AVP, INC. ANNOUNCES 2007 THIRD QUARTER
FINANCIAL RESULTS
Nine Month Revenue Increases 12% over 2006; Company Announces Hot Winter Nights Tour Scheduled to Bring 19 New Indoor Events in 2008
LOS ANGELES, Calif., - November 12, 2007 - AVP, Inc. (OTC Bulletin Board: AVPI), a lifestyle sports entertainment company focused on professional beach volleyball, today announced financial results for the third quarter of calendar year 2007.
Highlights
· | Total Revenue increased 12% year-over-year for the first nine months of 2007 to $23.8 million |
· | Launched Hot Winter Nights indoor volleyball tour set with 19 events in January and February 2008 |
· | CROCS title sponsorship extended for AVP CROCS Tour through 2012 |
· | Russ Pillar appointed as Vice Chairman, Operations and Vice Chairman of the Board of Directors |
· | Unveiled AVP.com Mosaic, powered by Major League Baseball Advanced Media (MLBAM) to provide fans the ability to watch multiple matches via live streaming video |
· | AVP CROCS Tour debut on NBC sports, broadcasted live and featuring over 14 hours of Tour coverage |
Third Quarter Results
For the third quarter, ended September 30, 2007, the Company reported revenue of $12.8 million, down slightly when compared to the $13.8 million reported in the third quarter of 2006. Net loss for the third quarter of 2007 was ($0.8 million), or a loss of ($0.04) per share, which compares to a net income of $2.6 million, or $0.09 per diluted share, in the third quarter of 2006. Included in the third quarter net loss of 2007 was a one time charge of ($0.6 million), or a loss of ($0.03) per share of legal and other fees associated with the terminated Shamrock Holdings transaction.
The Company ended the third quarter with cash and cash equivalents of $3.7 million.
Nine Months Ended September 30, 2007
For the nine months ended September 30, 2007, total revenue was $23.8 million, up 12% compared to $21.2 million for the same period in 2006. Net loss for the first nine months of 2007 was ($2.0 million), or a loss of ($0.10) per share, compared to a net income, excluding deemed dividend, of $1.1 million, or $0.05 per diluted share, for the same period last year. Included in the nine month net loss of 2007 is a one time charge of ($1.4 million) or a loss of ($0.07) per share of legal and other fees associated with the terminated Shamrock Holdings transaction.
“We continue to make progress with the expansion and growth of AVP,” said Chief Executive Officer and Tour Commissioner of AVP, Inc., Leonard Armato. “During the year we have had a number significant developments including the announcement of the AVP Hot Winter Nights tour series which will add nineteen new indoor beach volleyball events in January and February of 2008. We are also very pleased to have signed a five- year extension agreement with CROCS to extend their title sponsorship of the AVP CROCS tour through 2012, as we continue a strong strategic relationship with them. Most significantly, we continued to increase the number of tour events and cities, and associated media and broadcast coverage as we work to expand the overall reach of the AVP Tour.”
Mr. Armato continued, “During the first nine months of the year we strengthened our internal operations significantly and are very pleased with the new promoters and key hires we have announced throughout the past year. I was particularly excited to announce recently the appointment of Russ Pillar to our board of directors. Russ comes to us with a rich background in media and entertainment and will focus on helping us realize improved operational efficiencies and execute on our growth initiatives.”
Mr. Armato added, “During the quarter we mutually terminated our agreement with Shamrock to take AVP private due to shareholder opposition of the transaction. As anticipated, we recognized some legal fees associated with this transaction. Looking forward, we remain focused on moving onward and upward, growing our business through exciting initiatives, new strategic relationships and continuing to explore a flood of other expansion opportunities that we look forward to announcing in the coming quarters.”
Mr. Armato concluded, "We anticipate increased visibility for the AVP and its athletes leading into, including, and following the 2008 Olympic Games. Notably, both the AVP men's and women's teams won the World Championships of Beach Volleyball and are medal favorites going into the Olympics."
About AVP, Inc.
