![](/cdn/assets/images/search/clock.png)
We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Share Name | Share Symbol | Market | Type |
---|---|---|---|
AdStar Inc (CE) | USOTC:ADST | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.000001 | 0.00 | 01:00:00 |
þ | QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 22-3666899 | |
(State or other jurisdiction of incorporation or | (I.R.S. Employer Identification No.) | |
organization) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer o | Smaller reporting company þ | |||
(Do not check if a smaller reporting company) |
Page | ||||
PART I FINANCIAL INFORMATION
|
||||
Item 1. Interim condensed consolidated financial Statements
|
||||
Balance Sheet March 31, 2008 (unaudited) and December 31, 2007
|
3 | |||
Statements of Operations for the three month periods ended March 31, 2008 and 2007
(unaudited)
|
4 | |||
Statements of Cash Flows for the month periods ended March 31, 2008 and 2007
(unaudited)
|
5 | |||
Notes to Interim Financial Statements (unaudited)
|
6 | |||
Item 2. Managements discussion and analysis of financial condition and results of
operations
|
11 | |||
Item 3. Quantitative and qualitative disclosures about market risk
|
15 | |||
Item 4 T. Controls and procedures
|
15 | |||
PART II OTHER INFORMATION
|
||||
Item 2. Unregistered sales of equity securities and use of proceeds
|
17 | |||
Item 6. Exhibits
|
17 | |||
Signatures
|
18 | |||
Exhibit 31.1
|
||||
Exhibit 31.2
|
||||
Exhibit 32.1
|
||||
Exhibit 32.2
|
2
March 31, | December 31, | |||||||
2008 | 2007 | |||||||
(Unaudited) | ||||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 511,000 | $ | 717,000 | ||||
Accounts receivable, net of allowance for doubtful
accounts of $71,000 for both periods
|
570,000 | 571,000 | ||||||
Notes receivable from officers current portion
|
10,000 | 9,000 | ||||||
Prepaid and other current assets
|
144,000 | 126,000 | ||||||
|
||||||||
Total current assets
|
1,235,000 | 1,423,000 | ||||||
|
||||||||
Notes receivable from officers, net of current portion
|
195,000 | 197,000 | ||||||
Property and equipment, net
|
99,000 | 109,000 | ||||||
Capitalized and purchased software, net
|
179,000 | 261,000 | ||||||
Intangible assets, net
|
1,110,000 | 1,133,000 | ||||||
Goodwill
|
2,132,000 | 2,132,000 | ||||||
Other assets
|
35,000 | 40,000 | ||||||
|
||||||||
Total assets
|
$ | 4,985,000 | $ | 5,295,000 | ||||
|
||||||||
|
||||||||
Liabilities and Stockholders Equity
|
||||||||
|
||||||||
Current liabilities:
|
||||||||
Due to publications
|
$ | 1,419,000 | $ | 1,223,000 | ||||
Accounts payable and accrued expenses
|
593,000 | 630,000 | ||||||
Deferred revenue and customer deposits current portion
|
143,000 | 113,000 | ||||||
Capital lease obligations current portion
|
6,000 | 6,000 | ||||||
|
||||||||
Total current liabilities
|
2,161,000 | 1,972,000 | ||||||
|
||||||||
Deferred revenues, net of current portion
|
24,000 | 24,000 | ||||||
Capital lease obligations, net of current portion
|
18,000 | 20,000 | ||||||
|
||||||||
Total liabilities
|
2,203,000 | 2,016,000 | ||||||
|
||||||||
|
||||||||
Commitments and contingencies
|
||||||||
Stockholders equity:
|
||||||||
Preferred Stock, par value $0.0001; authorized
5,000,000 shares; 0 issued and outstanding
|
| | ||||||
Common Stock, par value $0.0001; authorized 40,000,000
shares; 20,459,648 and 20,209,648 issued and
outstanding, respectively
|
2,000 | 2,000 | ||||||
Additional paid-in capital
|
27,331,000 | 27,051,000 | ||||||
Treasury stock; 67,796 shares, at cost, respectively
|
(68,000 | ) | (68,000 | ) | ||||
Accumulated deficit
|
(24,483,000 | ) | (23,706,000 | ) | ||||
|
||||||||
Total stockholders equity
|
2,782,000 | 3,279,000 | ||||||
|
||||||||
Total liabilities and stockholders equity
|
$ | 4,985,000 | $ | 5,295,000 | ||||
|
3
Quarter ended | ||||||||
March 31, | ||||||||
2008 | 2007 | |||||||
ASP, net
|
$ | 421,000 | $ | 459,000 | ||||
Licensing and software
|
551,000 | 633,000 | ||||||
Customization and other
|
80,000 | 273,000 | ||||||
|
||||||||
Net revenues
|
1,052,000 | 1,365,000 | ||||||
|
||||||||
Cost of revenues
|
435,000 | 579,000 | ||||||
|
||||||||
Gross profit
|
617,000 | 786,000 | ||||||
|
||||||||
General and administrative expense
|
645,000 | 563,000 | ||||||
Product maintenance and development costs
|
387,000 | 319,000 | ||||||
Selling and marketing expense
|
342,000 | 885,000 | ||||||
Amortization of customer list
|
22,000 | 22,000 | ||||||
|
||||||||
Loss from operations
|
(779,000 | ) | (1,003,000 | ) | ||||
|
||||||||
Interest income
|
6,000 | 10,000 | ||||||
Interest expense
|
(1,000 | ) | (2,000 | ) | ||||
|
||||||||
