Adsouth Partners, Inc. Announces Fourth Quarter and Full-Year 2005 Financial Results.BOCA RATON Boca Raton (bō`kə rətōn`), city (1990 pop. 61,492), Palm Beach co., SE Fla., on the Atlantic; inc. 1925. Boca Raton is a popular resort and retirement community that experienced significant industrial development in the 1970s and 80s. , Fla. -- Adsouth Partners, Inc. (OTCBB OTCBB See OTC Bulletin Board (OTCBB). :ASPR ASPR Assistant Secretary for Preparedness and Response (US Department of Health and Human Services) ASPR Austrian Study Center for Peace and Conflict Resolution ASPR Armed Services Procurement Regulations (now DAR) ): --Full-Year 2005 consolidated revenue of $13.3 million exceeds $12 million guidance --Increases first quarter 2006 revenue guidance to be in excess of $5.8 million from previously issued $5.5 million --Genco Power Solutions subsidiary's total orders almost double since last update on March 1, 2006 Adsouth Partners, Inc. (OTCBB:ASPR), a vertically integrated direct response marketing company that generates revenues from the placement of advertising, the production of advertisements, creative advertising and public relations public relations, activities and policies used to create public interest in a person, idea, product, institution, or business establishment. By its nature, public relations is devoted to serving particular interests by presenting them to the public in the most consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" announced today financial results for the fourth quarter and full-year ended December December: see month. 31, 2005. All share information and per share amounts are presented as if the Company's 1-for-15 reverse stock split, which became effective on March 25, 2005, and was effective for all periods presented. The Company reported consolidated revenue for the fourth quarter of 2005 of $3.6 million, compared to $232,000 for the fourth quarter last year. Consolidated operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. for the fourth quarter of 2005 was $212,000, compared to a loss of $2.3 million for the same period in 2004. Net loss was $254,000 for the fourth quarter of 2005, compared to a loss of $2.3 million for the fourth quarter 2004. The net loss attributable to common stockholders for the fourth quarter of 2005 was $254,000, or $0.03 basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. loss per common share, compared to a net loss available to common stockholders of $2.2 million, or $0.38 basic and diluted loss per common share, for the same period in 2004. During 2005 the Company shipped products to two large national retailers on a pay on scan basis. The fourth quarter of 2005 does not include $947,000 of revenue from those retailers for the items such retailers did not sell to the end use consumers in which gross margins of approximately $300,000 would be realized. The Company believes it was important to establish a presence for our products in such markets and that the ultimate sell through by these retailers will help the Company achieve its long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. sales objectives. For the full-year 2005 consolidated revenue was $13.3 million, compared to $4.0 million for the 2004 fiscal year. Consolidated operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the full year of 2005 was $171,000, compared to an operating loss of $5.8 million for the same period in 2004. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the full year of 2004 included $4.5 million of non-cash stock-based compensation expense which resulted from the issuance to the Company's officers and other key employees of common stock pursuant to stock grants, and stock options that were granted to consultants. Net loss for the full year 2005 was $669,000, compared to a loss of $5.8 million in 2004. For 2005, non-cash stock based compensation expense was $264,000. The net loss for the full year 2005 includes $537,000 of loss on the early extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of the convertible notes that were issued in February February: see month. and May of 2005 and $193,000 of interest expense on the convertible notes that were extinguished ex·tin·guish tr.v. ex·tin·guished, ex·tin·guish·ing, ex·tin·guish·es 1. To put out (a fire, for example); quench. 2. To put an end to (hopes, for example); destroy. See Synonyms at abolish. 3. in June June: see month. 2005. The net loss attributable to common stockholders for the full-year 2005 was $2.0 million, or ($0.26) per share, basic and diluted, compared to a net loss of $5.8 million, or ($1.05) per share, basic and diluted, for the full-year 2004. In connection with a private placement completed on June 17, 2005, the fair value of the securities issued (including the preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. and warrants to purchase common stock) when compared to the net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). resulted in a beneficial conversion feature that approximated $1.34 million. For purposes of calculating per share amounts attributable to common stockholders, such beneficial conversion feature is considered a deemed dividend and is deducted de·duct v. de·duct·ed, de·duct·ing, de·ducts v.tr. 1. To take away (a quantity) from another; subtract. 