AdStar Announces Third Quarter Results Net Revenue Increases More
Than 90 Percent for Third Consecutive Quarter MARINA DEL REY,
Calif., Nov. 15 /PRNewswire-FirstCall/ -- AdStar, Inc.
(NASDAQ:ADSTNASDAQ:ADSTW), a leading applications service provider
of e-commerce transaction technology for the advertising and
publishing industries, today reported operating results for the
third quarter and first nine months of 2004. For the three months
ended September 30, 2004, AdStar reported net revenues of $1.26
million, an increase of 90 percent when compared with net revenues
of $666,000 in the third quarter of 2003. The increase in net
revenue for 2004 was primarily comprised of higher ASP revenues; an
increase of $342,000, or 164 percent, in licensing and software
revenues; and a gain of $220,000, or 417 percent, in customization
and other revenues. The increase in licensing, software, and
customization revenues was primarily related to the addition of
EdgCapture and EdgFlow to AdStar's suite of e-commerce services for
the newspaper publishing industry. AdStar did not record any
revenue in the third quarter of 2003 from Edgil Associates, which
was acquired in October 2003. In addition to the customization
revenues derived from EdgCapture and EdgFlow, AdStar also reported
an $111,000 increase in customization services that was related to
a project for The Atlanta Journal-Constitution (AJC). AdStar's
technology now powers a classified web order entry system for the
AJC's four online vertical classified advertising products,
Recruitment, Autos, Real Estate and Merchandise. During the
quarter, AdStar processed more than 115,000 ad transactions with a
total value of $19.3 million, an increase of 4.2 percent when
compared with the third quarter of 2003. Gross profit margin
improved slightly to 57 percent of net revenues during the third
quarter of 2004, from 55 percent during the third quarter of 2003.
Gross profits for the third quarter of 2004 were approximately
$715,000, which represented an increase of 94 percent when compared
with gross profits of $369,000 in the third quarter in 2003. The
company reported a third quarter net loss of $521,000 or $0.04 per
share, versus a net loss of $414,000 or $0.05 per share, in the
prior-year quarter. General and administrative expenses increased
51 percent during the third quarter of 2004 to $480,000, from
$318,000 during the prior-year quarter. Selling expenses increased
119 percent to $322,000 (vs. $147,000) while product maintenance
and development expenses increased 7 percent to $331,000 (vs.
$310,000). Increases in general and administrative expenses,
selling expenses and product maintenance and development costs were
attributed primarily to activities associated with supporting
EdgCapture and EdgFlow. "We continue to enjoy steady growth in ASP
revenues from our expanding list of top-tier newspaper customers,"
stated Leslie Bernhard, president and chief executive officer of
AdStar, Inc. "We have made significant strides to improve our
financial performance, as demonstrated in our ability to maintain
consistent growth in revenues and gross profits throughout the past
few quarters. In addition to our improvements in revenues and ad
transaction volumes, we enhanced our e-commerce suite during the
most recent quarter with a number of marketing and revenue-sharing
agreements, including previously announced relationships with Data
Based Ads and CityXpress. These types of marketing opportunities
should allow AdStar to expand its domestic and international
customer base and grow our global sales with existing customers."
Net revenues for the nine months ended September 30, 2004 increased
96 percent to $3.7 million, from $1.89 million the corresponding
period of the previous year. The increase in net revenue for the
nine months was primarily comprised of a 14 percent rise in ASP
revenues, a 161 percent increase in licensing and software
revenues, and a 423 percent net increase in customization and other
revenues. The significant increase in net revenues was primarily
attributed to the products and services AdStar acquired from Edgil
Associates in 2003. For the first nine months of 2004, AdStar
reported a net loss of $1.45 million or $0.11 per share, compared
with a net loss of $1.36 million or $0.16 per share, in the nine
months ended September 30, 2003. AdStar will discuss the company's
performance for the quarter, as well as the outlook for the future
and related issues, during a conference call on Monday, November
15, 2004, at 4:15 p.m. Eastern Time (EST). Shareholders and other
interested parties may participate in the conference call by
dialing 800-500-0311 (international/local participants dial
719-457-2698), and referencing conference ID 553806 a few minutes
before 4:15 p.m. EST on November 15, 2004. A replay of the
conference call will be available two hours after its completion,
from November 15, 2004 until November 22, 2004, by dialing
888-203-1112 for participants in the US/Canada (international/local
participants dial 719-457-0820) and entering the conference ID
553806. About AdStar, Inc. AdStar, Inc.
(NASDAQ:ADSTNASDAQ:-NASDAQ:NewsNASDAQ:ADSTWNASDAQ:-NASDAQ:News) is
the leading provider of e-commerce transaction software and
services for the advertising and publishing industries. AdStar's
proprietary suite of e-commerce services includes remote ad entry
software and web-based ad transaction services, as well as payment
processing and content processing solutions that are provided
through its Edgil Associates subsidiary, the industry's largest
supplier of automated payment processing services. AdStar's ad
transaction infrastructure powers classified ad sales for more than
40 of the largest newspapers in the United States, the Newspaper
Association of America's bonafideclassifieds.com, CareerBuilder,
and a growing number of other online and print media companies.