Loss before income taxes
|
(774,000 | ) | (995,000 | ) | ||||
|
||||||||
Provision for income taxes
|
3,000 | 3,000 | ||||||
|
||||||||
Net loss
|
$ | (777,000 | ) | $ | (998,000 | ) | ||
|
||||||||
|
||||||||
Loss per share basic and diluted
|
$ | (0.04 | ) | $ | (0.05 | ) | ||
Weighted average number of shares
basic and diluted
|
20,286,571 | 20,130,140 |
4
Quarter ended | ||||||||
March 31, | ||||||||
2008 | 2007 | |||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$ | (777,000 | ) | $ | (998,000 | ) | ||
|
||||||||
Adjustments to reconcile net loss to net cash used in operating
activities:
|
||||||||
Depreciation and amortization
|
122,000 | 130,000 | ||||||
Loss on disposal of equipment
|
| 7,000 | ||||||
Stock based charges
|
280,000 | 546,000 | ||||||
Bad debt recovery
|
| (10,000 | ) | |||||
Changes in assets and liabilities:
|
||||||||
Accounts receivable
|
1,000 | (193,000 | ) | |||||
Prepaids and other assets
|
(13,000 | ) | 5,000 | |||||
Due to publications
|
196,000 | 267,000 | ||||||
Accounts payable and accrued expenses
|
(37,000 | ) | (39,000 | ) | ||||
Deferred revenue and customer deposits
|
30,000 | 29,000 | ||||||
|
||||||||
Net cash used in operating activities
|
(198,000 | ) | (256,000 | ) | ||||
|
||||||||
Cash flows from investing activities:
|
||||||||
Additions to capitalized and purchased software
|
(3,000 | ) | (3,000 | ) | ||||
Purchase of property, equipment and intangible assets
|
(4,000 | ) | (17,000 | ) | ||||
Repayment of officer receivable
|
1,000 | 2,000 | ||||||
|
||||||||
Net cash used in investing activities
|
(6,000 | ) | (18,000 | ) | ||||
|
||||||||
Cash flows from financing activities:
|
||||||||
Proceeds from exercise of options and warrants
|
| 361,000 | ||||||
Principal repayments on capital leases
|
(2,000 | ) | (1,000 | ) | ||||
|
||||||||
Net cash (used in) provided by financing activities
|
(2,000 | ) | 360,000 | |||||
|
||||||||
Net (decrease) increase in cash and cash equivalents
|
(206,000 | ) | 86,000 | |||||
Cash and cash equivalents at beginning of period
|
717,000 | 2,545,000 | ||||||
|
||||||||
Cash and cash equivalents at end of period
|
$ | 511,000 | $ | 2,631,000 | ||||
|
5
1. | General | |
AdStar, Inc. (the Company) provides classified advertising technology services to publishers, primarily within the newspaper industry. Our services are provided using proprietary software that electronically connects the advertiser with the publisher. We enable professional advertising agencies, businesses and individuals to send ads to publishers electronically. This gives publishers the ability to receive classified advertising insertions directly into their sophisticated newspaper publishing systems, as well as their website or other publication channel. Our solutions are available in an application service provider (ASP) model whereby we contract with publishers or third parties to design, implement, host, and manage the on-line ad-taking capabilities of their websites. We provide all the technical and application expertise, customer support, and security measures that are needed to connect with our platform, and with the publisher system. Our services afford publishers the ability to increase revenue and reduce costs by automating the process of composing and formatting, pricing, scheduling, and electronically sending classified ads into the publishing systems. Additionally, we enable credit card payment processing for ad placement, using our proprietary EdgCapture software. | ||
The interim financial statements for the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with instructions to Form 10-Q of the Securities and Exchange Commission. Accordingly they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 2008 are not necessarily indicative of the results that may be expected for the year ending December 31, 2008. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Companys Annual Report on Form 10-KSB for the year ended December 31, 2007. | ||
The accompanying financial statements have been prepared assuming the Company will have liquidity to maintain its required minimum level of operations. At March 31, 2008, the Companys accumulated deficit was $24,483,000, resulting from recurring net losses. For the years ended December 2007 and 2006, the net losses were $3,310,000 and $1,393,000 respectively, and for the three months ended March 31, 2008, the net losses were $777,000. At March 31, 2008, the Company had a working capital deficit of $926,000, compared to a working capital deficit of $549,000 at December 31, 2007. | ||
