SOURCE: Avatar Systems, Inc.

May 23, 2007 11:03 ET

Avatar Systems, Inc. Reports First Quarter 2007 Results -- 95% Increase in Revenues

FRISCO, TX -- (MARKET WIRE) -- May 23, 2007 -- Avatar Systems, Inc. (OTCBB: AVSY) today announced first quarter ending March 31, 2007 results. Revenues for the first quarter 2007 were $966,248 compared to revenues of $495,589 for the comparable quarter of 2006 representing a 95% increase. All revenue components increased except Hardware sales which declined modestly, Software sales increased 87%, Maintenance 88% and Professional Services 184%. Net income for the 2007 quarter reflected a loss of $5,914 compared to a profit of $2,977 for the first quarter of 2006. The loss was due primarily to an increase in interest expense of $69,194 for the quarter because of the debt incurred by the Company to acquire Questa Software Systems, Inc. in August of 2006. Shares outstanding increased 2.2% due to shares issued related to acquiring Questa.

Chuck Shreve, President and Chief Executive Officer of Avatar Systems, Inc., commented, "Our performance continued strong beginning the 2007 year. Demand for our products remains robust and we reiterate our guidance for Avatar to produce earnings of $.08/share in 2007."

Avatar Systems' Headquarters are in Frisco, Texas, USA with branch offices in Midland and Tyler, TX. The Company provides ERP / Accounting Software and Computing Infrastructure Solutions for companies engaged in the petroleum exploration and production industry. Avatar has a growing customer base on its Petroware2000™, Integra Energy™ products for Microsoft Windows, Avatar400™ on the IBM AS400 platform, and subscribers utilizing its (SaaS) On-Demand ASP services. Avatar's products and services provide an excellent resource for critical information management requirements of the petroleum industry. Avatar also provides document imaging/document management systems, disaster recovery services and remote backup services for all vertical markets.

The information in this news release includes certain forward-looking statements that are based upon assumptions that in the future may prove not to have been accurate and are subject to significant risks and uncertainties, including statements to the future financial performance of the Company. Although the Company believes that the expectations reflected in its forward-looking statements are reasonable, it can give no assurance that such expectation or any of its forward-looking statements will prove to be correct. Factors that could cause results to differ include, but are not limited to, successful performance of internal plans, product development and acceptance, the impact of competitive services and pricing, or general economic risks and uncertainties.

                           Avatar Systems, Inc.
                         STATEMENTS OF OPERATIONS

                                                    Three months ended
                                                         March 31,
                                                     2007         2006
                                                ------------  ------------
Revenue:
Software                                        $    143,751  $     76,700
Maintenance                                          626,294       333,388
Professional services                                176,891        62,231
Hardware                                              19,312        23,270
                                                ------------  ------------
Total revenue                                        966,248       495,589

Cost of revenue:
Software                                              60,050        38,504
Maintenance                                          117,599        59,665
Professional services                                 55,926        18,668
Hardware                                              16,928        13,973
                                                ------------  ------------
Total cost of revenue                                250,503       130,810
                                                ------------  ------------

Gross profit                                         715,745       364,779

Operating expenses:
Sales and marketing                                  105,910        75,689
General and administrative                           310,539       139,086
Amortization                                         189,748        98,161
Depreciation                                          51,107        50,524
                                                ------------  ------------
Total operating expenses                             657,304       363,460
                                                ------------  ------------

Operating income                                      58,441         1,319

Other income (expense):
Investment income                                      4,232         5,615
Loss on sales of marketable securities                   (15)            -
Interest expense                                     (71,618)       (2,424)
                                                ------------  ------------
Total other income (expense)                         (67,401)        3,191
                                                ------------  ------------

Income (loss) before income taxes                     (8,960)        4,510

Deferred income tax expense (benefit)                 (3,046)        1,533
                                                ------------  ------------

NET INCOME (LOSS)                               $     (5,914) $      2,977

Other comprehensive income, net of tax
Unrealized gain on marketable securities                 524         8,114
Deferred income tax expense                              178         2,759
Other comprehensive income                               346         5,355
                                                ------------  ------------

Total comprehensive income (loss)               $     (5,568) $      8,332
                                                ============  ============

Net income (loss) per share:
Basic and diluted                               $          -  $          -
                                                ============  ============

Weighted average common shares outstanding:
Basic                                              9,038,152     8,838,152
                                                ============  ============
Diluted                                            9,038,152     8,838,152
                                                ============  ============

Contact Information

  • Investor Relations Contact:
    The Eversull Group, Inc.
    Jack Eversull
    972-991-1672
    972-991-7359 (fax)
    Email Contact