FOR IMMEDIATE RELEASE
AdStar Reports Operating Results For 2002
Transaction Revenues Increase 220% as ASP Model Gains Momentum
MARINA DEL REY, Calif. - April 1, 2003 - AdStar, Inc. (Nasdaq: ADST, ADSTW), a
leading provider of remote advertising technology services to the classified
advertising industry, today announced its operating results for the year ended
December 31, 2002
For the twelve months ended December 31, 2002, AdStar's revenues increased 8
percent to $2,241,000, compared with $2,081,000 in 2001. Gross profits for the
year declined 11 percent to $1,135,000, versus $1,275,000 in the previous year.
The Company reported a net loss of ($2,364,000), or ($0.29) per share, for the
year ended December 31, 2002, compared with a net loss of ($1,884,000), or
($0.30) per share in 2001. Per-share figures for 2002 were calculated on
8,193,132 weighted average shares outstanding, versus 6,373,037 weighted average
shares outstanding in the previous year.
ASP transactions increased 149% to approximately 214,000 in 2002, compared with
86,000 in 2001. Related gross billings generated from these transactions
increased 271% to approximately $27.1 million in 2002, versus $7.3 million in
2001. AdStar estimates that greater than $400 million in classified ads were
placed in newspapers using the Company's full suite of remote advertising
technology products and services during 2002.
"The modest 8% gain in total revenues during 2002 does not reflect the
impressive growth in sales derived from our ASP (Application Service Provider)
services," noted Jeffrey Baudo, Senior Vice President and Chief Operating
Officer of AdStar, Inc. "ASP revenues increased 220% and accounted for 41% of
total revenues last year. I am pleased to report that 30 metropolitan newspapers
are now using our ASP product. This compares with 14 newspapers on the ASP
program at the end of 2001."
"The rapid growth in ASP revenues was partly offset by a 3% decline in licensing
and software revenues, as a number of customers transitioned to the
transaction-based ASP model, and a 63% reduction in one-time customization and
other fees," continued Baudo. "While this moderated the gain in total revenues
for the year, we are confident that the high gross margins on transaction-based
ASP revenues will greatly benefit AdStar's long-term profitability."
"One of the most significant developments during 2002 involved our new strategic
relationship with Tribune Company," stated Leslie Bernhard, President and Chief
Executive Officer of the Company. "In March 2002, we entered into an agreement
with Tribune Company to provide Web-based recruitment ad sales technology to all
major market Tribune newspapers, including the Chicago Tribune, the Los Angeles
Times, Newsday and others, and to provide ad sales services to CareerBuilder, a
leading online recruitment portal owned by Tribune Company, Knight-Ridder, and
Gannett. In the third quarter of 2002, Tribune Company launched a
multimillion-dollar ad campaign promoting its new FleXads, which allow
professional advertisers and businesses to simultaneously compose, schedule, pay
and place help-wanted ads online and in affiliated newspapers. Tribune's
commitment to this program is illustrated by equity investments totaling $3.3
million into AdStar during the past twelve months, and we expect revenue from
FleXads to accelerate in the current year."
"We have spent much time and invested a great deal of money in the development
of Web-based products and services that allow newspapers and other publishers to
take full advantage of online technology to sell classified advertising. We have
also developed an application-programming interface (API) that expands our
market opportunity across all major verticals of classified advertising,
including real estate, automotive and recruitment, enabling third parties to
access the power of AdStar's technology infrastructure. Management believes that
2003 will be a year in which we begin reaping benefits from such investments in
the form of accelerating revenue growth and significant progress towards
profitability," concluded Bernhard.
About AdStar, Inc.
AdStar (Nasdaq: ADST, ADSTW), headquartered in Marina del Rey, Calif., is a
leading provider of remote advertising technology products and services to the
$20+ billion classified advertising industry. AdStar transforms publishers' Web
sites into full-service classified ad sales channels for their print and online
classified ad departments. Since 1986, AdStar has set the standard for remote ad
entry software by allowing advertisers to place ads electronically with many of
the largest newspapers in the United States. Today, AdStar's infrastructure,
through its private label model, powers classified ad sales for more than 50 of
the largest newspapers in the United States, the Newspaper Association of
America's BonafideClassifieds Web site (where ads can be placed in more than 120
newspapers), CareerBuilder, and a growing number of other online and print media
companies.
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.
For Further Information, Please Contact:
Jeffrey Baudo, COO at (310) 577-8255 or via email at jbaudo@adstar.com
Or
R. Jerry Falkner, CFA, RJ Falkner & Company, Inc. at (800) 377-9893
or via email at jerry@rjfalkner.com
(Financial Highlights Follow)
AdStar Announces Preliminary Annual Results for 2002 pg. 3
AdStar, Inc.
Balance Sheet
December 31,
2002
------------
Assets
Current assets:
Cash and cash equivalents $ 940,378
Restricted cash 174,918
Accounts receivable, net of allowance for doubtful
accounts of $49,672 155,159
Notes receivable from officers - current portion 7,179
Prepaid and other assets 143,884
----------
Total current assets 1,421,518
Notes receivable from officers, net of current portion 239,945
Property and equipment, net 2,548,969
Intangible, net 47,346
Other assets 31,413
----------
Total assets $4,289,191
==========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $1,126,425
Accrued expenses 555,816
Deferred revenue 113,571
Capital lease obligations - current portion 28,980
----------
Total current liabilities 1,824,792
Capital lease obligations, net of current portion 49,807
----------
Total liabilities 1,874,599
Stockholders' equity 2,414,592
----------
Total liabilities and stockholders' equity $4,289,191
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-- more --
AdStar Announces Preliminary Annual Results for 2002 Pg. 4
Statements of Operations
Year ended December 31,
--------------------------
2002 2001
----------- -----------
ASP, net $ 915,819 $ 286,501
Licensing and software 1,070,341 1,100,431
Customization and other 255,332 693,680
----------- -----------
Net revenues 2,241,492 2,080,612
Cost of revenues 1,106,502 805,964
----------- -----------
Gross profit 1,134,990 1,274,648
Selling and marketing expense 555,588 656,349
General and administrative expenses 1,859,286 1,881,957
Product development costs 627,040 639,503
Restructuring costs 322,604 --
----------- -----------
Loss from operations (2,230,068) (1,903,161)
Other Income 62,796 --
Interest income (expense), net 14,389 23,871
----------- -----------
Loss before taxes (2,152,883) (1,879,290)
Provision for income taxes (6,760) (5,208)
----------- -----------
Net loss $(2,159,643) $(1,884,498)
Deemed dividend on issuance of series B-1 preferred stock (204,000) --
----------- -----------
Net loss applicable to common stockholders $(2,363,643) $(1,884,498)
=========== ===========
Loss per share - basic and diluted $ (0.29) $ (0.30)
=========== ===========
Weighted average number of shares - basic and diluted 8,193,132 6,373,037
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