|
| a21 Reports Fourth Quarter and Full Year Financial Results Jacksonville, FL—April 4, 2005—a21, Inc. ("a21") (OTCBB: ATWO), a leading online digital content marketplace for creative professionals, today reported financial results for the fourth quarter and fiscal year ended December 31, 2004. Gross revenue for the fourth quarter of 2004 was $2.1 million, compared to $0 for the same period in 2003. The increase in gross revenue reflects a21's acquisition of SuperStock, Inc. in February 2004. Prior to the acquisition, SuperStock generated gross revenue of $2.2 million for the fourth quarter of 2003. Net loss for the fourth quarter of 2004 was $377,000, or $0.01 per share, versus net loss of $254,000, or $0.02 per share, for the same period in 2003. Earnings per share for the fourth quarter of 2004 is calculated on the basis of 38.1 million weighted average shares outstanding, compared to 16.7 million weighted average shares outstanding for the same period in 2003. Gross revenue for the year ended December 31, 2004 was $7.5 million, compared to $0 for the same period in 2003. The increase in gross revenue reflects ten months of sales following a21's acquisition of SuperStock. Had the acquisition of SuperStock occurred at the beginning of fiscal 2004, gross revenue for the year ended December 31, 2004 would have been $9.0 million. Net loss for the year ended December 31, 2004 was $2.1 million, or $0.06 per share, versus net loss of $1.3 million, or $0.08 per share, for the same period in 2003. Earnings per share for the year ended December 31, 2004 is calculated on the basis of 35.0 million weighted average shares outstanding, compared to 16.7 million weighted average shares outstanding for the same period in 2003. "In our first year of operating SuperStock, we have repositioned the company as a viable and valuable alternative for creative professionals by focusing on making significant operational improvements in content, technology, sales, marketing, and copyright protection," said Albert H. Pleus, Chairman and CEO of a21. "We nearly doubled our content in the past year and recently surpassed the one million image mark, solidifying our place as one of the top image providers worldwide. We redesigned and updated our website and e-commerce engine, www.superstock.com, while introducing innovative features such as 'SuperSelects' and 'Show More Like This' that greatly enhance the accessibility and search capabilities for our customers. We have also strengthened our global distribution network such that we are now available in 100 countries while generating increased awareness of the SuperStock brand. In addition, we have aggressively pursued copyright protection to track and prevent unauthorized use of our images." "During the year, we added significant strength to our management team with the addition, among others, of seasoned technology and marketing executive Tom Butta as CEO of SuperStock and President of a21. Tom has brought discipline and focus to our core business while positioning the company for success in this rapidly changing industry. We improved our overall working capital by unlocking value in non-core assets including the $7.7 million sale and leaseback of our headquarters building and the subsequent $3.5mm six year sublease transaction of our underutilized space. Through all capital transactions, we have minimized dilution to our shareholders. "The company is now well positioned to take advantage of the tremendous opportunities our expanding markets afford," Pleus concluded. "We believe that the creativity, professionalism and enthusiasm of our people assure our continued progress." About a21/SuperStock a21 (http://www.a21group.com) is a leading digital content marketplace for the professional creative community. Through SuperStock (http://www.superstock.com), a21 delivers high quality images and exceptional customer service. Together a21 and SuperStock provide a whole new level of image access to the best photographers, artists, photography agencies and customers in the business, offering a valuable and viable choice in the stock image industry. a21, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands)
YEARS ENDED DECEMBER 31, 2004 2003
----------------------------------------------------- -------- -------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $717 $1
Accounts receivable, net 1,462 ---
Prepaid expenses and other current assets 200 ---
Income tax receivable 108
-------- -------
Total current assets 2,487 1
-------- -------
Land and building, net 7,329
Photo collection, net 2,198 ---
Property and equipment, net 547 15
Goodwill 2,283 ---
Contracts with photographers 1,133 ---
Long-term notes receivable 18 ---
Intangible assets, net 92 ---
Advance to shareholder --- 15
Other long-term assets 101 ---
Restricted cash 600 ---
-------- -------
Total assets $16,788 $31
-------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY / (CAPITAL
DEFICIENCY)
CURRENT LIABILITIES
Accounts payable $872 $556
Accrued wages and payroll taxes 147 340
Accrued interest 187 60
Accrued purchase price payable 201 ---
Current portion of promissory note payable 32 ---
Unsecured notes payable to affiliates --- 584
Royalties payable 979 ---
-------- -------
Total current liabilities 2,418 1,540
-------- -------
LONG-TERM LIABILITIES
Promissory note payable, long-term portion 67 ---
Other long-term liabilities 61
Loan payable, less current portion 7,458 ---
Convertible subordinated notes payable, net 1,071 ---
Unsecured notes payable to others, net 1,040 ---
Deferred income taxes 1,234
-------- -------
Total liabilities 13,349 1,540
----------------------------------------------------------------------
