financial statements are reasonable and prudent. The most significant estimates used in these consolidated financial statements include the allowance for doubtful accounts, reserves for returns, inventory reserves, valuation allowance on deferred tax assets and share based compensation. Actual results could differ from these estimates.


Recently Issued Accounting Pronouncements


In July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2015-11- Inventory (Topic 330) - Simplifying the Measurement of Inventory (“ASU 2015-11”), which provides that an entity should measure inventory within the scope of this update at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. The amendments in this update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter.  The Company is currently evaluating the impact of the new guidance to the consolidated financial statements.


In May 2014, the FASB issued ASU No. 2014-09 - Revenue from Contracts with Customers which provides new accounting guidance on revenue recognition. The new standards provides for a single five-step model to be applied to all revenue contracts with customers as well as required additional financial statement disclosure that will enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows relating to customer contracts. Companies have an option to use either a retrospective approach or cumulative effect adjustment approach to implement the standard. There is no option for early adoption. On July 9, 2015, the FASB agreed to delay the effective date by one year. In accordance with the agreed upon delay, the new standard is effective for us beginning in the first quarter of 2018. The Company is currently evaluating the impact of the new guidance to the consolidated financial statements.


In August 2014, the FASB issued ASU 2014-15 - Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.  The amendments in this update provide guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The amendments in this update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter.  The Company is currently evaluating the impact to the consolidated financial statements related to this guidance.


Concentration of credit risk


Financial instruments, which potentially subject the Company to concentrations of credit risk, include cash and trade receivables. The Company maintains cash in bank accounts that, at times, may exceed federally insured limits. The Company has not experienced any losses and believes it is not exposed to any significant risks on its cash in bank accounts.


As of September 30, 2015, 75% of the Company’s accounts receivable were due from various individual customers to whom our products had been sold directly via Direct Response Television and 19% from televised live home shopping. In addition, 6% of the Company’s accounts receivable was cash due from the Company’s credit card processors as of September 30, 2015. Major customers are considered to be those who accounted for more than 10% of net sales. For the three and nine months ended September 30, 2015, there were no major customers as compared to 24% and 14%, respectively, of net sales made to one major international third party distributor for the three and nine months ended September 30, 2014.




9




ICTV BRANDS INC. AND SUBSIDIARY  


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015 and 2014

 (Unaudited)


Note 2 - Summary of significant accounting policies (continued)


Fair value of financial instruments


Fair value estimates, assumptions and methods used to estimate fair value of the Company’s financial instruments are made in accordance with the requirements of Accounting Standards Codification (“ASC”) 825-10, “Disclosures about Fair Value of Financial Instruments.” The Company has used available information to derive its estimates. However, because these estimates are made as of a specific point in time, they are not necessarily indicative of amounts the Company could realize currently. The use of different assumptions or estimating methods may have a material effect on the estimated fair value amounts. The carrying values of financial instruments such as cash, accounts receivable, accounts payable, and accrued liabilities approximate their fair values due to the short settlement period for these instruments.


Cash and cash equivalents


The Company considers all unrestricted highly liquid investments with an original maturity of three months or less to be cash equivalents.


Cash held in escrow


The Company utilized Transfirst ePayment Services’ Check Gateway platform for electronic check processing, which maintained a reserve fund within our electronic check processing account to cover fees, charges, and expenses due to them, including those estimated for possible customer charge backs. Effective April 28, 2015, the Company discontinued the acceptance of e-checks and no longer uses the Check Gateway platform. At September 30, 2015 and December 31, 2014, the amount of such reserves were approximately $0 and $48,000, respectively. The reserve was released in full on June 30, 2015.  ICTV’s credit card processing vendor for VISA, Mastercard, Discover and American Express transactions in the United States, Chase Paymentech, does not require such a reserve.  Additionally, as described further in Note 6, effective February 18, 2015, the Company terminated its Credit Facility and the $500,000 collateral held in escrow was released.  


Foreign currency transactions


Transactions entered into by the Company in currencies other than its local currency, are recorded in its local currency and any changes in currency exchange rates that occur from the initiation of a transaction until settled are recorded as foreign currency gains or losses in the condensed consolidated statements of operations.


Accounts receivable


Accounts receivable are recorded net of allowances for returns and doubtful accounts of approximately $114,000 at September 30, 2015 and $317,000 at December 31, 2014. The allowances are estimated based on customer returns and bad debts.


In addition to reserves for returns and doubtful accounts on accounts receivable, an accrual is made for the return of product that has been sold to customers and had cash collections, while the customer still has the right to return the product. The amounts of these accruals included in accounts payable and accrued liabilities in our condensed consolidated balance sheets were approximately $73,000 at September 30, 2015 and $221,000 at December 31, 2014.


Inventories


Inventories consist primarily of products held for resale, and are valued at the lower of cost (first-in, first-out method) or market. The Company adjusts inventory for estimated obsolescence when necessary based upon demand and market conditions. Included in inventory at September 30, 2015 and December 31, 2014 is approximately $37,000 and $115,000, respectively, of consigned product that has been shipped to customers under the 30-day free trial period for which the trial period has not expired and as such the customer has not accepted the product.




10




ICTV BRANDS INC. AND SUBSIDIARY


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015 and 2014

 (Unaudited)


Note 2 - Summary of significant accounting policies (continued)


Furniture and equipment


Furniture and equipment are carried at cost and depreciation is computed over the estimated useful lives of the individual assets ranging from 3 to 5 years.  Depreciation is computed using the straight-line method. The related cost and accumulated depreciation of assets retired or otherwise disposed of are removed from the accounts and the resultant gain or loss is reflected in earnings.  Maintenance and repairs are expensed currently while major renewals and betterments are capitalized.


Depreciation expense amounted to approximately $2,000 and $6,000 and $2,000 and $4,500 for the three and nine months ended September 30, 2015 and 2014, respectively.


Impairment of long-lived assets


In accordance with ASC 360-10, “Accounting for the Impairment or Disposal of Long-Lived Assets,” long-lived assets are reviewed for impairment when circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to the future net cash flows estimated by the Company to be generated by such assets. If such assets are considered to be impaired, the impairment to be recognized is the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of by sale are recorded as held for sale at the lower of carrying value or estimated net realizable value. No impairment losses were identified or recorded for the nine months ended September 30, 2015 and 2014.


Revenue recognition


For our DRTV consumer television sales generated by our infomercials, product sales revenue is recognized when the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred, the selling price is fixed or determinable, and collectability is reasonably assured. The Company’s revenues in the condensed consolidated statements of operations are net of sales taxes.


