LANGHORNE, Pa., Oct. 31, 2005 (PRIMEZONE) -- eGames, Inc. (OTCBB:EGAM), a publisher of Family Friendly(TM), affordably priced consumer entertainment PC software games, today announced financial results for the three months ended September 30, 2005.
Quarter ended September 30, 2005:
Net sales increased by $116,000, or 10%, to $1,294,000, for the quarter ended September 30, 2005, compared to $1,178,000 for the same quarter a year earlier. Net loss was $54,000, or less than a penny per diluted share, for the quarter ended September 30, 2005, compared to a net loss of $184,000, or $0.02 per diluted share, for the same quarter a year earlier.
Financial Highlights:
The $116,000 increase in net sales for the quarter ended September 30, 2005 was driven by net sales increases to inventory liquidators and software retailers of $73,000 and $21,000, respectively, in addition to a $66,000 increase in licensing revenues. Partially offsetting these net sales increases was a $45,000 decrease in net sales to software distributors caused by a decline in sales to Canadian software distributors.
For the quarter ended September 30, 2005, the Company realized a net loss of $54,000 compared to a net loss of $184,000 for the same quarter a year ago. The $130,000 decrease in net loss resulted from a $158,000 reduction in operating expenses, which was partially offset by a $17,000 reduction in gross profit.
The following table represents the Company's net sales by distribution channel for the quarters ended September 30, 2005 and 2004, respectively:
Net Sales by Distribution Channel
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(rounded to the nearest thousand)
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Quarters Ended September 30,
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Distribution Increase %
Channel 2005 % 2004 % (Decrease) Change
------------- ---------- ---- ---------- ---- ---------- ------
Software
Distributors $ 770,000 59% $ 815,000 69% ($ 45,000) (6%)
Software
Retailers 181,000 14% 160,000 14% 21,000 13%
Licensing 158,000 12% 92,000 8% 66,000 72%
Internet 74,000 6% 73,000 6% 1,000 1%
Inventory
Liquidators 111,000 9% 38,000 3% 73,000 192%
------------- ---------- ---- ---------- ---- -------- ------
Totals $1,294,000 100% $1,178,000 100% $116,000 10%
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Comments:
Jerry Klein, President and CEO of eGames, commented "The first quarter of fiscal 2006 represented a key period in our plan to return to profitability and positive cash flow. We recently completed the acquisition of assets of Cinemaware, Inc., bringing into our intellectual property portfolio key gaming assets of this well-positioned PC and console game developer to support our strategy of introducing higher-quality, higher-priced games for the PC and other platforms. During the first quarter, we also focused on securing higher quality product content and more attractive packaging for our $9.99 retail priced PC games; increasing revenues within the very profitable licensing channel; and converting end of lifecycle titles into cash through a viable network of discount retailers and inventory liquidators."
Klein continued, "We realize that for eGames to grow we must expand our business presence beyond the value-priced PC software market and begin to penetrate other retail gaming markets, such as higher-priced PC and other gaming platforms, which represent greater growth and profit potential compared to the value-priced PC software market segment. We will continue to implement this more aggressive and opportunistic growth strategy in an effort to realize improved financial results during the second half of our fiscal 2006. As we do, we will also search for ways to improve the distribution of our software titles to the major North American retailers."
eGames, Inc.
Balance Sheets
(Unaudited) (Audited)
As of As of
September 30, June 30,
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ASSETS 2005 2005
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Current assets:
Cash and cash equivalents $ 2,181,206 $ 2,412,162
Accounts receivable, net 772,631 269,168
Inventory, net 811,492 893,766
Prepaid and other expenses 367,027 313,684
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Total current assets 4,132,356 3,888,780
Furniture and equipment, net 44,099 49,881
Intangible assets 24,089 24,089
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Total assets $ 4,200,544 $ 3,962,750
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 410,273 $ 156,592
Accrued expenses 430,554 409,640
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Total current liabilities 840,827 566,232
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Stockholders' equity:
Common stock 9,179,827 9,179,827
Additional paid-in capital 1,653,316 1,636,144
Accumulated deficit (6,972,009) (6,918,036)
Treasury stock (501,417) (501,417)
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Total stockholders' equity 3,359,717 3,396,518
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Total liabilities and
stockholders' equity $ 4,200,544 $ 3,962,750
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eGames, Inc.
Statements of Operations
(Unaudited)
Quarters Ended
September 30,
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2005 2004
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Net sales $1,294,012 $1,177,829
Cost of sales 703,806 571,158
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Gross profit 590,206 606,671
Operating expenses:
Product development 84,028 239,115
Selling, general and administrative 568,228 571,132
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Total operating expenses 652,256 810,247
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Operating loss (62,050) (203,576)
Interest income, net 8,077 1,230
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Loss before income taxes (53,973) (202,346)
Benefit for income taxes -- 18,024
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Net loss ($53,973) ($184,322)
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Net loss per common share:
- Basic ($0.00) ($0.02)
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- Diluted ($0.00) ($0.02)
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Weighted average common
shares outstanding - Basic 10,906,754 10,102,673
Dilutive effect of common
share equivalents -- --
---------- ----------
Weighted average common
shares outstanding - Diluted 10,906,754 10,102,673
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About eGames, Inc.
eGames, Inc., headquartered in Langhorne, PA, publishes and markets a diversified line of Family Friendly(tm), affordably priced consumer entertainment PC software games. The Company promotes the eGames(tm) and Cinemaware(tm) brands in order to generate customer loyalty, encourage repeat purchases and differentiate eGames software products to retailers and consumers. Additional information regarding eGames, Inc. can be found at www.egames.com and www.cinemaware.com. eGames -- Where the "e" is for Everybody!(R)
Forward-Looking Statement Safe Harbor:
This press release contains certain forward-looking statements, including without limitation, statements regarding: the Company's intention to expand its business beyond the value-priced PC software market and into other retail gaming markets, such as higher-priced PC and other gaming platforms; the expectation that higher-priced PC and other gaming platforms represent greater growth and profit potential compared to the value-priced PC market segment; the Company's implementation of more aggressive and opportunistic growth strategies; the Company's efforts to improve the distribution of its software titles to the major North American retailers; and other statements that contain the words "believes," "expects," "may," "should" or "anticipates." The actual results achieved by the Company and the factors that could cause actual results to differ materially from those indicated by the forward-looking statements are in many ways beyond the Company's control. The Company cautions readers that the risks and uncertainties that may affect the Company's future results and performance include, but are not limited to, those discussed under the heading "Factors Affecting Future Performance" in the Company's Annual Report on Form 10-KSB for the fiscal year ended June 30, 2005, as filed with the Securities and Exchange Commission.