AVP, Inc. Announces First Quarter 2005 Results

AVP, Inc. Announces First Quarter 2005 Results

LOS ANGELES, May 25 /PRNewswire-FirstCall/ -- AVP, Inc. (BULLETIN BOARD: AVPN) today announced first quarter consolidated results for AVP, Inc. and its wholly owned subsidiary AVP Pro Beach Volleyball Tour, Inc. ("AVP"), a lifestyle sports entertainment company focused on professional beach volleyball events.

For the first quarter 2005, total revenue increased 97% to $103,956 compared to $52,698 for the same period in the prior year. First quarter revenue does not include the Company's sponsorship or event-specific revenue as it is recognized as tour events are held. No tour events were held in the first quarter. The year over year revenue growth is primarily related to increased trademark licensing revenue as well as other non-event specific revenue.

Operating expense totaled $4.9 million for the first quarter of 2005 compared with $1.0 million for the first quarter of 2004. First quarter 2005 operating expense included a $3.5 million charge to consulting expense related to the warrants granted in connection with a $5.0 million private placement of AVP, Inc. stock and the merger transaction between AVP and AVP, Inc. (formerly Othnet, Inc.) completed in February 2005, along with other administrative costs associated with the merger transaction. Shortly after the merger, AVP, Inc. commenced trading on the OTC bulletin board under the symbol "AVPN.OB."

Net loss was $(4.9) million for the first quarter of 2005, compared to a net loss of $(1.0) million for the first quarter of 2004. Earnings per share for the first quarter was $(0.22) versus earnings per share of $(0.06) for the corresponding period in 2004.

"We are pleased with the upward trend in our revenue during the pre-season first quarter and look forward to building revenue momentum during the second and third quarters, which is the peak season for the sport of beach volleyball," said Leonard Armato, Chief Executive Officer of AVP, Inc. "Although we do not recognize sponsorship revenue until the tour season starts, which is typically after the first quarter, we signed several new and renewal contracts with major national sponsors including Nautica, Nature Valley, Xbox, Nair, Herbalife, Halls Fruit Breezers and JetBlue.

"The AVP Nissan Series tour launched on April 1, 2005 in Fort Lauderdale, Florida. Since then, three more successful events have generated record levels of prize money, and several national sponsors have joined our roster of blue chip supporters. Our management, players and fans are looking forward to a vigorous season as we continue to drive growth in attendance, ratings and sponsorships.

"We remain strategically focused on accelerating the growth of our national sponsorship revenue, while pursuing other revenue generating opportunities that leverage our presence in beach volleyball and the media to grow our AVP brand and sports/entertainment platform, which includes not only events, but programming, licensing, merchandising and international growth." Armato concluded.

About the AVP

AVP Pro Beach Volleyball Tour, Inc. ("AVP") is a leading lifestyle sports entertainment company focused on the production, marketing and distribution of professional beach volleyball events. AVP operates the industry's most prominent national touring series, the AVP Pro Beach Volleyball Tour, currently sponsored by Nissan and referred to as the AVP Nissan Series, which was organized in 1983. Featuring more than 150 of the top American men and women competitors in the sport, AVP will stage 14 events throughout the United States in 2005. All tournaments will be televised live (or same day) on either Fox Sports Net or NBC Sports. Professional beach volleyball is one of the most exciting and fastest growing sports in the United States today. 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.

AT THE COMPANY: AT FINANCIAL RELATIONS BOARD:
Courtney Leddy Amy Cozamanis
Director of Public Relations General Information and Investor Inquiries
(646) 283-2121 (310) 854-8314
cleddy@avp.comacozamanis@financialrelationsboard.com

AVP, Inc.
Balance Sheet
(Unaudited)

March 31,
2005

ASSETS
CURRENT ASSETS
Cash and cash equivalents $4,820,821
Accounts receivable, net of allowance
for doubtful accounts of $10,000 1,102,843
Prepaid expenses 554,082
Deferred commission-related party 190,004
TOTAL CURRENT ASSETS 6,667,750

PROPERTY AND EQUIPMENT, net 316,986

OTHER ASSETS
Investment in sales-type lease 604,078
Other assets 45,228
TOTAL OTHER ASSETS 649,306

