VWPT Viewpoint (MM)

Viewpoint Corporation (NASDAQ: VWPT), a leading internet marketing technology company, today announced financial results for the first quarter ended March 31, 2007. The Company also recently announced a strategic partnership with DG FastChannel and concurrent $4.3 million private equity investment in Viewpoint, as well as an additional private equity investment from Gruber & McBaine Capital Management of $1.0 million. Viewpoint reported total revenue of $3.3 million for the first quarter 2007, inline with our expectations a 22 percent decrease as compared to $4.3 million in the fourth quarter 2006 and a 17 percent decrease as compared to $4.0 million in the first quarter 2006. Gross profit was $2.3 million for the first quarter of 2007, a decrease of 25 percent as compared to the $3.1 million for the fourth quarter of 2006 and an increase from $2.2 million for the first quarter of 2006. Patrick Vogt, President and Chief Executive Officer, commented, �In the first quarter, we achieved important milestones in developing our business platform. Our strategic partnership with DG FastChannel, combined with our recent acquisition of MAKOS, provide us with the opportunity to capture more growth in our business. The inclusion of our rich media and video technology into the vast DG FastChannel system enables more integrated advertising services and reporting for customers. Furthermore, through MAKOS, we are now able to better serve clients that require cross platform advertising support including broadcast video, creative and story boarding capabilities. �The Viewpoint internet marketing technology platform is now built and we are now entering the next phase in our business strategy,� continued Mr. Vogt. �Our Q2 pipeline is strong and as such we expect significant sequential improvement in revenue and our bottom-line results. We expect growth in revenue for 2007 compared to 2006, in addition we expect significant improvement in bottom-line performance in 2007 compared to 2006. We are confident in the business going forward and believe that the momentum that has been building in the first half of the year will continue throughout the year.� Operating loss for the first quarter of 2007 was $2.0 million as compared to an operating loss of $1.1 million in the fourth quarter of 2006 and an improvement of $1.1 million as compared to an operating loss of $3.1 million for the first quarter of 2006. Operating expenses for the first quarter decreased by almost $1.0 million year over year, including a $0.3 million decrease in non-cash stock-based compensation expense. Christopher Duignan, Chief Financial Officer stated, �The year over year decrease in operating expenses highlights our commitment to effective cost management as we grow the business.� Net loss for the first quarter was $2.0 million or $(0.03) per share compared to a net loss of $0.6 million, or $(0.01) per share in the fourth quarter 2006 and a net loss of $3.9 million or $(0.06) per share, in the first quarter 2006. Viewpoint�s cash, cash equivalents, and marketable securities as of March 31, 2007 were $2.8 million. As noted above, the Company completed a private placement raising $5.3 million on May 7, 2007. FINANCIAL INFORMATION Management prepares and is responsible for the Company�s consolidated financial statements which are prepared in accordance with accounting principles generally accepted in the United States. The financial information contained in this press release, which is unaudited, is subject to revision and should not be considered final until the Company files its Quarterly Report on Form 10-Q, which is scheduled to occur on or before May 10, 2007. At the present time, the Company has no reason to believe that there will be changes to the financial information contained herein. FINANCIAL MEASURES In addition to the results presented above in accordance with generally accepted accounting principles, or GAAP, the Company presents financial measures that are non-GAAP measures, specifically adjusted operating income. The Company believes that this non-GAAP measure, viewed in addition to and not in lieu of the Company�s reported GAAP results, provides useful information to investors regarding its performance and overall results of operations. These metrics are an integral part of the Company�s internal reporting to measure the performance of the Company and the overall effectiveness of senior management. Reconciliations to comparable GAAP measures are available in the accompanying schedules and on the Company�s website. The financial measures presented are consistent with the Company�s historical financial reporting practices. The non-GAAP measures presented herein may not be comparable to similarly titled measures presented by other companies, and are not identical to corresponding measures used in our various agreements or public filings. CONFERENCE CALL The Company will host a conference call on May 9, 2007 at 9:00 A.M. (Eastern Time) to discuss first quarter 2007 financial results. The conference call will be available via the Internet in the Investor Relations section of Viewpoint�s Web site at http://www.viewpoint.com, as well as through Thomson/CCBN at www.earnings.com. If you are not able to access the live Web cast, dial in information is as follows: Toll-Free Telephone Number: (800) 603-7883 International