The Company offers a 30-day risk-free trial as one of its payment options. Revenue on the 30-day risk-free trial sales is not recognized until customer acceptance and collectability are assured which we determine to be when the trial period ends. If the risk-free trial expires without action by the customer, product is determined to be accepted by the customer and revenue is recorded. Revenue for items purchased without the 30-day free trial is recognized upon shipment of the product to the customer and collectability is assured.


Revenue related to our DermaVital TM continuity program is recognized monthly upon shipment to customers. Revenue related to international wholesale customers is recorded at gross amounts with a corresponding charge to cost of sales upon shipment. Deferred revenue – short-term for payment received prior to shipment on international third party distributor sales approximated $310,000 and $471,000 as of September 30, 2015 and December 31, 2014, respectively.


The Company has a return policy whereby the customer can return any product received within 30 days of receipt for a full refund. However, historically the Company has accepted returns past 30 days of receipt. The Company provides an allowance for returns based upon past experience. Returns for the periods presented have been offset against gross sales.




11




ICTV BRANDS INC. AND SUBSIDIARY


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015 and 2014

 (Unaudited)


Note 2 - Summary of significant accounting policies (continued)


In 2012, the Company started selling warranties on the DermaWand TM for one-year, three-year and lifetime terms. In 2013, the Company started selling five-year warranties and discontinued lifetime warranties. One-year, three-year and five-year warranties are recognized ratably over the term. Lifetime warranties were recognized over the estimated term of 5 years. Any unearned warranty is included in deferred revenue on the accompanying condensed consolidated balance sheet. Changes in the Company’s deferred service revenue related to the warranties is presented in the following table:


 

 

September 30,

2015

Deferred extended warranty revenue:

 

 

Balance at January 1, 2015

$

670,075

Revenue deferred for new warranties

 

149,392

Revenue recognized

 

(159,879)

Balance at September 30, 2015

$

659,588

 

 

 

Current portion

$

218,227

Non-current portion

 

441,361

 

$

659,588


Shipping and handling


The amount billed to customers for shipping and handling is included in revenue. Shipping, handling and processing revenue approximated $489,000 and $2,593,000 and $786,000 and $3,320,000 for the three and nine months ended September 30, 2015 and 2014, respectively. Shipping and handling costs are included in cost of sales. Shipping and handling costs approximated $284,000 and $1,476,000 and $415,000 and $1,780,000 for the three and nine months ended September 30, 2015 and 2014, respectively.


Research and development


Research and development costs are expensed as incurred and are included in selling and marketing expense in the accompanying condensed consolidated statement of operations.  Research and development costs primarily consist of efforts to discover and develop new products, including clinical trials, product safety testing, certifications for international regulations and standards, etc.  Product testing and development costs approximated $26,000 and $90,000 and $86,000 and $315,000 for the three and nine months ended September 30, 2015 and 2014, respectively.


Media and production costs


Media and internet marketing costs are expensed as incurred and are included in selling and marketing expense in the accompanying condensed consolidated statement of operations.  Production costs associated with the creation of new and updated infomercials and advertising campaigns are expensed at the commencement of a campaign.  The Company incurred approximately $1,206,000  and $1,768,000 in media costs for airing its infomercials, $85,000 and $22,000 in new production costs, and $146,000 and $111,000 in internet marketing costs for the three months ended September 30, 2015 and 2014, respectively and approximately $6,519,000 and $7,680,000 in media costs for airing its infomercials, $293,000 and $187,000 in new production costs, and $462,000 and $395,000 in internet marketing costs for the nine months ended September 30, 2015 and 2014, respectively.  




12




ICTV BRANDS INC. AND SUBSIDIARY


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015 and 2014

 (Unaudited)


Note 2 - Summary of significant accounting policies (continued)


Income taxes


In preparing our condensed consolidated financial statements, we make estimates of our current tax exposure and temporary differences resulting from timing differences for reporting items for book and tax purposes. We recognize deferred taxes by the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred income taxes are recognized for differences between the financial statement and tax bases of assets and liabilities at enacted statutory tax rates in effect for the years in which the differences are expected to reverse. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. In addition, valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. In consideration of our accumulated losses and limited historical ability to generate taxable income to utilize our deferred tax assets, we have estimated that we will not be able to realize any benefit from our temporary differences and have recorded a full valuation allowance. If we sustain profitability in the future at levels which cause management to conclude that it is more likely than not that we will realize all or a portion of the net operating loss carry-forward, we would record the estimated net realizable value of the deferred tax asset at that time and would then provide for income taxes at a rate equal to our combined federal and state effective rates. Subsequent revisions to the estimated net realizable value of the deferred tax asset could cause our provision for income taxes to vary significantly from period to period.


Stock options


In June 2001, our shareholders approved our 2001 Stock Option Plan (the “Plan”). The Plan is designed for selected employees, officers and directors of the Company and its subsidiary, and is intended to advance the best interests of the Company by providing personnel who have substantial responsibility for the management and growth of the Company and its subsidiary with additional incentive by increasing their proprietary interest in the success of the Company, thereby encouraging them to remain in the employ of the Company or its subsidiary. The Plan is administered by the Board of Directors of the Company, and authorizes the issuance of stock options not to exceed a total of 3,000,000 shares. The terms of any awards under the Plan are determined by the Board of Directors, provided that no options may be granted at less than the fair market value of the stock as of the date of the grant. The Plan expired in February 2011. As of September 30, 2015, 316,667 options are outstanding under the Plan.


In December 2011, our shareholders approved our 2011 Stock Option Plan (the “2011 Plan”).  The 2011 Plan is designed for selected employees, officers, and directors of the Company and its subsidiary, and is intended to advance the best interests of the Company by providing personnel who have substantial responsibility for the management and growth of the Company and its subsidiary with additional incentive by increasing their proprietary interest in the success of the Company, thereby encouraging them to remain in the employ of the Company or its subsidiary.  The 2011 Plan is administered by the Board of Directors of the Company, and authorizes the issuance of stock options not to exceed a total of 3,000,000 shares.  On April 21, 2014, the Company’s Board of Directors adopted a resolution to increase the number of common shares which may be granted to 6,000,000 shares. On September 19, 2014, the increase in the number of shares that may be granted under the 2011 Plan was approved by a majority of the Company’s shareholders. The terms of any awards under the Plan are determined by the Board of Directors, provided that no options may be granted at less than the fair market value of the stock as of the date of the grant.  Generally, the options granted vest over three years with one-third vesting on each anniversary date of the grant. As of September 30, 2015, 3,579,056 options are outstanding under the 2011 Plan.


The Company accounts for equity instruments issued to non-employees in accordance with the provisions of ASC Topic 505, subtopic 50, Equity-Based Payments to Non-Employees based upon the fair-value of the underlying instrument. The equity instruments, consisting of stock options granted to consultants, are valued using the Black-Scholes valuation model. The measurement of share-based compensation is subject to periodic adjustments as the underlying equity instruments vest and is recognized as an expense over the period which services are received. Nonvested stock options granted to non-employees are remeasured at each reporting period.