Revenues for the three month period ended March 31, 2008 have decreased to $1,052,000 from $1,365,000 in the prior year. The Company has been notified of the termination of one of its largest customer publications, representing approximately 12% of its revenues in 2007 and 11% of its revenues during the quarter ended March 31, 2008. | ||
The Company may continue to incur losses until it is able to increase revenues significantly from fees derived from its advertising intake and payment processing services. The ability to increase revenues from ASP service offerings during the next 12 months may be hampered by the current unstable climate in the advertising market relating to newspaper publishers and state of the economy in general. These factors, coupled with possible competition from other vendors, the extended selling cycle in the industry, and customer delays in customization and implementations, could delay its ability to increase revenue to a level sufficient to cover expenses. | ||
The continuation of AdStars business is dependent upon achieving a break even or profitable level of operations or on obtaining further financing. To the extent that funds generated from operations are insufficient, the Company will have to raise additional working capital from private placements, public offerings and/or bank financing. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is not available |
6
the Company may be required to further reduce certain discretionary spending, which could have a material adverse effect on the Companys ability to achieve its intended business objectives. | ||
These conditions raise doubt about the Companys ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. | ||
2. | Summary of Significant Accounting Policies | |
Principles of Consolidation | ||
The accompanying consolidated financial statements include the accounts of AdStar, Inc. and its wholly owned subsidiary, Edgil Associates, Inc. All intercompany transactions and balances have been eliminated in consolidation. | ||
Concentration of Credit Risk and Major Customers | ||
Financial instruments that potentially subject the Company to significant concentrations of credit risk are principally comprised of trade accounts receivable. | ||
The Company generally contracts with individual publication customers for its services, however, a number of publication customers fall under common enterprise ownership. For the three months ended March 31, 2008, three groups of customers, under common ownership, accounted for 19%, 12% and 12% of the Companys revenues. For the three months ended March 31, 2007, three groups of customers, under common ownership, accounted for 20%, 11% and 11% of the Companys revenues. At March 31, 2008, three groups of customers, under common ownership, accounted for 18%, 15% and 12% of the Companys accounts receivable, respectively. At December 31, 2007, three groups of customers, under common ownership, accounted for 25%, 13% and 13% of the Companys accounts receivable, respectively. | ||
The majority of the Companys customers have historically consisted of newspapers and publishers of classified advertisements. | ||
Earnings (Loss) Per Share | ||
Basic earnings (loss) per share is computed by dividing the net income (loss) applicable to Common Stockholders by the weighted average number of shares of Common Stock outstanding during the period. Diluted earnings (loss) per share is computed by dividing the net income (loss) applicable to Common Stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are excluded from the computation when their effect is antidilutive. | ||
For the period ended March 31, 2008 and March 31, 2007 the weighted average shares outstanding as used in the calculation of diluted loss per share does not include options and warrants to purchase 2,588,583 and 2,485,583 shares of common stock, respectively, as their inclusion would be antidilutive. | ||
Accounting for Stock-Based Compensation | ||
During the first quarter of fiscal 2006, the Company adopted the provisions of, and accounting for stock-based compensation in accordance with, the Financial Accounting Standards Boards (FASB) Statement of Financial Accounting Standards No. 123 revised 2004 (SFAS 123(R), Share-Based Payment which replaced Statement of Financial Accounting Standards No. 123 (SFAS 123), |
7
Accounting for Stock-Based Compensation and supersedes APB Opinion No. 25 (APB 25), Accounting for Stock Issued to Employees. | ||
Under the fair value recognition provisions of this statement, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense on a straight-line basis over the requisite service period, which often approximates the vesting period. | ||
