Adstar Wts 12/16/2004 (MM) (NASDAQ:ADSTW)
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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/