The Company uses ASC Topic 718, “Share-Based Payments” to account for share-based compensation issued to employees and directors. The Company recognizes compensation expense in an amount equal to the fair value of share-based payments such as stock options granted to employees over the requisite vesting period of the awards.




13




ICTV BRANDS INC. AND SUBSIDIARY


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015 and 2014

 (Unaudited)


Note 2 - Summary of significant accounting policies (continued)


Stock options (continued)


The following is a summary of stock options outstanding under the Plan and 2011 Plan (collectively “Stock Option Plans”) for the nine months ended September 30, 2015 and 2014:


 

Number of Shares

 

Weighted Average Exercise Price

 

 

 

Non-

 

 

 

 

Employee

 

Employee

 

Totals

 

 

 

 

 

 

 

 

 

Balance, January 1, 2015

4,220,002

 

350,000

 

4,570,002

$

0.40

Exercised during the period

(309,279)

 

(350,000)

 

(659,279)

 

0.14

Forfeited during the period

(15,000)

 

-

 

(15,000)

 

0.49

 

 

 

 

 

 

 

 

Balance, September 30, 2015

3,895,723

 

-

 

3,895,723

$

0.38


 

Number of Shares

 

Weighted Average Exercise Price

 

 

 

Non-

 

 

 

 

Employee

 

Employee

 

Totals

 

 

 

 

 

 

 

 

 

Balance, January 1, 2014

3,125,002

 

350,000

 

3,475,002

$

0.24

Granted during the period

600,000

 

-

 

600,000

 

0.62

Exercised during the period

(374,999)

 

-

 

(374,999)

 

0.15

 

 

 

 

 

 

 

 

Balance, September 30, 2014

3,350,003

 

350,000

 

3,700,003

$

0.31


Of the stock options outstanding as of September 30, 2015 under the Stock Option Plans, 1,942,389 options are currently vested and exercisable. The weighted average exercise price of these options was $0.32. These options expire through December 2024. The aggregate intrinsic value for options outstanding and exercisable at September 30, 2015 and 2014 was approximately $349,000 and $674,000, respectively. The aggregate intrinsic value for options exercised during the nine months ended September 30, 2015 was approximately $204,000.


For the three and nine months ended September 30, 2015 and 2014, the Company recorded approximately $138,000 and $416,000 and  $106,000 and $266,000, respectively in share based compensation expense related to vesting of options previously granted under the Stock Option Plans. At September 30, 2015, there was approximately $815,000 of total unrecognized compensation cost related to non-vested option grants that will be recognized over the remaining vesting period of 3 years.


The following assumptions are used in the Black-Scholes option pricing model for the nine months ended September 30, 2014 to value the stock options under the Stock Option Plans granted during that period.  There were no grants for the nine months ended September 30, 2015.


2014

Risk-free interest rate

2.14%-2.30%

Expected dividend yield

0.00

Expected life

6.00 years

Expected volatility

324-340%

Weighted average grant date fair value

$0.71




14




ICTV BRANDS INC. AND SUBSIDIARY


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015 and 2014

(Unaudited)


Note 2 - Summary of significant accounting policies (continued)


Stock options (continued)


The following is a summary of stock options outstanding outside of the existing Stock Option Plans for the nine months ended September 30, 2015 and 2014:


 

Number of Shares

 

Weighted Average Exercise Price

 

 

 

Non-

 

 

 

 

Employee

 

Employee

 

Totals

 

 

 

 

 

 

 

 

 

Balance, January 1, 2015

466,667

 

2,016,667

 

2,483,334

$

0.36

Exercised during the period

-

 

(40,000)

 

(40,000)

 

0.15

 

 

 

 

 

 

 

 

Balance, September 30, 2015

466,667

 

1,976,667

 

2,443,334

$

0.36


 

Number of Shares

 

Weighted Average Exercise Price

 

 

 

Non-

 

 

 

 

Employee

 

Employee

 

Totals

 

 

 

 

 

 

 

 

 

Balance, January 1, 2014

291,667

 

1,590,000

 

1,881,667

$

0.23

Granted during the period

100,000

 

510,000

 

610,000

 

0.63

Exercised during the period

-

 

(133,333)

 

(133,333)

 

0.15

 

 

 

 

 

 

 

 

Balance, September 30, 2014

391,667

 

1,966,667

 

2,358,334

$

0.34


Of the stock options outstanding as of September 30, 2015 outside of the existing Stock Option Plans, 2,251,668 options are currently vested and exercisable. The weighted average exercise price of these options was $0.34. These options expire through December 2024. The aggregate intrinsic value for options outstanding and exercisable at September 30, 2015 and 2014 outside of the existing stock option plans was approximately $384,000 and $580,000, respectively. The aggregate intrinsic value for options exercised during the nine months ended September 30, 2015 was approximately $12,000.


For the three and nine months ended September 30, 2015 and 2014, the Company recorded approximately $16,000 and $223,000 and $48,000 and $570,000 of expense, respectively, in share based compensation related to vesting of options previously granted outside of the Stock Option Plans. At September 30, 2015, there was approximately $84,000 of total unrecognized compensation cost related to non-vested option grants outside the Stock Options Plans will be recognized over the remaining vesting period of approximately 3 years.


The following assumptions are used in the Black-Scholes option pricing model for the nine months ended September 30, 2014 to value the stock options granted outside the Stock Options Plans during that period.  There were no grants for the nine months ended September 30, 2015.


2014

Risk-free interest rate

1.01%-2.73%

Expected dividend yield

0.00

Expected life

2.5-10.00 years

Expected volatility

184-341%

Weighted average grant date fair value

$0.76




15




ICTV BRANDS INC. AND SUBSIDIARY


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015 and 2014

 (Unaudited)


Note 2 - Summary of significant accounting policies (continued)


Stock options (continued)


The following is a summary of all stock options outstanding and nonvested for the nine months ended September 30, 2015:


 

Number of Shares

 

Weighted Average Exercise Price

 

 

 

Non-

 

 

 

 

Employee

 

Employee

 

Totals

 

 

 

 

 

 

 

 

 

Balance, January 1, 2015 – nonvested

3,262,779

 

100,000

 

3,362,779

$

0.51

Vested

(1,102,779)

 

(100,000)

 

(1,202,779)

 

0.40

Forfeited

(15,000)

 

-

 

(15,000)

 

0.49

Balance September 30, 2015 - nonvested

2,145,000

 

-

 

2,145,000

$

0.45


For the nine months ended September 30, 2015 and 2014, the Company recognized approximately $464,000 and $300,000, respectively, in share based compensation expense related to employee stock options and approximately $0 and $536,000, respectively, related to share based compensation expense related to non-employee stock based awards.


