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| a21 Reports First Quarter Financial Results Jacksonville, FL—May 17, 2005—a21, Inc. ("a21") (OTCBB: ATWO), a leading online digital content marketplace for creative professionals, today announced financial results for the first quarter ended March 31, 2005. Gross revenue for the first quarter of 2005 was $2,312,000, compared to $798,000 for the same period in 2004. Net loss for the first quarter of 2005 was $701,000, or $0.02 per share, versus net loss of $600,000, or $0.02 per share, for the same period in 2004. Earnings per share for the first quarter of 2005 is calculated on the basis of 38,136,237 weighted average shares outstanding, compared to 25,726,916 weighted average shares outstanding for the same period in 2004. "During the first quarter, a21 continued to make positive strides in our business in both the operations of our subsidiary, SuperStock, as well as the financial health of a21," said Albert H. Pleus, Chairman and CEO of a21. "On the fiscal management side, in February 2005 we completed a financing with our existing investors on more favorable terms, which improves a21's financial position and flexibility by providing increased working capital." "From an operations standpoint, we made significant progress in four areas: content, sales, technology, and management," added Thomas V. Butta, Vice Chairman and President of a21 and CEO of SuperStock. "Regarding content, the SuperStock image collection surpassed the one million mark in the first quarter. Since the a21 acquisition of SuperStock on February 29, 2004, the total number of images available online has grown by more than 80 percent. "In direct sales, we showed sequential growth over fourth quarter results as well as over first quarter 2004 in both direct and channel sales. Regarding technology, we continued to make performance improvements and add new features to SuperStock.com. Our management team continues to recruit top talent into the company as evidenced by key changes in sales and marketing leadership positions," said Butta. 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
(Unaudited)
($ in thousands)
March 31, December 31,
2005 2004
------------------------------------------- ----------- --------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $850 $717
Accounts receivable, net 1,776 1,462
Prepaid expenses and other current assets 202 200
Income tax receivable 108 108
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Total current assets 2,936 2,487
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Land and building, net 7,462 7,329
Photo collection, net 2,076 2,198
Property and equipment, net 477 547
Goodwill 2,283 2,283
Contracts with photographers 1,082 1,133
Long-term notes receivable 16 18
Intangible assets, net 85 92
Other long-term assets 102 101
Restricted cash 608 600
----------- --------------
Total assets $17,127 $16,788
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of loan payable $5 $---
Accounts payable 564 872
Accrued wages and payroll taxes 173 147
Accrued interest, current 27 187
Accrued purchase price payable 201 201
Current portion of promissory note
payable 33 32
Royalties payable 1,100 979
----------- --------------
Total current liabilities 2,103 2,418
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a21, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS (cont.)
(Unaudited)
($ in thousands)
March 31, December 31,
2005 2004
---------------------------------------- --------------- -------------
LONG-TERM LIABILITIES
Promissory note payable, long-term
portion 33 67
Other long-term liabilities 62 61
Loan payable 7,453 7,458
Senior secured notes payable, net 2,213 1,071
Unsecured notes payable to others, net 1,050 1,040
Accrued interest, long-term 137 ---
Deferred income taxes 1,241 1,234
--------------- -------------
Total liabilities 14,292 13,349
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COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST 2,800 2,800
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STOCKHOLDERS' EQUITY
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 shares issued and
38,136,237 shares outstanding at
March 31, 2005 and
December 31, 2004, respectively 42 42
Treasury stock (at cost, 3,679,775
shares) --- ---
Additional paid-in capital 9,701 9,655
Accumulated deficit (9,719) (9,018)
Accumulated comprehensive income 11 (40)
--------------- -------------
Total stockholders' equity 35 639
--------------- -------------
Total liabilities and stockholders'
equity $17,127 $16,788
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a21, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
($ in thousands)
Three Months Ended
March 31,
-----------------------
2005 2004
----------- -----------
REVENUE $2,312 $798
COST OF REVENUE 712 212
----------- -----------
GROSS PROFIT 1,600 586
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EXPENSES
Selling, general and administrative 1,566 986
Depreciation and amortization 353 99
----------- -----------
TOTAL OPERATING EXPENSES 1,919 1,085
----------- -----------
OPERATING LOSS (319) (499)
----------- -----------
Interest expense, net (480) (101)
Other income, net 105 ---
----------- -----------
NET LOSS BEFORE TAXES (694) (600)
----------- -----------
Income tax expense (7) ---
----------- -----------
NET LOSS (701) (600)
----------- -----------
COMPREHENSIVE LOSS
Foreign currency translation adjustment 51 ---
----------- -----------
TOTAL COMPREHENSIVE LOSS $(650) $(600)
----------- -----------
NET LOSS PER SHARE, BASIC AND DILUTED $(0.02) $(0.02)
----------- -----------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING, BASIC AND DILUTED 38,136,237 25,726,916
a21, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
($ in thousands)
Three Months Ended
March 31,
2005 2004
------------------------------------------------------ ------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(701) $(600)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation & amortization 353 99
Amortization of finance costs 2 53
Compensation from the prior issuance of variable
options --- 305
Compensation from the issuance of options --- 48
Amortization of debt discount related to unsecured
notes payable to others (10) ---
Write-off of debt discount related to convertible
subordinated notes payable (179) ---
Deferred income taxes, net 7 (9)
Changes in:
Accounts receivable (314) (202)
Prepaid expenses & other current assets (2) (115)
Long-term assets 2 (1)
Accounts payable and accrued expenses 161 62
Accrued interest and other current liabilities 23 23
Restricted cash 8 ---
------- -------
NET CASH USED IN OPERATING ACTIVITIES (650) (337)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in acquisition of SuperStock, net of cash
balance of SuperStock at date of acquisition in the
amount of $1,151 --- (1,400)
Purchase of fixed assets (236) (96)
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NET CASH USED IN INVESTING ACTIVITIES (236) (1,496)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Lease payments accounted for as repayment of loan
payable 1 ---
Net proceeds from senior secured notes payable 2,250 ---
Net proceeds from sale of common stock and warrants --- 2,790
Proceeds from issuance of unsecured notes payable
and warrants --- 1,050
Proceeds from issuance of convertible subordinated
notes payable and warrants --- 1,250
Repayment of convertible subordinated notes payable (1,250) ---
Repayment of revolving credit line --- (1,700)
Repayment of unsecured notes payable to affiliates --- (75)
Repayment of promissory note payable (33) ---
Principal payment of note payable to bank --- (521)
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 968 2,794
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a21, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW (cont.)
(Unaudited)
($ in thousands)
Three Months Ended
March 31,
2005 2004
-------------------------------------------------- --------- ---------
NET EFFECT OF CUMULATIVE TRANSLATION ADJUSTMENTS $51 $1
--------- ---------
NET INCREASE IN CASH 133 962
CASH AT BEGINNING OF PERIOD 717 1
--------- ---------
CASH AT END OF PERIOD $850 $963
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Income taxes paid $--- $---
Interest paid 99 11
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
Debt discount recorded for the issuance of
warrants in connection with unsecured note
payable and convertible subordinated notes
payable --- 551
Debt discount recorded for the issuance of
warrants in connection with senior secured notes
payable 39 ---
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 --- 300
Accrued acquisition costs --- 17
Minority interest --- 2,800
Acquisition of SuperStock (See Note C) --- 7,477
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. |
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