LANGHORNE, Pa., Feb. 8, 2007 (PRIME NEWSWIRE) -- eGames, Inc. (Pink Sheets:EGAM), a publisher of PC software games, today announced its financial results for the three and six months ended December 31, 2006.
Three Months Ended December 31, 2006:
Net sales decreased by $58,000, or 5%, to $1,096,000 for the three months ended December 31, 2006, compared to $1,154,000 for the similar three month period a year earlier. The $58,000 decrease in net sales for the three months ended December 31, 2006 resulted from decreases of $32,000 in net product sales to traditional software distributors and retailers, $28,000 in liquidation product sales, and $23,000 in Internet revenues which decreases were partially offset by a $25,000 increase in licensing revenues.
For the three months ended December 31, 2006, the Company recognized a net loss of $236,000, or $0.02 per diluted share, which was comparable to the year ago period.
Six Months Ended December 31, 2006:
Net sales decreased by $294,000, or 12%, to $2,154,000 for the six months ended December 31, 2006, compared to $2,448,000 for the same six month period a year earlier. The $294,000 decrease in net sales for the six months ended December 31, 2006 resulted from decreases of $118,000 in net product sales to traditional software distributors and retailers, $116,000 in liquidation product sales, $56,000 in Internet revenues, and $4,000 in licensing revenues.
For the six months ended December 31, 2006, the Company recognized a net loss of $580,000, or $0.05 per diluted share, compared to the six months ended December 31, 2005 in which the Company reported a net loss of $287,000, or $0.03 per diluted share. This $293,000 increase in the net loss for the six months ended December 31, 2006 compared to the similar six month period a year earlier was due to a $109,000 decrease in gross profit on lower sales, combined with a $177,000 increase in operating expenses largely related to increased product development efforts and a $7,000 decrease in net interest income.
The following table represents the Company's net sales by distribution channel for the three and six months ended December 31, 2006 and 2005, respectively:
Net Sales by Distribution Channel
(rounded to the nearest thousand)
Three Months Ended
December 31,
-------------------------------------
Distribution Increase %
Channel 2006 % 2005 % (Decrease) Change
---------------------------------------------------------------------
Traditional
product
sales $ 826,000 75% $ 858,000 74% ($32,000) (4%)
Licensing
revenues 204,000 19% 179,000 16% 25,000 14%
Internet
revenues 47,000 4% 70,000 6% (23,000) (33%)
Liquidation
product
sales 19,000 2% 47,000 4% (28,000) (60%)
---------------------------------------------------------------------
Totals $1,096,000 100% $1,154,000 100% ($58,000) (5%)
========== ==== ========== ==== ========= ====
Six Months Ended
December 31,
--------------------------------------
Distribution Increase %
Channel 2006 % 2005 % (Decrease) Change
---------------------------------------------------------------------
Traditional
product
sales $1,691,000 79% $1,809,000 74% ($118,000) (7%)
Licensing
revenues 333,000 15% 337,000 14% (4,000) (1%)
Internet
revenues 88,000 4% 144,000 6% (56,000) (39%)
Liquidation
product
sales 42,000 2% 158,000 6% (116,000) (73%)
---------------------------------------------------------------------
Totals $2,154,000 100% $2,448,000 100% ($294,000) (12%)
========== ==== ========== ==== ========= ====
Comments:
Jerry Klein, President and CEO of eGames, commented "our financial results continue to reflect our investment in the transition of our business model from a model where we licensed content to a model where we develop our own content. Today's casual game consumers want high quality games that are fun, familiar, challenging, visually appealing, and addictive. Those are attributes we have strived to deliver in the games we licensed and published in the past. They are the same attributes we intend to deliver with the development of our own game titles, whether they are new game concepts or remakes of some of the great Cinemaware properties. During this quarter, our first three internally developed titles, a Flash-based remake of the great Cinemaware classic "Defender of the Crown", the tropical island-based "Burger Bash", and "Puzzle City" a puzzle game with a classic city simulation element in the dominant casual puzzle game genre, will each be released for worldwide distribution. Our plans are to license our content for retail distribution in International territories, distribute the games on the Internet at www.egames.com and other leading game portals, and achieve retail distribution in North America. Developing our own game properties will afford us revenue opportunities we could not realize under our previous business model."
