EXHBIT 99.1
AVP, INC. ANNOUNCES 2006 FIRST QUARTER RESULTS
LOS ANGELES - May 15, 2006 - AVP, Inc. (OTC:AVPI.OB) today announced first
quarter 2006 consolidated results for AVP, Inc. and its wholly owned subsidiary
AVP Pro Beach Volleyball Tour, Inc., a lifestyle sports entertainment company
focused on professional beach volleyball events.
With the recent kickoff of our 2006 professional beach volleyball tournament
season which runs April through September, we remain very enthusiastic about our
outlook. We ended the first quarter with strong momentum gained through
sponsorship activity with a number of world-class partners," said Leonard
Armato, Chief Executive Officer of AVP.
"Since the start of the 2006 season last month, we are thrilled to have signed a
three-year deal establishing Crocs, Inc. (Nasdaq: CROX) as our title sponsor and
official footwear, creating the newly branded `AVP Crocs Tour' and the `Crocs
Cup.' We were also pleased to announce a three-year extension of our marketing
agreement with Bud Light as the official beer of our Tour, and a new three-year
licensing agreement with Speedo to create a new `AVP & AVP Pro Series Apparel by
Speedo' line of clothing for sale at retail and AVP events.
In addition, several new or extended marketing deals with major commercial
brands include a multi-year agreement making Nautica our official apparel
sponsor, a multi-year agreement with New Motion making MobileSidewalk(TM) the
official mobile marketing partner and content provider for our Tour, and a
return by Jose Cuervo Tequila as an official sponsor.
Going forward, we intend to capitalize on recent positive trends including a 48%
increase in our fan base, increased on-site event exposure, broader media
coverage and multiple new national sponsors. We anticipate a highly successful
2006 Tour with significant near term growth opportunity commensurate with the
growing popularity and commercial potential of our sport," concluded Armato.
First Quarter Results
For the three months ended March 31, 2006, total revenue was $122,816, compared
to $103,956 for the same period prior year. The 18% increase in the first
quarter of 2006 primarily reflects higher trademark licensing revenue in
connection with volleyball and volleyball sales. During the course of the entire
year, the majority of AVP's revenues are derived from sponsorship and
advertising contracts with national and local sponsors along with local event
revenue. The Company's beach volleyball tournament season customarily begins in
early April and continues through late September or early October and AVP
recognizes sponsorship and advertising revenue as well as event costs during the
tour, as events occur. As a result, the majority of AVP's revenues will be
recognized in the second and third quarters of the year. AVP did not produce any
beach volleyball events in the first quarters of 2006 or 2005 and therefore, did
not recognize any sponsorship or advertising revenue or any event costs during
these periods.
Total operating expenses were $1.6 million for the first quarter of 2006,
compared with $4.9 million for the first quarter of 2005. The decrease was due
to lower stock compensation expense. For the period ending March 31, 2005,
operating expenses included a $3.5 million charge to stock compensation for
non-employee warrants valued under SFAS 123. This was partially offset by higher
marketing expenses associated with the expansion of AVP's marketing department
and other miscellaneous marketing expenses during the first quarter of 2006.
During the first quarter of 2006, the Company recorded total other income of
$12,926 compared to a total other expense of $55,202 for the same period last
year. The improvement was due primarily to lower interest expense due to the
elimination of short-term debt and bridge financing related to the Company's
February 28, 2005 merger.
The Company's net loss narrowed to $(1.5) million for the first quarter of 2006,
compared to $(4.9) million for the first quarter of 2005. Basic and diluted loss
per share was $(0.12) for the first quarter, compared to $(0.95) for the
corresponding period in 2005.
Mr. Armato continued, "Our strategy remains focused on increasing our sponsor
revenue, building upon our local partnerships, and taking advantage of
additional revenue generating opportunities such as our focus on new media. AVP
has experienced strong growth over the past four seasons and we are looking
forward to an even stronger 2006 season and beyond."
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 will hold 16 AVP Crocs Tour events throughout the
United States in 2006. 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.
Financial Tables to Follow
AVP, INC.
