EX-99 2 q107releasev2.htm

Exhibit 99.1

 

PHOTOWORKS 1ST QUARTER DIGITAL REVENUE UP 44%

Total sales rise for the first time in eight years

 

SEATTLE—Feb. 15, 2007--PhotoWorks(R), Inc. (OTCBB: PHTW), a leading Internet-based digital photo-publishing company, today reported results for the first quarter of fiscal year 2007 ended December 31, 2006.

 

 

Ø

Digital revenue increased

44%

 

 

Ø

Non print revenue increased to

83% of overall revenue

 

 

Ø

Average dollars per customer

$64.28

 

 

Ø

Average dollars per order

$42.73

 

"This achievement is more evidence that our strategy of returning the company to significant growth is working well, as it’s the first quarter in more than eight years that a fiscal first quarter - our big seasonal quarter - had revenue greater than the comparable quarter of the prior year,” said Andy Wood, President and CEO of PhotoWorks. “That fact, combined with our increase in order sizes and volumes in high margin products, such as photo books, cards, calendars and keepsakes, demonstrate the success of PhotoWorks’ philosophy of giving customers new, more sophisticated and creative ways to express themselves, indulge their passions and preserve their digital memories.”

 

For the 1st quarter for 2007:

Digital revenue totaled $3.3 million, an increase of 44% from $2.3 million in the 1st quarter of 2006. Traditional film processing revenue totaled $933,000, a 43.1% decline from $1.6 million. Total net revenue of $4.3 million was up by almost 8% over the same quarter last year, when net revenue totaled $4.0 Million.

 

More than 83% of PhotoWorks’ revenue was driven from the sale of non-print products, such as customer created books, cards and calendars. In addition, average dollars per customer was $65.28 and average dollars per order was $42.73.

 

The Company reported a net loss of $2.3 million compared to a net loss of $328,000 in the first quarter of fiscal year 2006. The majority of the loss reported for the 1st quarter of 2007 was due to a non-recurring, non-cash beneficial conversion of $1.8 million as a consequence of a bridge note converting to stock during the quarter.

 

About PhotoWorks, Inc.

PhotoWorks(R), Inc. is an Internet-based digital photo-publishing company. The company's web-based services allow PC and Mac users to create hardbound photo books, customized greeting cards, calendars, prints and other photography-sourced products straight from their computers. Formerly known as Seattle Film Works, PhotoWorks has a 30-year national heritage of helping photographers share and preserve their memories with innovative and inspiring products and services. More information on the Company is available at www.photoworks.com or by e-mailing customercare@photoworks.com.

 

PhotoWorks(R) is a trademark of PhotoWorks, Inc.

 

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PHOTOWORKS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

 

December 31,

 

September 30,

ASSETS

 

 

2006

 

2006

 

 

 

(Unaudited)

 

(Unaudited)

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

Cash and cash equivalents

 

$

4,797

$

825

Employee advances

 

 

-

 

3

Short-term vendor receivable

 

 

78

 

95

Inventories

 

 

192

 

183

Prepaid expenses

 

 

158

 

146

 

 

 

 

TOTAL CURRENT ASSETS

 

 

5,225

 

1,252

 

 

 

 

 

 

 

 

 

 

PROPERTY AND EQUIPMENT, NET

 

 

449

 

383

 

 

 

 

 

 

 

 

 

 

OTHER ASSETS

 

 

 

 

 

Long-term vendor receivable

 

 

95

 

95

Lease deposits

 

 

24

 

24

 

 

 

 

TOTAL OTHER ASSETS

 

 

119

 

119

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

5,793

$

1,754

 

 

 

 

 

 

 

 

 

 

LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

Accounts payable

 

$

2,186

$

1,133

Accrued compensation

 

 

207

 

370

Other accrued expenses

 

 

194

 

179

ITC penalty, current portion

 

 

201

 

201

Deferred revenues

 

 

271

 

227

 

 

 

 

TOTAL CURRENT LIABILITIES

 

 

3,059

 

2,110

 

 

 

 

 

 

 

 

 

 

LONG-TERM LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

ITC penalty, non-current portion

 

 

250

 

250

Capital lease obligations, net of current portion

 

 

-

 

-

Debentures Payable

 

 

-

 

1,274

Debenture interest

 

 

-

 

115

 

 

 

 

TOTAL LONG-TERM LIABILITIES

 

 

250

 

1,639

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

 

3,309

 

3,749

 

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

-

 

-

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

Preferred stock, 2,000,000 shares authorized

 

 

 

 

 

$0.01 per value, 0 shares issued and outstanding

 

 

 

 

 

Common stock, 101,250,000 shares authorized,

 

 

 

 

 

$0.01 par value; 39,440,042 and 19,799,922 shares

 

 

 

 

 

issued and outstanding, respectively

 

 

394

 

198

Additional paid-in capital

 

 

32,622

 

26086

Accumulated deficit

 

 

(30,532)

 

(28,279)

 

 

 

 

TOTAL STOCKHOLDERS' EQUITY (DEFICIT)

 

 

2,484

 

(1,995)

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY/DEFICIT

$

5,793

$

1,754

 

 

 

 

The accompanying condensed notes are an integral part of these interim consolidated financial statements.

 

 

 

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PHOTOWORKS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

 

Three Months Ended

 

 

December 31,

2006

(Unaudited)

 

December 24,

2005

(Unaudited)

 

 

 

 

REVENUES

 

 

 

Digital

$ 3,344

 

$ 2,323

Film

933

 

1,641

 

 

TOTAL REVENUES

$ 4,277

 

$ 3,964

 

 

 

 

 

 

COST OF GOODS AND SERVICES

 

 

 

Digital

1,966

 

1,095

Film

489

 

1,136

 

 

TOTAL COST OF GOODS AND SERVICES

2,455

 

2,231

 

 

 

 

 

 

GROSS PROFIT

1,822

 

1,733

 

 

 

 

OPERATING EXPENSES

 

 

 

Sales and marketing

1,034

 

1,223

Engineering

561

 

450

General and administrative

526

 

380

 

 

TOTAL OPERATING EXPENSES

2,121

 

2,053

 

 

 

 

 

 

LOSS FROM OPERATIONS

(299)

 

(320)

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

Interest Income

23

 

3

Benefit conversion/non-cash Interest

(1,790)

 

 

Stock option valuation

(107)

 

(51)

Depreciation

(73)

 

(10)

Other income (expense), net

(7)

 

50

 

 

TOTAL OTHER INCOME (EXPENSE)

(1,954)

 

(8)

 

 

 

 

 

 

LOSS BEFORE INCOME TAXES

(2,253)

 

(328)

 

 

 

 

INCOME TAX

-

 

-

 

 

 

 

NET LOSS

$ (2,253)

 

$ (328)

 

 

 

 

 

 

BASIC AND DILUTED NET LOSS PER COMMON SHARE

$ 0.06

 

$ 0.02

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON

 

 

 

STOCK SHARES OUTSTANDING, BASIC AND DILUTED

39,440,042

 

19,794,672

 

 

 

 

The accompanying condensed notes are an interim part of these interim consolidated financial statements.

 

 

 

MEDIA CONTACT:

Hal Bienstock

Maloney & Fox

646.356.8307

hbienstock@maloneyfox.com