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| a21 Announces Third Quarter 2007 Results Quarter Highlighted by New Strategic Initiatives including Reorganization and Planned MediaMagnet Launch Jacksonville, FL—November 12, 2007—a21, Inc. ("a21") (OTCBB: ATWO), a leading online digital content marketplace, today reported its financial results for the third quarter ending September 30, 2007. Revenue for the third quarter of 2007 was $5.4 million compared to $5.9 million for the same prior year period. Total cost of sales for the third quarter of 2007 were $2.2 million, or 40% of revenues, compared to 38% of revenues for the same prior year period. Third quarter 2007 selling, general, and administrative expenses were reduced by $163,000 compared to the same prior year period through a continued focus on expense reduction. In the third quarter of 2007, the Company recognized a $315,000 extraordinary charge for organizational consolidation and restructuring expenses. The third quarter 2007 operating loss was $1.0 million including restructuring expense of $315,000, compared to a loss of $614,000 for the same prior year period. The net loss for the third quarter of 2007 was $1.4 million, or $0.02 per fully diluted share, essentially unchanged from a net loss of $1.4 million, or $0.02 per fully diluted share, for the same prior year period. Net income for the quarter reflects lower revenues and margins along with the extraordinary restructuring charge. Third quarter 2006 net income included a one-time deemed dividend of $336,000. At September 30, 2007, the Company's cash position was $2.8 million and working capital $2.6 million with no short-term debt obligations. John Ferguson, Chief Executive Officer of a21, said, "During the third quarter we announced important new strategic initiatives including reorganization across our businesses and the development and planned launch of our new MediaMagnet platform. Part of our strategy is to streamline and create more efficient operations. During the third quarter, we undertook a company-wide consolidation and restructuring to achieve this objective. At ArtSelect, we initiated focus and marketing around our direct-to-consumer online channels and also introduced our new print-only product offering. Both initiatives are gaining traction and contributing incremental revenue to help offset the current market challenges of our legacy, core markets." Thomas Costanza, Chief Financial Officer of a21, said, "We are making good progress with our consolidation and restructuring plan to improve the overall efficiency of our entire organization. We have already demonstrated reduced overhead spending showing sequential quarters of lower spending levels on a year over year basis. We are now prepared for the next phase of our plan to concentrate our resources on effectively implementing our new strategy and improving our liquidity and capital structure. Our goal is to enter 2008 in better financial health and with adequate resources to grow the business and build shareholder value". About a21 a21 (www.a21group.com) is a leading online digital content company. Through SuperStock (www.superstock.com; www.superstock.co.uk; and www.purestockx.com), and ArtSelect (www.artselect.com), a21 delivers high quality images, art framing, and exceptional customer service. a21 and its companies, with offices in Florida, Iowa, New York City, and London, provides valuable and viable choices to key business partners and customers in the stock image, art and wall decor industries. Financial Exhibits
a21, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands except per share amounts)
(unaudited)
Three Months Ended
September 30,
2007 2006
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REVENUE
Licensing revenue $ 2,765 $ 2,986
Product revenue 2,622 2,918
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TOTAL REVENUE 5,387 5,904
COSTS AND EXPENSES
Cost of licensing revenue (excludes related
amortization of $290 and $383 for three
months, and $854 and $1,100 for nine months
ended September 30, 2007 and 2006,
respectively) 890 902
Cost of product revenue (excludes related
amortization of $44 and $132 for three and
nine months ended September 30, 2007) 1,285 1,366
Selling, general and administrative 3,298 3,461
Restructure costs, including severance 315 ---
Depreciation and amortization 640 789
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TOTAL OPERATING EXPENSES 6,428 6,518
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OPERATING LOSS (1,041) (614)
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Interest expense (446) (448)
Warrant income (expense) --- 29
Other income (expense), net 117 39
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NET LOSS BEFORE INCOME TAX EXPENSE (1,370) (994)
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Income tax expense (23) (48)
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NET LOSS (1,393) (1,042)
Disproportionate deemed dividends --- ---
Deemed dividend on convertible preferred
stock --- (336)
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NET LOSS ATTRIBUTED TO COMMON STOCKHOLDERS$ (1,393) $ (1,378)
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NET LOSS ATTRIBUTED TO COMMON STOCKHOLDERS
PER SHARE, BASIC AND DILUTED $ (0.02) $ (0.02)
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WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING, BASIC AND DILUTED 86,719,936 81,692,872
a21, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in thousands, except per share amounts)
(unaudited)
September 30, December 31,
2007 2006
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ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 2,810 $ 5,455
Accounts receivable, net allowance for
doubtful accounts of $243 and $108, at
September 30, 2007 and December 31,
2006, respectively 2,652 2,773
Inventory 816 844
Prepaid expenses and other current assets 641 441
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Total current assets 6,919 9,513
Property, plant and equipment, net 6,883 7,300
Goodwill 8,778 8,648
Intangible assets, net 4,858 5,232
Restricted cash 750 750
Other 2,456 3,171
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Total assets $ 30,644 $ 34,614
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LIABILITIES AND STOCKHOLDERS' EQUITY
(CAPITAL DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 2,271 $ 3,559
Royalties payable 1,308 1,288
Deferred revenue 422 242
Restructure liability 243 ---
Other 100 124
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Total current liabilities 4,344 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 7,364 7,403
Other 68 112
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Total liabilities 29,831 30,727
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a21, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
($ in thousands, except per share amounts)
(unaudited)
September 30, December 31,
2007 2006
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COMMITMENTS AND CONTINGENCIES
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MINORITY INTEREST 1,071 2,254
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STOCKHOLDERS' EQUITY (CAPITAL DEFICIT)
Common stock; $.001 par value;
200,000,000 shares authorized;
90,399,711 and 87,191,575 shares issued
and 86,719,936 and 83,511,800 shares
outstanding at September 30, 2007 and
December 31, 2006, respectively 90 87
Treasury stock (at cost, 3,679,775
shares) --- ---
Additional paid-in capital 26,055 24,341
Accumulated deficit (26,871) (23,286)
Accumulated other comprehensive income 468 491
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Total stockholders' equity (capital
deficit) (258) 1,633
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Total liabilities and stockholders'
equity (capital deficit) $ 30,644 $ 34,614
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Press Contact:Joseph Hassett Gregory FCA Communications 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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