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EXHIBIT 99.1
CONTACTS: MIMI SELLS OR SILVIA YOUNG
EGREETINGS NETWORK, INC.
PH. 415.375.4100
FOR RELEASE AT 10:00 A.M. PST, OCTOBER 25, 2000
EGREETINGS NETWORK, INC. REPORTS THIRD QUARTER RESULTS
-- COMPANY ANNOUNCES MANAGEMENT RESTRUCTURING --
SAN FRANCISCO - October 25, 2000 - Egreetings Network, Inc. (Nasdaq: EGRT), a
rich media company and leading online card and entertainment site at
www.egreetings.com, today reported financial results for the third quarter ended
September 30, 2000. The company also announced a management restructuring and
staff reduction.
Revenues for the third quarter of 2000 were $2.3 million, compared with $803,000
reported in the third quarter of 1999, an increase of 185 percent. Net loss for
the third quarter of 2000, including certain non-cash charges, was $10.9 million
or a loss of $0.32 per share on 33.6 million shares. This compares with a net
loss of $10.0 million or a loss of $0.61 per share on 16.4 million shares for
the third quarter of 1999.
Excluding the amortization of non-cash stock-based compensation and deferred
content, net loss for the third quarter of 2000 was $9.3 million, or a loss of
$0.28 per share, compared with a net loss of $8.8 million, or a loss of $0.54
per share during the third quarter of 1999.
(more)
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EGREETINGS NETWORK, INC. REPORTS THIRD QUARTER RESULTS
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The Board announced a management restructuring and a 34% reduction in force.
President and Chief Executive Officer, Gordon M. Tucker is stepping down and
Andrew Moley, the current Chief Financial Officer has been named his successor
and will also take a seat on the Board of Directors. Scott Neamand, formerly
Vice President, Finance and Controller, has been named Chief Financial Officer
and Senior Vice President. Sarah Anderson has been named Chief Operating
Officer. She was previously Senior Vice President of User Experience and
Editor-in-Chief. Nancy Levin continues as President of Entertainment and has
been named a Senior Vice President of the company. The restructuring involves a
reduction in force of 60 permanent employees, with over 100 remaining. The
Entertainment Division is unaffected by the staff reductions, reflecting a core
focus of the company going forward.
Stewart Alsop, director of Egreetings and a general partner in New Enterprise
Associates, announced the executive management changes: "Gordon Tucker did a
great job building Egreetings Network into a world class enterprise with a
significant future as a publicly held company. The Board accepts his resignation
with both regret and appreciation for his contribution."
CEO Andrew Moley addressed the difficult decision to reduce staff: "The slowing
advertising environment has clearly impacted our business. While we have
continued to tightly manage expenses, it has not been enough. Reducing our staff
is a painful step as all of our employees have been vital contributors in
building Egreetings. However, current market realities require that we tightly
focus our business toward achieving profitability and we must therefore staff
accordingly. I want to express my utmost appreciation and respect for the
efforts of these employees and we are making every effort to be sensitive to
their needs at this time.
(more)
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EGREETINGS NETWORK, INC. REPORTS THIRD QUARTER RESULTS
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"The Board has confidence in the new management team under Andrew Moley's
leadership and believes they are strongly positioned to execute on the goal of
profitability in 2001," Alsop said.
Going forward, the Egreetings Network management team will focus on the
company's core competencies: continuing to create a compelling consumer site,
leveraging music and entertainment content, and optimizing current
business-to-business partnerships.
Egreetings Network management will hold a conference call to discuss these
results today, October 25, at 1:30 PM Pacific Time. Those wishing to join should
dial 630.395.0173 at approximately 1:15 PM. The passcode for the call is
Egreetings. A replay will be available for one week after today by calling
402.220.0219.
ABOUT EGREETINGS NETWORK, INC.
Egreetings Network, Inc. (Nasdaq: EGRT) is a rich media company and operates a
leading online card and entertainment site at www.egreetings.com. Our business
offerings include content platform services and multi-media communications tools
for customer acquisition, retention and revenue generation.