a21, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
($ in thousands)
YEARS ENDED DECEMBER 31, 2004 2003
----------------------------------------------------- -------- -------
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST $2,800 $---
-------- -------
STOCKHOLDERS' EQUITY / (CAPITAL DEFICIENCY)
Preferred stock; $.001 par value; 100,000 shares
authorized; no shares issued and outstanding --- ---
Common stock; $.001 par value; 100,000,000 shares
authorized; 41,816,012 and 22,707,423 shares
issued and 38,136,237,and 19,027,648 shares outstanding 42 23
Treasury stock (at cost, 3,679,775 shares) --- ---
Additional paid-in capital 9,655 5,388
Accumulated deficit (9,018) (6,920)
Accumulated comprehensive income (40) ---
-------- -------
Total stockholders' equity/(capital deficiency) 639 (1,509)
-------- -------
Total liabilities and stockholders'
equity/(capital deficiency) $16,788 $31
a21, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands)
Twelve months ended
December 31,
-----------------------
2004 2003
----------- -----------
REVENUE $7,475 $-
COST OF REVENUE 2,241 -
----------- -----------
GROSS PROFIT 5,234 -
----------- -----------
EXPENSES
Selling, general and administrative 5,929 1,133
Write-off of website development costs - 77
Depreciation and amortization 1,127 36
----------- -----------
TOTAL OPERATING EXPENSES 7,056 1,246
----------- -----------
OPERATING LOSS (1,822) (1,246)
----------- -----------
Interest expense, net (1,050) (87)
Other income, net 44 -
----------- -----------
NET LOSS BEFORE TAXES (2,827) (1,333)
----------- -----------
Income tax benefit 729 -
----------- -----------
NET LOSS (2,098) (1,333)
----------- -----------
COMPREHENSIVE LOSS
Foreign currency translation adjustment (40) -
----------- -----------
TOTAL COMPREHENSIVE LOSS $(2,138) $(1,333)
----------- -----------
NET LOSS PER SHARE, BASIC AND DILUTED $(0.06) $(0.08)
----------- -----------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING, BASIC AND DILUTED 35,031,876 16,699,582
a21, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
($ in thousands)
YEARS ENDED DECEMBER 31, 2004 2003
---------------------------------------------------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(2,098) $(1,333)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation & amortization 1,127 36
Amortization of finance costs 394 ---
Write-down of notes receivable and advance to
shareholder 64 ---
Compensation from the prior issuance of variable
options --- 22
Compensation from the issuance of options 48 (103)
Loss from valuation of investments --- 77
Financing costs from the issuance of warrants --- 28
Common stock issued for services 21 444
Deferred income taxes, net (728) ---
Changes in:
Accounts receivable (210) ---
Prepaid expenses & other current assets (131) ---
Income tax receivable (108) ---
Long-term assets 176 ---
Subtenant deposit 61 ---
Accounts payable and accrued expenses (55) 380
Accrued interest and other current liabilities --- 19
Restricted cash (600)
-------- --------
NET CASH USED IN OPERATING ACTIVITIES (2,040) (430)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in acquisition of SuperStock, net of
cash balance of SuperStock at date
of acquisition in the amount of $1,150,653 (1,417) ---
Investment in property and equipment (322) ---
Investment in building (21) ---
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (1,760) ---
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the sale of land and building
accounted for as a loan payable 7,516 ---
Lease payments accounted for as repayment of loan
payable (60) ---
Net proceeds from sale of common stock and
warrants 2,790 260
Proceeds from issuance of unsecured notes payable
and warrants 1,050 ---
Proceeds from issuance of convertible
subordinated notes payable and warrants 1,250 ---
Proceeds from notes payable - shareholders --- 177
Repayment of revolving credit line (1,700) ---
Repayment of unsecured notes payable to
affiliates (160) (15)
Repayment of seller note payable (1,576) ---
Finance costs charged to APIC --- ---
Principal payment of note payable to bank (4,554) ---
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 4,556 422
a21, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASHFLOW
($ in thousands)
YEARS ENDED DECEMBER 31, 2004 2003
---------------------------------------------------- -------- --------
NET EFFECT OF CUMULATIVE TRANSLATION
ADJUSTMENTS (40) ---
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 716 (8)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 1 9
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $717 $1
-------- --------
----------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Income taxes paid $108 $---
Interest paid 103 ---
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND
INVESTING ACTIVITIES:
Issuance of equity for:
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 ---
Issuance of notes payable for accounts payable --- 90
Deferred compensation --- 90
Debt discount recorded for the issuance of
warrants in connection with unsecured note
payable and convertible subordinated notes
payable 583 ---
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 201 ---
Issuance of promissory note payable in connection
with acquisition of SuperStock 100 ---
Minority interest 2,800 ---
Acquisition of SuperStock 7,477 ---
Adjustment to goodwill for reduction in valuation
allowance for tax asset 301 ---
The statements contained in this press release contain certain forward-looking statements, including statements regarding a21, Inc. 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. management. |
||
  |