EXHIBIT 99.1
At eGames, Inc. At The Financial Relations Board:
- --------------- ---------------------------------
Jerry Klein Glenn Sapadin (212) 661-8030 (General Inquiries)
President and CEO Elisa Mailman (212) 661-8030 (Analyst Inquiries)
(215) 750-6606 (Ext. 118) Deanne Eagle (212) 661-8030 (Media Inquiries)
For Immediate Release
eGames Announces Fourth Quarter And Year-End 1999 Results; Revenues And
Earnings Below Expectations As A Result Of Transition To New
Distribution Strategy
Fiscal 4Q Operational Highlights
o eGames enters into direct relationships with CompUSA, Electronics Boutique and
Toys R Us
o eGames enters into new distribution relationships with SVG Distribution, Inc.,
Navarre, Merisel and Beamscope
o eGames Announces Strategic Partnership with ICTV to Bring Games To Cable TV
Langhorne, PA - July 22, 1999 - eGames, Inc. (Nasdaq: EGAM), the leading
publisher and developer of Family Friendly(TM), value-priced computer software
games for players of all ages, today announced results for the fourth quarter
and year-ended June 30, 1999.
The net loss recorded by eGames for the fiscal fourth quarter of 1999 was
$863,000, or $0.09 per diluted share, on net sales of $1.4 million. This
compares to a net loss of $134,000, or $0.01 per diluted share, on net sales of
$1.9 million for the comparable quarter of fiscal 1998. Net income for the 1999
fiscal year was $463,000, or $0.05 per diluted share, on net sales of $10.0
million. This compares to net income of $1.1 million, or $0.12 per diluted
share, on net sales of $9.3 million for the 1998 fiscal year.
At the end of fiscal 1999, eGames entered into a new distribution agreement with
SVG Distribution ("SVG"), in order to more effectively distribute the eGames
products to various mass market, regional and alternative channel retailers. SVG
is a California-based wholesale distributor of interactive entertainment
software. The Company has shipped approximately $400,000 of inventory to SVG at
cost during the quarter. This inventory, once sold into the retail channel,
would amount to sales of approximately $1,600,000 for the Company. In addition,
$400,000 in orders were received by eGames too late in the quarter to be shipped
in fiscal 1999, and are scheduled to be shipped during the first quarter of
fiscal 2000.
Jerry Klein, President and Chief Executive Officer of eGames, said, "I want to
emphasize that we remain very confident with the fundamental strength of our
business. The popularity of our product line continues to increase, reflecting
our focus on delivering high-quality games to the rapidly growing family
friendly, value-priced segment of the home computer market. In fact, our
continued strong sell-through results from fiscal 1999 combined with the new SVG
distribution relationship are expected to result in a doubling of net income for
the first quarter of fiscal 2000 compared to the year ago quarter.
Overall, fiscal 1999 has been a very exciting year for eGames, in terms of the
successful evolution of our business strategy on multiple fronts. Specifically,
over the past twelve months we have achieved a number of significant milestones,
including:
o The creation of new direct relationships with CompUSA, Electronics Boutique,
Rite Aid, and Toys R Us
o Our entering into new distribution relationships with SVG, Navarre, Merisel
and Beamscope (Canada's leading distributor)
o Our introduction of 42 exciting new software titles to the home computer
markets
o Achieving international sales of $2,700,000 representing a 288% increase over
fiscal 1998
o The introduction of potential new revenue streams including the availability
of our games through cable television via ICTV and our ability to
generate incremental advertising revenue through our new relationship with
Conducent, Inc.
o The successful launch of our www.egames.com Web Site
o Our revised distribution relationship with GT Interactive Software
Corporation's Value Products Division
Of note, the recent strategic partnership between eGames and Conducent, Inc.
enables eGames to incorporate advertising and Internet functionality (search,
e-commerce buttons) into eGames software. Conducent's advanced technology will
provide eGames with incremental advertising revenues in addition to generating
valuable end-user data for eGames in-depth market research efforts. In
addition, Conducent's relationships with leading portals, including Lycos,
significantly enhances the visibility of eGames over the Internet. Specifically,
visitors to the Lycos.com Web Site can now download and play many of our eGames
titles directly from these sites. Visitors will also be able to hyperlink to the
eGames Web Site (www.egames.com) to shop in the eGames superstore."
"While we did not achieve our original fourth quarter estimates, we are pleased
with where we are now and where we see ourselves heading in fiscal 2000 and
beyond," concluded Mr. Klein.
As of June 30, 1999, the eGames balance sheet remains strong with a current
ratio of 2.49 to 1.00 and long-term debt to equity ratio of only .11 to 1.00.
