Business News

AdStar Reports Operating Results for 2007

Wednesday 02. April 2008 - AdStar, Inc. (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 year ended December 31, 2007

Net revenues for the year ended December 31, 2007 totaled $4,760,000, compared with net revenues of $5,114,000 in 2006. ASP revenues remained constant at $1,910,000 in 2007 as a result of the addition of seven new publications since 2006, offset by the loss of two publications during the same period and decreases in the volume of transactions from several customers. Fewer non-recurring projects undertaken during 2007 resulted in a decrease in customization revenues of $161,000, to $568,000 in 2007. Licensing and software revenues declined by $195,000, or 8 percent, to $2,282,000 in 2007. Gross profit of $2,693,000 represented a 56.6 percent gross margin on revenues in the year ended December 31, 2007, compared with a gross margin of 58.7% in 2006.

Prepaid ads processed during 2007 using AdStar’s ASP technology infrastructure decreased by nine percent to approximately 353,000 transactions. Total ads processed, including large contract accounts, decreased by seven percent to approximately 480,000 transactions in 2007.

AdStar reported a net loss applicable to common shareholders of $3,310,000, or $0.16 per share, in 2007, versus a net loss of $1,393,000, or $0.07 per share, in 2006. The loss in 2007 was attributed to the decrease in net revenues as well as an increase in operations costs of $1,678,000, of which $690,000 represented increased stock option expense. Increases in selling and marketing expenses, as well as product maintenance and development costs, were primarily due to the planning and development of AdStar’s new software applications related to mobile advertising.

EBITDA (a non-GAAP measure), or earnings before interest, taxes, depreciation and amortization; before stock option expense, totaled a proforma negative $2,008,000 in 2007, compared with a negative EBITDA of $435,000 in 2006. (See EBITDA table at end of this release for further non-GAAP information).

“The contraction in newspaper print advertising throughout the industry is having a significant impact on our core business,” stated Leslie Bernhard, president and chief executive officer of AdStar, Inc. “We will continue to support the newspaper industry with Web-based ad sales and payment processing services, while we direct our focus towards providing advertising services in new publishing channels. Our mobile advertising order entry dashboard development activities during the past year have allowed us to target new digital publishing opportunities, and we anticipate traction in this area during the months to come. We will continue to develop strategic partnerships and pursue business opportunities with content publishers, and we have launched a major initiative to advance sales and partnership opportunities in the wireless industry.”

As of December 31, 2007, AdStar’s cash and cash equivalents approximated $717,000, compared with $2.5 million as of December 31, 2006, a net decrease of $1,828,000.

Bernhard concluded, “We have significantly reduced expenses in recent months, reflecting the completion of our recent development activities, and this should allow our cash requirements to decline substantially going forward.”