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| a21
Second Quarter 2007 Bottom Line Improves $865,000 Eighth Consecutive Quarter of Revenue Growth Announces Resignation of Executive Chairman Jacksonville, FL—August 10, 2007—a21, Inc. ("a21") (OTCBB: ATWO), a leading online digital content marketplace, today reported its financial results for the second quarter ending June 30, 2007. Recent highlights include:
John Ferguson, Chief Executive Officer of a21, said, "Despite challenging
markets in our core business, we are continuing to improve our bottom line
performance through improved cost management, while positioning the Company
to capitalize on growth opportunities. In the coming weeks, we plan to launch
significant strategic initiatives across our businesses that we believe will
allow us to compete more effectively, while at the same time leveraging a
more efficient cost structure." Financial Exhibits
a21, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in thousands, except per share amounts)
(unaudited)
June 30, December 31,
2007 2006
----------------------------------------- ------------- -------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,873 $ 5,455
Accounts receivable, net allowance for
doubtful accounts of $213 and $108,
at June 30, 2007 and December 31,
2006, respectively 2,727 2,773
Inventory 760 844
Prepaid expenses and other current
assets 680 441
------------- -------------
Total current assets 8,040 9,513
Property, plant and equipment, net 7,006 7,300
Photo collection, net 1,476 1,520
Goodwill 8,740 8,648
Intangible assets, net 4,891 5,232
Restricted cash 750 750
Other 1,205 1,651
------------- -------------
Total assets $ 32,108 $ 34,614
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 2,600 $ 3,559
Royalties payable 1,452 1,288
Deferred revenue 406 242
Other 97 124
------------- -------------
Total current liabilities 4,555 5,213
LONG-TERM LIABILITIES
Senior secured convertible notes
payable, net - related party 15,500 15,500
Secured notes payable, net - related
party (ArtSelect Sellers) 2,555 2,499
Loan payable from sale-leaseback of
building, less current portion 7,380 7,403
Other 103 112
------------- -------------
Total liabilities 30,093 30,727
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a21, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
($ in thousands, except per share amounts)
(unaudited)
June 30, December 31,
2007 2006
---------------------------------------------- ---------- ------------
COMMITMENTS AND CONTINGENCIES
---------- ------------
MINORITY INTEREST 1,071 2,254
---------- ------------
STOCKHOLDERS' EQUITY
Common stock; $.001 par value; 200,000,000
shares authorized; 90,141,872 and
87,191,575 shares issued and 86,462,097
and 83,511,800 shares outstanding at June
30, 2007 and December 31, 2006,
respectively 90 87
Treasury stock (at cost, 3,679,775 shares) --- ---
Additional paid-in capital 25,891 24,341
Accumulated deficit (25,478) (23,286)
Accumulated other comprehensive income 441 491
---------- ------------
Total stockholders' equity 944 1,633
---------- ------------
Total liabilities and stockholders' equity $ 32,108 $ 34,614
========== ============
a21, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands except per share amounts)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
----------- ----------- ----------- -----------
REVENUE
Licensing revenue $ 3,038 $ 3,022 $ 6,206 $ 5,957
Product revenue 2,658 1,489 5,614 1,489
----------- ----------- ----------- -----------
TOTAL REVENUE 5,696 4,511 11,820 7,446
COSTS AND EXPENSES
Cost of licensing
revenue (excludes
related amortization
of $285 and $383 for
three months, and $564
and $766 for six
months ended June 30,
2007 and 2006,
respectively) 1,012 1,007 1,962 1,910
Cost of product revenue
(excludes related
amortization of $44
and $88 for three and
six months ended June
30, 2007) 1,253 694 2,651 694
Selling, general and
administrative 3,646 3,819 7,309 6,624
Depreciation and
amortization 632 830 1,251 1,433
----------- ----------- ----------- -----------
TOTAL OPERATING
EXPENSES 6,543 6,350 13,173 10,661
---------------------------------------------- ----------- -----------
OPERATING LOSS (847) (1,839) (1,353) (3,215)
----------- ----------- ----------- -----------
Interest expense (442) (447) (884) (800)
Warrant income
(expense) --- 174 (1) (91)
Other income, net 84 62 97 48
----------- ----------- ----------- -----------
NET LOSS BEFORE
INCOME TAX EXPENSE (1,205) (2,050) (2,141) (4,058)
----------- ----------- ----------- -----------
Income tax expense (24) (44) (51) (71)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
NET LOSS (1,229) (2,094) (2,192) (4,129)
----------- ----------- ----------- -----------
Disproportionate deemed
dividends --- --- --- (157)
----------- ----------- ----------- -----------
NET LOSS ATTRIBUTED
TO COMMON
STOCKHOLDERS $ (1,229) $ (2,094) $ (2,192) $ (4,286)
----------- ----------- ----------- -----------
NET LOSS ATTRIBUTED TO
COMMON STOCKHOLDERS
PER SHARE, BASIC AND
DILUTED $ (0.01) $ (0.03) $ (0.03) $ (0.06)
----------- ----------- ----------- -----------
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING, BASIC AND
DILUTED 86,418,141 77,566,527 86,254,523 74,817,306
a21, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
(unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 2007 2006
----------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (2,192) $ (4,129)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 1,251 1,433
Share-based compensation 323 809
Other 74 391
Changes in assets and liabilities:
Accounts receivable 46 (418)
Prepaid expenses and other current
assets (26) (483)
Inventory 84 60
Accounts payable and accrued expenses (620) 852
Deferred revenue 163 87
Other 7 (169)
----------- ------------
NET CASH USED IN OPERATING ACTIVITIES (890) (1,567)
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of ArtSelect, net of cash
acquired of $231 --- (4,476)
Investment in property, plant and
equipment (14) (141)
Investment in technology (199) (143)
SuperStock acquisition earn-out (285) (206)
Investment in photo collection (266) (195)
Restricted cash for lease deposit --- (750)
Other (5) (9)
----------- ------------
NET CASH USED IN INVESTING ACTIVITIES (769) (5,920)
----------- ------------
a21, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
($ in thousands)
(unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 2007 2006
----------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from senior secured convertible
notes payable - related party, net --- 15,285
Payment of senior secured notes payable -
related party --- (2,250)
Payment of unsecured notes payable --- (1,050)
Net proceeds from the exercise of stock
options 29 100
Net proceeds from the exercise of stock
warrants 19 1,200
Payment of SuperStock seller promissory note
payable (33) (33)
Other 41 37
---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 56 13,289
---------- ----------
EFFECT OF EXCHANGE RATES ON CASH AND CASH
EQUIVALENTS 21 22
---------- ----------
NET (DECREASE) INCREASE IN CASH (1,582) 5,824
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 5,455 1,194
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,873 $ 7,018
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Foreign income taxes paid $ 51 $ 178
Interest paid 809 635
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING
AND INVESTING ACTIVITIES:
Issuance of convertible preferred stock as
part of ArtSelect acquisition --- 3,150
Issuance of senior secured note payable as
part of ArtSelect acquisition --- 2,350
Issuance of warrants as part of ArtSelect
acquisition --- 375
Issuance of common stock for financing
costs --- 62
Issuance of senior convertible debt in
exchange for cancellation of warrants --- 215
Conversion of SuperStock Seller Preferred
stock into common stock (see Note H) 1,182 ---
Cashless exercise of warrants for common
stock 19 ---
Accrued purchase price payable 110 85
Press Contact:Gregory FCA Communications Joseph Hassett 610-642-8253 JoeH@gregoryfca.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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