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."