IDEX Online Research: Abazias: Still In Business... Barely

During the September quarter, Abazias, an online jewelry retailer, posted sales of just over $500,000, down about 16 percent from the prior year.  It lost $300,000.  The company does not disclose much information in its SEC filings, but management did note that for the nine months ended September 2005, it had an average monthly cash gross profit of $24,800 and average monthly cash expenses of $33,400, yielding an average monthly cash loss of about $8,600. 

Further, Abazias had non-cash expenses of $65,450 for the first nine months of the year; which added to its financial woes. 

Abazias' management also reported that it expects to continue to run a monthly cash loss at about the same level for the next 12 months.  The company’s majority stockholder advances money to Abazias on an as-needed basis, but he is under no legal obligation to make further advances. 

In mid-November, management put out a press release that bubbled with enthusiasm.  Management predicted that fourth quarter sales would hit $1 million and profits would be up based on the company’s new gross margin mix.  It did not explain the “new gross margin mix,” nor did it explain how profits “would be up”, given that the company has not posted a profit since 2002. 

Quoting from Abazias’ press release:  “In addition, there are several promising initiatives in the works that if successfully concluded in the fourth quarter, would significantly enhance Abazias' stature as a premier leader in the online diamond and jewelry market. ‘Our goal is to create enough momentum to make people sit up and notice Abazias the way they do Blue Nile, and it is extremely attainable,’ [Oscar] Rodriguez, [CEO of Abazias] states.

“Activities for 2005 include investor relations through professional associations including SmallCapVoice.com, and investor relations with road show luncheons in key markets through Friedland Capital. Additionally, Abazias continues to promote the company through consumer public relations and strategic marketing alliances including promotional giveaways on national television game shows like, The Price is Right.

“Abazias.com showcases over 70,000 diamonds, valued at over $350 million on its site at www.abazias.com. Most of Abazias.com diamonds are GIA, AGS or EGL certified. Abazias.com offers the "Couples Diamond®" which is required to meet even higher standards for cut, clarity and dimensions. Abazias.com is also a full-service jeweler offering a large selection of settings for stones purchased.”