PPOL Reports First Quarter Fiscal 2005 Financial Results ORANGE,
Calif., Aug. 24 /PRNewswire-FirstCall/ -- PPOL, Inc. (OTC:PPLC)
(BULLETIN BOARD: PPLC) today reported financial results for the
2005 first fiscal quarter ended June 30, 2004. Net loss for the
first quarter of fiscal 2005 was $475,066, or $0.03 per share,
compared with net income of $1.2 million, or $0.07 per share on a
fully diluted basis, for the first quarter of fiscal 2004. The
decrease primarily is due to a decline in MOJICO unit sales and
corresponding initial Pan Pacific Online subscription fees as the
Company prepares to launch the next-generation model. Total revenue
for the first quarter of fiscal 2005 was $32.0 million, compared
with $33.3 million in the first quarter of fiscal 2004. Product
sales and network services revenue for the 2005 first fiscal
quarter was $26.5 million, down from $28.6 million in the same
quarter last year. Other on-line services revenue increased 18% to
$5.5 million as a result of the Company's continuing efforts to
expand the higher-margin on-line service business. Selling, general
and administrative expenses for the quarter ended June 30, 2004
increased approximately 24% to $7.4 million from $6.0 million last
year, primarily due to the timing of software related research
costs incurred to develop the Company's new commission calculation
system, order & receiving system and software development for
the next-generation MOJICO. Cash equivalents at June 30, 2004
totaled $8.6 million, with $17.5 million of cash associated with
pre-payments of membership dues re-classified as restricted cash.
At March 31, 2004, cash and cash equivalents totaled $28.3 million.
As of May 28, 2004, advance payments and orders from members are
received and administered by a third party, Kamome Benefit Club,
rather than AJOL and will be classified as restricted cash. "We are
making significant progress on our growth strategy for PPOL, and
our new subsidiary, GateFor, remains on schedule for an October
launch of the Japanese version of BridgeGate, a software we
licensed this year from Object Innovation," said Hideo Ohkubo,
Chairman and Chief Executive Officer of PPOL. "In addition, our
AJOL subsidiary is preparing to launch its next-generation MOJICO
model and has invested in software improvements to fuel subscriber
growth and usage in an effort to accelerate growth of the
higher-margin on-line service business." Mr. Ohkubo added, "We are
seeking to acquire or license other innovative technologies as part
of our new growth plan to expand into the business of distributing
technologies between Asia and the U.S. We continue to believe this
is a scalable model that will utilize our powerful distribution
network and pay substantial dividends to our shareholders." PPOL
uses the U.S. dollar as its reporting currency for financial
statement purposes. PPOL conducts business through its
international subsidiary that uses local currency (Japanese yen) to
denominate its transactions. All revenues and expenses are
translated at weighted average exchange rates for the periods
reported. The resulting changes in the financial statements due to
the fluctuating exchange rates do not indicate any underlying
changes in the financial position of the international subsidiary
but merely reflect the adjustment in the carrying value of the net
assets of the subsidiary at the current U.S. dollar exchange rate.
Due to the long-term nature of PPOL's investment in this
subsidiary, the translation adjustments resulting from these
exchange rate fluctuations are excluded from the results of
operations and are recorded in a separate component of consolidated
stockholders' equity. PPOL monitors its currency exposures but does
not hedge its translation exposures primarily due to the long-term
nature of its investment. About PPOL PPOL, Inc. is a
California-based holding company whose primary asset is AJOL of
Tokyo, Japan. AJOL actively promotes the interactions of the
members of Acube, an organization sponsored by AJOL, through
conferences and speaking engagements conducted by AJOL's President
and CEO, Yoshihiro Aota. In addition, through their own
interactions, Acube members spread the word about MOJICO hardware
and drive growth of related services. Many members serve as MOJICO
hardware members of Acube and MOJICO hardware, and they develop
membership businesses featuring interaction and distribution of
related products and services among all members. Through the use of
AJOL's MOJICO hardware, members can network and communicate using
hand-written Japanese characters, including Kanji whose full
meaning cannot be adequately communicated through the present fonts
of a computer. Members across Japan use the service to find other
subscribers and to establish interpersonal relationships, and
access other services such as insurance unique to Acube, mail order
purchases, the handling of partner-affiliated services, event
planning, as well as products and services offered under AJOL's
Kamome brand. In April 2004 PPOL announced its new strategy to grow
the Company through the early stage identification of proven and
promising low-cost target U.S.- and European-developed technologies
that it can quickly introduce into Japan thereby creating a
significant lead over competitors. Via PPOL's network in Japan,
software products can be localized and sold with local support
provided either by PPOL staff or its marketing partners. Certain
information contained herein includes information that is
forward-looking. The matters referred to in forward-looking
statements may be affected by the risks and uncertainties involved
in the Company's business. These forward-looking statements are
qualified in their entirety by the cautionary statements contained
in the Company's Securities and Exchange Commission filings.