Note 3- Commitments and contingencies


Leases


As of September 30, 2015, the Company had an active lease related to the office space in Wayne, Pennsylvania. The amended lease is for three years, through March 2016.


Rent expense incurred during the three and nine months ended September 30, 2015 and 2014 totaled approximately $14,000 and $42,000 and $14,000 and $43,000, respectively. The schedule below details the future financial obligations under the remaining lease.


 

 

Remaining three months

2015

 

2016

 

2017

 

TOTAL OBLIGATION

Wayne - Corporate HQ

$

14,600

$

14,600

$

-

$

29,200

 

 

 

 

 

 

 

 

 

Total Lease Obligations

$

14,600

$

14,600

$

-

$

29,200


DermaWand TM


On October 15, 1999, Windowshoppe.com Limited (“WSL”) entered into an endorsement agreement with an individual for her appearance in a DermaWand infomercial. On July 11, 2001, the agreement was amended to include a royalty payment for each unit sold internationally, up to a maximum royalty payment for any one calendar quarter. Further, if the infomercial is aired in the United States, then the airing fee will revert back to the same flat rate per calendar quarter. The initial term of the agreement was five years starting October 15, 1999. The agreement automatically and continually renews for successive additional five-year terms unless R.J.M.Ventures (“RJML”) is in material default and is notified in writing at least thirty days prior to the end of the then current term that the individual intends to terminate the agreement. The Company assumed any and all responsibilities associated with the license and reconveyance agreements dated April 1, 2000 entered into by the Company and WSL and RJML. On January 5, 2001, WSL entered into an agreement with Omega 5. WSL shall have worldwide nonexclusive rights to manufacture, market and distribute DermaWand TM . In consideration of these rights, WSL shall pay a monthly payment for each unit sold of DermaWand depending on various scenarios as defined in the agreement. The agreement is silent as to its duration.



16




ICTV BRANDS INC. AND SUBSIDIARY


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015 and 2014

(Unaudited)


Note 3- Commitments and contingencies (continued)


During 2007, the Company entered into an exclusive license agreement with Omega 5 wherein ICTV was assigned all of the trademarks and all of the patents and pending patents relating to the DermaWand TM and was granted exclusive license with respect to the commercial rights to the DermaWand TM . This agreement was amended and superseded on July 28, 2010. The geographical scope of the license granted is the entire world consisting of the United States of America and all of the rest of the world. The license remains exclusive to ICTV provided ICTV pays to Omega 5 a minimum annual payment of $250,000 in the initial 18 month term of the agreement and in each succeeding one-year period. If in any calendar year the payments made by the Company to Omega exceed the annual minimum of $250,000, then the amount in excess of the annual minimum or “rollover amount” will be credited towards the Company’s annual minimum for the immediately following calendar year only. If the Company fails to meet the minimum requirements as outlined in the agreement, it may be forced to assign the trademarks and patents back to Omega 5. After the initial term, the exclusive license granted shall renew automatically for a three year period, and thereafter automatically at three-year intervals. The Company met the minimum annual requirements in the year ended December 31, 2014 and has already met the annual minimum requirements during the nine months ended September 30, 2015.


The amount of royalty expense incurred for sales of the DermaWand TM included in cost of sales in the accompanying condensed consolidated statements of operations were approximately $103,000 and $591,000 and $194,000 and $732,000 for the three and nine months ended September 30, 2015 and 2014, respectively.


Product Liability Insurance


For certain products, the Company was (and is) listed as an additional insured party under the product manufacturers’ insurance policy. The current policy has a scheduled expiration of April 20, 2016.  At present, management is not aware of any claims against the Company for any products sold.


Consulting Agreement


On August 15, 2015, the Company entered into a new one year agreement with the consultant. As part of the agreement, the consultant receives a commission of 5% on internet retailers’ net sales, including Amazon.com, which is paid monthly with a $6,000 per month minimum. In addition, if the gross sales for Amazon reach a certain threshold for the year, the consultant will receive incentive bonuses. The consultant met the minimum requirements and was paid $9,000 under the new agreement during the three months end September 30, 2015.


Note 4 – Severance payable


In September 2010 the Company entered into a severance agreement with a former consultant. Under the severance agreement, the consultant will be paid $270,000 over a 27 month period in increments of $10,000 per month beginning in September 2010 and continuing through November 2012. The Company recorded the $270,000 as a General and Administrative expense in the three months ended September 30, 2010. In April 2011, the Company amended the aforementioned severance agreement. The amendment allows the Company to make monthly payments of $3,400 per month for a period of one year from April 2011 through March 2012. In March 2012, the Company amended the aforementioned severance agreement for a second time to continue the monthly payment amount of $3,400 through March 2016. The severance payable balance was approximately $16,400 at September 30, 2015, all of which is current as of September 30, 2015, and $47,000 at December 31, 2014, of which approximately $41,000 is current and approximately $6,000 is long-term.



17




ICTV BRANDS INC. AND SUBSIDIARY


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015 and 2014

 (Unaudited)


Note 5 - Related party transactions


In April 2012, the Company modified a convertible note payable to a shareholder with an original amount of $590,723 from being interest-free with no specific terms of repayment, to including interest at the rate of four and three quarters percent (4.75%) per annum as well as a conversion option such that all or any part of this note may be converted into shares of common stock of the Company at any time, and from time to time, prior to payment, at a conversion price of $0.50 per share. During 2014, the shareholder sold $275,000 of the note to accredited investors, who converted the notes into 550,000 shares of the Company’s stock at the contractual conversion price of $.50 per share.  The remainder of the note was paid in full in 2014. Interest payments of $1,800 and $7,600 were paid during the three and nine months ended September 30, 2014, respectively.


Note 6 – Notes payable


On July 2, 2014, the Company entered into a $500,000, one-year Credit Facility with JPMorgan Chase Bank, N.A with an expiration date of July 2, 2015. Interest on the Credit Facility was calculated using the Adjusted One Month LIBOR Rate plus 2.50%. The facility was collateralized by a lien on the Company’s assets and requires the Company to maintain prescribed levels of liquidity and EBITDA.  Effective November 7, 2014, the Credit Facility was amended to remove the EBITDA covenant and hold $500,000 as cash collateral for the amount of the line of credit.  The Company did not utilize the Credit Facility. Effective February 18, 2015, the Company terminated the Credit Facility and the $500,000 collateral held in escrow was released.  