TOTAL ASSETS $7,634,042

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $1,330,070
Accounts payable 479,177
Accrued expenses 1,215,861
Accrued interest 260,502
Deferred revenue 3,294,897
TOTAL CURRENT LIABILITIES 6,580,507

OTHER LIABILITIES
Long-term deferred revenue 225,000
Long-term debt - less current portion 683,334
TOTAL OTHER LIABILITIES 908,334

TOTAL LIABILITIES 7,488,841

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY

Series A convertible preferred stock,
$.001 par value, 2,000,000 shares authorized,
288,014 shares issued and outstanding 288

Series B convertible preferred stock,
$.001 par value, 2,000,000 shares authorized,
147,364 shares issued and outstanding 147

Common stock, $.0001 par value,
40,000,000 shares authorized,
22,514,742 shares issued and outstanding 22,515

Additional paid-in capital 13,717,431

ACCUMULATED DEFICIT (13,595,180)

TOTAL STOCKHOLDERS' EQUITY 145,201

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $7,634,042

AVP, Inc.
Statements of Operations
(Unaudited)

Three Months Ended March 31,
2005 2004

REVENUE
Sponsorships $-- $--
Other 103,956 52,698
TOTAL REVENUE 103,956 52,698

EVENT COSTS -- --
Gross Profit 103,956 52,698

OPERATING EXPENSES
Marketing 411,600 328,985
Administrative 4,518,384 677,653
TOTAL OPERATING EXPENSE 4,929,984 1,006,638

OPERATING LOSS (4,826,028) (953,940)

OTHER INCOME (EXPENSE)
Interest expense (70,558) (38,000)
Interest income 15,356 24,517
Joint venture loss -- --
TOTAL OTHER EXPENSE (55,202) (13,483)

LOSS BEFORE INCOME TAXES (4,881,230) (967,423)

INCOME TAXES -- --

NET LOSS $(4,881,230) $(967,423)

Basic and diluted loss per share $(0.22) $(0.06)

Weighted average common shares
outstanding 22,514,742 17,364,279

AVP, Inc.
Statement of Cash Flows
(Unaudited)

Three Months Ended March 31,
2005 2004

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss $(4,881,230) $(967,423)
Adjustments to reconcile net loss
to net cash flows from
operating activities:
Depreciation and amortization of
property and equipment 22,101 4,993
Other amortization 2,011 --
Amortization of deferred commissions 63,335 73,726
Consulting expense from issuance
of stock options 3,498,022 --
Decrease (increase) in operating assets:
Accounts receivables (453,706) (328,430)
Investment in and due from
joint venture -- 291,084
Prepaid expenses (527,476) (275,767)
Other assets (4,500) (5,028)
Increase (decrease) in operating
liabilities:
Accounts payable 164,381 (509,342)
Accrued expenses 251,555 (317,196)
Accrued officer compensation (43,208) 169,230
Accrued interest (56,127) 157,698
Deferred revenue 2,969,847 2,253,986

NET CASH FLOWS FROM
OPERATING ACTIVITIES 1,005,005 547,530

CASH FLOWS FROM INVESTING ACTIVITIES
Investment in property and equipment (137,384) (14,497)
Investment in sales-type lease 24,244 21,967

NET CASH FLOWS FROM
INVESTING ACTIVITIES (113,140) 7,470

Three Months Ended March 31,
2005 2004

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of capital stock 4,247,023 --
Debt repayments (950,000) --

NET CASH FLOWS FROM
FINANCING ACTIVITIES 3,297,023 --

NET INCREASE IN CASH 4,188,888 555,000

CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 631,933 71,056

CASH AND CASH EQUIVALENTS,
END OF PERIOD $4,820,821 $626,056

SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Cash paid during the period for:
Interest $48,939 --
Income taxes -- --

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 Series A
convertible preferred stock $3,657,600 --

Conversion of notes payable into
Series A convertible preferred stock $2,290,348 --

Source: AVP, Inc.

CONTACT: Courtney Leddy, Director of Public Relations of AVP, Inc.,
+1-646-283-2121, cleddy@avp.com; or General Information and Investor
Inquiries, Amy Cozamanis of Financial Relations Board, +1-310-854-8314,
acozamanis@financialrelationsboard.com, for AVP, Inc.

Web site: http://www.avp.com/

-------
Profile: intent