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| a21 Reports Third Quarter Financial Results Jacksonville, FL—November 29, 2005—a21, Inc. ("a21") (OTCBB: ATWOE), a leading online digital content marketplace for creative professionals, today announced financial results for the third quarter ended September 30, 2005. Revenues for the third quarter of 2005 were $2,064,000 compared to $2,077,000 for the same period in 2004. Net loss for the third quarter of 2005 was $1,343,000 or $0.03 per share, versus a net loss of $1,046,000, or $0.03 per share, for the same period in 2004. Earnings per share for the third quarter of 2005 was calculated on the basis of 41,874,607 weighted average number of shares outstanding, compared to 38,115,732 weighted average number of shares outstanding for the same period in 2004. The third quarter 2005 results include non-cash charges of $531,000 primarily for compensation, depreciation and amortization expenses. Revenues were $6,703,000 in the nine months ended September 30, 2005 compared to $5,402,000 in the nine months ended September 30, 2004. Net loss was $3,310,000, or $0.08 per share, in the nine months ended September 30, 2005 as compared to a net loss of $1,997,000, or $0.06 per share, in the nine months ended September 30, 2004. Earnings per share for the nine months ended September 30, 2005 was calculated on the basis of 41,752,336 weighted average number of shares outstanding, compared to 34,000,866 weighted average number of shares outstanding for the same period in 2004. The results for the nine months ended September 30, 2005 include non-cash charges of $1,880,000 primarily for compensation, depreciation and amortization expenses. The company's Chairman and CEO, Albert H. Pleus, said, "While our revenues were even with the same quarter last year, we have invested more in our business in the third quarter, are pleased with the progress we are making and believe encouraging results will follow. Feedback from our customers, contributors, employees and other partners has been overwhelmingly positive. In addition, we believe our recent capital raises totaling over $5mm and the acquisition of Ingram Publishing Limited will enable us to further implement our business plan." Thomas V. Butta, Vice Chairman and President of a21 and CEO of operating subsidiary SuperStock added, "We believe we have made gains on a number of fronts: sales from direct customers, the number of channel partners carrying our products, the number of images available for sale, the number of image contributors, the further rollout of our new Royalty-Free (RF) brand, Purestock, the successful launch of an RF store on SuperStock.com, continued improvement in customer features on our web site, and in structuring our organization to have our most qualified people in critical positions." About a21 a21 (http://www.a21group.com) is a leading digital content marketplace for the professional creative community. Through SuperStock (http://www.superstock.com) and Ingram Publishing (www.ingrampublishing.com; www.ingramstock.com), its most recent acquisition, a21 delivers high quality images and exceptional customer service. a21 and its companies provide a whole new level of image access to photographers, artists, photography agencies and other customers, offering a valuable and viable choice in the stock image industry. a21, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
($ in thousands)
September December
30, 31,
2005 2004
--------------------------------------------------- --------- --------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,157 $ 717
Accounts receivable, net 1,286 1,302
Inventory 96 ---
Prepaid expenses and other current assets 219 200
Income tax receivable --- 108
--------- --------
Total current assets 2,758 2,327
--------- --------
Land and building, net 7,256 7,329
Photo collection, net 1,839 2,198
Property and equipment, net 411 547
Goodwill 1,049 1,049
Contracts with photographers, net 980 1,133
Long-term accounts receivable 508 160
Long-term notes receivable 15 18
Intangible assets, net 74 92
Other long-term assets 101 101
Restricted cash 669 600
--------- --------
Total assets $15,660 $15,554
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
(CAPITAL DEFICIT)
CURRENT LIABILITIES
Current portion of notes payable $ 1,078 $ ---
Accounts payable 901 872
Accrued wages and payroll taxes 116 147
Accrued interest, current 269 187
Accrued purchase price payable 306 201
Current portion of promissory note payable 33 32
Royalties payable 1,083 979
--------- --------
Total current liabilities 3,786 2,418
--------- --------
LONG-TERM LIABILITIES
Promissory note payable, long-term portion 33 67
Other long-term liabilities 62 61
Loan payable 7,480 7,458
Convertible subordinated notes payable, net --- 520
Senior secured notes payable, net 2,291 ---
Unsecured notes payable to others, net --- 1,040
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Total liabilities 13,652 11,564
a21, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS (Cont')
(Unaudited)
($ in thousands)
September December
30, 31,
2005 2004
------------------------------------------------- ---------- ---------
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST 2,800 2,800
---------- ---------
STOCKHOLDERS' EQUITY (CAPITAL DEFICIT)
Preferred stock; $.001 par value; 100,000
shares authorized; no shares issued
and outstanding --- ---
Common stock; $.001 par value; 100,000,000
shares authorized; 53,006,012 and 41,816,012
shares issued at September 30, 2005 and
December 31, 2004, respectively, and
49,326,237 and 38,136,237 shares outstanding
at September 30, 2005 and December 31, 2004,
respectively 53 42
Treasury stock (at cost, 3,679,775 shares) --- ---
Additional paid-in capital 11,990 10,599
Deferred compensation (189) ---
Accumulated deficit (12,721) (9,411)
Accumulated comprehensive income/(loss) 75 (40)
---------- ---------
Total stockholders' equity (capital deficit) (792) 1,190
---------- ---------
Total liabilities and stockholders' equity
(capital deficit) $15,660 $15,554
========== =========
