SOURCE: CoActive Marketing Group, Inc.

August 14, 2007 16:07 ET

CoActive Marketing Group, Inc. Reports First Quarter Results Ended June 30, 2007

NEW YORK, NY--(Marketwire - August 14, 2007) - CoActive Marketing Group, Inc. (NASDAQ: CMKG), a full-service marketing, sales promotion and interactive services company, reported financial results for its first quarter ended June 30, 2007.

Operating Results - First Quarter ended June 30, 2007

Sales:

For the three months ended June 30, 2007, the Company reported sales of $20 million, compared to sales of $27 million for the three months ended June 30, 2006, a decrease of $7 million.

Operating Revenue:

The Company believes that "operating revenue" is a key performance indicator. Operating revenue is defined as sales, less reimbursable program costs and expenses and outside production costs and other direct program expenses. Operating revenue is the net amount derived from sales to customers which the Company believes is available to fund its compensation and general and administrative expenses, debt service and capital expenditures. For the three months ended June 30, 2007, operating revenue amounted to $7.8 million, compared to $9 million in the three months ended June 30, 2006.

Operating Results:

The Company reported a net loss and fully diluted loss per share of $246,000 and $.04 per share, respectively, for the three months ended June 30, 2007. This compares to a net income of $756,000 and fully diluted net earnings per share of $.11 for the three months ended June 30, 2006.

Balance Sheet:

At June 30, 2007, the Company's working capital deficit was $3.5 million, compared to a working capital deficit of $3.3 million at June 30, 2006. During the first quarter, the Company repaid all bank loan obligations. As a result of the loan pay-off, the Company is seeking to arrange a new banking facility and is in discussions with several lending institutions for this purpose.

Outlook - Fiscal Year 2008

Charlie Tarzian, CoActive's President and Chief Executive Officer, commented, "As we have described in the past our goal is to act as a strategic marketing partner to all our clients by taking our strength in events, experiential, promotions and interactive and integrating those services through customer data capture, analytics and segmentation. To that end, we have been reshaping our talent and business mix adding strategic and digital talent, winning integrated marketing work with existing and new clients and exiting the business of one-off promotional work. Our shift in focus has been underway for about six months and showed in the Q1 results as compared to the prior year's first fiscal quarter in several ways. The decline in operating revenue was adversely affected by the elimination of one-off non-recurring project work while benefiting, but to a lesser extent, from increased solutions related recurring operating revenue from both existing and new clients. Compensation as a percentage of operating revenue remained high reflecting the addition of new talent and capabilities in order to implement our business strategy. However, despite the shift in client mix, the addition of senior talent and the incurrence of an anticipated loss, we achieved 15% sequential quarter to quarter growth in operating revenue from $6,800,000 in fourth quarter of 2007 to $7,814,000 in the first quarter of fiscal 2008."

Susan Murphy, Interim CFO, stated: "The first quarter saw significant change in the finance function as well. We successfully completed the conversion to a new IT finance system enabling better, more efficient information management and controls. With the elimination of the costs associated with pursuing one-off project work and better controls, SG&A spending was reduced. We paid off our remaining bank debt and currently are in discussions with several lenders to secure a line of credit. Finally, accounts receivables increased considerably in the first quarter due to a systems problem at one of our largest clients, resulting in a reduction in cash balances at the end of the quarter. After the close of the quarter, the problem was corrected and cash balances have improved significantly to approximately $6.5 million as of August 10th."

Mr. Tarzian concluded, "We have largely completed the purging of the project work. Our pipeline is strong, we are winning integrated marketing work from existing and new clients, and we expect to see year over year revenue growth and profitability for the remaining quarters of fiscal 2008."

This press release includes statements which constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this press release are not promises or guarantees and are subject to risks and uncertainties that could cause our actual results to differ materially from those anticipated. These statements are based on management's current expectations and assumptions and are naturally subject to uncertainty and changes in circumstances. We caution you not to place undue reliance upon any such forward-looking statements. Actual results may vary materially from those expressed or implied by the statements herein. Factors that could cause actual results to differ materially from the Company's expectations are set forth in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2007 under "Risk Factors," including but not limited to "Internal Control Deficiencies," "Unpredictable Revenue Patterns," "Customers," "Competition," "Need for Additional Funding," "Recent Loss" "Dependence on Key Personnel," and "Control by Executive Officers and Directors" and include the risk that projected business opportunities will fail to materialize or will be delayed. The Form 10-K may be obtained by accessing the database maintained by the Securities and Exchange Commission at http://www.sec.gov.


                    CoActive Marketing Group, Inc.
                Consolidated Statements of Operations
                            (unaudited)


                                                 Three Months Ended
                                           -------------------------------
                                            June 30, 2007    June 30, 2006
                                           --------------   --------------

Sales                                      $   20,408,000   $   27,021,000

Operating Income (Loss)                          (359,000)       1,536,000
Income (Loss) from Continuing Operations
 before Provision for Income Taxes               (366,000)       1,555,000
Provision (Benefit) for Income Taxes             (120,000)         622,000
                                           --------------   --------------

Income (Loss) from Continuing Operations         (246,000)         933,000
Discontinued Operations                                 -         (177,000)
                                           --------------   --------------
Net Income (Loss)                                (246,000)         756,000
                                           ==============   ==============
Basic Earnings (Loss) per Share:
  Income (Loss) from Continuing
   Operations                              $         (.04)  $          .14
  Discontinued Operations                               -             (.03)
                                           --------------   --------------
  Net Income (Loss)                        $         (.04)  $          .11
                                           ==============   ==============
Diluted Earnings (Loss) per Share:
  Income (Loss) from Continuing
   Operations                              $         (.04)  $          .13
  Discontinued Operations                               -             (.02)
                                           --------------   --------------
  Net Income (Loss)                        $         (.04)  $          .11
                                           ==============   ==============
Weighted Average Shares Outstanding:
  Basic                                         6,923,751        6,785,054
  Diluted                                       6,923,751        7,012,784



                           Consolidated Balance Sheet

                                            June 30, 2007    March 31, 2007
                                              (unaudited)      (audited)

Total Assets                               $    39,942,000  $    42,141,000
Current Debt                                             -        2,000,000
Total Liabilities                               30,050,000       32,085,000
Stockholders' Equity                             9,892,000       10,056,000



                           Operating Revenue Schedule

                                                  Three Months Ended
                                           --------------------------------
                                             June 30, 2007    June 30, 2006
                                           ---------------  ---------------

Sales                                      $    20,408,000  $    27,021,000
Reimbursable Program Costs and Outside
 Production Expenses                            12,594,000       18,070,000
                                           ---------------  ---------------
Operating Revenue                          $     7,814,000  $     9,014,000
                                           ===============  ===============

Contact Information

  • Contact:
    CoActive Marketing Group, Inc.
    Charles Tarzian
    President and Chief Executive Officer
    212-366-3407