3. | Stock Based Compensation | |
The Companys stock option program is a long-term retention program that is intended to attract, retain and provide incentives for talented employees, officers and directors, and to align stockholder and employee interests. Currently, the Company grants options from either the 1999 Stock Option Plan or the 2004 Stock Option Plan (the Plans), under which options could be granted to all employees, including executive officers and non-employee directors of the Company. | ||
The Plans provide for issuance of nonqualified and incentive stock options to officers, key employees, consultants and non-employee directors of the Company. Each nonqualified stock option shall have an exercise price not less than 100% of the fair value of the Common Stock on the date of grant, unless as otherwise determined by the committee that administers the Plans. Incentive stock options shall have an exercise price equal to or greater than the fair value of the Common Stock on the date of grant provided that incentive stock option granted to a 10% holder of the Companys voting stock shall have an exercise price equal to or greater than 110% of the fair market value of the Common Stock on the date of grant. Each option generally has a term of five years from the date of grant unless otherwise determined by the committee that administers the Plans. Option vesting periods are generally three years, and have five-year contractual terms. Certain option and share awards provide for accelerated vesting if there is a change in control (as defined in the Plans). | ||
The Company currently uses the Black-Scholes option pricing model to determine the fair value of stock options. The determination of the fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by the stock price as well as assumptions regarding a number of complex and subjective variables. These variables include the expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rate and expected dividends. | ||
The Company estimates the expected term of options granted by taking an average of the mid-point between the vesting date and the expiration date of the option. The volatility of its common stock is determined by using historical volatility. The risk-free rate for periods within the contractual life of the option is based on the United States Treasury yield curve in effect at the time of grant. The Company does not anticipate paying any cash dividends in the foreseeable future and therefore uses an expected dividend yield of zero in the option valuation model. Estimated forfeitures are required at the time of grant and those estimates are revised in subsequent periods if actual forfeitures differ from those estimates. The estimate of forfeitures is based on historical rates, adjusted for expected activity in the future. All stock-based payment awards are amortized on a straight-line basis over the requisite service periods of the awards, which are generally the vesting periods. | ||
As of March 31, 2008, there was $211,000 of unrecognized compensation cost, net of forfeitures, related to unvested share-based compensation arrangements. This compensation expense is expected to be recognized on a straight-line basis over the remaining weighted-average vesting period of approximately two years. At March 31, 2008, there were 628,000 shares available for future grants under the Plans. |
8
Three Months Ended | ||||
March 31, 2008 | ||||
Risk-free interest rate
|
2.2 | % | ||
Expected lives (years)
|
3.5 | |||
Dividend yield
|
0.0 | % | ||
Expected volatility
|
90.6 | % |
During the three and three months ended March 31, 2008, the Company issued 4,000 options to its employees. On March 3, 2008, the Company repriced 1,488,581 employee and director options to an exercise price of $0.32. Such options had previously been issued at exercise prices between $0.62 per share and $3.50 per share. The total increase in stock compensation expense, as a result of the repricing, was $149,000; of which $145,000 was recognized in the quarter ended March 31, 2008. Total stock-based compensation recognized on the Companys consolidated statement of operations for the three months ended March 31, 2008 was $280,000, which includes $80,000 of shares issued to a consultant and $200,000 of stock option expense. There were no stock options exercised in the three months ended March 31, 2008. | ||
The following table summarizes all stock option activity for the three months ended March 31, 2008 and includes all options currently outstanding under the Plans and 530,000 non-qualified options issued outside the Plans. |
