2008-08-20 07:30:00
MARINA DEL REY, Calif., Aug. 20 /EMWNews/ -- AdStar, Inc. (OTC Bulletin Board: ADST), the leading provider of e-commerce transaction services and payment processing software for the digital and print advertising and publishing industries, today reported its operating results for the three months ended June 30, 2008. Net revenues for the three months ended June 30, 2008 totaled $1,038,000, compared with net revenues of $1,168,000 in 2007. ASP revenues declined by $91,000, or 18%, and Customization and other revenues declined $35,000, or 29%. The decline in ASP revenues is generally a result of the recent declines in classified advertising impacting the newspaper publishing industry as a whole, resulting in the loss of several customers and reduced processing volume in several others. The revenue reductions have been partially offset by revenue increases from four new ASP customers in 2008. AdStar reported a net loss applicable to common shareholders of $217,000, or $0.01 per share, during the three months ended June 30, 2008, versus a net loss of $630,000, or $0.03 per share, in 2007. The loss in 2008 was primarily due to abandoned acquisition costs. During the first fiscal quarter ended March 31, 2008, the Company suspended incurring additional costs for its mobile advertising development initiative, resulting in a significant reduction in expenses reflected during the second fiscal quarter ended June 30, 2008. Excluding non-cash charges and direct abandoned acquisition costs, the Company earned a positive margin on operations (a non-GAAP measure) of $47,000 during the quarter ended June 30, 2008 (See table at end of this release for further non-GAAP information). "Newspaper print advertising has undergone unprecedented declines that are beyond analyst expectations for the industry," stated Leslie Bernhard, president and chief executive officer of AdStar, Inc. "This has caused our revenues to decline in a corresponding magnitude. AdStar has responded by dramatically reducing costs. We have postponed our mobile advertising initiative, along with the attendant costs, as well as the significant costs relating to our SEC reporting; which has resulted in a level of stability in our cash flow. We are not aware of any significant pending customer cancellations at this time, and we are at the same time adding new customers to our payment processing software and to our web-based ad services. We believe that there are opportunities arising from the adversity in the industry, whereby publishers are seeking efficiencies in their operations that can be facilitated by AdStar. Our payment processing software remains the premier solution in the industry for processing both circulation and advertising costs, and we are exploring wider applications for this sophisticated solution. We believe that AdStar has a platform for growth as the industry reaches a new equilibrium." As a part of the Company's current efforts to conserve cash, AdStar has determined that it will suspend its quarterly filings on Form 10-Q. The Company intends to continue to report to its stockholders its quarterly and annual financial results in press releases and to maintain the corporate governance improvements the Company has made in recent years.
About AdStar, Inc.
AdStar, Inc. is a leading provider of e-commerce transaction services
and payment processing solutions for the digital and print advertising and
publishing industries. AdStar's proprietary suite of e-commerce services
includes remote ad-entry software, web-based ad transaction and campaign
management services, and payment processing and content processing
solutions. AdStar is headquartered in Marina del Rey, Calif. and its Edgil
Associates subsidiary is located in Billerica, Mass. For more information
on AdStar, 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, 760-308-0423, [email protected]
Financial Tables to Follow
AdStar, Inc. and Subsidiary
Consolidated Statements of Operations
For the Three and Six Months
Ended June 30, 2008 and 2007
Three months ended Six months ended
June 30, June 30,
2008 2007 2008 2007
ASP, net $401,000 $492,000 $822,000 $951,000
Licensing and software 550,000 554,000 1,101,000 1,188,000
Customization and other 87,000 122,000 167,000 394,000
