WORCESTER, Mass., Feb. 13, 2003 (PRIMEZONE) -- Sales OnLine Direct (OTCBB:PAID) today announced that it is now running on an operations cash flow positive basis for the first time since becoming a publicly traded company in 1999. The company has reduced operating expenses and is experiencing strong growth in profit margins for its collectibles auction, as well as growth from new revenue channels.
Sales OnLine Direct also announced it has reached an agreement for a $1.5 million revolving line of credit with a related party. Closing of the financing is anticipated within 25 days, subject to satisfaction of customary closing conditions and documents.
"This pending investment in Sales OnLine Direct by a related party is a vote of confidence in the company's products and business plan," stated Greg Rotman, CEO of Sales OnLine Direct. "We will continue to methodically and opportunistically place equity on terms that are favorable to the Company and its shareholders. This process helps to maintain the strength of our balance sheet as we work through our growth plan."
Collectibles Auction Profits Margins Increase
Sales OnLine has increased profitability for its collectibles sales by upgrading the quality of its offerings and reducing operating expenses. Since January 1, 2003, Sales OnLine Direct processed 3,999 auctions with an average closing bid of $44.00 per lot, up from $34 per lot during first quarter 2002, but with lower costs. Gross profits from collectibles sales increased from 44 percent to 57 percent for the same respective periods. The company is on track to show increased revenues for first quarter 2003.
"In July 2002, we brought on renowned sports collectibles buyer and appraiser Don Flanagan to help us expand the range of collectibles sold by Rotman Auction and increase the average realized price per item to ultimately increase gross sales and profits of our Rotman Auction operation," said Richard Rotman, Sales OnLine Direct CFO. "Don's efforts have been extremely successful. His purchases of numerous high quality collections of sports, Americana and other non-sports memorabilia have allowed us to increase the quality and price level of our offering. As a result, our profit margin has grown substantially."
Interest in Collectibles Grows Despite Weak Economy
"When the economy is poor, investors don't get the returns they would like through the traditional investment vehicles, like stocks and bonds, so often they will turn to collectibles, which have always provided consistent returns for knowledgeable and savvy collectors," said Greg Rotman. "In addition, more collections are available at a lower cost with the poor economy, so we have been able to increase our profit margins. We've seen this trend over many economic downturns and Sales OnLine Direct is now in a position to maximize this opportunity due to our strategic activities over the past two years."
One example of the strong interest collectibles are receiving is Sales OnLine Direct's 1940s vintage movie poster promotion facilitated through its Rotman Auction arm on February 3rd-7th. During that event, the week's revenues from posters sales tripled their norm, generating $18,966 from 255 online auctions. A linen-backed 3-sheet poster from Alfred Hitchcock's "Spellbound" fetched an astounding $2,617 -- a record price for that item.
In the company's new Americana collectibles line, Sales OnLine Direct purchased the "Dollan" collection for $100,000. The Company has realized revenues of more than $207,000 since it began offering the items on eBay on approximately January 1, 2003, with an additional $11,000 currently in open sales. The collection also has $30,000 left in inventory at a zero cost. Revenues on that $100,000 investment are anticipated to be $248,000 with a gross margin of 60 percent.
New Revenue Channels Enhance Bottom Line
-- Celebrity Web Site Hosting and Development -- Since mid 2002, Sales OnLine Direct has been steadily building its new celebrity web site development and hosting services, focusing primarily on sites for professional athletes and sports figures. Sales OnLine Direct has executed numerous contracts to develop and host celebrity web sites and is on track to hit its goal of a $250,000 in executed contracts during first quarter 2003. Recently the Company announced the launch of Antoine Walker's web site, (www.antoinewalker.com), and in the next several weeks it will be launching several other well known sports figures' web sites.
-- E-Commerce Software -- Through third quarter 2002, Sales OnLine devoted a large portion of its resources to research and development of its Auction Inc (aiSuite) (www.auctioninc.com), software, an e-business solution designed to increase revenues and reduce overhead for online auction sellers on eBay. In fourth quarter 2002, Sales Online concluded its beta testing of aiSuite. The company has licensed the software to several hundred-auction sellers of all sizes already.