2. To derive by deduction; deduce. v.intr. from the net loss for purposes of calculating basic and diluted loss per share for 2005. Excluding the non-recurring items related to the 2005 financings, the Company's pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma profitability for 2005 would have been $61,000. Recent Corporate Highlights --Established a new 66% majority-owned subsidiary majority-owned subsidiary A firm in which more than 50% of outstanding voting stock is owned by the parent company. , Genco Power Solutions which markets, sells, installs and services integrated power generator generator, in electricity, machine used to change mechanical energy into electrical energy. It operates on the principle of electromagnetic induction, discovered (1831) by Michael Faraday. systems to residential homeowners and commercial businesses throughout Florida Florida, state, United States Florida (flôr`ĭdə, flŏr`–), state in the extreme SE United States. A long, low peninsula between the Atlantic Ocean (E) and the Gulf of Mexico (W), Florida is bordered by Georgia and . As of March 20, 2006 Genco has entered into contracts for 42 orders for standby generators A standby generator is a back-up electrical system that operates automatically. Within seconds of a utility outage an automatic transfer switch senses the power loss, commands the generator to start and then transfers the electrical load to the generator. an increase of 19 orders since the Company's last update on March 1, 2006. Total orders as of March 20, 2006 are $915,000 versus approximately $500,000 on March 1, 2006. Genco finished its first installation and believes it can fully complete 3 to 5 installations during the first quarter 2006. Genco operates as an additional product category of Adsouth's Product Division. --Launched a new product line Mitsu Products, allowing Adsouth to enter a new fast growing consumer category, personal intimacy This article or section may contain original research or unverified claims. Please help Wikipedia by adding references. See the for details. This article has been tagged since September 2007. . The majority of Mitsu sales will come from a new distribution channel, Convenience Stores The following is a list of convenience stores organized by geographical location. Stores are grouped by the lowest heading that contains all locales in which the brands have significant presence. also known as C Stores, such as Loves, Travel Centers of America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. and 7-11, which has a total market potential of approximately 100,000 retail outlets retail outlet n → punto de venta retail outlet n → point m de vente retail outlet retail n → . The product line is scheduled to begin shipping in April 2006. --Secured retail placement in no less than four major U.S. retailers for StarMaker's first product Pearl pearl, gem pearl, hard, rounded secretion formed inside the shell of certain mollusks, used as a gem. It is secreted by the epithelial cells of the mantle, a curtain of tissue between the shell and body mass, and is deposited in successive layers around an Anti-Wrinkle Moisturizing Mist. The national launch of Pearl Anti-Wrinkle Moisturizing Mist is scheduled for approximately 15,000 retail locations throughout the country. Additional StarMaker products will be distributed domestically and internationally under Adsouth's DermaFresh brand. --Initiated four new internal Direct Response campaigns for Genco, Pearl Anti-Wrinkle Moisturizing, Hercules Hercules, in astronomy Hercules (hûr`kyəlēz'), in astronomy, northern constellation located between Lyra and Corona Borealis. It is traditionally depicted as the hero Hercules in a kneeling position. Hook and E-70 to drive brand awareness and sales. --Completed new advertising spots for Stacker 2 products and launched them nationally. --Hired a new VP of Product Sales John Cammarano, Adsouth's Chief Executive Officer commented, "With our financial and operational restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). behind us, Adsouth's new leadership team is clearly demonstrating the capability of executing the Company's business strategy and positioning Adsouth for sustainable growth and profitability related to its currently existing operations. Our focus is to continue to leverage our business model in order to build the brands of our existing products and advertising clients and drive sales growth. However, we are committed to entering new and exciting product categories, as we have recently accomplished in both power generator systems, through our new Genco subsidiary, and the fast growing personal intimacy category via our Mitsu product line. We believe these new opportunities will provide additional platforms of growth for the Company and not only increase our size, but also add an increased level of predictability to our business." Products Sector Adsouth sells a range of products, both through direct marketing operations and sales to retail stores. Some of the products are not related to the others and have different distribution channels. There is typically a period of several months from the time that Adsouth acquires the right to distribute a product until it generates revenue from that product. During this period, Adsouth is engaged in marketing activities and thus is incurring in·cur tr.v. in·curred, in·cur·ring, in·curs 1. To acquire or come into (something usually undesirable); sustain: incurred substantial losses during the stock market crash. 