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IParty Corp. Reports Third Quarter Sales Increase Of 3% - Comp Stores Up 1.4%

Accordingly, EBITDA should be used in addition to and in conjunction with results presented in accordance with GAAP and should not be considered as an alternative to net income, operating income, or any other operating performance measure prescribed by GAAP, nor should these measures be relied upon to the exclusion of GAAP financial measures. EBITDA reflects additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures, provides a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure.

       
 
For the three months ended For the nine months ended
RECONCILIATION OF NON-GAAP MEASURES Sep 25, 2010 Sep 26, 2009 Sep 25, 2010 Sep 26, 2009
 
Net income (loss) as reported under GAAP $ (1,945,873 ) $ (1,396,982 ) $ (2,663,523 ) $ (2,443,385 )
 
plus, Interest expense, net 70,326 125,724 208,034 390,759
plus, Depreciation and amortization 446,307 495,986 1,322,568 1,571,641
plus, Income taxes   -     -     -     -  
 
EBITDA, non-GAAP $ (1,429,240 ) $ (775,272 ) $ (1,132,921 ) $ (480,985 )

Safe harbor statement under the Private Securities Litigation Reform Act of 1995

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You can identify these statements by the fact that they use words such as "anticipate," "believe," "estimate," "expect," "intend," "project," "plan," "outlook," and other words and terms of similar meaning. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from the potential results discussed in the forward-looking statements. Among the factors that could cause actual results and outcomes to differ materially from those contained in such forward-looking statements are the following: changes in consumer confidence and consumer spending patterns, particularly those impacting the New England region and Florida, which may result from, among other factors, rising or sustained high levels of unemployment, access to consumer credit, mortgage foreclosures, credit market turmoil, declines in the stock market, general feelings and expectations about the overall economy, and unseasonable weather; the successful implementation of our growth and marketing strategies; our ability to access our existing credit line or to obtain additional financing, if required, on acceptable terms and conditions; rising commodity prices, especially oil and gas prices; our relationships with our third party suppliers; the failure of our inventory management system and our point of sale system; competition from other party supply stores and stores that merchandise and market party supplies, including big discount retailers, dollar store chains, and temporary Halloween merchandisers; the availability of retail store space on reasonable lease terms; and compliance with evolving federal securities, accounting, and stock exchange rules and regulations applicable to publicly-traded companies listed on the NYSE Amex. For a more detailed discussion of risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see Item 1A, "Risk Factors" of iParty's most recently filed Annual Report on Form 10-K for the fiscal year ended December 26, 2009 and our other periodic reports filed with the SEC. iParty is providing this information as of this date, and does not undertake to update the information included in this press release, whether as a result of new information, future events or otherwise.

iPARTY CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
       
For the three months ended For the nine months ended
Sep 25, 2010 Sep 26, 2009 Sep 25, 2010 Sep 26, 2009
Revenues $ 16,898,251 $ 16,404,046 $ 51,799,462 $ 50,541,462
Operating costs:
Cost of products sold and occupancy costs 10,676,032 10,282,326 32,114,729 31,356,342
Marketing and sales 6,371,234 5,810,227 16,894,562 16,231,004
General and administrative   1,726,532     1,582,751     5,245,660     5,006,742  
 
Operating income (loss) (1,875,547 ) (1,271,258 ) (2,455,489 ) (2,052,626 )
 
Interest expense, net   (70,326 )   (125,724 )   (208,034 )   (390,759 )
 
Net income (loss)

$

(1,945,873

)

$

(1,396,982

)

$

(2,663,523

)

$

(2,443,385

)
 
Income (loss) per share:
Basic and diluted $ (0.08 ) $ (0.06 ) $ (0.12 ) $ (0.11 )
 
Weighted-average shares outstanding:
Basic and diluted   23,267,507     22,731,667     23,081,165     22,731,667  

iPARTY CORP.
CONSOLIDATED BALANCE SHEETS
   
Sep 25, 2010 Dec 26, 2009
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 72,950 $ 61,050
Restricted cash 577,185 1,056,525
Accounts receivable 930,171 688,506
Inventories, net 20,509,587 13,048,104
Prepaid expenses and other assets 381,591 174,752
Deferred income tax asset - current   70,997     70,997  
Total current assets 22,542,481 15,099,934
Property and equipment, net 3,060,266 2,892,835
Intangible assets, net 1,102,504 1,606,585
Other assets 294,645 349,378
Deferred income tax asset   343,690     343,690  
Total assets $ 27,343,586   $ 20,292,422  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 11,480,751 $ 3,885,062
Accrued expenses 2,586,045 2,649,468
Current portion of capital lease obligations 9,228 9,228
Current note payable - 600,000
Borrowings under line of credit   5,129,464     2,526,982  
Total current liabilities 19,205,488 9,670,740
 
Long-term liabilities:
Capital lease obligations, net of current portion 6,920 13,841
Other liabilities   1,511,331     1,529,257  
Total long-term liabilities 1,518,251 1,543,098
 
Commitments and contingencies
 
Convertible preferred stock 13,043,321 13,589,491
Common stock 23,268 22,799
Additional paid-in capital 53,061,546 52,311,059
Accumulated deficit   (59,508,288 )   (56,844,765 )
Total stockholders' equity   6,619,847     9,078,584  
 
Total liabilities and stockholders' equity $ 27,343,586   $ 20,292,422  




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