AVP, Inc. is a lifestyle sports entertainment company focused on the production, marketing and distribution of professional beach volleyball events worldwide. AVP operates the industry's most prominent volleyball tour in the United States, the AVP Crocs Tour. Featuring more than 200 of the top American men and women competitors in the sport, AVP held 18 AVP Crocs Tour events throughout the United States in 2007. In 2004, AVP athletes successfully represented the United States during the Olympics in Athens, Greece, winning gold and bronze medals, the first medals won by U.S. women in professional beach volleyball. For more information, please visit www.avp.com.
All above-mentioned trademarks are the property of their respective owners.
Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of the Company. We wish to caution you that these statements involve risks and uncertainties and actual results might differ materially from those in the forward-looking statements, if we receive less sponsorship and advertising revenue than anticipated, or if attendance is adversely affected by unfavorable weather. Event-related expenses, such as for the stadium, transportation and accommodations, or security might be greater than expected; or marketing or administrative costs might be increased by our hiring, not currently planned, of a particularly qualified prospect. Additional factors have been detailed in the Company’s filings with the Securities and Exchange Commission, including our recent filings on Forms 10-KSB and 10-QSB.
AVP, Inc | MKR Group, Inc. |
Tom Torii | Investor Relations |
Interim CFO | Charles Messman |
(310) 426-8000 | (323) 468-2300 |
avpi@mkr-group.com |
- Financial tables to follow -
AVP, INC |
CONSOLIDATED BALANCE SHEETS |
(Unaudited) | |||||||
September 30, | December 31, | ||||||
2007 | 2006 | ||||||
ASSETS | |||||||
CURRENT ASSETS | |||||||
Cash and cash equivalents | $ | 3,739,212 | $ | 5,052,636 | |||
Accounts receivable, net of allowance for doubtful accounts of $232,269 and $25,193 | 5,479,284 | 2,653,473 | |||||
Prepaid expenses | 237,941 | 242,007 | |||||
Other assets - current portion | 162,355 | 301,477 | |||||
TOTAL CURRENT ASSETS | 9,618,792 | 8,249,593 | |||||
PROPERTY AND EQUIPMENT, net | 413,301 | 340,054 | |||||
OTHER ASSETS | 133,678 | 105,373 | |||||
TOTAL ASSETS | $ | 10,165,771 | $ | 8,695,020 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
CURRENT LIABILITIES | |||||||
Accounts payable | $ | 2,878,334 | $ | 529,331 | |||
Accrued expenses | 2,682,217 | 1,049,439 | |||||
Deferred revenue | 84,369 | 1,056,960 | |||||
TOTAL CURRENT LIABILITIES | 5,644,920 | 2,635,730 | |||||
NON-CURRENT LIABILITIES | 100,945 | 190,766 | |||||
TOTAL LIABILITIES | 5,745,865 | 2,826,496 | |||||
COMMITMENTS AND CONTINGENCIES | |||||||
STOCKHOLDERS' EQUITY | |||||||
Preferred stock, 2,000,000 shares authorized: | |||||||
Series A convertible preferred stock, $.001 par value, 1,000,000 shares authorized,no shares issued and outstanding | - | - | |||||
Series B convertible preferred stock, $.001 par value, 250,000 shares authorized,47,152 and 69,548 shares issued and outstanding | 48 | 70 | |||||
Common stock, $.001 par value, 80,000,000 shares authorized,20,490,096 and 19,751,838 shares issued and outstanding | 20,490 | 19,752 | |||||
Additional paid-in capital | 39,626,548 | 39,077,065 | |||||
