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A21 SuperStock Posts $4.7MM Loss for 2005

By Chris Ferrone April 27, 2006

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A21 Group, owner of SuperStock, PureStock, and Ingram Publishing, reported its 2005 full-year results, posting a net loss of $4.8MM on revenue of $9.6MM.   Compared to adjusted(*) figures for 2004, this represents a 7% increase in the company’s gross sales and a near doubling of its net loss.   The company’s gross profit margin decreased from 70% to 68% as its cost of revenue rose at a faster rate than revenue.  Management attributes this relative increase in the cost of revenue to the normal fluctuations in the proportions of higher vs. lower commission imagery it licenses.  Conversely, Selling General and Administrative expenses dropped as a percentage of revenue leading to a relatively flat negative EBITDA of $928K in 2005 vs. an adjusted $834K in 2004.

Net losses jumped in 2005 due to higher depreciation and amortization write-offs, $173K shown as “warrant expense” and $505K of “Other” expenses, which management explains as a significant loss on the extinguishment of the convertible subordinated notes payable and currency transaction losses.  Further, the company recorded a tax benefit of $729K in 2004 connected with the sale of its Jacksonville, Florida office building while it paid taxes of $105K in 2005.



A21 SuperStock Results in $000s

 

Full year Ended*:       12/31/05         %         12/31/04         %        

 

Gross Sales               $9,563            100     $8,970            100

Cost of Revenue       $3,090              32      $2,689              30

                                    ======                       ======

Gross Profit               $6,473              68      $6, 280             70

 

SG&A Expenses       $7,401              77      $7,114              79

                                    ======                       ======

EBITDA (Loss)          ($928)             -10     ($834)               -9

 

[* Please Note: A21 purchased SuperStock in February of 2004.  Therefore, the actual figures for 2004 apply to only ten months of operations.  For the sake of this article and in order make more useful comparisons between 2005 and 2004 results, we adjusted the 2004 figures by dividing them by ten and multiplying them by twelve.]

 

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