2. costs before it can generate any revenue from a product. Before Adsouth sells products to retail accounts, it may use its direct marketing capability to introduce the product to market. For the fourth quarter and full year of 2004, all product revenues were from sales of the DermaFresh line of products. During the fourth quarter of 2005 the product mix as a percentage of product revenue was 26% from Simon Cosmetics cosmetics, preparations externally applied to change or enhance the beauty of skin, hair, nails, lips, and eyes. The use of body paint for ornamental and religious purposes has been common among primitive peoples from prehistoric times (see body-marking). , 32% from e70 product line, 15% from the DermaFresh line, 13% from the Extreme Beam and the Cliplight product line, 5% from the Hercules Hook product, 8% from D-Shed and 1% from other products. For the full-year of 2005 the product mix as a percentage of product revenue was 43% from Simon Cosmetics, 26% from e70 product line, 18% from the DermaFresh line, 6% from the Extreme Beam and the Cliplight product line, 4% from the Hercules Hook product, 2% from D-Shed and 1% from other products. The products sector reported revenue of $1.7 million for the fourth quarter of 2005, compared to $191,000 for the fourth quarter of last year. The product sector's operating loss was $324,000 for the fourth quarter of 2005, compared to $732,000 for same period in 2004. The product sector's net loss was $352,000 for the fourth quarter of 2005, compared to $754,000 for the fourth quarter of last year. For the full-year of 2005 the product sector reported revenue of $5.6 million, compared to $1.1 million for the full-year of 2004. The product sector's operating loss for the full-year of 2005 was $88,000, compared to an operating loss of $1.5 million for the same period last year, which included $770,000 in expenses related to stock option grants for 2004 and $123,000 for 2005. The product sector's net loss for the full-year of 2005 was $669,000, compared to $1.5 million for the full-year of 2004. The product sector's net loss for the full-year of 2005 includes $358,000 of loss from the early extinguishment of convertible notes that were issued in February and May 2005 and $130,000 of interest expense on the convertible notes that were extinguished in June 2005. Excluding the non-recurring items related to the 2005 convertible note financings, the product sector's pro forma loss for 2005 would have been $181,000. Advertising Sector The advertising sector includes the placement of advertising in different media, the production of direct marketing commercials, and the planning and implementation of direct marketing programs for our clients. Both revenue and gross margins reflect services in addition to those of a typical advertising agency since the gross margin on advertising revenue is typically a percentage of the amount paid for the advertisement. The advertising sector reported revenue of $1.98 million for the fourth quarter of 2005, compared to $41,000 for the fourth quarter of last year. Advertising's operating income was $112,000 for the fourth quarter of 2005, compared to an operating loss of $1.5 million for the same period last year. Net income for the advertising sector was $98,000 for the fourth quarter of 2005, compared to a net loss of $1.5 million for the fourth quarter of last year. The advertising sector's revenue for the full-year of 2005 was $7.7 million, compared to $2.9 million for the full-year of last year. Operating income for the full-year of 2005 was $259,000, compared to an operating loss of $4.29 million for the full-year of last year, which included $3.7 million in expenses related to stock option grants for 2004 and $141,000 for 2005. Advertising was breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations for the full-year of 2005 compared to a net loss of $4.3 million for the same period in 2004. Advertising's 2005 results includes $179,000 of loss from the early extinguishment of convertible notes that were issued in February and May 2005 and $63,000 of interest expense on the convertible notes that were extinguished in June 2005. Excluding the non-recurring items related to the 2005 convertible note financings, the advertising sector's pro forma profitability for 2005 would have been $242,000. Balance Sheet At December 31, 2005, we had available working capital of approximately $1.8 million compared to a working capital deficiency A shortage or insufficiency. The amount by which federal Income Tax due exceeds the amount reported by the taxpayer on his or her return; also, the amount owed by a taxpayer who has not filed a return. of $916,000 at December 31, 2004. The following table details changes in components of working capital during 2005. As of December 31, 2005 2004 Change --------------------------------------------------------------------- Cash $1,429,000 $38,000 $1,391,000 Certificate of deposit (restricted) 103,000 100,000 3,000 Accounts receivable - net 967,000 36,000 931,000 Due from factor 154,000 - 154,000 Inventory 1,959,000 186,000 1,773,000 Prepaid media 289,000 - 289,000 Other current assets 234,000 34,000 200,000 Accounts payable (810,000) (475,000) (335,000) Accrued expenses (306,000) (481,000) 175,000 Deferred media revenue (1,029,000) - (1,029,000) Current debt (1,149,000) (354,000) (795,000) --------------------------------------------------------------------- Working capital (deficiency) $1,841,000 ($916,000) $2,757,000 --------------------------------------------------------------------- The most significant increases to working capital were inventory, cash and accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying . At December 31, 2005, $644,000 of inventory are the costs of products shipped to two large national retailers on which sales are made on a pay on scan basis, whereby in 2005 we did not recognize sales nor the cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold , until such retailers sold the items to consumers. The remaining inventory costs are related to inventory items on-hand for products including the DermaFresh line, e-70, Hercules Hook, D-Shed and other products which are actively marketed. During the last three months of 2004 product shipments were not significant and all but $36,000 of the invoices related to 2004 shipments had been collected as of December 31, 2004. During 2005 product shipments were $5,584,000, of which $1,663,000 was shipped in December 2005, a significant portion of which are included in outstanding receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed as of December 31, 2005. The terms that we have with the retailers for our product shipments range from 30 to 60 days from shipment. During January January: see month. 