SOURCE: Joystar, Inc.

April 19, 2007 19:41 ET

Joystar, Inc. Reports 2006 Financial Results

ALISO VIEJO, CA -- (MARKET WIRE) -- April 19, 2007 -- Joystar, Inc. (OTCBB: JYSR), one of the nation's largest and fastest growing travel agency networks and leading seller of cruises, vacations, and group travel, today released the Company's financial results for 2006.

William M. Alverson, CEO of Joystar, commented, "We are pleased to report continued tremendous growth for the Company in 2006 in terms of the size of our travel network, gross travel bookings and revenue. Additionally, our cash increased substantially and we significantly reduced our operational loss."

Full Year 2006 Highlights:

--  Joystar's Block Group Cruise Space program grew to over 25,000 cabins
    across 12 major cruise lines.  Joystar travel agents and clients can take
    advantage of inventories, favorable pricing, availability and amenities
    that may not be available through other sales channels.
--  Joystar's gross bookings surpassed $65 million.  High-revenue margin
    cruises and vacation packages represent 90% of the Company's sales with a
    large portion of the growth coming from its group and incentive travel
    division.
--  Joystar signed a distribution agreement with Amadeus, a global leader
    in technology and distribution solutions for the travel and tourism
    industry.  The relationship provides Joystar's network of travel agency
    partners and clients with access to more than 95% of the world's scheduled
    airline seats; 56,700 hotel properties; 42 car rental companies and other
    provider groups including cruise, ferry, rail, insurance and tour
    operators.
--  Joystar listed as "Host with The Most" by James Shillinglaw, Editor-in-
    Chief of leading travel industry trade, Agent @ Home Magazine.
--  Joystar recognized as a Carnival Cruise Lines National Account,
    Celebrity and Royal Caribbean International Key Account; a Regent Seven
    Seas Cruises Top account; a Cunard Inner Circle Agency; a Princess I-Excel
    Gold Agency.  These preferred supplier relationships give Joystar access to
    top account commission levels and special promotions.
--  Joystar recognized for its sales performance and inducted into
    Norwegian Cruise Line's Captain's Club Agency program.  Benefits of the
    expanded relationship include top account commission levels and special
    promotions.
--  Joystar signed an agreement with Holland America Line offering the
    Company top account commission levels and special promotions.  Joystar's
    relationship with the cruise line continues under the banner of a Holland
    America Centurion Agency.
--  Joystar rewarded with an increase in commission levels and special
    promotions by Oceania Cruises. Joystar is one of Oceania's valued travel
    agency partners and is considered a top producer.
--  Joystar achieved exclusive Club 500 status with Funjet Vacations based
    on sales production through the Company's network of professional sellers
    of travel. Funjet Vacation is the flagship brand of the Mark Travel
    Corporation.
--  Joystar formed a strategic partnership with Bedsonline to promote the
    company's 20,000 plus hotel and accommodation types.  The program includes
    national account commission levels, automation and marketing initiatives.
--  Joystar attains Crystal Apple status, the highest level with Apple
    Vacations.
--  Joystar receives Star Award from Sandals for 2006 production levels.
--  Joystar recognized by Travel Impressions, a wholly owned subsidiary of
    American Express, as "Best of the Best" travel agency partner.
--  Joystar acknowledged as "Top 200" travel agencies by Classic
    Vacations, a subsidiary of Expedia, Inc.
--  Joystar recognized as a Premiere Agency Partner by The Globus family
    of brands.
    


The Company continued to invest heavily in 2006, focusing on both Marketing and Technology advances. To attract the industry's top producing travel sellers and to promote the Company's Enterprise program for travel agency owners with their own sales forces and small and mid-size host agencies, Joystar made several enhancements to its technology offerings and service capabilities, including the launch in December 2006 of VacationCompare.com, a consumer web site designed to match leisure travelers with agents in the Joystar network.