"Our challenge during the remainder of fiscal 2007 is to achieve profitability and a positive cash flow. We believe we have initiated the activities to accomplish that goal. We are on schedule to launch our first six internally developed titles by June 30, 2007," Klein added. "Additionally, we continue to license high-quality PC game content for the eGames and Cinemaware brands so we can offer a full range of games for today's growing casual gamer market. We look forward to the next phase of our business development while improving our financial condition during the second half of calendar 2007."
eGames, Inc.
Balance Sheets
(Unaudited) (Audited)
As of As of
December 31, June 30,
----------- -----------
ASSETS 2006 2006
------ ----------- -----------
Current assets:
Cash and cash equivalents $ 1,113,911 $ 1,526,629
Accounts receivable, net of allowances
of $636,098 and $654,076 429,359 521,086
Inventory, net 829,836 973,735
Prepaid and other expenses 248,519 299,661
----------- -----------
Total current assets 2,621,625 3,321,111
Furniture and equipment, net 42,813 49,595
Goodwill 420,000 420,000
Intangible assets 24,089 24,089
----------- -----------
Total assets $ 3,108,527 $ 3,814,795
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 261,508 $ 343,283
Accrued expenses 535,521 614,668
----------- -----------
Total current liabilities 797,029 957,951
----------- -----------
Stockholders' equity:
Common stock 9,179,827 9,179,827
Additional paid-in capital 2,170,298 2,135,168
Accumulated deficit (8,537,210) (7,956,734)
Treasury stock (501,417) (501,417)
----------- -----------
Total stockholders' equity 2,311,498 2,856,844
----------- -----------
Total liabilities and
stockholders' equity $ 3,108,527 $ 3,814,795
=========== ===========
eGames, Inc.
Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
----------------------- -----------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Net sales $1,095,806 $1,154,053 $2,154,130 $2,448,064
Cost of sales 578,664 678,619 1,197,570 1,382,424
---------- ---------- ---------- ----------
Gross profit 517,142 475,434 956,560 1,065,640
Operating expenses:
Product development 279,487 127,492 497,136 211,520
Selling, general
and administrative 479,364 593,674 1,052,812 1,161,901
---------- ---------- ---------- ----------
Total operating
expenses 758,851 721,166 1,549,948 1,373,421
---------- ---------- ---------- ----------
Operating loss (241,709) (245,732) (593,388) (307,781)
Interest income, net 6,185 12,331 12,912 20,408
---------- ---------- ---------- ----------
Loss before income
taxes (235,524) (233,401) (580,476) (287,373)
---------- ---------- ---------- ----------
Provision for income
taxes 0 0 0 0
---------- ---------- ---------- ----------
Net loss ($235,524) ($233,401) ($580,476) ($287,373)
========== ========== ========== ==========
Net loss per common
share:
- Basic ($0.02) ($0.02) ($0.05) ($0.03)
========== ========== ========== ==========
- Diluted ($0.02) ($0.02) ($0.05) ($0.03)
========== ========== ========== ==========
Weighted average
common shares
outstanding
- Basic 11,724,193 11,618,717 11,724,193 11,262,736
---------- ---------- ---------- ----------
Dilutive effect of
common share
equivalents 0 0 0 0
---------- ---------- ---------- ----------
Weighted average
common shares
outstanding
- Diluted 11,724,193 11,618,717 11,724,193 11,262,736
========== ========== ========== ==========
About eGames, Inc.
eGames, Inc., headquartered in Langhorne, Pennsylvania, publishes and markets a diversified line of PC software games which now include the eGames(tm), Cinemaware(r) and Cinemaware Marquee(tm) brands. Additional information regarding eGames, Inc. can be found at www.egames.com.
Forward-Looking Statement Safe Harbor:
This press release contains certain forward-looking statements, including without limitation, statements regarding: the transition of our business model; the release of three of our own game titles during our third fiscal quarter; our plans for marketing, selling and distributing these new game titles; our expectation that developing our own games will provide us with new revenue opportunities; our plans to improve our financial condition during the second half of calendar 2007; and our expectations regarding the number of titles we expect to launch by June 30, 2007. 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, delays in the development of future titles; inability to fund continued development of future titles; technical and other issues that may delay or halt development of future titles; as well as the risks and uncertainties 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, 2006 as filed with the Securities and Exchange Commission.