Telephone Number: (706) 643-1946 Pass code: 8050565 Participants should call at least 10 minutes prior to the start of the call. A complete replay of the conference call will be available approximately one hour after the completion of the call by dialing (800) 642-1687 through Wednesday, May 16, 2007. Callers should enter the pass code above to access the recording. ABOUT VIEWPOINT Viewpoint is a leading Internet marketing technology company, offering Internet marketing and online advertising solutions through the powerful combination of its proprietary visualization technology and a full range of campaign management services including TheStudio, Viewpoint's creative services group, Unicast, Viewpoint's online advertising group, and KeySearch, Viewpoint's search engine marketing consulting practice. Viewpoint's technology and services are behind the online presence of some of the world's most esteemed brands, including AOL, GE, Sony, and Toyota. More information on Viewpoint can be found at www.viewpoint.com. The company has approximately 100 employees principally at its headquarters in New York City and in Los Angeles. FORWARD LOOKING STATEMENTS This press release contains "forward-looking" statements as that term is defined in the Private Securities Litigation Reform Act of 1995 and similar expressions that reflect Viewpoint's current expectations about its future performance. These statements and expressions are subject to risks, uncertainties and other factors that could cause Viewpoint's actual performance to differ materially from those expressed in, or implied by, these statements and expressions. Such risks, uncertainties and factors include those described in Viewpoint's filings and reports on file with the Securities and Exchange Commission. Copyright � 2007 Viewpoint Corporation. All Rights Reserved. Viewpoint, Unicast, TheStudio by Viewpoint and KeySearch are trademarks or registered trademarks of Viewpoint Corporation. VIEWPOINT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (Unaudited) � Three Months Ended March 31, December 31, 2007� 2006� 2006� Revenue: Advertising systems $ 1,110� $ 1,595� $ 1,683� Search 1,485� 1,789� 1,485� Services 719� 553� 1,040� Licenses � 6� � 46� � 66� Total revenue 3,320� 3,983� 4,274� � Cost of revenue: Advertising systems 452� 1,040� 538� Search 43� 36� 41� Services 481� 663� 571� Licenses � -� � 6� � -� Total cost of revenue � 976� � 1,745� � 1,150� Gross profit 2,344� 2,238� 3,124� � Operating expenses: � Sales and marketing 1,195� 1,578� 1,411� Research and development 810� 1,088� 781� General and administrative 2,078� 2,359� 1,779� Depreciation 115� 117� 129� Amortization of intangible assets 128� 110� 127� Restructuring charges � -� � 92� � -� Total operating expenses 4,326� 5,344� 4,227� � Loss from operations (1,982) (3,106) (1,103) � Other income (expense) Interest and other income, net 51� 79� 68� Interest expense (204) (287) (217) Changes in fair values of warrants to purchase common stock � 157� � (628) � 666� Total other income (expense) � 4� � (836) � 517� Loss before provision for income taxes (1,978) (3,942) (586) Provision for income taxes � 12� � 7� � 22� Net loss $ (1,990) $ (3,949) $ (608) Basic and diluted net loss per common share: Net loss per common share $ (0.03) $ (0.06) $ (0.01) � Weighted average number of shares outstanding-basic and diluted 67,670� 64,864� 67,670� VIEWPOINT CORPORATION CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) (Unaudited) � March 31, 2007 December 31, 2006 Assets Current assets: Cash and cash equivalents $ 1,749� $ 4,154� Marketable securities 1,034� 113� Accounts receivable, net 2,520� 3,037� Prepaid expenses and other current assets � 547� � 543� Total current assets 5,850� 7,847� � Restricted cash 192� 190� Property and equipment, net 919� 1,023� Goodwill 14,882� 14,882� Intangible assets, net 3,534� 3,689� Other assets � 43� � 56� Total assets $ 25,420� $ 27,687� � Liabilities and Stockholders� Equity Current liabilities: Accounts payable $ 1,390� $ 1,660� Accrued expenses 387� 401� Deferred revenue 61� 70� Current portion of notes payable 389� 389� Accrued incentive compensation 545� 545� Current liabilities related to discontinued operations � 231� � 231� Total current liabilities 3,003� 3,296� � Accrued expenses - Deferred Rent 206� 232� � Warrants to purchase common stock 310� 467� Subordinate notes 2,368� 2,456� Unicast notes 1,500� 1,541� � Stockholders� equity Preferred stock -� -� Common stock 68� 68� Paid-in capital 306,552� 306,214� Treasury stock (1,015) (1,015) Accumulated other comprehensive loss 4� 14� Accumulated deficit � (287,576) � (285,586) Total stockholders� equity � 18,033� � 19,695� Total liabilities and stockholders� equity $ 25,420� $ 27,687� VIEWPOINT CORPORATION RECONCILIATION OF INCOME (LOSS) FROM OPERATIONS TO ADJUSTED OPERATING INCOME (LOSS) (in thousands, except per share amounts) (Unaudited) � Three Months Ended March 31, December 31, 2007� 2006� 2006� � Loss from Operations $ (1,982) $ (3,106) $ (1,103) Plus (Less): Non-cash stock based Compensation: COS-Ad Systems 4� 3� 10� COS � Services 7� 55� 21� Sales and marketing 86� 172� 101� Research and development 28� 109� 60� General and administrative 213� 329� 236� Depreciation 141� 145� 145� Amortization 156� 138� 155� Restructuring charges � -� � 92� � -� � Adjusted Operating Income $ (1,347) $ (2,063) $ (375)