Gross Travel Bookings

Gross travel bookings for the year ended December 31, 2006 increased 316% to $65,594,211 compared to $15,750,481 for the year ended December 31, 2005. Gross travel bookings refers to the total dollar value, inclusive of all taxes and fees, of all travel services purchased by consumers. The term "gross travel bookings" is a "non-GAAP" financial measure, as such term is defined by the Securities and Exchange Commission, and may differ from non-GAAP financial measures used by other companies. The measure of "gross travel bookings" is in no way derived from the financial statements. Revenue recorded in the Company's financial statements represents a percentage of commissions or ticketing fees paid by travel suppliers on travel bookings, membership services revenue and override commissions from travel suppliers. The Company believes that the measure "gross travel bookings" is useful for investors to evaluate the Company's future ongoing performance because they enable a more meaningful comparison of the activity levels of the Company's travel agent network with its historical results from prior periods.

Revenue Recognition and Reserve

Our business continues to be dominated by complex leisure travel. Commission revenue for these types of bookings is paid to the company by travel suppliers, typically upon completion of the travel. Because the average time lag between booking travel and receiving the commission is approximately six months, we determined it prudent to recognize a reserve against revenues for the possibility of cancellations or other factors. Therefore, we recognized a reserve equal to 25% of the gross commissions generated for the year ended December 31, 2006. The company will be monitoring receivables and adjusting the reserve levels on a regular basis, as required.

Revenue

Revenues, including the reduction in commission revenue caused by our decision to recognize a reserve against gross travel bookings, increased 257% to $6,932,277 for the year ended December 31, 2006 compared to $1,942,526 for the year ended December 31, 2005.

The increase in both gross travel bookings and revenues are due to continued substantial growth and increased activity of our travel agent network.

The Company accounts for freestanding derivative financial instruments potentially settled in its own common stock under Emerging Issues Task Force ("EITF") Issue No. 00-19, "Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock." As the Company potentially does not have sufficient authorized shares available to settle its open stock-based contracts, the initial fair value of the applicable contracts (consisting primarily of non-employee stock warrants and rights to purchase common stock) (see Note 5) has been classified as "accrued liability related to warrants and stock purchase rights" on the accompanying balance sheet and measured subsequently at fair value (based on a Black-Scholes computation), with gains and losses included in the statement of operations. The accrued liability has a balance of $7,801,193 at December 31. 2006.

Net income was adversely affected by a non-cash charge associated with the Company's issuance of warrants in 2006. As the combined total of the Company's outstanding shares and common stock warrants exceeded the number of authorized shares, the Company was required to account for the warrants under Emerging Issues Task Force ("EITF") Issue No. 00-19, "Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock." The Company's 2006 operating loss decreased 36% to $2.5 million compared with an operating loss of $3.9 million in 2005. The net loss for the year, giving effect to the warrant liability of $7.8 million, was $10.3 million.

About Joystar, Inc.

Joystar is the one of the nation's largest and fastest-growing leisure travel agency networks and a leading seller of cruises and vacations. The Company sells complex travel products including cruises, vacation packages and group travel through and its growing virtual sales force of travel agents, branded, and private label travel websites.

"Forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995 may be included in this news release. These statements relate to future events or our future financial performance. These statements are only predictions and may differ materially from actual future events or results. Joystar, Inc. disclaims any intention or obligation to revise any forward-looking statements whether as a result of new information, future developments or otherwise. Please refer to the documents filed by Joystar, Inc. with the Securities and Exchange Commission, which identify important risk factors that could cause actual results to differ from those contained in forward-looking statements, including, but not limited to risks associated with our ability to (i) increase revenues, (ii) obtain profitability, and (iii) obtain additional financing, changes in general economic and business conditions (including in the online business and financial information industry), actions of our competitors, the extent to which we are able to develop new services and markets for our services, risks in connection with acquisitions, the time and expense involved in such development activities, the level of demand and market acceptance of our services and changes in our business strategies.

Additionally, forward-looking statements concerning the performance of the travel and leisure industry are based on current market conditions and risks, which may change as the result of certain regulatory, political or economic events, a shift in consumer travel preferences, as well as those risks and uncertainties described in the Company's filings with the Securities and Exchange Commission, which could cause actual events or results to differ materially from the events described in the forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements.

Contact Information

  • For Investor Information, contact:
    Michael Matsie
    Investor Relations
    (800) 561-4341
    mmatsie@joystar.com
    Joystar, Inc.