|
| a21 Reports Third Quarter Financial Results Jacksonville, FL—November 15, 2004—a21, Inc. ("a21") (OTCBB: ATWO), a leading online digital content marketplace, today reported financial results for the third quarter and nine-months ended September 30, 2004. Gross revenue for the third quarter of 2004 was $2.1 million, compared to $0 for the same period last year. 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 third quarter of 2003. Net loss for the third quarter of 2004 was $928,000 or $0.02 per share, versus net loss of $456,000 or $0.02 per share, for the same period in 2003. Earnings per share for the third quarter of 2004 is calculated on the basis of 38.1 million weighted average shares outstanding, compared to 18.3 million weighted average shares outstanding for the same period last year. Gross revenue for the nine-months ended September 30, 2004 was $5.4 million, compared to $0 for the same period last year. The increase in gross revenue reflects seven 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 nine-months ended September 30, 2004 would have been $6.9 million. Net loss for the nine-months ended September 30, 2004 was $1.7 million or $0.05 per share, versus net loss of $1.1 million or $0.07 per share, for the same period in 2003. Earnings per share for the nine-months ended September 30, 2004 is calculated on the basis of 34.0 million weighted average shares outstanding, compared to 15.9 million weighted average shares outstanding for the same period last year. "During the third quarter, we focused on several key areas: 1) upgrading and launching our new customer portal, SuperStock.com; 2) expanding our base of over 900,000 images by adding new royalty-free and rights-managed providers and images; 3) pursuing copyright protection through our new affiliation with PicScout to track unauthorized uses of our property; and 4) re-purposing non-core assets, including subleasing our underutilized headquarter space for $3.5 million over six years," commented Albert H. Pleus, Chairman and Chief Executive Officer of a21. "We look forward to the initiatives undertaken this quarter contributing to the company's future growth." About a21 a21 (http://www.a21group.com) is a leading digital content marketplace for the professional creative community. Through SuperStock (http://www.superstock.com), a21 provides images distinguished by the quality of their photographers and attention to the customer experience. Together a21 and SuperStock provide a 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
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
30-Sep-04 31-Dec-03
------------ ------------
CURRENT ASSETS (Unaudited)
Cash $ 1,412,312 $ 702
Accounts receivable, net of allowance for
doubtful accounts of $50,000 1,331,961 --
Prepaid expenses and deposits 84,760 --
------------ ------------
2,829,033 702
------------ ------------
PROPERTY AND EQUIPMENT - net 8,009,877 14,732
PHOTO COLLECTION - net 2,528,465 --
OTHER ASSETS
Goodwill 2,969,461 --
Long term note receivables 67,302 --
Advance to shareholder 15,000 15,000
Long term deposits 600,000 --
Other assets 95,240 --
------------ ------------
$17,114,378 $ 30,434
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY /
(DEFICIENCY)
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 2,101,206 $ 955,292
Accrued purchase price payable 300,000 --
Current portion of loan payable -- --
Unsecured notes payable to affiliates -- 584,266
Unsecured notes payable to others, net 1,023,805 --
Income taxes payable 312,496 --
------------ ------------
TOTAL CURRENT LIABILITIES 3,737,507 1,539,558
------------ ------------
LONG TERM LIABILITIES
Loan payable, less current portion 7,454,746 --
Subtenant deposit 61,633 --
Convertible subordinated notes payable, net 1,033,249 --
Deferred income taxes 789,023 --
------------ ------------
Total long-term liabilities 9,338,651 --
------------ ------------
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST 2,800,085 --
------------ ------------
SHAREHOLDERS' EQUITY / (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 outstanding 41,816 22,708
Treasury stock (at cost, 3,679,775 shares) -- --
Additional paid-in capital 9,815,902 5,388,384
Accumulated deficit (8,641,820) (6,920,216)
Accumulated comprehensive income 22,237 --
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 1,238,135 (1,509,124)
------------ ------------
$17,114,378 $ 30,434
============ ============
a21, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended, Nine months ended,
September 30, September 30,
---------------------------------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
REVENUE $ 2,076,995 $ -- $ 5,402,160 $ --
COST OF REVENUE 609,884 -- 1,597,131 --
------------ ------------ ------------ ------------
GROSS PROFIT 1,467,111 -- 3,805,029 --
EXPENSES:
Selling, general
and
administrative 2,020,488 351,930 4,365,988 897,654