Egreetings Network's Web site, offers thousands of online cards for all
occasions and sentiments featuring rich graphics, animations and music that can
be personalized to make messages memorable and unique. E-greetings is a
registered trademark and Egreetings is a trademark of Egreetings Network, Inc.
(more)
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EGREETINGS NETWORK, INC. REPORTS THIRD QUARTER RESULTS
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FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements regarding the company's
expected future business and financial performance, changes to the company's
executive management team, the company's expansion of market share, present and
future content licensing and strategic marketing relationships, increasing site
usage and future distribution partnerships that involve risks and uncertainties.
Actual results may differ materially because of various risks associated with
the business. These risks include expanding and enhancing our product and
service offerings; revenue goals and achievement of financial performance of our
business model; continually enhancing the technology we use to deliver our
products and services; maintaining and enhancing our brand; increasing the
amount of traffic to our Web site; monetizing our services and site and selling
sponsorships and advertising; increasing the value of our products and services
to consumers, advertisers and e-commerce merchants; continuing to build premium
content distribution deals; and attracting, integrating, retaining and
motivating qualified personnel; and the risks associated with a reduction in
force. Important factors, which could cause actual results to differ materially
from those in the forward-looking statements are detailed in filings with the
U.S. Securities and Exchange Commissions made from time to time by Egreetings,
including its annual report on Form 10-K/A for the fiscal year ended December
31, 1999 and its quarterly report for the fiscal quarter ended June 30, 2000.
For an expanded discussion on such risks, please see the documents filed by
Egreetings Network, Inc. with the U.S. Securities and Exchange Commission.
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All outstanding shares used in the computation of net loss per share assume
conversion of all preferred stock, as if the conversion to common stock occurred
at the beginning of the period or at the date of issuance, if later.
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EGREETINGS NETWORK, INC.
CONDENSED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- -------------
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 6,600 $ 81,774
Short-term investments 28,746 -
Receivables, net 2,531 1,228
Prepaid expenses and other current assets 8,173 9,244
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Total current assets 46,050 92,246
Long-term investments 14,909 -
Property and equipment, net 16,725 11,800
Restricted cash deposit - 2,172
Deferred content costs 9,012 12,740
Deposits and other assets 892 1,165
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Total assets $ 87,588 120,123
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 2,378 $ 7,910
Accrued expenses and other current liabilities 3,032 4,319
Deferred revenue 1,448 581
Current portion of equipment term loan 1,814 1,764
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Total current liabilities 8,672 14,574
Equipment term loan, less current portion 2,377 3,718
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Total liabilities 11,049 18,292
Stockholders' Equity:
Common stock 165,924 159,227
Deferred stock compensation (868) (2,195)
Notes receivable from stockholders (7,620) (5,490)
Accumulated deficit (80,897) (49,711)
Total stockholders' equity 76,539 101,831
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Total liabilities and stockholders' equity $ 87,588 $ 120,123
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</TABLE>
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EGREETINGS NETWORK, INC.
CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts )
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------- ------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $ 2,289 $ 803 $ 8,163 $ 1,527
Costs and expenses:
Cost of services 2,154 918 4,567 1,989
Sales and marketing 3,288 2,948 13,557 8,221
Operations and development 4,687 3,713 13,153 7,081
General and administrative 1,926 2,045 5,599 4,051
Amortization of deferred content costs 1,339 349 3,933 754
Amortization of deferred stock compensation 242 807 942 1,366
--------- -------- --------- ---------
Total costs and expenses 13,636 10,780 41,751 23,462
--------- -------- --------- ---------
Loss from operations (11,347) (9,977) (33,588) (21,935)
income (expense), net 728 15 2,531 (92)
Other income (expense), net (279) -- (129) --
--------- -------- --------- ---------
Net loss $ (10,898) $ (9,962) $ (31,186) $ (22,027)
========= ======== ========= =========
Net loss per share:
Proforma basic and diluted $ (0.32) $ (0.61) $ (0.94) $ (1.51)
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Shares used in calculation of net loss per share:
Proforma basic and diluted 33,637 16,414 33,326 14,570
========= ======== ========= =========
</TABLE>
