SOURCE: Seven Arts Pictures plc

Seven Arts Pictures plc

February 28, 2011 12:53 ET

Seven Arts Pictures plc Announces Results of Operations for the Fiscal Year Ended June 30, 2010

HOLLYWOOD, CA--(Marketwire - February 28, 2011) - Seven Arts Pictures plc (NASDAQ: SAPX) ("Seven Arts" or the "Company") announced today its results of operation for its fiscal year ended June 30, 2010. The Company reported revenue of $6,417,000, gross profit of $4,018,000, and profit before interest and taxes of $1,080,000.

These results compare to the results of operations for the fiscal year ended June 30, 2009, in which the Company reported revenues of $10,232,000, gross profits of $5,569,000 and profit before income and taxes of $1,444,000.

The Company reported net profits of $4,737,000 for the fiscal year ended June 30, 2009 which was a result of profit before interest and taxes plus other income of $5,602,000 from the cancellation of indebtedness realized in that period, offset by net interest expense of $2,308,000. Seven Arts is now reporting a net loss of $476,000 for the fiscal year ended June 30, 2010, which was a result of profit before interest and taxes plus other income of $150,000 from debt settlement offset by net interest expense of $1,706,000.

As of June 30, 2010, Seven Arts accrued, as a matter of caution, the full amount of the indebtedness claimed by the Arrowhead Target Fund of $1,000,000 plus accrued interest of approximately $790,000. Management believes, however, that Seven Arts is not liable for these amounts and will prevail in the litigation currently pending regarding this indebtedness. If Seven Arts prevails in certain proceedings in the current fiscal year ending June 30, 2011, management expects these amounts will be removed as a liability in the fiscal year with appropriate cancellation of indebtedness income.

In addition, in the fiscal year ended June 30, 2010, Seven Arts has written off prepayments and other receivables, principally the costs of its planned follow-on public offering of approximately $573,000 and interest due from the Seven Arts Employee Benefit Trust ("EBT") of approximately $179,000. Seven Arts currently expects to continue the process for its follow-on public offering of common stock in the current fiscal year. The total provisions as of June 30, 2010 for the disputed Arrowhead indebtedness, prepayments and EBT interest is approximately $2,542,000.

Peter Hoffman, Chief Executive Officer of Seven Arts, stated, "We are pleased to have achieved comparable gross profit and profit before interest and taxes for our fiscal year ended June 30, 2010. We do not believe the differences in net income reflect on Seven Arts' prospects. The independent film industry has experienced many challenges in the last fiscal year which led to changes in our expected revenue model. Seven Arts reduced production in this period as it completed new sources of financing. We currently believe that Seven Arts is poised for success in the current fiscal year and beyond. We are particularly optimistic regarding our new relationship with Fletcher Asset Management and look forward to joint production and distribution of films with Fletcher.

"Seven Arts has now also completed the transfer of its assets and liabilities to a wholly-owned US-based subsidiary, Seven Arts Entertainment Inc. ('SAE'), effective by January 27, 2011. Seven Arts currently intends to distribute shares of SAE common stock to the holders of Seven Arts' ordinary shares promptly upon approval by NASDAQ of a change in Seven Arts' listing to SAE, following the effectiveness of a resale registration statement to be filed by SAE for the unrestricted distribution of those shares. Trading in Seven Arts ordinary shares is expected to continue uninterrupted and no trading of SAE shares shall begin until both of these conditions are met. All SAE shares will remain restricted securities until satisfaction of both of these conditions."

Summary Financial Information:


                       Selected Financial Data
                 (in $ 000's, except per share data)


                 Fiscal Year    Fiscal Year    Fiscal Year    Fiscal Year
Summary Profit      Ended          Ended           Ended         Ended
and Loss Data   June 30, 2010   June 30, 2009  March 31, 2008 June 30, 2008
                -------------   ------------   -------------  ------------

Total Revenues  $       6,417   $     10,232   $       3,266  $      2,793

Cost of Sales   $      (2,399)  $     (4,663)  $      (4,088) $     (1,302)

Gross Profit    $       4,018   $      5,569   $        (822) $      1,491

Other operating
 expenses       $      (2,939)  $     (4,125)  $      (4,015) $       (711)

Profit before
 interest and
 taxes          $       1,080   $      1,444   $         780  $     (4,837)

Other Income    $         150   $      5,602   $           -  $          -

Net interest
 expense/income $      (1,706)  $     (2,308)  $        (206) $       (423)

Profit/(Loss)
 Before Taxes   $        (476)  $      4,737   $      (5,044) $        357

Provision for
 Taxes          $           0   $          0   $         486  $          0

Net Profit/
 (Loss)         $        (476)  $      4,737   $      (4,557) $        357

Weighted Average
 Ordinary Shares
 used in Earnings/
 (loss) per share
 calculation
Basic (in ,000's)       7,014          6,051           4,676         4,871
Diluted
 (in ,000's)            7,014          8,147           4,676         8,256

Earnings (loss)
 Per Share -
 Basic          $       (0.07)  $       0.78   $       (0.97) $       0.07
Earnings (loss)
 Per Share -
 Diluted        $       (0.07)  $       0.58   $       (0.97) $       0.04



Balance Sheet Data

Total Debt      $      18,301   $     17,828   $     261,656  $    248,716

Total Assets    $      28,625   $     27,387   $     302,388  $    400,853

Shareholders'
 Equity         $       2,200   $      1,717   $         410  $        832

About Seven Arts:

Seven Arts Pictures PLC was founded in 2002 as an independent motion picture production and distribution company engaged in the development, acquisition, financing, production, and licensing of theatrical motion pictures for exhibition in domestic (i.e., the United States and Canada) and foreign theatrical markets, and for subsequent worldwide release in other forms of media, including home video and pay and free television.

Cautionary Information Regarding Forward-Looking Statements:

Forward-looking statements contained in this press release are made under the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from the anticipated.

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