Note 7 - Capital transactions


On August 15, 2012, the Company entered into a three year corporate public relations agreement with a consultant.  As part of the agreement, the consultant received a monthly consulting fee of $4,000, a commission of $7.50 for each DermaWand TM sold on Amazon.com, and 125,000 warrants with an exercise price of $0.30 that expires 36 months from the date of the agreement.  In addition, the Consultant had an additional 125,000 warrants from a prior agreement with an exercise price of $0.30, which were exercised during 2013. On June 3, 2015, the 125,000 warrants with an exercise price of $0.30 were exercised. For each of the three and nine months ended September 30, 2015 and 2014, the Company recorded $3,000 and $21,000 and $9,000 and $28,000 of stock based compensation expense for the 125,000 warrants issued to the consultant under the new consulting agreement. As of September 30, 2015, there was no unrecognized compensation costs included in prepaid expenses related to these warrant grants.


On October 27, 2015, the Board authorized the issuance of up to 3,333,334 shares of common stock to be purchased at $0.30 per share to accredited investors.  A total of 3,333,334 shares were purchased through October 30, 2015 for gross proceeds of $1,000,000.  No underwriting discounts or commissions were paid.  As part of the offering, we agreed to register their shares for resale.  The offering will be used for funding opportunities we have for the promotion and sale of our DermaWand TM , CoralActives ® , Derma Brilliance ® , and Jidue ® line of products.  The purchasers are accredited investors, as that term is defined in Regulation D promulgated by the Securities and Exchange Commission, and the shares were issued with restrictive legends.  The issuance of the shares is exempt from registration under Section 4(2) of the Securities Act of 1933, and Rule 5.06(b) of Regulation D.  





18




ICTV BRANDS INC. AND SUBSIDIARY


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015 and 2014

 (Unaudited)


Note 8 - Basic and diluted earnings per share


ASC 260, “Earnings Per Share” requires presentation of basic earnings per share and dilutive earnings per share.


The computation of basic earnings per share is computed by dividing earnings available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted earnings per share gives the effect to all dilutive potential common shares outstanding during the period. The computation of diluted earnings per share does not assume conversion, exercise or contingent exercise of securities that would have an anti-dilutive effect. At September 30, 2015 there were no warrants outstanding and exercisable. At September 30, 2015 there were approximately 6,339,057 stock options outstanding and 4,194,056 were vested and exercisable at an average exercise price of $0.33.


All outstanding securities were anti-dilutive for the three and nine months ended September 30, 2015 and 2014 as a result of a net loss for both periods.  The following securities were not involved in the computation of diluted net (loss) per share as their effect would have been anti-dilutive:

 


September 30,

 

2015

 

2014

Options to purchase common stock

6,339,057

 

6,058,337

Warrants to purchase common stock

-

 

460,000

Convertible debt

-

 

787,446


The computations for basic and fully diluted earnings per share are as follows:


 

 

 

 

Weighted

Average

 

 

For the three-months ended September 30, 2015:

 

Loss

(Numerator)

 

Shares (Denominator)

 

Per Share Amount

 

 

 

 

 

 

 

Basic and diluted earnings per share

 

 

 

 

 

 

Loss to common shareholders

$

(821,945)

 

24,693,678

$

(0.03)

 

 

 

 

 

 

 


 

 

 

Weighted

Average

 



For the three-months ended September, 2014:

 

Income

(Numerator)

 

Shares (Denominator)

 

Per Share Amount

 

 

 

 

 

 

 

Basic and diluted earnings per share

 

 

 

 

 

 

Loss to common shareholders

$

(501,520)

 

23,183,650

$

(0.02)

 

 

 

 

 

 

 



19




ICTV BRANDS INC. AND SUBSIDIARY


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015 and 2014

 (Unaudited)


Note 8 - Basic and diluted earnings per share (continued)


The computations for basic and fully diluted earnings per share are as follows:


 

 

 

 

Weighted

Average

 

 

For the nine-months ended September 30, 2015:

 

 Income (Numerator)

 

Shares (Denominator)

 

Per Share Amount

 

 

 

 

 

 

 

Basic and diluted earnings per share

 

 

 

 

 

 

Loss to common shareholders

$

(805,501)

 

24,320,974

$

(0.03)

 

 

 

 

 

 

 

 

 

 

 

Weighted

Average

 

 

For the nine-months ended September 30, 2014:

 

(Loss)

(Numerator)

 

Shares (Denominator)

 

Per Share Amount

 

 

 

 

 

 

 

Basic and diluted loss per share

 

 

 

 

 

 

Loss to common shareholders

$

(857,845)

 

22,969,630

$

(0.04)




20




ICTV BRANDS INC. AND SUBSIDIARY


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015 and 2014

(Unaudited)


Note 9 - Income taxes


The income tax expense (benefit) for the three and nine months ended September 30, 2015 and 2014 consist of the following:


 

 

Three Months Ended

 

Nine Months Ended

Current

 

September 30,

2015

 

September 30,

2014

 

September 30,

2015

 

September 30,

2014

 Federal

$

-

$

(2,317)

$

-

$

(2,232)

 State

 

-

 

(25,442)

 

50

 

(18,942)

Total

$

-

$

(27,759)

$

50

$

(21,174)


The provision (benefit) for income taxes is approximately $0 and $(28,000) for the three months ended September 30, 2015 and 2014, respectively, or 0% and (5.2%), respectively, of pre-tax income. The provision (benefit) for income tax is approximately $0 and $(21,000) for the nine months ended September 30, 2015 and 2014, respectively, or 0% and (2.4%), respectively, of pre-tax income.  The effective tax rates for 2015 and 2014 reflect provisions for current federal and state income taxes. As of December 31, 2014, the Company had approximately $843,000 of gross federal net operating loss carryforwards and $546,000 of gross state net operating loss carryforwards available. As of December 31, 2013, the Company completed its IRC Section 382 study and concluded that the availability of the Company’s net operating loss carry forwards will not be subject to annual limitations against taxable income in future periods due to change in ownership rules. The Company has provided a full valuation allowance on the remaining net deferred asset as the Company does not have sufficient history of taxable income. During 2012, the Company filed income tax returns from inception, 1998, through 2011. The Company is now current in all tax filings.


The Company’s policy is to recognize interest and penalties related to tax matters in general and administrative expenses in the Condensed Consolidated Statements of Operations. The Company recorded zero interest and penalties for the three and nine months ended September 30, 2015 and 2014.


Note 10 - Segment reporting


The Company operates in one industry segment and is engaged in the selling of various consumer products primarily through direct marketing infomercials and televised home shopping. The Company evaluates performance and allocates resources based on several factors, of which the primary financial measure is operating income (loss) by the end customer, either direct to consumer DRTV sales or international third party distributor sales. Operating expenses are primarily prorated based on the relationship between DRTV consumer sales and international third party distributor sales.




