EXHIBIT 99.1
At eGames, Inc. At The Financial Relations Board:
--------------- ---------------------------------
Jerry Klein Glenn Sapadin or Victor Vanov
President and CEO (212) 661-8030
(215) 750-6606 (Ext. 118)
For Immediate Release
eGAMES ANNOUNCES RECORD NET SALES FOR
FISCAL 2001 FIRST QUARTER
Company Enters Into First Sales Agreement For eGames
Branded Browser and Game Content
Fiscal 2001 First Quarter Highlights
------------------------------------
o Company reports best-ever first quarter revenue, returns to profitability
o Establishes new revenue stream and branding opportunity through branded
browser
o Begins national rollout of store-in-a-store program with national drug chains
Langhorne, PA - October 26, 2000 - eGames, Inc. (Nasdaq: EGAM), a leading
publisher and developer of Family Friendly(TM), value-priced computer software
games for players of all ages, today announced results for the first quarter of
fiscal 2001 ended September 30, 2000.
The Company's net sales increased 5% to a first quarter record $4.3 million,
compared to $4.1 million for the first quarter of fiscal 2000. On a sequential
basis, net sales increased 39% over fiscal 2000 fourth quarter net sales of $3.1
million. These improved top-line results reflect both increased shipments to
certain existing customers and first-time shipments to new customers.
Net income for the fiscal 2000 first quarter declined to $24,000, or break even
on a per share basis, compared to net income of $577,000, or $0.06 per share,
for the fiscal 2000 first quarter. This decrease in net income resulted from
increased promotional expenditures and lower margins on sales of third party
titles in the food and drug channel as part of the Company's Store-in-a-Store
program. On a sequential basis, eGames net income improved from a bottom line
loss of $128,000, or $0.01 per share, for the quarter ended June 30, 2000.
According to Jerry Klein, President and Chief Executive Officer of eGames, "We
are very pleased with our accomplishments during the first quarter of fiscal
2001. We have successfully reversed losses from the two previous quarters by
effectively settling outstanding litigation, increasing our product shipments,
and generating stronger sell through results at the retail level. Perhaps the
most significant accomplishment is the first quarter rollout of our
<PAGE>
Store-in-a-Store program, which is enabling us to more deeply penetrate
non-traditional retail outlets, resulting in initially lower margins but
increased sales volume. While the initial promotional and distribution costs
associated with this rollout has led to a decrease in margins, we expect to be
able to show margin improvement in subsequent quarters as we experience
continuing sell-through results in these stores without incurring additional
start-up costs."
"We are very gratified to have launched the Store-in-a-Store concept to help
meet the unique needs of the national food and drug chains," said Bill Acheson,
Executive Vice President. "These stores represent very high traffic locations
for today's consumers shopping for all their mass consumer household products.
As a result, we see a perfect fit between these retail channels, our leading
selection of Family Friendly products, and the entertainment needs of today's
consumers."
This new merchandising program features a variety of top selling, value-priced
entertainment software titles in one coordinated display unit to provide a
category managed solution to national food and drug store chains. These displays
are already placed in more than 4,000 storefronts including two leading national
drug store chains and eGames expects to expand this distribution into additional
food and drug stores during the fiscal second quarter.
"We have launched our Store-in-a-Store program at a time when the American
consumer is growing more and more concerned about violence in video games. This
being the case, our strict focus on fun, non-violent content has positioned us
to bring our Family Friendly gaming alternative to the potentially lucrative
food and drug store sales channels. While we started to market our products in
these channels last year, our Store-in-a Store program is now taking the extra
step to bring an even wider selection of these types of games to the overall
shopping experience. This allows parents to purchase enjoyable family
entertainment software products without worrying whether or not they are buying
something appropriate for their children."
The eGames Branded Browser
--------------------------
eGames also announced today that it has entered into its first co-marketing
agreement for eGames' Family Friendly game content and its branded browser
technology. This agreement was signed with the marketing agent for a leading
fast-food restaurant chain under which eGames will initially provide 500,000
eGames software units to the customer.
The marketing agent has agreed to purchase and distribute eGames Family
Friendly(TM) software games installed with a co-branded browser on a CD-ROM. It
is anticipated that the branded browser product will contain hyperlinks to each
company's websites. Management believes that this relationship will
significantly benefit eGames' ongoing branding efforts.
Mr. Klein stated, "This arrangement will bring eGames products directly into the
homes of families throughout the world while driving traffic to an
eGames-branded website and to the customer's quick service restaurants. We hope
to continue to build the eGames brand as more and more children familiarize
themselves with our excellent game play and high-quality sounds and graphics.
Parents and children alike will appreciate the value, Family Friendly content,
and entertaining play of our games.
<PAGE>
"We anticipate that the successful implementation of this program will be just
the first step in our strategy to combine eGames' branded browser technology and
our quality gaming content to bring an exciting, new product offerings to
corporate America," continued Mr. Klein.
Management's Outlook for Remainder of Fiscal 2001
-------------------------------------------------
Going forward, management plans to maintain its sharp focus on building
relationships, delivering quality product and growing the eGames brand. While
the first quarter rollout of the eGames Store-in-a-Store program has increased
SG&A expenses, management believes that this strategy will benefit both the
Company's top line and profitability in future quarters as it experiences
continuing sell-through results in participating stores.
