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| ASVP.OB > SEC Filings for ASVP.OB > Form 10-Q on 13-Aug-2009 | All Recent SEC Filings |
13-Aug-2009
Quarterly Report
This Report contains statements that may contain forward-looking statements, concerning the Registrant's future operations and planned future acquisitions and other matters and the Registrant intends that such forward-looking statements be subject to the safe harbors for such statements. Any statements that involve discussions with respect to predictions, expectations, belief, plans, projections, objectives, assumptions or future events or performance (often, but not always, using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "estimates" or "intends", or stating that certain actions, events or results "may", could", "might", or "will" be taken to occur or be achieved) are not statements of historical fact and may be "forward looking statements". These forward-looking statements include statements relating to, among other things, the ability of the Registrant to continue as a going concern.
The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Such forward-looking statements are based on the beliefs and estimates of the Company's management as well as on assumptions made by and information currently available to the Company at the time such statements were made. Forward looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward looking statements, including, without limitation, the failure to obtain adequate financing on a timely basis. Actual results could differ materially from those projected in the forward- looking statements, either as a result of the matters set forth or incorporated in this Report generally and certain economic and business factors, some of which may be beyond the control of the Registrant. Additional risks and uncertainties that may affect forward-looking statements about the Company's business and prospects include adverse economic conditions, inadequate capital, unexpected costs, and other factors which could have an immediate and material adverse effect. The Company disclaims any obligation subsequently to revise any forward -looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
The following discussion and analysis of the results of operations and financial condition of the Company should be read in conjunction with the audited financial statements for the period ended December 31, 2008 and the related notes, contained in the Company's Annual Report on Form 10-K and in conjunction with the unaudited financial statements and notes thereto appearing elsewhere in this Form 10-Q.
Three Months Ended June 30, 2009 and 2008
Revenue. Revenue for the three months ended June 30, 2009 ("Q2 2009") was $7,356,376 as compared to $ 2,762,547 for the three month period ended June 30, 2008 ("Q2 2008"). The increase in revenue in Q2 2009 was primarily due to the acquisition of iPrint Technologies, LLC, ("iPrint") which occurred on October 31, 2008. Revenues from the sale of toner cartridges increased by $4,068,319 for three months ended June 30, 2009 compared to the same period in 2008 due to the revenue associated with the acquisition of iPrint. Revenues from service increased by $525,510 for the three months ended June 30, 2009 compared to the same period in 2008 primarily due to increased service contract revenue.
Gross Profit. Gross profit for Q2 2009 increased to $2,233,817 from $1,062,965 in Q2 2008. The gross profit margin in Q2 2009 was 30.4% compared
Salaries and Wages. Salaries and wages expenses were $ 872,044 for Q2 2009 compared to $682,724 in Q2 2008. The Q2 2009 increase was due to the increase in employees due to the iPrint acquisition.
Professional Fees and Services. Professional fees and services expenses were $494,652 in Q2 2009 compared to $146,244 in Q2 2008. This increase was primarily due to $ 358,771 in warrant compensation to certain directors of the company for personally guaranteeing Standby Letter's of Credit to secure vendor terms.
Sales and Marketing. Sales and marketing expenses were $610,748 for Q2 2009 compared to $ 286,986 in Q2 2008. The increase in Q2 2009 was primarily due to the additional sales personnel hired through the acquisition of iPrint, increased commissions paid out due to higher revenues and an increase in Independent Sales Partners (ISP's) in 2009 from 2008. The iPrint acquisition brought on seventeen ISP's and since then, the Company has increased that amount to thirty-eight ISP's through an aggressive recruiting strategy.
General and Administrative. General and administrative expenses were $500,250 in Q2 2009 as compared to $ 407,270 in Q2 2008. General and Administrative expenses increased due to the overhead associated with the operations of iPrint.
Amortization Expense. Amortization expense was $181,310 in Q2 2009 as compared to $154,229 in Q2 2008. The increase was due to the acquisition of assets from iPrint in October 2008 of $58,101 offset by a reduction in amortization from the Tonertype customer list of $37,564 which was due to the purchase price adjustment in December 2008.
