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Releases Financial Details on ArtSelect Acquisition Combined Companies Had Proforma 2005 Revenue of $21.3 Million ArtSelect had 2005 EBITDA Exceeding $500,000 Jacksonville, FL—June 13, 2006—a21, Inc. ("a21")(OTCBB: ATWO), a leading online digital content marketplace, today announced additional financial details on its recent acquisition of ArtSelect, Inc. ("ArtSelect"), an Iowa-based provider of online technology and fulfillment infrastructure for retailers in the custom framed Art and Wall Decor market. On a pro forma basis, the two companies had 2005 revenue of $21.3 million. ArtSelect had 2005 gross revenue of $12.1 million and EBITDA of $501,254. "We believe this transaction will provide us with additional operational and financial leverage," said Thomas Costanza, a21 Vice President and Chief Financial Officer. "The transaction allows the companies to combine ArtSelect's core infrastructure strengths and client base to provide cross-selling opportunities for a21's images." "We have already begun integrating ArtSelect into our client offerings," said Albert H. Pleus, a21 Chairman and Chief Executive Officer. "We believe that the combination of ArtSelect's unique product offering and the fine art and vintage content from our SuperStock portfolio will differentiate the Company in the Art and Wall Decor market." Additional details on ArtSelect's audited financial statements can be found on Form 8-K filed recently by the Company. Non-GAAP Financial Measures This release contains disclosure of EBITDA for certain periods, which may be deemed to be a non-GAAP financial measure within the meaning of Regulation G promulgated by the Securities and Exchange Commission. Management believes that EBITDA, or earnings before interest, taxes, depreciation and amortization, is an appropriate measure of evaluating operating performance and liquidity, because it reflects the resources available for strategic opportunities including, among others, investments in the business and strategic acquisitions. The disclosure of EBITDA may not be comparable to similarly titled measures reported by other companies. EBITDA should be considered in addition to, and not as a substitute, or superior to, operating income, cash flows, revenue, or other measures of financial performance prepared in accordance with generally accepted accounting principles. About a21 a21 (www.a21group.com) is a leading online digital content marketplace for the professional creative community. Through SuperStock (www.superstock.com; www.superstock.co.uk and www.purestockx.com) Ingram Publishing (www.ingrampublishing.com), and ArtSelect (www.artselect.com) a21 delivers high quality images and exceptional customer service. a21 and its companies, with offices in New York, Florida, Iowa, and the United Kingdom, provide a valuable and viable choice to photographers, artists, photography agencies and other customers in the stock image, art and wall décor industries. PRO FORMA FINANCIAL STATEMENTS
INCOME STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2005
(thousands, except
share amounts) Consolidated
a21 ArtSelect Adjustments Proforma
Revenue, net $9,563 $11,739 $- $21,302
Cost of Revenue 3,090 5,213 - 8,303
Selling, general and
administrative 7,401 6,025 - 13,426
Depreciation and
amortization 1,683 353 1,200 3,236
TOTAL OPERATING
EXPENSES 12,174 11,591 1,200 24,965
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OPERATING (LOSS)
INCOME (2,611) 148 (1,200) (3,663)
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Interest expense, net (1,380) (603) 217 (1,766)
Other income, net (678) 3 - (675)
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NET LOSS BEFORE TAXES (4,669) (452) (983) (6,104)
Income tax (105) - - (105)
Deemed dividends (219) - (219)
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NET LOSS ($4,993) ($452) ($983) ($6,428)
NET LOSS PER SHARE,
BASIC AND DILUTED (0.10) (0.12)
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING,
BASIC AND DILUTED 47,723,202 4,950,000 52,673,202
ARTSELECT, INC.
Statements of Operations
Years ended December 31, 2005 and 2004
2005 2004
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Gross sales $ 12,119,367 12,050,304
Less returns and adjustments 379,964 487,539
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Net sales 11,739,403 11,562,765
Cost of goods sold 5,213,135 5,210,384
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Gross profit 6,526,268 6,352,381
Selling, general, and administrative expenses 6,024,744 6,245,708
Depreciation and amortization expense 353,323 310,578
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Income (loss) from operations 148,201 (203,905)
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Other income (expenses):
Interest income 2,853 7,371
Interest expense (603,285) (10,120)
Other -- 1,580
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Total other expense (600,432) (1,169)
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Net loss from continuing
operations before income tax
expense and discontinued
operations (452,231) (205,074)
Income tax expense -- --
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Net loss from continuing
operations before discontinued
operations (452,231) (205,074)
Net loss from discontinued operations -- (832,351)
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Net loss $ (452,231) (1,037,425)
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Investor Relations ContactDennis Early CEOcast 212.732.4300 dearly@ceocast.com 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.'s 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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