AIVtech International Group Announces Record 2010 Third Quarter Financial Results

Financial Highlights for the Three Months Ended September 30, 2010

• Revenue increased 72% year-over-year to $27.5 million, a record.
• Gross profit rose 40.6% to $6 million; gross margin for the quarter totaled 21.8%.
• Income from operations increased 39.6% to $5.3 million.
• Net income increased 27.8% to $4.4 million; Diluted EPS was $0.22.

"We are very pleased to report record financial results for the third quarter of 2010 which included an increase in revenue of 72% and net income of 27.8%. Continued momentum in our business is a direct result of several competitive advantages including the well known domestic and international brand we have worked diligently on establishing since the Company was founded in 2004. We have also met consumer demand with new and innovative products. Our new product line of LED TV's have complimented our existing consumer and electronics product base of specialty audio and multimedia speakers, accounting for approximately 39% of total revenue during the third quarter of 2010," stated Mr. JinLin Guo, AIVtech's Chairman and Chief Executive Officer.

Mr. JinLin Guo continued, "The manufacturing of our products take place in our 30,000 sq. meter facility in Dongguan, Guangdong Province, where we are currently operating at 90% capacity. The production cycle at our facility occurs is 12 to 18 days for existing products and 15 to 21 days for new products.  Additionally, we have an established and stable distribution channel with well known and respected distributors nationwide. Going forward, we expect sales momentum to continue for each of our product lines," stated Mr. JinLin Gro, AIVtech's Chairman and Chief Executive Officer.

Financial results for the three months ended September 30, 2010

Revenue for the three months ended September 30, 2010 totaled $27.5 million, a 72% increase compared to $16 million for the three months ended September 30, 2009. 80% of the sales were to International customers, while the balance where to domestic customers.  AVItech's product base can be divided into three categories, casual furniture audio, multi-media speakers and LED-TV. . In June 2010, AIVtech introduced a new product line of LED TV's which accounted for 39% or $10.7 million of total revenue during the third quarter of 2010.

Cost of sales for the three months ended September 30, 2010 totaled $21.5 million as compared to $11.7 million for the three months ended September 30. 2009. Gross profit increased 40.6% to $6 million, an increase of 40.6% for the third quarter of 2010 compared to $4.3 million for the same period one year earlier. Gross margin for the third quarter of 2010 was 21.8% as compared to 26.7% for the same period in 2009. Margins were impacted by higher revenue contribution of the LED TV unit, which carries lower margins.

Income from operations for the three months ended September 30, 2010 totaled $5.3 million, an increase of 39.6% as compared to $3.8 million for the three months ended September 30, 2009. Operating margin was 19.2% for the third quarter of 2010 compared to 23.6% for the same period in 2009.

Net income for the third quarter of 2010 increased 27.8% to $4.4 million compared to $3.4 million for the third quarter of 2009. Basic and diluted earnings per share totaled $0.22 based on 20 million shares outstanding for the third quarter of 2010, compared to $0.17 per basic and diluted share based on 20 million shares outstanding for the same period one year prior.

Summary Financials for nine months ended September 30, 2010:

Financial results for the nine months ended September 30, 2010

Revenue for the nine months ended September 30, 2010 was $56.2 million, an increase of 102% compared to $27.8 million for the same nine month period in 2009. Revenue increased to due to contracts with new customers and greater volume. Additionally, in June 2010 the Company introduced the new LED TV product line which generated $10.7 million in revenue during the third quarter of 2010.  Approximately 80% of sales were International centric, while 20% were domestic.

Cost of sales for the nine month period ending September 30, 2010 totaled $42.7 million compared to $20.3 million for the same nine month period in 2009. Gross profit increased 80.5% to $13.5 million for the first nine months of 2010 compared to $7.5 million for the first nine months of 2009. Gross profit margin for the first nine months of 2010 was 23.9% compared to 26.8% for the same period in 2009 and were impacted by contributions of the LED TV revenue.

Income from operations increased 93.7% to $11.6 million for the first nine months of 2010 compared to $6 million for the first nine months of 2009. Operating margin was 20.6% for the first nine months of 2010 compared to 21.5% for the first nine months of 2009.

