ROCKLIN, Calif.--(Business Wire)--
Avasoft, Inc. (OTCBB:AVAF) purveyor of a patented, innovative
soft-serve ice cream system to the estimated $6 billion combined U.S.
and United Kingdom soft-serve marketplace, today issued the following
Special Letter to Shareholders:
Dear Shareholder:
February 13 marked Avasoft's one-year anniversary as a public
company, a timely occasion upon which to report that over the past
year, Avasoft has made great strides and today is positioned for
strong growth and profitability.
2007 in Review: Meeting Goals, Solid Progress
The April 11, 2007 Shareholder letter discussed Avasoft's enviable
market position, competitive advantages and its establishment of an
infrastructure with top quality ice cream and equipment production,
sales and distribution resources. The Company had just begun
commercial operations in January 2007, and in April was preparing its
initial marketing launch. That Letter described our goals for the
remainder of 2007, which today merit review and comment:
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-- 'Build Financial Strength, Sales and Cash Flow.' Revenues for the
nine months ended September 30, 2007 increased 183% over the
equivalent nine months period ended September 30, 2006. To
strengthen the Company's financial structure, in September 2007
Avasoft formed a strategic alliance with Schoep's Ice Cream Co.
in which Schoep's provides the Company with product
manufacturing, packaging, storage, distribution and certain
marketing activities - and then pays Avasoft what is comparable
to a net royalty based on every case of ice cream Schoep's sells.
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Outsourcing these functions to Schoep's capitalizes on its
tremendous economies of scale, and has dramatically reduced
Avasoft's operational and cash requirements. This enables a
streamlined Company the ability to focus on its core strengths in
marketing and key account sales. Schoep's has an 80-year track
record of ice cream industry excellence, and Avasoft benefits by
tapping into their 132 U.S. distributor relationships, their sub
distributors, and thousands of sales reps and account managers.
-- 'Execute Aggressive Marketing Strategy.' Avasoft in 2007 forged
relationships with leading regional distributors such as Jack and
Jill, and major food distributors and brokers including Sysco, US
Foods, Ben E. Keith, HT Hackney and others that increased its
market penetration. Total customer accounts grew to over 3,000 at
year end 2007, reflected preliminarily by Avasoft revenue growth
as those accounts' sales ramp up. In December, we reported early
progress on our national account initiative with a number of
various new fast foods, convenience store and other major account
relationships in development or testing.
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-- 'Reinforce Management Team.' Avasoft has added veteran ice cream
industry executive and entrepreneur Andy Downes as chief
operating officer. Andy Downes has over 15 years' experience
serving at senior executive and director level positions within
the United Kingdom ice cream industry. He was responsible for
successfully bringing to market the first soft ice cream
cartridge system in the United Kingdom. Mr. Downes has first-hand
experience in product and equipment development and
manufacturing, establishment of distribution networks, marketing
and negotiations at all levels.
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-- 'Raise Expansion Capital.' Avasoft in May 2007 announced the
completion of an oversubscribed $7.4 million in new capital
raised through an investment bank, more than half of which was
raised in 2007.
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-- 'Expand Avasoft Product Line.' Avasoft has added new ice cream
offerings including Mint Chocolate Chip and Chocolate Fudge
flavors as well as a new frozen yogurt line currently being
readied for launch. We also developed freezer and dispenser
equipment placement programs for high volume and national
accounts. These initiatives have received very positive responses
from the industry and our customers.
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-- 'Form Strategic Alliances.' In October 2007, Avasoft acquired Ezee
Whip Europe, Ltd. Based in England, Ezee Whip markets the same
unique soft serve ice cream system throughout the United Kingdom
as Avasoft does in North America. Ezee Whip provides operating
synergies and a platform for expansion in the U.K. and Europe.
Although the Schoep's alliance is covered under 'financial
strength' above, it too is strategic in nature through its
enhanced industry, geographic and competitive positioning.
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Outlook 2008: Profitability
Having fortified its infrastructure and refined its business
model, Avasoft has set the following goals for 2008:
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-- Achieve Profitability by Q3-08. We intend to accelerate the path
to profitability, driven by growing sales and our royalty model,
by the third quarter of 2008. Importantly, our top line revenue,
as reported prior to the Schoep's alliance, represents ice cream
sales before the cost of goods such as production, storage and
distribution are expensed. From Q4-07 and going forward into 2008
Avasoft ice cream revenues will primarily be high-margin
'royalty' sales already net of those costs. By closely managing
its fixed and other corporate expenses such as marketing, Avasoft
is well positioned for profitability.
