EX-99.1 2 v037017_ex99-1.txt EXHBIT 99.1 AVP, Inc. Announces 2005 Full Year Results LOS ANGELES, March 3 /PRNewswire-FirstCall/ -- AVP, Inc. (OTC Bulletin Board: AVPI) today announced full year 2005 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. 2005 Full Year Highlights: * Total revenue increased 27% to $15.6 million, compared to 2004 total revenue of $12.3 million. * Net loss excluding stock compensation and merger related expenses decreased by 28% to $(2.1) million. * Sponsorship revenue was $12.9 million, an increase of 30% from same period last year. * Local revenue increased to $1.2 million, a 104% increase from the same period prior year. * Began implementing strategic alliances with local event promotion companies to extend the AVP brand and fan base. * Increased fan base by 48%, according to Scarborough Sports Marketing. * Added multiple new national sponsors, including Herbalife, Nature Valley and Nautica. * Expanded number of 2005 Tour events to 14 from 12 in 2004; 2005 prize money totaled $3 million, an increase of nearly 80% over 2004. * On-site event exposure, as measured by SMRI, increased to 1.12 million people in 2005 from 808,000 in 2004. * Strong additions to AVP's executive management team and board of directors. "By all accounts, 2005 was a terrific year of growth for AVP, and the Company continues to progress in capitalizing on the popularity and commercial potential of beach volleyball," said Leonard Armato, AVP's Chief Executive Officer and Tour Commissioner. "During the year, we added two new tour events in Cincinnati and Boulder, which brought the total number of tour events to 14 for the 2005 season. The addition of these new tour stops coupled with an increase in sponsorship revenue resulted in total revenue of $15.6 million, a 27% increase over 2004. Sponsors continue to find AVP's unique integrated marketing platform extremely appealing. For the year, we added several exciting new national sponsors including Herbalife, Nature Valley and Nautica. In addition we renewed existing agreements through 2006 and subsequent years with important AVP supporters such as Gatorade, Xbox and McDonald's. "While on-site event exposure improved significantly during 2005, we are also extremely pleased with AVP's increased exposure on both cable and network television. During the year, cable and network TV exposure including FOX Sports Net, OLN and NBC Sports totaled more than 100 hours, more than double the total television hours in 2004. Our television platform continued to reach more viewers, with total gross rating points on cable and network television increasing 58% and 41%, respectively. We expect these trends to continue into the upcoming season as evidenced by the recently announced agreement with the FOX Broadcasting Company to air two live event finals on the 2006 AVP Tour." Mr. Armato continued, "AVP is poised for continued success with an experienced management team and guidance from a strong board of directors that was significantly enhanced during the year. With an exceptional background in entertainment marketing and sales, Andy Goldman joined AVP as our Chief Revenue Officer and assumed responsibilities for leading and expanding AVP's sales efforts nationwide. Moreover, we are also quite pleased with the appointments of new board members Roger Werner, co-founder of ESPN, and Jack Kemp, a former cabinet member and nominee for Vice President of the U.S." 2005 Full Year Results For the year ended December 31, 2005, total revenue was $15.6 million, compared to $12.3 million in 2004, a 27% increase. Total revenue per event increased to $1.1 million in 2005, compared to $1.0 million per event in 2004. Sponsorship revenue from the period increased 30% during the year to $12.9 million. AVP recognizes sponsorship revenue as Tour events are held. The Company held fourteen events in 2005, compared to twelve events in the same period last year. Local revenue for the year increased 104% to $1.2 million, due primarily to two additional events held during 2005, along with increased revenue from on-site tour event suites and corporate hospitality. During 2005, local revenue per event also increased 75% over the prior year. Event costs, recognized on an event-by-event basis, increased to $11.5 million for 2005, compared with $9.1 million for 2004. The increase is a result of two additional events held in 2005. Average event cost increased slightly during 2005 to $820,000 from $760,000 in 2004, primarily due to additional costs associated with the larger Tour event stadium introduced in 2005. Operating expenses of $13.0 million for 2005 included a $5.6 million charge to consulting expenses related to the warrants granted in connection with the February 2005 private placement and merger transaction, as well as approximately $1.3 million in merger-related legal costs, SEC reporting costs and consulting fees related to the merger, costs of the related financing and resale registration of the Company's securities, which became effective on November 3, 2005. Excluding such warrant consulting expense, merger-related costs and fees and financial registration costs and fees, net loss for the year ended December 31, 2005 would have been approximately $(2.1) million compared to $(2.9) million for the same period in 2004, a decrease of 28%. The Company's net loss increased to $(9.0) million for 2005, from $(2.9) million for 2004. Loss per share was $(1.03) for 2005, compared to $(0.97) for 2004. Regarding AVP's outlook for 2006, Mr. Armato said, "As the new season approaches, AVP is aggressively engaged in brand building and revenue generating activities to capitalize on the buzz and momentum garnered from the record 2005 season. AVP has experienced strong growth over the past several seasons, and