Spy Optic is filing a public offering to raise an indicated $20.7 million which would be used to repay loans of $300,000 and for general corporate purposes. In particular, the company wants to expand its distribution in the USA outside its home base in California, a state which accounted for 48 percent of its US sales last year, and in other countries, which represented 24 percent of its total revenues. Spy is also looking for opportunities to acquire other action sports and lifestyle brands and plans to expand its product range.

Spy's total revenues increased by 23 percent to $27.4 million in 2003, but pre-tax earnings fell by 25 percent to $1,189,000 and net profit fell by 82 percent to $500,000. In the six months ended last June 30, sales rose by 30 percent to $14 million and unit shipments of sunglasses jumped by 36 percent, but the gross margin slipped by 230 basis points to 55.1 percent. The net result for the six months was a net loss of $432,000, compared with a loss of $76,000 in the year-ago period.

Spy, which recently set up a European sales and sourcing office in Italy, was established in Carlsbad, California ten years ago by No Fear, an American activewear company that still owns 40 percent of its equity. Spy lent $400,000 to No Fear last Spring for working capital purposes and another $98,000 more recently. No Fear will sell $3 million worth of shares in Spy as part of the planned public offering.