Other (Expense) Income. During the three month period ended June 30, 2009, there was an increase of $165,751 in interest expense as compared to three month period ended June 30, 2008 as a result of the restructuring of the Brody Enterprises note, the issuance of notes in connection with the iPrint acquisition in 2008 and the issuance of notes in a private offering. There was an increase in income related to the change in fair value of warrant liabilities of $36,656 for Q2 2009 versus Q2 2008. The Company had a $250,000 gain in Q2 2009 on the fair value of convertible debt which was exchanged into the Company's Preferred D Series offering compared to an expense of $375,000 during Q2 2008.
Net Loss from operations. The net loss from operations for the three months ended June 30, 2009 was $425,187 compared to a net loss of $614,488 for the three months ended June 30, 2008. The decrease in the net loss of $ 189,301 for Q2 2009 was primarily related to the effect of the iPrint acquisition.
Net Loss. The net loss for the three months ended June 30, 2009 was $568,452 compared to a net loss of $ 1,254,809 for the three months ended June 30, 2009. The decrease in the net loss over the prior year was primarily related to the increased gross profit from the acquisition of iPrint along with the implementation of cost cutting measures and improved operational efficiencies. The reduction in the net loss has reduced the amount of outside
Net Loss per Share. The net loss per share in Q2 2009 was $0.01 compared to a net loss of $ 0.02 in Q2 2008. The decrease in the net loss per share was primarily due to the acquisition of iPrint and an increased number of shares of common stock outstanding which occurred during the last six months of 2008 and in 2009.
EBITDA. Earnings before interest, taxes, depreciation and amortization ("EBITDA") for Q2 2009 was $87,984 compared to a negative EBITDA of $803,893 for Q2 2008. The $891,877 improvement in EBITDA was primarily the result of the iPrint acquisition, the implementation of cost cutting measures and improved operational efficiencies. An increase in other income related to the change in fair value of convertible debt of $ 625,000 for Q2 2009 versus Q2 2008 also impacted this number positively.
Adjusted EBITDA. Adjusted EBITDA, which represents net income before interest, taxes, depreciation, amortization and other non-cash related expenditures, for Q2 2009 was $270,913 compared to a negative Adjusted EBITDA of $338,693 for Q2 2008. This increase of $609,606 was primarily the result of the iPrint acquisition, the implementation of cost cutting measures and improved operational efficiencies.
Six Months Ended June 30, 2009 and 2008
Revenue. Revenue for the six months ended June 30, 2009 ("YTD 2009") was $13,732,491 as compared to $5,452,226 for the six month period ended June 30, 2008 ("YTD 2008"). The increase in revenue in YTD 2009 was primarily due to the acquisition of iPrint Technologies, LLC, ("iPrint") which occurred on October 31, 2008. Revenues from the sale of toner cartridges increased by $7,178,655 for six months ended June 30, 2009 compared to the same period in 2008 due to the revenue associated with the acquisition of iPrint. Revenues from service increased by $1,101,610 for the six months ended June 30, 2009 compared to the same period in 2008 primarily due to increased service contract revenue.
Gross Profit. Gross profit for YTD 2009 increased to $4,215,222 from $1,958,054 in YTD 2008. The gross profit margin in YTD 2009 was 30.7% compared to a gross profit margin for YTD 2008 of 35.9%. The Company's gross margins decreased due to the lower margins associated with sales to customers acquired from iPrint which have a high concentration of OEM cartridge sales.
Salaries and Wages. Salaries and wages expenses were $ 1,749,613 for YTD 2009 compared to $ 1,356,660 in YTD 2008. The increase was due to the additional wages resulting from the iPrint acquisition of $284,230 and $55,254 in bonuses paid out to certain operations managers.
Professional Fees and Services. Professional fees and services expenses were $783,309 in YTD 2009 compared to $731,126 in YTD 2008. This increase was primarily due to compensation of $365,576 for the issuance of warrants to certain directors of the Company offset by a reduction in stock related compensation of $265,311 paid to our former investment banker.
Sales and Marketing. Sales and marketing expenses were $1,100,500 for YTD 2009 compared to $ 480,207 in YTD 2008. The increase was primarily due to the additional sales personnel hired through the acquisition of iPrint, increased
General and Administrative. General and administrative expenses were $987,530 in YTD 2009 as compared to $742,511 in YTD 2008. General and Administrative expenses increased due to the overhead associated with the operations of iPrint.