About eGames Revised Sales Strategy:
In March 1999, eGames revised its exclusive relationship with GT Interactive
Software Corporation's Value Products Division (GT Value Products), allowing
management to build relationships directly with retail chains and other software
distributors. GT Value Products continues to serve as eGames' distribution agent
with Kmart, Wal*Mart, Target and Best Buy. Management anticipates that this new
strategy will expand eGames North American distribution channels and increase
profit margins.
eGames, headquartered in Langhorne, PA, develops, publishes and markets a
diversified line of personal computer software primarily for consumer
entertainment and small office/home office applications. eGames promotes the
Galaxy of Games(TM), Galaxy of Home Office Help(TM), Game Master Series(TM) and
Galaxy of Arcade(TM) brand names ("Galaxy Software(TM) products") in order to
generate customer loyalty, encourage repeat purchases and differentiate the
Galaxy Software products to retailers and consumers. eGames products are
available through retail distribution in 30 countries and over the Internet via
the eGames Web Site at http://www.egames.com.
eGames press releases are available free-of-charge by fax by dialing
1-800-PRO-INFO and entering ticker symbol EGAM or at eGames' Web Site.
This press release contains certain forward-looking statements, including
without limitation, statements regarding sales of eGames products through SVG
Distribution and other new distributors, eGames revised sales strategy and
anticipated sales and earnings' growth in the first quarter of fiscal 2000 and
beyond. The actual results achieved by eGames and the factors that could cause
actual results to differ 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 eGames actual results
to differ materially from those expressed in this press release: 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; the timeliness and success of developing and selling products;
the acceptance by the market of the Company's existing and new products; access
to and control over distribution channels; 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, 1998, and
Form 10-QSB dated March 31, 1999, filed by eGames (formerly RomTech) with the
Securities and Exchange Commission.
- Financial Tables To Follow -
eGames, Inc.
Consolidated Statements of Operations
(Un-audited)
Three months ended Year ended
June 30, June 30,
-------------------------- -------------------------
1999 1998 1999 1998
---- ---- ---- ----
Net sales $ 1,383,264 $ 1,931,162 $10,022,305 $ 9,275,889
Cost of sales 642,182 689,193 3,596,982 3,441,793
----------- ----------- ----------- -----------
Gross profit 741,082 1,241,969 6,425,323 5,834,096
Operating expenses:
Product development 233,772 157,439 936,938 397,272
Selling, general and administrative 1,350,073 1,210,716 4,814,345 4,135,266
----------- ----------- ----------- -----------
Total operating expenses 1,583,845 1,368,155 5,751,283 4,532,538
Operating income (loss) (842,763) (126,186) 674,040 1,301,558
Interest expense (income), net (666) 8,242 31,761 45,859
------------ ----------- ----------- -----------
Income (loss) before taxes (842,097) (134,428) 642,279 1,255,699
Provision for income taxes 20,937 - 0 - 179,724 3,069
----------- ----------- ----------- -----------
Net income (loss) (863,034) (134,428) 462,555 1,252,630
Accretion of beneficial conversion
feature on preferred stock - 0 - - 0 - - 0 - (117,991)
----------- ----------- ----------- -----------
Net income (loss) attributable
to common stock ($ 863,034) ($ 134,428) $ 462,555 $ 1,134,639
=========== =========== =========== ===========
Net income (loss) per common share:
- Basic ($ 0.09) ($ 0.01) $ 0.05 $ 0.13
=========== =========== =========== ===========
- Diluted ($ 0.09) ($ 0.01) $ 0.05 $ 0.12
=========== =========== =========== ===========
Weighted average common shares
outstanding - Basic 9,600,935 9,371,200 9,494,988 8,716,756
Dilutive effect of common stock equivalents - 0 - - 0 - 556,991 937,850
----------- ----------- ----------- -----------
Weighted average common shares
outstanding - Diluted 9,600,935 9,371,200 10,051,979 9,654,606
=========== =========== =========== ===========
eGames, Inc.
Consolidated Balance Sheet
(Un-audited)
As of
June 30,
ASSETS 1999
Current assets:
Cash and cash equivalents $ 1,313,853
Restricted cash 17,560
Accounts receivable, net of allowances - $417,732 1,934,503
Inventory 1,153,198
Prepaid expenses 108,702
-----------
Total current assets 4,527,816
Furniture and equipment, net 375,717
Other assets 487,233
-----------
Total assets $ 5,390,766
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 129,210
Accounts payable 1,040,438
Accrued expenses 627,264
Capital lease obligations 22,986
-----------
Total current liabilities 1,819,898
Capital lease obligations 22,459
Notes payable 174,471
Convertible subordinated debt 150,000
-----------
Total liabilities 2,166,828
Stockholders' equity:
Common stock, no par value (40,000,000 shares authorized;
9,833,340 issued) 8,874,889
Additional paid in capital 1,148,550
Accumulated deficit (6,268,169)
Treasury stock, at cost - 231,900 shares (501,417)
Accumulated other comprehensive income/(loss) (29,915)
-----------
Total stockholders' equity 3,223,938
-----------
Total liabilities and stockholders' equity $ 5,390,766
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