Net revenues 1,038,000 1,168,000 2,090,000 2,533,000
Total cost of revenues 322,000 528,000 757,000 1,107,000
Gross profit 716,000 640,000 1,333,000 1,426,000
General and administrative
expense 481,000 518,000 1,126,000 1,082,000
Product maintenance and
development costs 249,000 286,000 636,000 604,000
Selling and marketing expense 181,000 468,000 523,000 1,353,000
Amortization of customer list 22,000 22,000 44,000 44,000
Loss from operations (217,000) (654,000) (996,000) (1,657,000)
Interest income 4,000 28,000 10,000 38,000
Interest expense (2,000) (1,000) (3,000) (3,000)
Loss before income taxes (215,000) (627,000) (989,000) (1,622,000)
Provision for income taxes 2,000 3,000 5,000 6,000
Net loss applicable to
common stockholders $(217,000) $(630,000) $(994,000) $(1,628,000)
Loss per share - basic and
diluted $(0.01) $(0.03) $(0.05) $(0.08)
Weighted average number
of shares - basic and
diluted 20,468,882 20,208,714 20,377,726 20,169,644
AdStar, Inc. and Subsidiary
Calculation of Margin on Operations
Six Months
Quarter ended Quarter ended ended
March 30, 2008 June 30, 2008 June 30, 2008
ASP, net $421,000 $401,000 $822,000
Licensing and software 551,000 550,000 1,101,000
Customization and other 80,000 87,000 167,000
Net revenues 1,052,000 1,038,000 2,090,000
Total Cost of Revenues * 345,000 272,000 617,000
General and administrative
expense * 463,000 336,000 799,000
Development and maintenance
costs * 377,000 247,000 624,000
Selling and marketing expense * 201,000 136,000 337,000
Total Direct Costs * 1,386,000 991,000 2,377,000
Margin on operations (334,000) 47,000 (287,000)
Depreciation & amortization 101,000 72,000 173,000
Stock based charges 279,000 56,000 335,000
Abandoned acquisition costs 65,000 136,000 201,000
Income (loss) from operations (779,000) (217,000) (996,000)
Interest income 6,000 4,000 10,000
Interest expense (1,000) (2,000) (3,000)
Net income (loss) before taxes (774,000) (215,000) (989,000)
Provision for income taxes 3,000 2,000 5,000
Net income (loss) $(777,000) $(217,000) $(994,000)
* non-GAAP presentation excluding depreciation, amortization, stock-based
charges, and abandoned acquisition costs; shown separately
The Company defines margin on operations as net loss before interest,
taxes, depreciation and amortization, non-cash expense for securities, and
direct abandoned acquisition costs. Other companies may calculate margin on
operations differently. Management believes that the presentation of margin
on operations provides a meaningful measure of performance that
approximates cash flow before interest expense and one-time costs, and is
meaningful to investors.
AdStar, Inc. and Subsidiary
Consolidated Balance Sheets
June 30, December 31,
2008 2007
Assets
Current assets:
Cash and cash equivalents $357,000 $717,000
Accounts receivable, net of allowance for
doubtful accounts of $71,000 for both periods 467,000 571,000
Notes receivable from officers - current portion 10,000 9,000
Prepaid and other current assets 94,000 126,000
Total current assets 928,000 1,423,000
Notes receivable from officers, net of current
portion 193,000 197,000
Property and equipment, net 84,000 109,000
Capitalized and purchased software, net 130,000 261,000
Intangible assets, net 1,088,000 1,133,000
Goodwill 2,132,000 2,132,000
Other assets 35,000 40,000
Total assets $4,590,000 $5,295,000
Liabilities and Stockholders' Equity
Current liabilities:
Due to publications $1,192,000 $1,223,000
Accounts payable and accrued expenses 586,000 630,000
Deferred revenue and customer
deposits - current portion 145,000 113,000
Capital lease obligations - current portion 7,000 6,000
Total current liabilities 1,930,000 1,972,000
Deferred revenues, net of current portion 23,000 24,000
Capital lease obligations, net of current portion 17,000 20,000
Total liabilities 1,970,000 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; 20,543,675 and 20,209,648
issued and outstanding, respectively 2,000 2,000
Additional paid-in capital 27,386,000 27,051,000
Treasury stock; 67,796 shares, at cost,
respectively (68,000) (68,000)
Accumulated deficit (24,700,000) (23,706,000)
Total stockholders' equity 2,620,000 3,279,000
Total liabilities and stockholders' equity $4,590,000 $5,295,000
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