SPY Inc. announced unaudited consolidated financial results for the second quarter and six months ended June 30, 2013. Second quarter sales of SPY(r) brand products were $10.0 million in 2013, an increase of 7% or $0.7 million greater than in the second quarter of 2012. Total company net sales increased by 6% or $0.5 million, to $10.0 million compared to $9.5 million in the second quarter of 2012. Income from operations improved by $1.4 million to $0.3 million in the second quarter of 2013, compared to a loss from operations of approximately $1.1 million in the second quarter of 2012. The $1.4 million improvement was partially due to the increase in sales combined with a 250 basis point improvement in gross profit as a percent of sales, which generated $0.5 million in additional gross profit contribution. Cash flow used by operating activities was $0.5 million in the second quarter of 2013, compared to negative $3.5 million in the second quarter of 2012, or an improvement of more than $3.0 million. The net loss improved by $1.1 million to $0.6 million or $0.04 per diluted share in the second quarter of 2013, compared to a net loss of $1.6 million or $0.13 per diluted share in the second quarter of 2012. Net sales were $9,995,000 against $9,466,000 for the same period of last year. Loss before provision for income taxes was $574,000 against $1,630,000 for the same period of last year.

First half sales of SPY(r) brand products were $19.0 million in 2013, an increase of 10% or $1.8 million greater than in the first half of 2012. Total company net sales increased by 8% or $1.4 million, to $19.0 million in the first half of 2013, compared to $17.6 million in the first half of 2012. Income from operations improved by $3.6 million to $0.4 in the first half of 2013, compared to a loss from operations of $3.2 million in the first half of 2012. The $3.6 million improvement was partially due to the increase in sales combined with a 340 basis point improvement in gross profit as a percent of sales, which generated $1.3 million in additional gross profit contribution. Cash flow generated by operating activities was $1.1 million in the first half of 2013, compared to negative $3.9 million in the first half of 2012, or an improvement of more than $4.9 million. The net loss improved by $2.9 million to $1.3 million or $0.10 per diluted share in the first half of 2013, compared to a net loss of $4.2 million or $0.33 per diluted share in the first half of 2012. The improved net loss in each period was due to the reduction in the loss from operations, partially offset by higher interest expense. Net sales were $19,002,000 against $17,611,000 for the same period of last year. Loss before provision for income taxes was $1,295,000 against $4,239,000 for the same period of last year.