2006, approximately $551,000 of the December 31, 2005 receivables was sold to our factor. The increase in cash reflects $500,000 of proceeds from the second funding of a demand note made in December 2005 plus the net difference between deferred media revenue received from advertising customers in advance of media airing dates and prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. media costs paid to networks
in advance of the media airing dates.Current debt increased by $795,000. During 2005, we shipped products to two large national retailers on a pay on scan basis. In order to obtain working capital to fund the costs of shipping to these two retailers, on December 20, 2005, we borrowed $1,000,000 from a non-affiliated lender. The loan requires quarterly interest payments and principal payments in an amount equal to collections from the two pay on scan retailers. In addition, during 2005 we repaid a $250,000 promissory note promissory note, unconditional written promise to pay a certain sum of money at a definite time to bearer or to a specified person on his order. Promissory notes are generally used as evidence of debt. which was issued in July July: see month. 2004 and we executed three vehicle loans and two machinery and equipment loans of which the current portion is $38,000 as of December 31, 2005. As of December 31, 2005, the outstanding balance on our bank line-of-credit was $100,000. The bank line-of-credit expired ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. on July 8, 2005 and was renewed re·new v. re·newed, re·new·ing, re·news v.tr. 1. To make new or as if new again; restore: renewed the antique chair. 2. by the bank until July 8, 2006, and is fully collateralized with a $100,000 certificate of deposit held by the bank. In March 2006 we paid-off the balance on the bank line-of-credit and closed it. First Quarter 2006 Guidance and Outlook On February 9, 2006, Adsouth announced revenue for the first quarter 2006 will be in excess of $5.5 million compared to $1.7 million in the first quarter 2005. At this time Adsouth is raising its revenue guidance for the first quarter 2006 to be in excess of $5.8 million. Conference Call Reminder The conference call will take place at 11:00 a.m. Eastern, on Monday Monday: see week. , March 20, 2006. Anyone interested in participating should call 800-565-5442 if calling within the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. or 913-312-1298 if calling internationally approximately 5 to 10 minutes prior to 11:00 a.m. There will be a playback Playback could mean:
The call is also being webcast by ViaVid Broadcasting and can be accessed at AdSouth's website at http://www.adsouthpartners.com. The webcast can also be accessed at ViaVid's website at http://www.viavid.net. The webcast may be accessed through June 20, 2006 on either site. About Adsouth Partners, Inc. Adsouth Partners is a vertically integrated direct response marketing company that generates revenues from the placement of advertising, the production of advertisements, creative advertising and public relations consulting services. Since mid 2004, it has expanded its activities as it obtained the rights to products that it markets and sells to retail outlets. Adsouth Partners, through its product division DermaFresh, has previously announced shipments to several of the largest retailers in the country. A complete list is available on our website at http://www.adsouthinc.com and a preview To see ahead of time. Page layout and word processing programs often have a preview function that lets you see how all the pages will appear before they are printed. In the days of character-based interfaces, a preview was absolutely necessary to see how different fonts would look or how of the products offered is available at http://www.dermafresh.com. Information on our websites and any other websites do not constitute a part of this press release. Certain statements in this news release may contain forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. information within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. created by those rules. All statements, other than statements of fact, included in this release, including, without limitation, statements regarding potential future plans and objectives of the company, are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Events that may arise could prevent the implementation of any strategically significant plan(s) outlined above. The Company cautions that these forward-looking statements are further qualified by other factors including, but not limited to, those set forth in the Company's Form 10-KSB filing, its registration statements and other filings with the United States Securities and Exchange Commission (available at www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. ). The Company undertakes no obligation to publicly update or revise any statements in this release, whether as a result of new information, future events or otherwise.