Accumulated deficit | (35,227,180 | ) | (33,228,363 | ) | |||
TOTAL STOCKHOLDERS' EQUITY | 4,419,906 | 5,868,524 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 10,165,771 | $ | 8,695,020 |
AVP, INC |
CONSOLIDATED STATEMENTS OF OPERATIONS |
(Unaudited) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||
2007 | 2006 | 2007 | 2006 | ||||||||||
REVENUE | |||||||||||||
Sponsorships/Advertising (1) | $ | 10,228,458 | $ | 11,155,368 | $ | 19,219,248 | $ | 17,388,458 | |||||
Other | 2,577,980 | 2,654,724 | 4,604,591 | 3,855,602 | |||||||||
TOTAL REVENUE | 12,806,438 | 13,810,092 | 23,823,839 | 21,244,060 | |||||||||
EVENT COST (2) | 10,761,071 | 9,292,516 | 17,998,538 | 14,652,753 | |||||||||
GROSS PROFIT | 2,045,367 | 4,517,576 | 5,825,301 | 6,591,307 | |||||||||
OPERATING EXPENSES | |||||||||||||
Sales and Marketing (3) | 919,872 | 814,098 | 2,658,089 | 2,037,892 | |||||||||
Administrative (4) | 1,919,833 | 1,200,724 | 5,324,373 | 3,648,772 | |||||||||
TOTAL OPERATING EXPENSES | 2,839,705 | 2,014,822 | 7,982,462 | 5,686,664 | |||||||||
OPERATING LOSS | (794,338 | ) | 2,502,754 | (2,157,161 | ) | 904,643 | |||||||
OTHER INCOME (EXPENSE) | |||||||||||||
Interest expense | (745 | ) | (7,823 | ) | (745 | ) | (19,754 | ) | |||||
Interest income | 44,748 | 72,173 | 158,725 | 127,118 | |||||||||
Gain on sale of asset | - | - | 9,774 | 9,863 | |||||||||
Gain on warrant derivative | - | - | - | 111,042 | |||||||||
TOTAL OTHER INCOME (EXPENSE) | 44,003 | 64,350 | 167,754 | 228,269 | |||||||||
INCOME (LOSS) BEFORE INCOME TAXES | (750,335 | ) | 2,567,104 | (1,989,407 | ) | 1,132,912 | |||||||
INCOME TAXES | (8,610 | ) | - | (9,410 | ) | (800 | ) | ||||||
NET INCOME (LOSS) | (758,945 | ) | 2,567,104 | (1,998,817 | ) | 1,132,112 | |||||||
Deemed Dividend to Series B Preferred | |||||||||||||
Stock Shareholders | - | - | - | 91,973 | |||||||||
Net Income (Loss) Available to Common | |||||||||||||
Shareholder | $ | (758,945 | ) | $ | 2,567,104 | $ | (1,998,817 | ) | $ | 1,040,139 | |||
Earnings (loss) per common share: | |||||||||||||
Basic | $ | (0.04 | ) | $ | 0.13 | $ | (0.10 | ) | $ | 0.07 | |||
Diluted | $ | (0.04 | ) | $ | 0.09 | $ | (0.10 | ) | $ | 0.04 | |||
Shares used in computing earning (loss) per share: | |||||||||||||
Basic | 20,443,269 | 19,672,889 | 20,064,693 | 15,978,091 | |||||||||
Diluted | 20,443,269 | 27,718,609 | 20,064,693 | 24,199,242 |
(1) Sponsorship/advertising includes $507,800 and $158,496 in stock base contra revenue for the three months ended September 30, 2007 and 2006, respectively and $507,800 and $252,842 for the nine months ended September 30, 2007 and 2006, respectively. |
(2) Event costs include stock based expenses of $0 and $0 for the three months ended September 30, 2007 and 2006, respectively and $0 and $1,000,000 for the nine months ended September 30, 2007 and 2006, respectively. |
(3) Sales and marketing expenses includes stock based expenses of $19,045 and $27,575 for the three months ended September 30, 2007 and 2006, respectively and $101,266 and $61,549 for the nine months ended September 30, 2007 and 2006, respectively. |
(4) Administrative expenses includes stock based expenses of $21,236 and $40,656 for the three months ended September 30, 2007 and 2006, respectively and $64,192 and $254,623 for the nine months ended September 30, 2007 and 2006, respectively. |