CARLSBAD, CA--(Marketwire - Aug 13, 2012) - SPY Inc. (OTCBB: [ XSPY ]) today announced financial results for the quarter ended June 30, 2012.

Total net sales increased by $0.5 million, or 5%, to $9.5 million for the quarter ended June 30, 2012, compared with total net sales of $9.0 million for the quarter ended June 30, 2011.  Total net sales increased by $1.9 million, or 13%, to $17.6 million for the six months ended June 30, 2012, compared with total net sales of $15.7 million for the six months ended June 30, 2011.

Sales of our core SPY^® brand products increased by $1.1 million, or 13%, to $9.3 million for the quarter ended June 30, 2012, compared with core SPY^® brand sales of $8.2 million during the quarter ended June 30, 2011. Other sales were $0.2 million during the quarter ended June 30, 2012, consisting of licensed brand products which are no longer a focus of the Company, compared with licensed product sales of $0.8 million during the quarter ended June 30, 2011.

Sales of our core SPY^® brand products increased by $2.5 million, or 17%, to $17.2 million for the six months ended June 30, 2012, compared with core SPY^® brand sales of $14.7 million during the six months ended June 30, 2011. Other sales were $0.4 million during the six months ended June 30, 2012, consisting of licensed brand products which are no longer a focus of the Company, compared with licensed product sales of $1.0 million during the six months ended June 30, 2011.

"We are once again pleased to have achieved another quarter with nice growth, making it our 5^th consecutive quarter of year over year growth of our core SPY^® brand products which we believe demonstrates the strength of our SPY^® brand," said Michael Marckx, President and CEO.

We incurred a net loss of $1.6 million during the quarter ended June 30, 2012, compared to a net loss of $3.0 million during the quarter ended June 30, 2011. The reduced loss during the quarter ended June 30, 2012 was primarily due to lower general and administrative expenses, offset by increased sales and marketing expenses related to our SPY^® brand products.  In addition, 2011 included other operating expense of $2.0 million substantially all related  to the decision to not make any more purchases of licensed products.

In August 2012, we increased our borrowing capacity by increasing the maximum principal amount available to us under one of our credit facilities with Costa Brava by $3.0 million (from $7.0 million to $10.0 million), thereby increasing the aggregate maximum principal amount under all credit facilities from Costa Brava from $14.0 million to $17.0 million (excluding deferred interest).  We also extended the due dates of both of our credit facilities with Costa Brava to become April 1, 2014.

The results of our operations, liquidity and capital resources during and as of the quarter ended June 30, 2012 and 2011, respectively, are more fully discussed in our Form 10-Q for the quarter ended June 30, 2012.

SPY Inc.:

We design, market and distribute premium products for hard core participants in action sports, motorsports, snow sports, cycling and multi-sports markets, which embrace their attendant lifestyle subcultures, crossing over into more mainstream fashion, music and entertainment markets.  We believe a principal strength is our ability to create distinctive products for active people within the youthful demographics of these subcultures.  Our principal products -- sunglasses, goggles and prescription frames -- are marketed under the SPY^® brand.  During 2011 and 2010, we also designed, manufactured and sold eyewear under the O'Neill^®,Melodies by MJB^® and Margaritaville^® brands and in 2011, we decided to cease any new purchase orders of additional inventory for these licensed eyewear brands and do not expect any significant sales from these brands in the future.

Safe Harbor Statement:

This press release contains forward-looking statements.  These statements relate to future events or future financial performance and are subject to risks and uncertainties.  In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expect," "plan," "anticipate," "believe," "feel," "estimate," "predict," "hope," the negative of such terms, expressions of optimism or other comparable terminology.  These statements are only predictions.  Actual events or results may differ materially.  Factors that could cause actual results to differ from those contained in our forward-looking statements include, but are not limited to lack of continuity and effectiveness of our management team, our ability to generate sufficient incremental sales of our core SPY® brand and new products to recoup our significant investments in sales and marketing, our ability to maintain the availability of our existing credit facilities and otherwise finance our strategic objectives, and the other risks identified from time to time in our filings made with the U.S. Securities and Exchange Commission.  Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee future results.  Moreover, except as required by law, we assume no responsibility for the accuracy or completeness of such forward-looking statements and undertake no obligation to update any of these forward-looking statements.