Selected financial information of our operating segments is
presented in the following tables.
Advertising Products Total
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Three Months Ended December 31,
2005: (Unaudited) (Unaudited)
Revenues $1,975,000 $1,663,000 $3,638,000
Costs and expenses (excluding
non cash stock based
compensation expense and non-
recurring payments) (1,814,000) (1,968,000) (3,782,000)
---------------------------------------------------------------------
161,000 (305,000) (144,000)
Non cash stock based
compensation (49,000) (19,000) (68,000)
---------------------------------------------------------------------
Operating income (loss) 112,000 (324,000) (212,000)
Discount on receivables sold to
factor - (17,000) (17,000)
Interest expense on line of
credit and notes payable (2,000) (14,000) (16,000)
Other income (expense), net (12,000) 3,000 (9,000)
---------------------------------------------------------------------
Net income (loss) 98,000 ($352,000) ($254,000)
---------------------------------------------------------------------
Three Months Ended December 31,
2004: (Unaudited) (Unaudited) (Unaudited)
Revenues $41,000 $191,000 $232,000
Costs and expenses (excluding
non cash stock based
compensation expense) (1,352,000) (816,000) (2,168,000)
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(1,311,000) (625,000) (1,936,000)
Non cash stock based
compensation (215,000) (107,000) (322,000)
---------------------------------------------------------------------
Operating loss (1,526,000) (732,000) (2,258,000)
Discount on receivables sold to
factor - (15,000) (15,000)
Interest expense on line of
credit and notes payable - (7,000) (7,000)
Other income (expense), net (4,000) -- (4,000)
---------------------------------------------------------------------
Net loss ($1,530,000) ($754,000) ($2,284,000)
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Advertising Products Total
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Year Ended December 31, 2005:
Revenues $7,730,000 $5,584,000 $13,314,000
Costs and expenses (excluding
non cash stock based
compensation expense and non-
recurring payments) (7,230,000) (5,524,000) (12,754,000)
---------------------------------------------------------------------
500,000 60,000 560,000
Payments to settle arbitration
and litigation matters (100,000) (25,000) (125,000)
Non cash stock based
compensation (141,000) (123,000) (264,000)
---------------------------------------------------------------------
Operating income (loss) 259,000 (88,000) 171,000
Discount on receivables sold
to factor - (70,000) (70,000)
Interest expense on line of
credit and notes payable (6,000) (28,000) (34,000)
Other income (expense), net (11,000) 5,000 (6,000)
---------------------------------------------------------------------
242,000 (181,000) 61,000
Interest expense from on the
extinguished convertible
securities (63,000) (130,000) (193,000)
Loss on early debt
extinguishment ($179,000) (358,000) (537,000)
---------------------------------------------------------------------
Net loss - ($669,000) ($669,000)
---------------------------------------------------------------------
Year Ended December 31, 2004:
Revenues $2,925,000 $1,119,000 $4,044,000
Costs and expenses (excluding
non cash stock based
compensation expense) (3,495,000) (1,820,000) (5,315,000)
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(570,000) (701,000) (1,271,000)
Non cash stock based
compensation (3,718,000) (770,000) (4,488,000)
---------------------------------------------------------------------
Operating loss (4,288,000) (1,471,000) (5,759,000)
Discount on receivables sold
to factor - (15,000) (15,000)
Interest expense on line of
credit and notes payable - (23,000) (23,000)
Other income (expense), net (14,000) -- (14,000)
---------------------------------------------------------------------
Net loss ($4,302,000) ($1,509,000) ($5,811,000)
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