EdgCapture, Edgil's automated payment process solution, is
currently employed by call centers at more than 100 of the nation's
leading newspaper and magazines. AdStar is headquartered in Marina
del Rey, Calif., and its Edgil office is located in North
Chelmsford, Mass. For additional information on AdStar, Inc., visit
http://www.adstar.com/. Forward Looking Statements This release
contains forward-looking statements concerning the business and
products of the company. Actual results may differ from those
projected or implied by such forward-looking statements depending
on a number of risks and uncertainties including, but not limited
to, the following: historical business has already matured, new
online business is unproven and may not generate expected revenues,
and Internet security risks. Other risks inherent in the business
of the company are described in Securities and Exchange Commission
filings, including the company's annual report on Form 10-KSB. The
company undertakes no obligation to revise or update any
forward-looking statements to reflect events or circumstances after
the date of this release. AdStar Company Contact: Jeff Baudo,
310-577-8255, AdStar Media Contact: Kevin Wilson, 513-885-5520,
AdStar, Inc. and Subsidiary Consolidated Balance Sheet As of
September 30, 2004 Assets Current assets: Cash and cash equivalents
$2,449,277 Accounts receivable, net of allowance for doubtful
accounts of $59,000 547,733 Notes receivable from officers -
current portion 7,911 Prepaids and other assets 410,070 Total
current assets 3,414,991 Notes receivable from officers, net of
current portion 226,381 Property and equipment, net 109,270
Capitalized and purchased software, net 1,890,101 Intangible
assets, net 1,422,852 Goodwill 2,246,454 Other Assets 133,838 Total
assets $9,443,887 Liabilities and Equity Current liabilities: Due
to publications $1,743,022 A/P and accrued expenses 844,588
Deferred revenue 184,149 Loans from shareholders, current portion
21,000 Capital lease obligations, current portion 24,862
Convertible Note - current portion 248,784 Total current
liabilities 3,066,405 Deferred revenue, net of current portion
162,538 Capital lease obligations, net of current portion 305 Loans
from shareholders, net of current portion 31,500 Convertible Note -
net of current portion 452,013 Total liabilities 3,712,761
Stockholders' equity $5,731,125 Total liabilities and stockholders'
equity $ 9,443,887 AdStar, Inc. and Subsidiary Consolidated
Statements of Operations For the Quarters ended September 30, 2004
Three months ended Nine months ended September 30, September 30,
2004 2003 2004 2003 ASP, net $440,282 $404,233 $1,264,486
$1,106,706 Licensing and software 551,118 209,304 1,664,972 637,344
Customization and other 272,437 52,750 770,890 147,417 Net revenues
1,263,837 666,287 3,700,348 1,891,467 Cost of revenues, including
Depreciation and Amortization of $142,548, $151,980, $378,161 and
$477,707 549,105 297,600 1,484,288 923,737 Gross profit 714,732
368,687 2,216,060 967,730 General and administrative expense
479,498 317,811 1,384,194 930,753 Selling and marketing expense
322,417 146,926 977,881 504,300 Maintenance and development costs
331,068 310,184 972,026 887,712 Amortization of customer list
22,059 -- 66,172 -- Loss from operations (440,310) (406,234)
(1,184,213) (1,355,035) Other income (expense) (67,451) (10,000)
(231,122) (10,000) Interest income (expense), net (10,170) 2,717
(21,507) 4,998 Loss before taxes (517,931) (413,517) (1,436,842)
(1,360,037) Provision for income taxes 3,463 963 14,544 2,888 Net
loss $(521,394) $(414,480) $(1,451,386) $(1,362,925) Loss per share
- basic and diluted $(0.04) $ (0.05) $(0.11) $ (0.16) Weighted
average number of shares - basic and diluted 14,491,204 8,423,387
13,889,859 8,296,130 Adstar, Inc. Statements of Cash Flows For the
Quarters ended September 30, 2004 (unaudited) 2004 2003 Cash flows
from operating activities: Net Loss $(1,451,386) $(1,362,925)
Adjustments to reconcile net loss to net cash used in operating
activities: Depreciation and amortization 595,180 592,764
Beneficial interest and amortization of financing fees on
Convertible Note 228,121 Stock based vendor payments 80,057 46,250
Changes in assets and liabilities: Accounts receivable (207,861)
(134,039) Prepaids and other assets (223,668) 50,319 Due to
publications 659,049 805,398 Accounts payable and accrued expenses
(348,839) 111,901 Deferred revenue and customer deposits 156,914
(3,761) Net cash used in operating activities (512,433) 105,907
Cash flows from investing activities: Purchase of Edgil Associates,
Inc. (85,000) -- Purchase of property and equipment (26,578)
(38,628) Additions to Capitalized and Purchased Software (423,964)
(514,971) Additions to intangible assets (6,003) -- Principal
repayments of shareholder notes receivable 5,653 5,347 Net cash
used in investing activities (535,892) (548,252) Cash flows from
financing activities: Increase to restricted cash (1,957,582)
Proceeds from issuance of convertible note payable 1,348,514 --
Repayment of note payable (45,454) -- Proceeds from sale of common
stock in private placement -- 1,741,714 Proceeds from issuance of
Series B-2 preferred stock -- 528,683 Proceeds from exercises of
options and warrants 167,579 251,574 Costs of conversion of Series
A preferred Stock (30,181) Principal repayments on loans from
shareholders (10,500) Principal repayments on capital leases
(24,833) (20,932) Net cash provided by financing activities
1,405,125 543,457 Net increase (decrease) in cash and cash
equivalents 356,800 101,111 Cash and cash equivalents at beginning
of period 2,092,477 940,378 Cash and cash equivalents at end of
period $2,449,277 $1,041,490 DATASOURCE: AdStar, Inc. CONTACT: Jeff
Baudo of AdStar, Inc., +1-310-577-8255, ; or Media, Kevin Wilson,
+1-513-885-5520, , for AdStar, Inc. Web site:
http://www.adstar.com/
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