a21, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
($ in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
REVENUE $ 2,064 $ 2,077 $ 6,703 $ 5,402
COST OF REVENUE 669 610 2,097 1,597
----------- ----------- ----------- -----------
GROSS PROFIT 1,395 1,467 4,606 3,805
----------- ----------- ----------- -----------
EXPENSES
Selling, general and
administrative 1,997 1,907 5,517 4,305
Depreciation and
amortization 363 251 1,075 675
----------- ----------- ----------- -----------
TOTAL OPERATING
EXPENSES 2,360 2,158 6,592 4,980
----------- ----------- ----------- -----------
OPERATING LOSS (965) (691) (1,986) (1,175)
----------- ----------- ----------- -----------
Interest expense, net (316) (522) (1,045) (1,041)
Other income/(expense), net (62) (113) (279) (61)
----------- ----------- ----------- -----------
NET LOSS BEFORE
INCOME TAX BENEFIT (1,343) (1,326) (3,310) (2,277)
----------- ----------- ----------- -----------
Income tax benefit --- 280 --- 280
----------- ----------- ----------- -----------
NET LOSS (1,343) (1,046) (3,310) (1,997)
----------- ----------- ----------- -----------
COMPREHENSIVE LOSS
Foreign currency translation
adjustment 19 4 115 22
----------- ----------- ----------- -----------
TOTAL COMPREHENSIVE
LOSS $(1,324) $(1,042) $(3,195) $(1,975)
----------- ----------- ----------- -----------
NET LOSS PER SHARE,
BASIC AND DILUTED $ (0.03) $ (0.03) $ (0.08) $ (0.06)
----------- ----------- ----------- -----------
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING,
BASIC AND DILUTED 41,874,607 38,115,732 41,752,336 34,000,866
----------- ----------- ----------- -----------
a21, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
($ in thousands)
Nine Months Ended
September 30,
2005 2004
---------------------------------------------------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(3,310) $(1,997)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 1,075 675
Loss from disposal of property and equipment 16 ---
Amortization of finance costs 41 ---
Compensation from the prior issuance of variable
options 28 161
Compensation from the issuance of options and
warrants 35 48
Compensation from the issuance of restricted stock 397 21
Amortization of debt discount related to unsecured
notes payable to others 10 251
Amortization of debt discount related to
convertible subordinated notes payable 96 364
Loss on extinguishment of debt due to beneficial
conversion features 371 ---
Deferred compensation (189) ---
Deferred income taxes, net --- (385)
Other changes in long-term assets and liabilities (15) (1)
Changes in:
Accounts receivable (331) (99)
Inventory (96) ---
Prepaid expenses and other current assets 70 5
Other assets --- 176
Subtenant deposit --- 62
Accounts payable and accrued expenses 102 (236)
Accrued interest and other current liabilities 187 98
Restricted cash (69) (600)
-------- --------
NET CASH USED IN OPERATING ACTIVITIES (1,582) (1,457)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of SuperStock, net of cash balance of
$1,151 of SuperStock at date of acquisition --- (1,417)
Additions to leasehold improvements (232) ---
Investment in photo collection (9) ---
Purchase of fixed assets (46) (294)
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (287) (1,711)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 1,204 ---
Proceeds from sale of land and building accounted
for as loan payable --- 7,457
Net proceeds from senior secured notes payable 2,250 ---
Net proceeds from sale of common stock and
warrants --- 2,790
Proceeds from issuance of unsecured notes payable
and warrants --- 1,050
Proceeds from issuance of convertible subordinated
notes payable and warrants --- 1,250
Proceeds from loan payable 23 ---
Payment of convertible subordinated notes payable (1,250) ---
Payment of revolving credit line --- (1,700)
a21, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
($ in thousands)
Nine Months Ended
September 30,
2005 2004
------------------------------------------------------ ------- -------
Payment of unsecured notes payable to affiliates --- (160)
Payment of seller note payable --- (1,576)
Payment of promissory note payable (33) ---
Payment of note payable to bank --- (4,554)
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 2,194 4,557
------- -------
NET EFFECT OF CUMULATIVE TRANSLATION ADJUSTMENTS 115 22
------- -------
NET INCREASE IN CASH 440 1,411
CASH AT BEGINNING OF PERIOD 717 1
------- -------
CASH AT END OF PERIOD $1,157 $1,412
------- -------
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Income taxes paid (refunded) $ (108) $ 108
Interest paid 769 193
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND
INVESTING ACTIVITIES:
Repayment of notes payable to affiliates --- 424
Issuance of common stock for accrued interest on
notes payable to affiliates --- 51
Issuance of common stock for accrued compensation --- 136
Issuance of common stock for placement costs in
connection with the sale of common stock --- 13
Issuance of common stock to sellers as part of
acquisition cost of SuperStock --- 137
Deferred compensation 397 ---
Debt discount recorded for the issuance of warrants
in connection with unsecured note payable and
convertible subordinated notes payable 17 422
Debt discount recorded for beneficial conversion of
convertible subordinated notes payable --- 1,105
Issuance of warrants as part of acquisition cost of
SuperStock --- 83
Note payable to sellers on acquisition of SuperStock --- 1,576
Accrued purchase price payable 105 300
Minority interest --- 2,800
Acquisition of SuperStock (See Note C) --- 7,477
Adjustment to goodwill for reduction in valuation
allowance for tax asset --- 484
The statements contained in this press release contain certain forward-looking statements, including statements regarding a21, Inc.'s expectations, intentions, strategies and beliefs regarding the future. All statements contained herein are based upon information available to a21, Inc. management as of the date hereof and actual results may vary based upon future events, both within and without the control of a21, Inc.'s management. |
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