Write-off of
website
development costs -- 76,700 -- 76,700
Depreciation and
amortization 250,932 9,667 674,785 35,118
Interest expense,
net 403,399 17,909 765,860 69,536
------------ ------------ ------------ ------------
TOTAL EXPENSES 2,674,819 456,206 5,806,633 1,079,008
------------ ------------ ------------ ------------
TOTAL OPERATING
LOSS (1,207,708) (456,206) (2,001,604) (1,079,008)
Income tax benefit 280,000 -- 280,000 --
------------ ------------ ------------ ------------
NET LOSS (927,708) (456,206) (1,721,604) (1,079,008)
------------ ------------ ------------ ------------
COMPREHENSIVE LOSS
Foreign currency
translation
adjustment 4,338 -- 22,237 --
------------ ------------ ------------ ------------
TOTAL
COMPREHENSIVE
LOSS $ (923,370) $ (456,206) $(1,699,367) $(1,079,008)
============ ============ ============ ============
NET LOSS PER
SHARE, BASIC AND
DILUTED $ (0.02) $ (0.02) $ (0.05) $ (0.07)
============ ============ ============ ============
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES
OUTSTANDING,
BASIC AND DILUTED 38,115,732 18,354,399 34,000,866 15,893,575
------------ ------------ ------------ ------------
a21, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended,
September 30,
2004 2003
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,721,604) $(1,079,008)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation & amortization 674,785 35,118
Amortization of finance costs 339,563 --
Compensation from prior issuance of variable
options 161,102 --
Compensation from the issuance of options 48,058 (20,741)
Consulting fee from the issuance of options
and warrants -- 13,980
Loss from valuation of investments -- 76,700
Financing costs from issuance of warrants -- 27,588
Common stock issued for services 20,850 397,263
Changes in:
Accounts receivable (99,383) --
Prepaid expenses & other current assets 4,875 --
Other assets 176,400 145,397
Subtenant deposit 61,633 --
Accounts payable and accrued expenses (138,485) --
Deferred income taxes (697,108) --
Income taxes payable 312,496 --
------------ ------------
NET CASH USED IN OPERATING ACTIVITIES (856,818) (403,703)
------------ ------------
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 (1,417,442) --
Notes receivables 3,145 --
Investment in property and equipment (294,097) --
Long term deposits (600,000) --
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (2,308,394) --
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the sale of land and building
accounted for as a loan payable 7,516,251 --
Lease payments accounted for as repayment of
loan payable (61,505)
Net proceeds from sale of common stock and
warrants 2,790,000 --
Proceeds from issuance of unsecured notes
payable and warrants 1,050,000 --
Proceeds from issuance of convertible
subordinated notes payable and warrants 1,250,000 --
Proceeds from notes payable - shareholders -- 137,000
Repayment of revolving credit line (1,700,000) --
Repayment of seller note payable (1,576,250) --
Repayment of notes payable to affiliates (159,946) --
Sales of common stock -- 260,000
Principal payment of long-term debt (4,553,965) --
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 4,554,585 397,000
------------ ------------
NET EFFECT OF CUMULATIVE TRANSLATION
ADJUSTMENTS 22,237 --
------------ ------------
NET INCREASE IN CASH 1,411,610 (6,703)
CASH AT BEGINNING OF PERIOD 702 8,590
------------ ------------
CASH AT END OF PERIOD $ 1,412,312 $ 1,887
------------ ------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Income taxes paid $ 108,455 --
Interest paid 65,348 --
SUPPLEMENTAL DISCLOSURE OF NON-CASH
FINANCING AND INVESTING ACTIVITIES:
Issuance of equity for:
Repayment of notes payable to affiliates $ 424,320 --
Issuance of common stock for accrued
interest on notes payable to affiliates 50,680 --
Issuance of warrants for accrued
compensation 136,250 --
Issuance of options for placement costs in
connection with the sale of common stock 13,035 --
Issuance of options to sellers as part of
acquisition cost of SuperStock 136,500 --
Issuance of common stock for payment of
other liabilities and accruals 450 22,000
Issuance of notes payable for accounts
payable -- 89,770
Paid-in capital contributed from general
release of accrued compensation by employee
Stockholder -- 45,000
Deferred compensation -- 93,860
Debt discount recorded for the issuance of
warrants in connection with unsecured note
payable and convertible subordinated notes
payable 582,510 --
Issuance of warrants as part of acquisition
costs of SuperStock 83,322 --
Note payable to sellers on acquisition of
SuperStock 1,576,250 --
Accrued purchase price payable 300,000 --
Minority interest 2,800,085 --
Acquisition of SuperStock (Note C) 7,477,287 --
Adjustment to goodwill for reduction in
valuation allowance for tax asset 484
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. |
||
  |