Weighted | ||||||||||||||||
Weighted | Average | |||||||||||||||
Average | Remaining | Aggregate | ||||||||||||||
Exercise | Contractual | Intrinsic | ||||||||||||||
Shares | Price | Term | Value | |||||||||||||
Outstanding at December 31, 2007
|
2,302,247 | $ | 2.11 | |||||||||||||
Granted
|
4,000 | 0.33 | ||||||||||||||
Exercised
|
| | ||||||||||||||
Forfeited
|
(58,000 | ) | 1.23 | |||||||||||||
|
||||||||||||||||
Outstanding at March 31, 2008
|
2,248,247 | $ | 2.13 | 3.02 | $ | 0 | ||||||||||
|
||||||||||||||||
Options exercisable at March 31, 2008
|
1,995,916 | $ | 0.84 | 2.95 | $ | 0 | ||||||||||
|
The following table summarizes information about stock options outstanding at March 31, 2008: |
Options Exercisable at | ||||||||||||||||||||
Options Outstanding at March 31, 2008 | March 31, 2008 | |||||||||||||||||||
Weighted Average | Weighted | |||||||||||||||||||
Number of | Remaining | Average | Number of | Weighted | ||||||||||||||||
Range of | Shares | Contractual Life | Exercise | Shares | Average | |||||||||||||||
Exercise Price | Outstanding | (years) | Price | Exercisable | Exercise Price | |||||||||||||||
$0.01 $0.99
|
1,503,914 | 2.89 | $ | 0.32 | 1,401,582 | $ | 0.32 | |||||||||||||
$1.00 $1.99
|
296,666 | 2.97 | $ | 1.45 | 196,667 | $ | 1.42 | |||||||||||||
$2.00 $2.99
|
447,667 | 3.49 | $ | 2.44 | 397,667 | $ | 2.37 | |||||||||||||
$3.00 $4.50
|
| | | | | |||||||||||||||
|
||||||||||||||||||||
|
2,248,247 | 1,995,916 | ||||||||||||||||||
|
9
Warrants | ||
During the three months ended March 31, 2008, there were no warrants granted, exercised or forfeited. At March 31, 2008, there were 340,336 warrants outstanding and exercisable at a weighted average price of $2.67 per share. | ||
The following table summarizes the outstanding warrants, all of which are currently exercisable, to purchase Common Stock at March 31, 2008: |
Number | Exercise Price | Expiration Date | ||
15,336
|
$1.87 | March 2009 | ||
120,000 | $2.58 | April 2011 | ||
80,000 | $2.80 | April 2011 | ||
25,000 | $4.00 | February 2009 | ||
100,000 | $2.45 | February 2017 |
4. | Subsequent Event | |
On April 7, 2008, the Company granted 750,000 stock options to a consultant as compensation for his services. These options expire five years from the grant date and are exercisable one year from the grant date at an exercise price of $0.21 per share, the per share market value on the grant date. |
10
Three Months Ended | ||||||||
March 31, | ||||||||
2008 | 2007 | |||||||
ASP, net
|
40 | % | 34 | % | ||||
Licensing and software
|
52 | % | 46 | % | ||||
Customization and other
|
8 | % | 20 | % | ||||
Net revenues
|
100 | % | 100 | % | ||||
Cost of revenues
|
41 | % | 42 | % | ||||
Gross Profit
|
59 | % | 58 | % | ||||
|
||||||||
General and administrative expense
|
61 | % | 41 | % | ||||
Product maintenance and development costs
|
37 | % | 23 | % | ||||
Selling and marketing expense
|
33 | % | 65 | % | ||||
Amortization of customer list
|
2 | % | 2 | % | ||||
Income (loss) from operations
|
(74 | %) | (73 | %) | ||||
Interest income
|
| | ||||||
Interest expense
|
| | ||||||
Loss before taxes
|
(74 | %) | (73 | %) | ||||
Provision for taxes
|
| | ||||||
Net loss
|
(74 | %) | (73 | %) | ||||
11
12
13
14
Less than | 1 to 3 | |||||||||||||||
Contractual Obligations | Total | 1 year | Years | 3 to 5 Years | ||||||||||||
Employment agreements
|
$ | 1,932,000 | $ | 617,000 | $ | 1,007,000 | $ | 308,000 | ||||||||
Operating lease
commitments
|
550,000 | 260,000 | 252,000 | 38,000 | ||||||||||||
Capital lease commitment
|
31,000 | 10,000 | 20,000 | 1,000 | ||||||||||||
Less: Interest on
capital lease
|
(6,000 | ) | (3,000 | ) | (3,000 | ) | | |||||||||
|
||||||||||||||||
|
$ | 2,507,000 | $ | 884,000 | $ | 1,276,000 | $ | 347,000 | ||||||||
Less: Sublease income
|
(94,000 | ) | (58,000 | ) | (36,000 | ) | | |||||||||
|
||||||||||||||||
|
$ | 2,413,000 | $ | 826,000 | $ | 1,240,000 | $ | 347,000 | ||||||||
|
15
16
Exhibit No. | Description | |
|
||
31.1
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
|
||
31.2
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
|
||
32.1
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
|
||
32.2
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
17
AdStar, Inc.
(Registrant) |
||||
Date: May 15, 2008 | /s/ Leslie Bernhard | |||
Leslie Bernhard | ||||
President and Chief Executive Officer
(Principal Executive Officer) |
||||
Date: May 15, 2008 | /s/ James Linesch | |||
James Linesch | ||||
Chief Financial Officer
(Principal Financial Officer) |
18
1 Year AdStar (CE) Chart |
1 Month AdStar (CE) Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions