Jill Kelly Productions Reports 11 Percent Profit Increase

NORTH HOLLYWOOD, Calif. — Publicly-traded adult company Jill Kelly Productions Holding, Inc. announced its financial results for the nine months ended Sept. 30 on Thursday, indicating an 11 percent increase in revenue to about $3.39 million and a 30 percent increase in gross profit to $1.89 million.

Total income from operations dropped from $640,486 to $58,110, though, primarily because of a $1 million across-the-board increase in operating expenses that the company attributes to expanded sales and marketing programs.

“The first nine months of 2004 set the tone for the Company’s bright prospects,” said Robert A. Friedland, chairman and CEO of Jill Kelly Productions. “Since the beginning of the year, we’ve taken steps to position the company for what we see to be a very exciting and rewarding future.”

Friedland said that company has been focusing primarily on increasing sales and ensuring future sustainable growth.

Over the past nine months, JKP has been involved in a flurry of mergers and distribution agreements, including signing New York-based Bizarre Video Unlimited to an exclusive licensing and distribution agreement, securing a Romanian television agreement with S.C. Folitexxx Video SRL, and inking a deal with Japanese distributors Max-A Co. and Japan Home Video Co.

JKP also relocated all of its operations and sales force to a new California warehouse.

“We’ve continuously broadened our product offerings and expanded to new markets, often through new revenue-sharing production agreements,” Friedland said. “For instance, our deals with Erotic Media, Bizarre and Gwen Media, and our new BLU and Collateral Damage XXX lines will expand our film library and are expected to increase our DVD and VHS sales.”

JKP, which maintains a variety of cable, satellite, video-on-demand and Internet operations, posted revenues of $3.9 million in 2003, but also reported a $9.2 million loss, according to SEC filings.

Stock prices for the Pink Sheet-listed company dropped from $1.41 in early June to 15 cents in mid-September before plateauing at about 50 cents and then steadily rising to 70 cents over the past several months. Total stockholder equity for the company is currently about $5.4 million.

“The impact of our efforts will be seen as time progresses,” said Friedland. “We look forward to reporting end-of-the-year results and future developments as Jill Kelly Productions Holding, Inc. progresses on its path toward growing revenues and earnings, and increasing shareholder value.”