we look for these trends to continue in 2006. Looking ahead, we remain focused on increasing our sponsor revenue, expanding our local promoter partnerships nationwide, and taking advantage of additional revenue generating opportunities as we increase AVP's media exposure. Our strategic alliances with top local promotion companies allows the AVP Tour to have a strong presence in new markets without the standard upfront capital resources, as well as gaining year-round, aggressive marketing and outreach for each event." About the AVP Pro Beach Volleyball Tour, Inc. AVP Pro Beach Volleyball Tour, Inc. is a leading lifestyle sports entertainment company focused on the production, marketing and distribution of professional beach volleyball events worldwide. AVP operates the industry's most prominent national touring series, the AVP Pro Beach Volleyball Tour, which was organized in 1983. Featuring more than 200 of the top American men and women competitors in the sport, AVP staged 14 events throughout the United States in 2005 and will stage 16 events in during the 2006 season. 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. Contact: Amy Cozamanis General Information and Investor Inquiries (310) 854-8314 acozamanis@financialrelationsboard.com Financial Tables to Follow AVP PRO BEACH VOLLEYBALL TOUR, INC. F/K/A ASSOCIATION OF VOLLEYBALL PROFESSIONALS, INC. BALANCE SHEET December 31, 2005 ASSETS CURRENT ASSETS Cash and cash equivalents $ 1,143,345 Accounts receivable, net of allowance for doubtful accounts of $49,232 484,770 Prepaid expenses 158,054 Current portion of investment in sales-type lease 145,768 TOTAL CURRENT ASSETS 1,931,937 PROPERTY AND EQUIPMENT, net 288,409 OTHER ASSETS Investment in sales-type lease 416,551 Other assets 38,641 TOTAL OTHER ASSETS 455,192 TOTAL ASSETS $ 2,675,538 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Notes payable $ 600,071 Accounts payable 711,303 Accrued expenses 1,576,435 Accrued interest 125,989 Deferred revenue 116,000 TOTAL CURRENT LIABILITIES 3,129,798 OTHER LIABILITIES Long-term deferred revenue 150,000 TOTAL LIABILITIES 3,279,798 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, 94,488 shares issued and outstanding 94 Common stock, $.001 par value, 80,000,000 shares authorized, 11,669,931 shares issued and outstanding 11,670 Additional paid-in capital 32,183,810 Accumulated deficit (32,799,834) TOTAL STOCKHOLDERS' DEFICIENCY (604,260) TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 2,675,538 AVP PRO BEACH VOLLEYBALL TOUR, INC. F/K/A ASSOCIATION OF VOLLEYBALL PROFESSIONALS, INC. STATEMENTS OF OPERATIONS Year Ended December 31, 2005 2004 REVENUE Sponsorships $ 12,918,471 $ 9,918,117 Other 2,662,811 2,390,888 TOTAL REVENUE 15,581,282 12,309,005 EVENT COSTS 11,512,511 9,125,829 Gross Profit 4,068,771 3,183,176 OPERATING EXPENSES Marketing 2,447,802 2,435,124 Administrative 4,769,687 3,442,479 Impairment loss for fixed assets 119,277 -- Stock compensation expense 5,640,132 -- TOTAL OPERATING EXPENSES 12,976,898 5,877,603 OPERATING LOSS (8,908,127) (2,694,427) OTHER INCOME (EXPENSE) Interest expense (167,859) (245,870) Interest income 112,030 67,185 TOTAL OTHER INCOME (EXPENSE) (55,829) (178,685) LOSS BEFORE INCOME TAXES (8,963,956) (2,873,112) INCOME TAXES -- -- NET LOSS $ (8,963,956) $ (2,873,112) Basic and diluted loss per share $ (1.03) $ (0.97) Weighted average common shares outstanding 8,681,388 2,973,861 AVP PRO BEACH VOLLEYBALL TOUR, INC. F/K/A ASSOCIATION OF VOLLEYBALL PROFESSIONALS, INC. STATEMENTS OF CASH FLOWS Year Ended December 31, 2005 2004 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(8,963,956) $(2,873,112) Adjustments to reconcile net loss to net cash flows from operating activities: Depreciation and amortization of property and equipment 164,148 57,561 Loss on impairment of property and equipment 119,277 -- Interest income on investment in sales-type lease (39,596) (67,185) Amortization of deferred commissions 253,339 294,904 Other amortization 8,043 6,033 Amortization of deferred costs -- 1,352,100 Allowance for doubtful accounts 39,232 10,000 Compensation from issuance of stock options and warrants 5,640,132 -- Decrease (increase) in operating assets: Accounts receivables 125,135 (169,442) Investment in and due from joint venture -- 291,084 Prepaid expenses (131,448) (26,606) Other assets (3,946) (1,305) Increase (decrease) in operating liabilities: Accounts payable 396,504 (625,052) Accrued expenses 582,133 211,950 Accrued officer compensation (43,208) (167,625) Accrued interest (7,308) 245,871 Deferred revenue (284,050) 275,050 NET CASH FLOWS FROM OPERATING ACTIVITIES (2,145,569) (1,185,774) CASH FLOWS FROM INVESTING ACTIVITIES Investment in property and equipment (370,131) (228,416) Investment in sales-type lease 105,600 158,400 NET CASH FLOWS FROM INVESTING ACTIVITIES (264,531) (70,016) AVP PRO BEACH VOLLEYBALL TOUR, INC. F/K/A ASSOCIATION OF VOLLEYBALL PROFESSIONALS, INC. STATEMENTS OF CASH FLOWS (Continued) Year Ended December 31, 2005 2004 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from sale of capital stock $ 5,000,061 $ -- Offering costs (753,038) -- Proceeds from borrowing -- 2,000,000 Payment of registration penalty for common stock 7,822 -- Debt repayments (1,333,333) (183,333) NET CASH FLOWS FROM FINANCING ACTIVITIES 2,921,512 1,816,667 NET INCREASE IN CASH AND CASH EQUIVALENTS 511,412 560,877 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 631,933 71,056 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,143,345 $ 631,933 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for: Interest $ 86,159 $ 48,939 Income taxes $ 800 $ -- 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 into common stock $ 2,290,348 $ -- Conversion of AEG note payable into common stock $ 1,183,333 $ --