21




ICTV BRANDS INC. AND SUBSIDIARY


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015 and 2014

(Unaudited)


Note 10 - Segment reporting (continued)


Information with respect to the Company’s operating income (loss) by segment is as follows:


 

 

For the three months ended September 30, 2015

 

For the three months ended September 30, 2014

 

 

DRTV Consumer

 

International Third Party Distributor

 

Totals

 

DRTV Consumer

 

International

Third Party Distributor

 

Totals

 

 

 

 

 

 

 

 

 

 

 

 

 

NET SALES

$

3,002,942

$

612,938

$

3,615,880

$

4,229,306

$

$ 1,818,737

$

6,048,043

 

 

 

 

 

 

 

 

 

 

 

 

 

COST OF SALES

 

871,916

 

338,861

 

1,210,777

 

1,033,078

 

873,678

 

1,906,756

Gross profit

 

2,131,026

 

274,077

 

2,405,103

 

3,196,228

 

945,059

 

4,141,287

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

1,029,416

 

148,873

 

1,178,289

 

1,750,305

 

93,164

 

1,843,469

Selling and marketing

 

2,021,008

 

27,884

 

2,048,892

 

2,799,850

 

25,668

 

2,825,518

Total operating expense

 

 3,050,424

 

176,757

 

3,227,181

 

4,550,155

 

118,832

 

4,668,987

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

$

(919,398)

$

97,320

$

(822,078)

$

(1,353,927)

$

$ 826,227

$

(527,700)

 

 



For the nine months ended September 30, 2015

 

For the nine months ended September 30, 2014

 

 

DRTV Consumer

 

International Third Party Distributor

 

Totals

 

DRTV Consumer

 

International

Third Party Distributor

 

Totals

 

 

 

 

 

 

 

 

 

 

 

 

 

NET SALES

$

15,739,693

$

4,000,119

$

19,739,812

$

18,938,141

$

$ 4,749,462

$

23,687,603

 

 

 

 

 

 

 

 

 

 

 

 

 

COST OF SALES

 

4,140,715

 

2,083,160

 

6,223,875

 

4,539,494

 

2,401,201

 

6,940,695

Gross profit

 

11,598,978

 

1,916,959

 

13,515,937

 

14,398,647

 

2,348,261

 

16,746,908

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

3,732,492

 

516,107

 

4,248,599

 

5,422,815

 

243,451

 

5,666,266

Selling and marketing

 

9,988,561

 

84,608

 

10,073,169

 

11,832,832

 

120,354

 

11,953,186

Total operating expense

 

13,721,053

 

600,715

 

14,321,768

 

17,255,647

 

363,805

 

17,619,452

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

$

(2,122,075)

$

1,316,244

$

(805,831)

$

(2,857,000)

$

1,984,456

$

(872,544)


Selected balance sheet information by segment is presented in the following table as of:


 

 

September 30,

 

December 31,

 

 

2015

 

2014

Domestic

$

4,060,396

$

5,180,013

International

 

46,105

 

52,621

Total Assets

$

4,106,501

$

5,232,634




22



 

ITEM 2.

MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION


Except for the historical information presented in this document, the matters discussed in this Form 10-Q, and specifically in the "Management's Discussion and Analysis or Plan of Operation”, or otherwise incorporated by reference into this document contain "forward looking statements" (as such term is defined in the Private Securities Litigation Reform Act of 1995). These statements can be identified by the use of forward-looking terminology such as "believes", "expects", "may", "will", "intends", "should", or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. The safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, apply to forward-looking statements made by the Company. You should not place undue reliance on forward-looking statements. Forward-looking statements involve risks and uncertainties. The actual results that the Company achieves may differ materially from any forward-looking statements due to such risks and uncertainties. These forward-looking statements are based on current expectations, and the Company assumes no obligation to update this information. Readers are urged to carefully review and consider the various disclosures made by the Company in this report on Form 10-Q and in the Company's other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect the Company's business.


The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the Financial Statements and accompanying notes and the other financial information appearing elsewhere in this report.


Overview


The Company develops, markets and sells products through a multi-channel distribution strategy, including long-form infomercials which we produce, short-form advertising spots, live home shopping television, specialty outlets, online shopping, and traditional retail stores. We offer primarily health, beauty and wellness products as well as various consumer products, including DermaWand TM , a skin care device that reduces the appearance of fine lines and wrinkles, and helps improve skin tone and texture, DermaVital ® , a professional quality skin care line that effects superior hydration, the CoralActives ® brand of acne treatment and skin cleansing products, Derma Brilliance ® , a skin care resurfacing device that helps reduce visible signs of aging, Jidue TM , a facial massager device which helps alleviate stress, and Good Planet Super Solution TM , a multi-use cleaning agent.  We acquire the rights to our products that we market primarily via licensing agreements, acquisition and in-house development and sell both domestically and internationally.


The goal of our strategy is to use the brand awareness we create in our infomercials so that we can sell the products featured in our infomercials, along with related families of products, under distinct brand names on both a continuity program model basis and in traditional retail stores. Our goal is to have these families of products sold in the traditional retail environment in shelf-space dedicated to the product category. The Company is presently exploring other devices and consumable product lines currently under licensing agreements.


Fluctuations in our revenue are driven by changes in our product mix. Revenues may vary substantially from period-to-period depending on our product line-up. A product that generates revenue in one quarter may not necessarily generate revenues in each quarter of a fiscal year for a variety of reasons, including, seasonal factors, number of infomercials run, the product’s stage in its life-cycle, the public’s general acceptance of the infomercial and other outside factors, such as the general state of the economy.


Just as fluctuations in our revenues are driven by changes in our product mix, our gross margins from period to period depend on our product mix. Our gross margins vary according to whether the products we are selling are primarily our own products or third-party products. As a general rule, the gross margins for our own products are considerably higher based on proportionately smaller cost of sales. For third-party products, our general experience is that our gross margins are lower, because we record as cost of sales the proportionately higher cost of acquiring the product from the manufacturer. Within each category (i.e., our own products versus third-party products), gross margins still tend to vary based on factors such as market price sensitivity and cost of production.


Many of our expenses for our own products are incurred up-front. Some of our up-front expenditures include infomercial production costs and purchases of media time. If our infomercials are successful, these up-front expenditures produce revenue as consumers purchase the products aired on the infomercials. We do not incur infomercial production costs and media time for our international sales to third party distributors, because we merely act as the distributor for pre-produced infomercials. It is the responsibility of the international infomercial operators to whom we sell the third-party products to take the pre-produced infomercial, adapt it to their local standards and pay for media time.



23




Results of Operations


The following discussion compares operations for the three and nine months ended September 30, 2015 with the three and nine months ended September 30, 2014.