Amortization Expense. Amortization expense was $353,491 in YTD 2009 as compared to $306,206 in YTD 2008. The increase was due to the acquisition of assets from iPrint in October 2008 of $114,702 offset by a reduction in amortization from the Tonertype customer list purchase price adjustment of $74,292 in December 2008.
Other (Expense) Income. During the six month period ended June 30, 2009, there was an increase of $360,710 in interest expense as compared to six month period ended June 30, 2008, as a result of the restructuring of the Brody Enterprises note, the issuance of notes in connection with the iPrint acquisition in 2008 and the issuance of notes in a private offering. There was an increase in income related to the change in fair value of warrant liabilities of $450,795 for YTD 2009 versus YTD 2008 due to the decrease in the Company's stock price that is used to value the warrants.
Net Loss from operations. The net loss from operations for the six months ended June 30, 2009, was $759,221 compared to a net loss of $1,658,656 for the six months ended June 30, 2008. The decrease in the net loss of $899,435 for YTD 2009 was primarily related to the effect of the iPrint acquisition.
Net Loss. The net loss for the six months ended June 30, 2009, was $846,066 compared to a net loss of $ 2,451,925 for the six months ended June 30, 2008. The decrease in the net loss over the prior year was primarily related to the increased gross profit from the acquisition of iPrint along with the implementation of cost cutting measures and improved operational efficiencies. The reduction in the net loss has reduced the amount of outside capital that the Company needs to raise to support its operations and existing debt service.
Net Loss per Share. The net loss per share for YTD 2009 was less than $0.01 compared to a net loss of $0.04 for YTD 2008. The decrease in the net loss per share was primarily due to the acquisition of iPrint and an increased number of shares of common stock outstanding which occurred during the last six months of 2008.
EBITDA. EBITDA for YTD 2009 was $391,921 compared to a negative EBITDA of $1,648,393 for YTD 2008. The $2,040,314 improvement in EBITDA was primarily the result of the iPrint acquisition, the implementation of cost cutting measures and improved operational efficiencies. An increase in other income related to the change in fair value of warrant liabilities of $ 450,795 and a $612,500 positive change in the fair value of convertible debt for YTD 2009 versus YTD 2008 also impacted this number positively.
Adjusted EBITDA. Adjusted EBITDA for YTD 2009 was $284,416 compared to a negative Adjusted EBITDA of $761,137 for YTD 2008. This increase of $1,045,553 was primarily the result of the iPrint acquisition, the implementation of cost cutting measures and improved operational efficiencies.
EBITDA and Adjusted EBITDA presented in this report are a supplemental measure of our performance that is not required by or presented in accordance with GAAP. These measures are not a measurement of our financial performance under GAAP and should not be considered as alternatives to net income, income from operations, or any other performance measures derived in accordance with GAAP or as an alternative to cash flow from operating, investing or financing activities as a measure of our liquidity.
EBITDA represents net income before interest, taxes, depreciation and amortization. Adjusted EBITDA represents net income before interest, taxes, depreciation, amortization and other non-cash related expenditures. We present EBITDA and Adjusted EBITDA because we consider them important supplemental measures of our performance and liquidity. We believe investors may also find these measures meaningful, given how our management makes use of them. The following is a discussion of our use of these measures.
We use EBITDA and Adjusted EBITDA to measure and compare the performance of our Company. We also use EBITDA and Adjusted EBITDA to measure performance for determining division-level compensation. We also use EBITDA and Adjusted EBITDA as a measurement to manage cash flow from our divisions to the corporate level and to determine the financial health of each division. We also use EBITDA and Adjusted EBITDA to evaluate potential acquisitions and to evaluate whether to incur capital expenditures.
EBITDA and Adjusted EBITDA have limitations as an analytical tool, and you should not consider them in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are as follows:
* They do not reflect our cash expenditures, or future requirements for capital expenditures and contractual commitments;
* They do not reflect changes in, or cash requirements for, our working capital needs;
* They do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments on our debt;
* Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements; and
* Other companies, including companies in our industry, may calculate these measures differently than we do, limiting their usefulness as comparative measures.
Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in business growth or to reduce our indebtedness. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA only as supplements.
We have presented EBITDA and Adjusted EBITDA for the three and six months ended June 30, 2009 and 2008 to reflect the exclusion of all stock related compensation and gain or loss recognized on the fair value of convertible debt
The following is a reconciliation of cash flows provided by operating activities to EBIT, EBITDA, and net loss:
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