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For example, under the old model Avasoft received revenues per
case of ice cream sold from which production; distribution and
other cost of goods were deducted to determine the gross margin.
Under the new model, however, Schoep's is responsible for all
cost of goods associated with the production and distribution of
our product. Avasoft simply receives a fixed royalty-like payment
per case of ice cream sold -- representing a 100 percent gross
profit margin. This shift in the business model significantly
reduces infrastructure and administrative costs and lowers
operational risk.
-- Double the Customer Account Base. Working closely with our
distributors, we will launch new marketing campaigns that
capitalize on our large food broker/distributor network.
Avasoft's goal is to more than double total customer accounts
from 3,000 to 6,500.
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Our best advertisement is the Avasoft System itself. As we gain
placement nationwide we receive an increasing number of inquiries
from retail, restaurant and food company managers - often
stemming from someone having been served their first Avasoft ice
cream cone at a sports, recreation or restaurant setting.
-- Raise Capital to Accelerate Growth. We plan to invest in new
marketing and publicity campaigns, product development, and the
roll out of our new freezer and dispenser equipment placement
programs for large national chain accounts which we will
ultimately outsource with lease programs through established food
service equipment leasing firms.
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-- Expand and Innovate. We will continue to introduce new products
that meet the growing demand of a dynamic marketplace. Our new
frozen yogurt line is being readied for full launch this spring.
A new low-sugar ice cream, which meets the most stringent
nutritional guidelines for schools, is in advanced testing.
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-- Build Management Team. Avasoft plans to name one or more new
members to its board of directors to add expertise in corporate
finance, industry sales, distribution or other strategic roles.
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-- Open Major National Accounts. With the Avasoft System's low cost
of entry, low maintenance and high product quality, we have
aggressively developed interest from a growing number of
prospective national and regional major accounts. These range
from fast food chains, convenience stores, theaters, theme parks,
hotel chains, sports venues, warehouse retail stores and more.
While they have longer sales cycles that often include pilot
market tests, several of these national accounts offer Avasoft
incremental sales potential equal to or greater than our entire
2007 ice cream sales.
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Profitability, growth, innovation - 2008 holds great promise as
Avasoft intends to capitalize on its strong foundation to increase
sales and earnings power. On behalf of everyone at Avasoft, we
appreciate your confidence and support.
Sincerely yours,
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Jim Wheeler
Chairman and Chief Executive Officer
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About Avasoft, Inc.
Headquartered in Rocklin, California, and through its wholly owned
Ezee Whip Europe, Ltd. subsidiary, Avasoft sells an innovative
soft-serve ice cream system into an estimated $6 billion combined U.S.
and U.K. soft-serve ice cream marketplace. This patented system, for
which it owns marketing rights in Europe and North America, has earned
widespread success in several European markets for the last five
years. Please visit Avasoft online at www.avasoft.com.
For more information
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information, please click on the following link:
http://www.b2i.us/irpass.asp?BzID=1493&to=ea&s=0
Forward Looking Statement
This news release includes forward-looking statements that are
made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. While these statements are made to
convey to the public the company's progress, business opportunities
and growth prospects, readers are cautioned that such forward-looking
statements represent management's opinion. Whereas management believes
such representations to be true and accurate based on information and
data available to the company at this time, actual results may differ
materially from those described. The company's operations and business
prospects are always subject to risk and uncertainties. Important
factors that may cause actual results to differ include without
limitation: the Company's limited operational experience; ability to
raise financing; market acceptance of the Company's ice cream
products; dependence on suppliers including Schoep's, and in turn,
their suppliers, distributors and providers of raw materials;
dependence on license partners; market prices of raw materials such as
milk, sugar, and other ingredients; continued enforceability of patent
rights; and competition. Many of these risk factors are set forth in
the company's periodic findings with the U.S. Securities and Exchange
Commission.
Avasoft, Inc.
Sheri Hydrick, Public Relations, 916-771-0900
sheri@avasoft.com
or
Investors:
Capital Market Relations ("CMR")
Chris Rosgen, Investor Relations, 949-481-9739
or
Capital Group Communications, Inc. ("CGC")
Richard Carpenter or George Carpenter, 415-332-7200
avasoft@capitalgc.com
www.capitalgc.com
Copyright Business Wire 2008
