AdStar Announces Operating Results for 2004

MARINA DEL REY, Calif., March 31 /PRNewswire-FirstCall/ -- AdStar, Inc. (Nasdaq: ADST - News), a leading provider of e-commerce transaction software and ...

MARINA DEL REY, Calif., March 31 /PRNewswire-FirstCall/ -- AdStar, Inc. (Nasdaq: ADST - News), a leading provider of e-commerce transaction software and services for the advertising and publishing industries, today reported its operating results for the fourth quarter and year ended December 31, 2004. For the year 2004, AdStar reported a 74 percent increase in net revenues to $4.9 million, compared with net revenues of $2.8 million in 2003. The increase was primarily comprised of an increase of $1.2 million, or 109 percent, in licensing and software revenues, and an increase of $702,000, or 254 percent, in customization and other revenues. The increase in licensing and software revenues was primarily due to the inclusion of a full year's revenues from the EdgCapture and EdgFlow products that were acquired in October 2003.

The company also reported an increase of 15 percent in ASP net revenues to $1.69 million for the year ended December 31, 2004, compared with 2003 ASP net revenues of $1.47 million. The increase reflects growth in business from existing customers and the addition of two new ASP customers. Gross profits for the year increased 305 percent to $2.65 million, versus $654,000 in 2003, with gross profit margin expanding to 54 percent of revenues, compared with 23 percent in 2003. For the year ended December 31, 2004, including charges related to beneficial interest and amortization of financing fees on a convertible note, the company reported a net loss of $3.6 million, or $0.26 per share, compared with a net loss of $2.8 million, or $0.31 per share, in 2003.

"In 2004 we focused our e-commerce development efforts to support the newspaper industry's growing interest in 'reverse publishing' -- wherein online ads are upsold to print publications and print ads are upsold to online -- as an effective means to generate incremental revenue," stated Leslie Bernhard, president and chief executive officer of AdStar, Inc. "We also positioned our e-commerce platform, which is comprised of our complete technology infrastructure, as a 'turn-key' solution for publishers seeking to integrate the many and varied e-commerce opportunities available to the industry.

"We enhanced a growing number of publishers' systems with our XML Gateway product and established significant partnerships that have already started to create new revenue opportunities with both current and potential customers. Our ability to bundle value-added services along with our end-to-end ad transaction and e-commerce solutions, is generating interest and enthusiasm from publishers across the country, reflecting a growing recognition of the potential of the Internet as a competitive tool and a new revenue source for newspapers. We will continue to expand the products and services we offer our customers by building on our proprietary software processes, marketing relationships and unique position within the industry."

During 2004, AdStar advanced customization efforts for The Atlanta Journal-Constitution, and completed integration and customization projects for the Los Angeles Times and The Washington Post. The company also signed marketing and distribution agreements with several third-party web application providers, including CityXpress, which provides auction tools and 'click-and- buy' options for online advertisers.

"The AJC project, in which AdStar is to power classified Web order entry for the newspaper's four online vertical classified advertising products (recruitment, real estate, automotive and merchandise), has generated considerable interest from other Cox-owned newspapers and establishes a model for the successful integration of print and online ad strategies," added Bernhard. "We are confident that our expanding association with the country's largest newspapers publishers, as well as our unique third-party partnerships, will continue to provide us opportunities to successfully compete in the marketplace.

"We entered 2005 with growing momentum, as evidenced by our recent announcement of one of the largest contracts in our company's history. Media News Group, America's seventh-largest newspaper company, has selected AdStar's technology as the e-commerce platform for all 50 of its daily newspapers and is moving forward to implement its new online business initiative in a very timely manner. We believe that 2005 will be the year that other multi-property newspaper publishers recognize the contributions that e-commerce can bring to their top and bottom lines, and this bodes very well for AdStar. We are optimistic that our company will become cash flow positive and achieve profitability during the course of 2005 as we begin to realize the tremendous potential of our proprietary technology," Bernhard concluded.

For the year, general and administrative expenses increased to $2.05 million from $1.34 million in 2003, a net increase of 52 percent. Product maintenance and development expenses increased 9 percent to $1.36 million (vs. $1.24 million), while selling and marketing expenses rose 72 percent to $1.3 million (vs. $750,000). AdStar also incurred expenses of $1.2 million in connection with the abandonment of four proposed acquisitions and related international expansion plans, and the company expensed costs related to three smaller acquisition targets that failed to meet AdStar's due diligence requirements and/or rejected acquisition offers.

As of December 31, 2004, AdStar's cash and cash equivalents approximated $1.1 million, compared with $2.1 million at the end of December 2003.

About AdStar, Inc.

Forward-Looking Statements

AdStar Company Contact:
Jeff Baudo, 310-577-8255, jbaudo@adstar.com
AdStar Media Contact:
Kevin Wilson, 513-885-5520, kwilson@kevinwilsonpr.com

Source: Yahoo News (press release) - USA