Net Sales


Our net sales decreased to approximately $3,616,000 and $19,740,000 for the three and nine months ended September 30, 2015, from $6,048,000 and $23,688,000 for the three and nine months ended September 30, 2014. During the three and nine months ended September 30, 2015, sales relating to DermaWand TM for direct response television (DRTV) were approximately $2,658,000 and $14,241,000 as compared to approximately $3,862,000 and $17,631,000 during the three and nine months ended September 30, 2014. The primary driver of the decline in sales was generated by the Company’s decrease in media related expenditures as it reduced the amount of airings of the DermaWand TM infomercial and allocated additional resources to its additional products still in a rollout phase.  Further, as a result of the reduced media spend, sales related to the DermaVital TM skin care line during the three and nine months ended September 30, 2015 were approximately $580,000 and $2,232,000 compared to $742,000 and $3,014,000 during the three and nine months ended September 30, 2014. Additionally, sales from the Spanish language version of the DermaWand TM infomercial decreased to approximately $435,000 and $3,229,000 for the three and nine months ended September 30, 2015 from $716,000 and $3,835,000 for the three and nine months ended September 30, 2014, respectively.  


The Company resumed airings on live televised home shopping in the first quarter of 2015 which resulted in increased revenue of $122,000 and $393,000 for the three and nine months ended September 30, 2015 compared to no generated sales from live televised home shopping for the three and nine months ended September 30, 2014.

 

During the three and nine months ended September 30, 2015, international distributor sales revenue decreased to approximately $613,000 and $4,000,000 from $1,819,000 and $4,749,000 for the three and nine months ended September 30, 2014.  The decreases can be attributed to timing of international shipments, the impact of the appreciation of the U.S. dollar, and seasonality with our third party distributors.  


Gross Margin


Gross margin percentage was approximately 67% and 68% for the three and nine months ended September 30, 2015, compared to approximately 68% and 71% during the three and nine months in 2014. For the three and nine months ended September 30, 2015, we generated approximately $2,405,000 and $13,516,000 in gross margin, compared to approximately $4,141,000 and $16,747,000 for the three and nine months ended September 30, 2014. The decreases in gross margin percentage can be attributed to additional live home shopping sales at a lower gross margin as well as changes in product mix as the Company brings additional products to market both domestically and internationally. For both the three and nine months ended September 30, 2015, the gross margin percentage for DRTV Revenue was approximately 84% and 86% compared to 88% and 87% for the three and nine months ended September 30, 2014.  The gross margin percentage for international sales for the three and nine months ended September 30, 2015 was approximately 45% and 48% compared to approximately 52% and 49%, for the three and nine months ended September 30, 2014.   


Operating Expenses


Total operating expenses decreased to approximately $3,227,000 and $14,322,000 during the three and nine months ended September 30, 2015, from approximately $4,669,000 and $17,619,000 during the three and nine months ended September 30, 2014. This decrease in operating expenses is due to a few key factors. The largest factor is a decrease in media expenditures. Media expenditures were approximately $1,206,000 and $6,519,000, and $1,768,000 and $7,680,000 for the three and nine months ended September 30, 2015 and 2014, respectively. In addition, consulting fees and share based compensation contributed to the decrease in operating expenses. As the Company now performs a number of responsibilities previously performed by third party consulting firms, consulting fees decreased to approximately $81,000 and $284,000 during the three and nine months ended September 30, 2015, compared to approximately $222,000 and $823,000 during the three and nine months ended September 30, 2014.  Further, as a result of vesting of awards for non-employees in the prior year, share based compensation expenses decreased to approximately $157,000 and $486,000 during the three and nine months ended September 30, 2015, from approximately $360,000 and $950,000 during the three and nine months ended September 30, 2014.  



24




As a result of the decrease in media expenses, there were additional volume related decreases. Answering service expense decreased to approximately $187,000 and $890,000 for the three and nine months ended September 30, 2015 from $247,000 and $1,099,000 for the three and nine months ended September 30, 2014. Customer service expenses decreased to approximately $133,000 and $723,000 during the three and nine months ended September 30, 2015, from approximately $189,000 and $910,000 during the three and nine months ended September 30, 2014. Merchant fees decreased to approximately $82,000 and $398,000 during the three and nine months ended September 30, 2015, compared to $126,000 and $575,000 during the three and nine months ended September 30, 2014. Total bad debt expenses decreased to approximately $199,000 and $1,169,000 during the three and nine months ended September 30, 2015, from approximately $303,000 and $1,319,000 during the three and nine months ended September 30, 2014, which is consistent with the decrease in sales.


Other decreases include a decrease in product development and clinical trial costs to approximately $26,000 and $86,000 during the three and nine months ended September 30, 2015, compared to approximately $90,000 and $315,000 during the three and nine months ended September 30, 2014, due to the Company completing a number of clinical trials in the prior year.


Net Loss


The Company generated a net loss of approximately $(822,000) and $(806, 000) for the three and nine months ended September 30, 2015, compared with a net loss of approximately $(501,000) and $(858,000) for the three and nine months ended September 30, 2014. The decrease can be attributed to the reduction in sales for both the three and nine months ended for September 30, 2015, partially offset by the decreases in operating expenses, as discussed above.   


Liquidity and Capital Resources


At September 30, 2015, we had approximately $876,000 in cash and cash equivalents, compared to approximately $1,145,000 at December 31, 2014. As a result of a pay-down of accounts payable and accrued liabilities of $787,000 and increase in inventory of approximately $422,000, net cash used in operating activities during the nine months ended September 30, 2015 was approximately $974,000 compared to net cash provided by operating activities of $89,000 in the nine months ended September 30, 2014.  Net cash provided by financing activities was $704,000 for the nine months ended September 30, 2015 compared to $76,000 for the nine months ended September 30, 2014. The reason for the change was the release of cash held as collateral on the Company’s former line of credit of $500,000 as discussed in Note 6 and the exercise of options and warrants for proceeds of approximately $204,000.  


The Company had no debt obligations as of September 30, 2015 and December 31, 2014. Working capital decreased to approximately $1,742,000 at September 30, 2015, compared to approximately $1,918,000 at December 31, 2014.  


As discussed in Note 7, on October 27, 2015, the Board authorized the issuance of up to 3,333,334 shares of common stock to be purchased at $0.30 per share to accredited investors.  A total of 3,333,334 shares were purchased through October 30, 2015 for gross proceeds of $1,000,000.  No underwriting discounts or commissions were paid.  As part of the offering, we agreed to register their shares for resale.  The offering will be used for funding opportunities we have for the promotion and sale of our DermaWand TM , CoralActives ® , Derma Brilliance ® , and Jidue ® portfolio of products.  The purchasers are accredited investors, as that term is defined in Regulation D promulgated by the Securities and Exchange Commission, and the shares were issued with restrictive legends.  The issuance of the shares is exempt from registration under Section 4(2) of the Securities Act of 1933, and Rule 5.06(b) of Regulation D.  