CONSOLIDATED BALANCE SHEET
(Unaudited)
March 31,
2006
------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 759,892
Accounts receivable, net of
allowance for doubtful accounts of $49,232 263,732
Prepaid expenses 1,650,121
Current portion of investment in sales-type lease 113,876
------------
TOTAL CURRENT ASSETS 2,787,621
------------
PROPERTY AND EQUIPMENT, net 306,279
------------
OTHER ASSETS
Investment in sales-type lease 387,020
Other assets 36,633
------------
TOTAL OTHER ASSETS 423,653
------------
TOTAL ASSETS 3,517,553
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 183,334
Accounts payable 296,769
Accrued expenses 1,233,757
Accrued interest 21,673
Deferred revenue 2,731,915
------------
TOTAL CURRENT LIABILITIES 4,467,448
------------
OTHER LIABILITIES
Long-term deferred revenue 131,250
------------
TOTAL LIABILITIES 4,598,698
------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIENCY
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, 74
74,708 shares issued and outstanding
Common stock, $.001 par value, 80,000,000 shares authorized, 12,819
12,817,919 shares issued and outstanding
Additional paid-in capital 33,194,342
Accumulated deficit (34,288,380)
------------
TOTAL STOCKHOLDERS' DEFICIENCY (1,081,145)
------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY 3,517,553
============
AVP, Inc.
Consolidated Statements of Operations
(Unaudited)
Three Months Ended March 31,
-------------------------------
2006 2005
------------ ------------
REVENUE
Sponsorships $ -- $ --
Other 122,816 103,956
------------ ------------
TOTAL REVENUE 122,816 103,956
EVENT COSTS -- --
------------ ------------
Gross Profit 122,816 103,956
------------ ------------
OPERATING EXPENSES
Marketing 555,950 411,600
Administrative (includes stock-based
compensation of $10,726 for 2006
and $3,498,022 for 2005) 1,068,338 4,518,384
------------ ------------
TOTAL OPERATING EXPENSES 1,624,288 4,929,984
------------ ------------
OPERATING LOSS (1,501,472) (4,826,028)
------------ ------------
OTHER INCOME (EXPENSE)
Interest expense (8,213) (70,558)
Interest income 21,139 15,356
------------ ------------
TOTAL OTHER INCOME (EXPENSE) 12,926 (55,202)
------------ ------------
LOSS BEFORE INCOME TAXES (1,488,546) (4,881,230)
INCOME TAXES -- --
------------ ------------
NET LOSS $ (1,488,546) $ (4,881,230)
============ ============
Basic and diluted loss per share $ (0.12) $ (0.95)
============ ============
Weighted average common shares
outstanding 12,468,848 5,135,713
============ ============
AVP, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended March 31,
--------------------------
2006 2005
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(1,488,546) $(4,881,230)
Adjustments to reconcile net loss to net cash
flows from operating activities:
Depreciation and amortization of property and equipment 36,545 22,101
Interest income on investment in sales-type lease (12,843) (15,356)
Amortization of deferred commissions -- 63,335
Gain on property and equipment (9,864) --
Other amortization 2,011 2,011
Compensation from issuance of stock options and warrants 10,726 3,498,022
Decrease (increase) in operating assets:
Accounts receivable 202,903 (453,706)
Prepaid expenses (492,067) (527,476)
Other assets (3) (4,500)
Increase (decrease) in operating liabilities:
Accounts payable (414,534) 164,381
Accrued expenses (341,742) 208,347
Accrued interest (104,316) (56,127)
Deferred revenue 2,597,165 2,969,847
----------- -----------
NET CASH FLOWS FROM
OPERATING ACTIVITIES (14,565) 989,649
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in property and equipment (64,216) (137,384)
Investment in sales-type lease 92,400 39,600
Proceeds from disposal of property and equipment 19,665 --
----------- -----------
NET CASH FLOWS FROM
INVESTING ACTIVITIES 47,849 (97,784)
----------- -----------
AVP, Inc.
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
Three Months Ended March 31,
--------------------------
2006 2005
--------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of capital stock $ -- $ 5,000,061
Offering costs -- (753,038)
Debt repayments (416,737) (950,000)
----------- -----------
NET CASH FLOWS FROM
FINANCING ACTIVITIES (416,737) 3,297,023
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (383,453) 4,188,888
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,143,345 631,933
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 759,892 $ 4,820,821
=========== ===========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 110,447 $ --
----------- -----------
Income taxes -- --
----------- -----------
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING INFORMATION
Net liabilities assumed in merger
Cash $ -- $ 4,217
Accounts payable -- (261,857)
Accrued expenses -- (173,934)
----------- -----------
$ -- $ (431,574)
----------- -----------
Conversion of Association redeemable preferred stock into
common stock $ -- $ 3,657,600
----------- -----------
Conversion of 10% convertible notes payable in
common stock $ -- $ 2,290,348
----------- -----------
Payment of accrued registration penalty in common stock $ 935 $ --
----------- -----------
Issuance of common stock to non-employees for services $ 1,000,000 $ --
----------- -----------