Net income for the first nine months of 2010 increased 81.6% to $9.8 million compared to $5.4 million for the first nine months of 2009. Basic and diluted earnings per share for the first nine months of 2010 totaled $0.49 per share based on 20 million shares compared to basic and diluted earnings per share for the first nine months of 2009 of $0.27.

Liquidity and Capital Resources

As of September 30, 2010, AIVtech had approximately $3.1 million in cash. Accounts receivable were $10.3 million, compared to $2.0 million on December 31, 2009 with the increase related to the ramp in sales. DSOs were 30 compared to 30 for each respective period and the Company's payment terms are typically 0 – 30 days.  As of September 30, 2010 working capital totaled $6.9 million, an increase of $6.2 million compared to $0.7 million as of December 31, 2009. Total shareholders' equity was approximately $7.2 million as of September 30, 2010 an increase of $6 million from approximately $1.2 million on December 31, 2009.  

Mr. JinLin Guo continued, "In June of 2010 we successfully unveiled our new product line of LED TV's. Through our expertise and working relationships with our retail partners we were successful in getting this product to market quickly and aggressively. We expect the same success to occur with other products that we bring to market such as our recently announced video conferencing system, Interactive Intelligent Panel. This panel is fully equipped a high-definition touch screen and on-screen handwriting recognition. We anticipate the Interactive Intelligent Panel will begin generating revenue in the first quarter of 2011 and yield gross profit margins in the range of 30%, as we plan for software sales to accompany the product. These new products coupled with our other core products in demand such as Digi Panda, have cemented AIVtech as a player in the industry and an emerging leader."

2010 GUIDANCE

Company's 2010 guidance included revenues of $69 million, net income of $9.4 million and $0.47 in earnings per share. Management will provide updated guidance in the near future.

Conference Call and Webcast Details

The Company will host a conference call to discuss financial results for the third quarter ended September 30, 2010 on Monday, November 15, 2010 at 4:30 p.m. Eastern time (1:30 p.m. Pacific).

To participate in the call, please dial (877) 941-8602, or (480) 629-9811 for international calls, approximately 10 minutes prior to the scheduled start time. Interested parties may also listen via a live Internet webcast, which can be found at the Company's website at http://www.aivtechgroup.com/.

A replay of the call will be available for two weeks from 5:30 p.m. Eastern on November 15, 2010, until 11:59 p.m. Eastern on November 29, 2010. The number for the replay is (877) 870-5176, or (858) 384-5517 for international calls. The passcode for the replay is 4382872. In addition, a recording of the call will be available via the company's website at http://www.aivtechgroup.com/ for one year.

About AIVtech International Group Co.

AIVtech International Group Co. is the parent company of wholly owned Shenzhen AIVtech Company Limited ("Shenzhen AIVtech"), which owns 70% of Dongguan AIVtech Company Limited ("Dongguan AIVtech"). AIVtech's founder, Chairman, and CEO JinLin Guo owns the remaining 30% of Dongguan AIVtech. Founded in 2004, the Company focuses on the integration of electronic products, such as multimedia speakers and video games, with furniture and has coined the term "electronic furniture" to describe its products. The Company has three major product categories: (1) electronic furniture, including video chairs with built-in speakers and vibration, as well as leisure furniture with built-in audio/video systems; (2) multimedia/digital speakers; and (3) LCD/LED televisions, which includes a new video conferencing system called the Interactive Intelligent Panel which will begin production in early 2011. For more information, visit http://www.aivtechgroup.com .

Forward-Looking Statements

Statements contained in this press release, which are not historical facts, are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, expectations of signing new customers and contracts, developing new products, projected revenues and earnings, and the success of new products. These forward-looking statements are based largely on current expectations and are subject to a number of known and unknown risks, uncertainties and other factors beyond our control that could cause actual events and results to differ materially from these statements. These statements are not guarantees of future performance, and readers are cautioned not to place undue reliance on these forward-looking statements, which are relevant as of the date of the given press release and should not be relied upon as of any subsequent date. AIVtech International Group Co. undertakes no obligation to update the forward-looking information contained in this press release.