Fiscal 2001 First Quarter Earnings Conference Call
--------------------------------------------------
eGames management will host a conference call/Webcast to discuss the Company's
fiscal first quarter results on Thursday, October 26, 2000 at 9:00 a.m. ET. The
Webcast is open to the public and is accessible live at www.egames.com,
www.streetevents.com or www.vcall.com. For those unable to participate at the
designated time, a replay will be available for 30 days following the call at
each of these locations.
About the Company
-----------------
eGames, Inc., headquartered in Langhorne, PA, develops, publishes and markets a
diversified line of personal computer software primarily for consumer
entertainment and personal productivity. The Company promotes the eGames(TM),
Game Master Series(TM), Multi-Pack and Galaxy of Home Office Help(TM) brand
names in order to generate customer loyalty, encourage repeat purchases and
differentiate the eGames Software products to retailers and consumers. eGames -
Where the "e" is for Everybody!
Additional information regarding eGames, Inc. can be found on the Company's Web
site at www.egames.com.
This press release contains certain forward-looking statements, including
without limitation, statements regarding improvements to the Company's gross
profit and operating margins, the Company's ability to more deeply penetrate
non-traditional retail outlet which would in turn increase the Company's sales
volume; the Company's ability to continue to expand the Store-in-a-Store Program
into additional food and drug stores during the fiscal second quarter; the
Company's ability to continue to enter into additional branded browser
partnerships on commercially viable terms; the ability of the Company's
Store-in-a-Store program to benefit both the Company's top line and
profitability in future quarters as management leverages its costs as the
Store-in-a-Store program penetrates additional store fronts; and eGames' ability
to continue to expand the distribution of its products into retail markets. The
actual results achieved by eGames and the factors that could cause actual
results to differ
<PAGE>
materially from those indicated by the forward-looking statements are in many
ways beyond eGames' control. eGames cautions readers that the following
important factors, among others, could cause the Company's actual results to
differ materially from those expressed in this press release: the Company's
ability to negotiate lower marketing a promotional costs in its Store-in-a-Store
and other retail relationships; the success of the branded browser relationship
and the Company's ability to generate continued interest in this promotional
medium and negotiate such agreements on commercially acceptable terms; the
allocation of adequate shelf space for eGames' products in major chain retail
stores; successful sell-through results for eGames' products at retail stores;
downward pricing pressure; fluctuating costs of developing, producing and
marketing the Company's products; the Company's ability to license or develop
quality content for its products; the timeliness and success of developing and
selling products; the acceptance by the market of the eGames products;
consumers' continuing demand for value-priced software; competition; the ability
to create successful strategic partnerships and implement its Internet strategy;
and various other factors described in eGames' reports, including Form 10-KSB,
dated June 30, 2000, filed by eGames (formerly RomTech) with the Securities and
Exchange Commission.
-financial tables follow-
<PAGE>
eGames, Inc.
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
September 30,
-------------------------
2000 1999
---- ----
<S> <C> <C>
Net sales $ 4,307,666 $ 4,117,575
Cost of sales 1,900,747 1,603,308
----------- -----------
Gross profit 2,406,919 2,514,267
Operating expenses:
Product development 181,147 242,847
Selling, general and administrative 2,190,775 1,600,406
----------- -----------
Total operating expenses 2,371,922 1,843,253
----------- -----------
Operating income 34,997 671,014
Interest expense, net 7,995 5,100
----------- -----------
Income before income taxes 27,002 665,914
Provision for income taxes 2,821 89,295
----------- -----------
Net income $ 24,181 $ 576,619
=========== ===========
Net income per common share:
- Basic $ 0.00 $ 0.06
=========== ===========
- Diluted $ 0.00 $ 0.06
=========== ===========
Weighted average common shares outstanding - Basic 9,749,975 9,633,973
Dilutive effect of common stock equivalents 53,869 503,569
----------- -----------
Weighted average common shares outstanding - Diluted 9,803,844 10,137,542
=========== ===========
</TABLE>
<PAGE>
eGames, Inc.
Consolidated Balance Sheet
(Unaudited)
<TABLE>
<CAPTION>
As of
September 30,
ASSETS 2000
----
<S> <C>
Current assets:
Cash and cash equivalents $ 271,863
Accounts receivable, net of allowances totaling $3,249,847 4,594,646
Inventory 1,764,776
Prepaid expenses 187,675
-----------
Total current assets 6,818,960
Furniture and equipment, net 304,967
Intangibles and other assets, net 261,694
-----------
Total assets $ 7,385,621
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 60,980
Accounts payable 1,541,335
Revolving line of credit 500,000
Accrued expenses 1,339,799
Convertible subordinated debt 150,000
Capital lease obligations 16,095
-----------
Total current liabilities 3,608,209
Capital lease obligations, net of current portion 9,345
Notes payable, net of current portion 108,426
-----------
Total liabilities 3,725,980
Stockholders' equity:
Common stock, no par value (40,000,000 shares authorized;
9,981,875 issued and 9,749,975 outstanding) 9,134,234
Additional paid-in capital 1,148,550
Accumulated deficit (5,991,408)
Treasury stock, at cost - 231,900 shares (501,417)
Accumulated other comprehensive loss (130,318)
-----------
Total stockholders' equity 3,659,641
-----------
Total liabilities and stockholders' equity $ 7,385,621
===========
</TABLE>