Sales OnLine Direct will officially launch aiSuite and announce expanded marketing plans and partners for the software on March 12th.
Since January 1, 2003, aiSuite has been used to process approximately 40,000 auctions on eBay. The Company earns 2.5 percent of the gross sale of items sold through online auctions utilizing the software.
Traffic through aiSuite from sellers and auction buyers using the system has been growing at a rate of 25 percent per month for the last four months. In January 2003, 89,000 unique visitors used aiSuite to calculate shipping costs, manage auctions and check out from auctions. The Company projects that more than 120,000 unique visitors will use aiSuite in February.
"We've shifted from 90 percent of our staff devoted to R&D to just 30 percent," Rotman said. "With 70 percent of our staff now focusing on sales, customer service and support, our potential for revenue generation has expanded exponentially."
"As we sign on more and larger customers for aiSuite and secure additional web site development and hosting contracts, we anticipate that a greater percentage of our income will be generated from these channels, even as our revenues from the online sale of collectibles and memorabilia continues to increase," Rotman noted. "We expect increased revenues each quarter throughout 2003 and beyond."
Operating Expenses Decrease
In addition to increasing revenues, Sales OnLine Direct has decreased operating expenses significantly, without reducing staffing levels. Annual operating costs have been reduced more than $350,000 through a combination of negotiating stronger vendor contracts and optimizing staff. With the completion of research and development for the aiSuite e-commerce software, Sales OnLine Direct has reduced expenditures for software R&D and reallocated those staffing resources to sales, customer support and marketing activities, which generate more revenue and have a lower operational cost.
"Our complete integration of the aiSuite into our entire online auction process has been another key factor in decreasing expenses and becoming cash flow positive," Richard Rotman stated. "AiSuite allowed us to more than double the number of online auctions that we are able to process each week through Rotman Auction on eBay while reducing the staffing required to manage them. With the majority of our revenues currently coming from the online auction sales of collectibles, this had a very positive impact on our income and expenses."
About Sales OnLine Direct and Rotman Auction
Sales OnLine Direct, www.paid.com, maintains and develops portals and web sites for various companies and industries. The Company has focused its efforts on the antique and collectible industry, offering the "Ask the Appraiser" online appraisal service, marketing and publishing the "Maloney's Antiques and Collectibles Resource Directory" and developing web sites that enhance the user's experience. Through web hosting and managed services, Sales OnLine Direct has provided e-business solutions to many different companies including their own Rotman Auction division. This division sells tens of thousands of items per year through auction, direct sales, and special events and is a certified eBay Gold Power Seller. The Company has developed the "AI Suite" http://www.auctioninc.com/ of software to increase revenues and reduce overhead for sellers on eBay, and offers these essential e-tools to other companies. Through recent initiatives, Sales OnLine Direct is establishing itself as one of the most important collectibles portals, and online auction services and technology providers to the collectibles industry. The Company's common stock is traded on the Nasdaq OTC Bulletin Board under the symbol "PAID."
This Press Release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are based upon current expectations or beliefs, as well as a number of assumptions about future events, including matters related to the Company's operations. Although the Company believes that the expectations reflected in the forward-looking statements and the assumptions upon which they are based are reasonable, it can give no assurance that such expectations and assumptions will prove to have been correct. The reader is cautioned not to put undue reliance on these forward-looking statements, as these statements are subject to numerous factors and uncertainties, including without limitation, successful implementation of the Company's business strategy and competition, any of which may cause actual results to differ materially from those described in the statements. In addition, other factors that could cause actual results to differ materially are discussed in the Company's most recent filings, including Form 10-KSB and 8K with the Securities and Exchange Commission.
URLs:
Link to, Alfred Hitchcock's "Spellbound" auction lot: http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=3308911634
Link to, Rotman Auction on eBay: http://members.ebay.com/aboutme/rotman-auction/
Link to, "Ask the Appraiser": http://www.collectingchannel.com/cMart/cesATEIndex.asp
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