GWIN
Reports First Quarter Results
GWIN Inc. announced today its
results for the quarter ended Oct. 31, 2005.
The company is pleased to announce a substantial
improvement in operating results for the three
months ending Oct. 31, 2005, with revenues increasing
51%, to $1,776,759 compared with $1,161,457
for the three months ending Oct. 31, 2004. The
company's net loss also improved by 45% as it
declined to ($462,848) for the three months
ending Oct. 31, 2005, compared with ($841,663)
for the three months ending Oct. 31, 2004.
Also
of significant importance is the fact that deferred
revenues, as reported on the balance sheet,
increased to over $1.2 million by the end of
the quarter. This increase in deferred revenue
directly reflects the consistently higher level
of sales the company has achieved and maintained
over the past year and is a positive indicator
of higher reported revenues and profits for
the next quarter.
The
company's accounting methodology requires that
only a portion of the sales produced during
the quarter are recorded as revenues during
the quarter in which the services are sold.
That is, accounting methodology requires us
to recognize revenue over the life of the sales
contract. Since the football season continues
through January, when we write a $1,000 contract
for the football season on Oct. 1, we report
only one month of the sale as revenue ($250)
in quarter 1 (Aug-Oct). The balance of sale
($750) is reported as deferred revenue on the
balance sheet for quarter 1 and then is recorded
as revenue on the P&L statement for quarter
2. Note also that all of the expense, including
commissions, and handicapping fees associated
with the sale that created this deferred revenue
is recorded as expense in the quarter the sale
is made. In the $1,000 example above, approximately
$500 is recorded as an expense in Q1 while only
$250 is recorded as revenue. Therefore, in Q2,
the entire $750 in deferred revenue that is
then reported as revenue on the P&L will
drop straight through to the bottom line contributing
to operating profit.
Said
CEO Wayne Root, "We are very pleased to
report this significant growth in revenues and
improved operating results. As shown in this
filing, the growth of our core business has
been and continues to be strong. We have now
achieved 11 consecutive months of increased
sales on a month-to-month basis. Just as importantly,
our diversification efforts aimed at producing
additional revenue streams are proceeding well.
This is evidenced by last month's press release
regarding our joint venture with Players Network
to produce both video and on-demand television.
In addition, 'The King of Vegas' TV series from
which the company will receive a share of the
executive producer fees (which will bolster
Q2 revenues and profits) is now in production
and is scheduled to begin airing on Tuesday,
Jan. 17 at 10 p.m. on SPIKE TV. We are confident
that this series is destined to be a major success
and provide the company with a continued revenue
stream. We expect to have additional news to
report in the coming months regarding additional
media ventures. The increase in both reported
revenues and deferred revenues positions the
company for an outstanding Q2 and a record-breaking
fiscal year '06."
Said
COO Douglas Miller, "It is important for
the informed investor to understand that the
accounting methodology requires that only a
portion of the sales made during the quarter
is recorded as revenues during the quarter the
services are sold while essentially all costs
associated with generating those sales are recorded
as expense in the quarter they are generated.
Consequently, while essentially all of the costs
associated with generating the $1.2 million
in deferred revenue recorded on the balance
sheet have already been recorded as expenses
in prior quarters, the bulk will be captured
as increased revenue and operating profit for
quarter 2. This, combined with the strides we
have made in reducing operating expenses, especially
advertising and G&A expense, puts the company
in a strong position going into the heart of
the football and basketball seasons and the
balance of the fiscal year."
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