Shareholders, potential investors and other readers are urged to
consider these factors in evaluating the forward-looking statements
and are cautioned not to place undue reliance on such
forward-looking statements. The forward-looking statements included
herein are only made as of the date of this news release, and PPOL
undertakes no obligation to publicly update such forward-looking
statements to reflect subsequent events or circumstances, except as
required under applicable laws. Investor Relations Contacts: Ina
McGuinness/Zachary Bryant Lippert/Heilshorn & Associates (310)
691-7100 PPOL, INC. CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME Three months Three months ended ended June 30,
2004 June 30, 2003 (Unaudited) (Unaudited) Net revenue: Product
sales and network services $26,485,853 $28,579,162 Other on-line
services 5,522,895 4,680,027 Total 32,008,748 33,259,189 Costs and
expenses: Cost of sales 7,697,965 7,681,813 Distributor incentives
15,852,493 17,343,364 Selling, general and administrative expenses
7,396,202 5,987,994 Total costs and expenses 30,946,660 31,013,171
Operating income 1,062,088 2,246,018 Other (expense) income, net
(33,065) 686,895 Income before income taxes 1,029,023 2,932,913
Income taxes: Current 35,356 86,217 Deferred 1,468,733 1,675,870
Total income taxes 1,504,089 1,762,087 Net (loss) income (475,066)
1,170,826 Other comprehensive gain Foreign currency translation
765,991 363,240 Comprehensive income $290,925 $1,534,066 Net (loss)
income per common share, Basic $(0.03) $0.07 Diluted $(0.03) $0.07
Weighted average common shares outstanding: Basic 17,993,752
17,994,920 Diluted 17,993,752 17,994,920 PPOL, INC. CONSOLIDATED
BALANCE SHEETS June 30, 2004 March 31, 2004 ASSETS (Unaudited)
Current assets: Cash and cash equivalents $8,629,489 $28,334,777
Restricted Cash - Cube 17,473,584 -- Trade accounts receivable, net
of allowance for doubtful accounts of $ 0 and $0 364,274 309,063
Merchandise inventories 4,265,438 2,651,259 Deferred costs
55,800,702 63,159,328 Deferred income taxes 8,418,201 9,467,524
Prepaid expenses and other 581,651 281,784 Total current assets
95,533,339 104,203,735 Property and equipment, net 1,235,668
1,250,975 Software, net 8,819,200 7,444,657 Deferred costs
31,164,114 37,042,494 Deferred income taxes 5,074,685 5,494,095
Lease deposits 736,896 766,457 Deposits 4,102,853 3,984,883 Other
assets 457,961 181,987 $147,124,716 $160,369,283 LIABILITIES AND
SHAREHOLDERS' DEFICIT Current liabilities: Accounts payable,
including related parties $10,613,500 $11,281,024 Advances received
- Cube 17,473,584 -- Advances received 2,160,462 17,604,942
Deferred revenue 75,089,228 84,644,397 Bank debt 2,768,038 -- Due
to majority shareholder 830,412 -- Income taxes payable 7,188
1,086,260 Other current liabilities 1,975,782 1,888,976 Total
current liabilities 110,918,194 116,505,599 Deferred revenue
41,207,575 49,155,662 Total liabilities 152,125,769 165,661,261
Shareholders' deficit: Common Stock; $0.001 par value; 100,000,000
shares authorized; 17,993,752 shares issued and outstanding as of
June 30, 2004 (unaudited) and March 31, 2004, respectively 17,994
17,994 Additional paid-in capital 3,362,359 3,362,359 Total other
comprehensive income 1,082,298 316,307 Accumulated deficit
(9,463,704) (8,988,638) Total shareholders' deficit (5,001,053)
(5,291,978) $147,124,716 $160,369,283 DATASOURCE: PPOL, Inc.
CONTACT: Investors, Ina McGuinness, or Zachary Bryant, , both of
Lippert/Heilshorn & Associates, +1-310-691-7100, for PPOL, Inc.
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