Based on the Company’s current rate of cash outflows and cash on hand, management believes that its current cash will be sufficient to meet the anticipated cash needs for working capital into the fourth quarter of 2016.




25




CRITICAL ACCOUNTING POLICIES AND ESTIMATES


There have been no changes to our critical accounting policies and estimates in the nine months ended September 30, 2015. The Securities and Exchange Commission (“SEC”) defines “critical accounting policies” as those that require application of management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Our significant accounting policies are described under “Critical Accounting Policies” in our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 7, as well as in our consolidated financial statements and footnotes thereto for the year ended December 31, 2014, as filed with the Commission with our Annual Report form 10-K filed on March 19, 2015.


ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


Not applicable


ITEM 4.

CONTROLS AND PROCEDURES


The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's Exchange Act reports is recorded, processed, summarized and reported within the time frames specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer, President, and its Chief Financial Officer, to allow timely decisions regarding required disclosure based closely on the definition of "disclosure controls and procedures" in Rule 13a-15(e) and 15d-15(e).


Management recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective internal control can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect material misstatements. In addition, effective internal control at a point in time may become ineffective in future periods because of changes in conditions or due to deterioration in the degree of compliance with our established policies and procedures.


We carried out an evaluation as of September 30, 2015, under the supervision and with the participation of our management, including our Chief Executive Officer, President, and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(b) and 15d-15(b). Based upon that evaluation, our Chief Executive Officer, President, and Chief Financial Officer concluded that our disclosure controls and procedures were effective.


There were no other changes in our internal control over financial reporting for the quarter ended September 30, 2015 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.


Off-Balance Sheet Arrangements


We do not have any off-balance sheet arrangements.



26




PART II – OTHER INFORMATION


ITEM 1.

LEGAL PROCEEDINGS


None


ITEM 1A.

RISK FACTORS


Not required for smaller reporting company


ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES


On October 27, 2015, the Board authorized the issuance of up to 3,333,334 shares of common stock to be purchased at $0.30 per share to accredited investors.  A total of 3,333,334 shares were purchased through October 30, 2015 for gross proceeds of $1,000,000.  No underwriting discounts or commissions were paid.  As part of the offering, we agreed to register their shares for resale.  The offering will be used for funding opportunities we have for the promotion and sale of our DermaWand TM , CoralActives ® , Derma Brilliance ® , and Jidue ® line of products.  The purchasers are accredited investors, as that term is defined in Regulation D promulgated by the Securities and Exchange Commission, and the shares were issued with restrictive legends.  The issuance of the shares is exempt from registration under Section 4(2) of the Securities Act of 1933, and Rule 5.06(b) of Regulation D.  


ITEM 3.

DEFAULTS UPON SENIOR SECURITIES


None


ITEM 4.

MINE SAFETY DISCLOSURES


None


ITEM 5.

OTHER INFORMATION


None



27




ITEM 6.

EXHIBITS


Exhibit

 

 

Number

 

Description

 

 

 

2*

 

Share and Option Purchase Agreement

 

 

 

3.1*

 

Amended and Restated Articles of Incorporation

 

 

 

3.2*

 

Amended and Restated Bylaws

 

 

 

3.3*

 

First Amendment to Amended and Restated Bylaws

 

 

 

10.1*

 

2001 Stock Option Plan

 

 

 

10.2*

 

Promissory Note by Moran Dome Exploration Inc. payable to the Trustees of the Better Blocks Trust, in the amount of $590,723.27

 

 

 

10.3*

 

Extension of Promissory Note dated August 23, 2001, by and between the Trustees of the Better Blocks Trust and International Commercial Television Inc.

 

 

 

10.4**

 

Second Extension of Promissory Note dated March 25, 2002, by and between the Trustees of the Better Blocks Trust and International Commercial Television Inc.

 

 

 

10.5***

 

Assignment of Trademark by Dimensional Marketing Concepts, Inc.

 

 

 

 

 

 

31.1****

 

Rule 13a-14(a)/15d-14(a) Certification – Chief Executive Officer

 

 

 

31.2****

 

Rule 13a-14(a)/15d-14(a) Certification – President

 

 

 

31.3****

 

Rule 13a-14(a)/15d-14(a) Certification – Chief Financial Officer

 

 

 

32****

 

Section 1350 Certifications


* Incorporated by reference from Form SB-2 filed with the Securities and Exchange Commission on October 3, 2001.


** Incorporated by reference from Post-Effective Amendment No. 1 to Form SB-2 filed with the Securities and Exchange Commission on April 12, 2002.


*** Incorporated by reference from Amendment No. 1 to Form SB-2 filed with the Securities and Exchange Commission on December 24, 2001.


**** Filed herewith




28




SIGNATURES


In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


ICTV BRANDS INC.

        Registrant



Date: November 9, 2015

By: /s/ Kelvin Claney

Name: Kelvin Claney

Title: Chief Executive Officer



Date: November 9, 2015

By: /s/ Richard Ransom

Name: Richard Ransom

Title: President



Date: November 9, 2015

By: /s/ Ryan LeBon

Name: Ryan LeBon

Title: Chief Financial Officer




























29



Exhibit 31.1


I, Kelvin Claney, certify that:


1. I have reviewed this Quarterly Report on Form 10-Q of ICTV Brands, Inc.;


2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:


(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and


5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):


(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and


(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date: November 9, 2015


/s/ Kelvin Claney

Kelvin Claney,

Chief Executive Officer






Exhibit 31.2


I, Richard Ransom, certify that:


1. I have reviewed this Quarterly Report on Form 10-Q of ICTV Brands, Inc.;


2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:


(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and


5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):


(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and


(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date: November 9, 2015


/s/ Richard Ransom

Richard Ransom,

President






Exhibit 31.3


I, Ryan LeBon, certify that:


1. I have reviewed this Quarterly Report on Form 10-Q of ICTV Brands, Inc.;


2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:


(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and


5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):


(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and


(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date: November 9, 2015


/s/ Ryan LeBon

Ryan LeBon,

Chief Financial Officer







Exhibit 32.1


In connection with the Quarterly Report of ICTV Brands, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Kelvin Claney, Chief Executive Officer, Richard Ransom, President, and Ryan LeBon, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of their knowledge and belief:


(1)

the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)

the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.


/s/ Kelvin Claney

Kelvin Claney,

Chief Executive Officer


/s/ Richard Ransom

Richard Ransom,

President


/s/ Ryan LeBon

Ryan LeBon,

Chief Financial Officer


Date: November 9, 2015