VWPT Viewpoint (MM)

Viewpoint Corporation (NASDAQ: VWPT), a leading internet marketing technology company, today announced financial results for the second quarter ended June 30, 2007. Viewpoint reported total revenue of $3.8 million for the second quarter of 2007, a 16 percent increase as compared to $3.3 million in the first of quarter 2007 and a 33 percent decrease as compared to $5.7 million in the second quarter of 2006. Gross profit was $2.4 million for the second quarter of 2007, an increase of 2 percent as compared to the $2.3 million for the first quarter of 2007 and a decrease of 15 percent from $2.8 million for the second quarter of 2006. Patrick Vogt, President and Chief Executive Officer, commented, �We made progress during the quarter by continuing to execute on our strategy to meet the escalating demand for Premium Rich Media from marketers, agencies and publishers. We are laying the groundwork for sustainable long-term profitability through our strategic DG Fastchannel partnership and our recent enterprise customer wins.� Mr. Vogt continued, �Moving forward we will continue to focus on creating the most flexible rich media and video ad platform in the industry. With the successful build out of our capabilities, we are now in a position where we can really take advantage of the tremendous opportunities in the market. We continue to refine our business � creating additional capabilities that complement our offerings in order to accelerate our growth. As a result, we expect improvement in both revenue and operating performance in 2007 compared to 2006.� Operating loss for the second quarter of 2007 was $2.6 million as compared to an operating loss of $2.0 million in the first quarter of 2007 and an operating loss of $2.1 million for the second quarter of 2006. Net loss for the second quarter of 2007 was $5.2 million or $(0.07) per share compared to a net loss of $2.0 million, or $(0.03) per share in the first quarter 2007 and a net loss of $2.8 million or $(0.04) per share, in the second quarter 2006. Adjusted operating income (�AOI�), as defined below, was $(1.5) million for the second quarter, as compared to $(1.3) million in the first quarter of 2007, and $(1.4) million for the second quarter of 2006 For the six months ended June 30, 2007, the Company reported revenue of $7.2 million, compared with $9.7 million for the same period in 2006. For the six months ended June 30, 2007, gross profit decreased 7 percent to $4.7 million in 2007 from $5.1 million in 2006. Viewpoint�s operating expenses for the six-month period ended June 30, 2007 were $9.3 million compared with $10.3 million for the six-month period ended June 30, 2006, a decrease of 10 percent. The Company�s net loss for the six months ended June 30, 2007 of $7.2 million, or $(0.10) per share, was based on a loss from operations of $4.6 million, which included charges of $1.0 million for stock based compensation and $0.7 million for depreciation and amortization. This compares to a net loss for the six months ended June 30, 2006 of $6.8 million, or $(0.10) per share, based on a loss from operations of $5.2 million, which included charges of $1.2 million for stock based compensation and $0.6 million for depreciation and amortization. AOI for the first six months ended June 30, 2007 was $(2.9) million, a $0.5 million operating performance improvement, compared to $(3.4) million for the first six months ended June 30, 2006. Viewpoint�s cash, cash equivalents, and marketable securities as of June 30, 2007 were $5.7 million. This can be compared with cash, cash equivalents, and marketable securities of $2.8 million as of March 31, 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 August 9, 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 August 9, 2007 at 9:00 A.M. (Eastern Time) to discuss second 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: 11784828 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 Thursday, August 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, with additional offices in Los Angeles, CA and in Austin, TX. 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, as well as, the lack of assurance that Viewpoint will achieve long-term profitability. 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 June 30, March 31, � 2007 � 2006 � 2007 Revenue: Advertising systems $ 1,426 $ 3,013 $ 1,110 Search 1,726 1,573 1,485 Services 680 1,091 719 Licenses � 5 � 32 � 6 Total revenue 3,837 5,709 3,320 � Cost of revenue: Advertising systems 913 2,199 452 Search 28 38 43 Services 509 648 481 Licenses � - � 2 � - Total cost of revenue � 1,450 � 2,887 � 976 Gross profit 2,387 2,822 2,344 � Operating expenses: � Sales and marketing 1,322 1,449 1,195 Research and development 804 1,068 810 General and administrative 2,507 2,226 2,078 Depreciation 113 107 115 Amortization of intangible assets � 230 � 111 � 128 Total operating expenses 4,976 4,961 4,326 � Loss from operations (2,589) (2,139) (1,982) � Other income (expense) Interest and other income, net 61 90 51 Interest expense (200) (209) (204) Changes in fair values of warrants to purchase common stock � (2,418) � (544) � 157 Total other income (expense) � (2,557) � (663) � 4 Loss before provision for income taxes (5,146) (2,802) (1,978) Provision for income taxes � 16 � 19 � 12 Net loss $ (5,162) $ (2,821) $ (1,990) Basic and diluted net loss per common share: Net loss per common share $ (0.07) $ (0.04) $ (0.03) � Weighted average number of shares outstanding-basic and diluted 76,577 66,505 67,670 VIEWPOINT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (Unaudited) � Six Months Ended June 30, � 2007 � 2006 Revenue: Advertising Systems $ 2,536 $ 4,608 Search 3,211 3,362 Services 1,399 1,644 Licenses � 11 � 78 Total revenue 7,157 9,692 � Cost of revenue: Advertising systems 1,365 3,239 Search 71 74 Services 990 1,311 Licenses � - � 8 Total cost of revenue � 2,426 � 4,632 Gross profit 4,731 5,060 � Operating expenses: � Sales and marketing 2,517 3,027 Research and development 1,614 2,156 General and administrative 4,585 4,585 Depreciation 228 224 Amortization of intangible assets 358 221 Restructuring charges � - � 92 Total operating expenses 9,302 10,305 � Loss from operations (4,571) (5,245) � Other income (expense): Interest and other income, net 112 169 Interest expense (404) (496) Changes in fair values of warrants to purchase common stock � (2,261) � (1,172) Total other income (expense) � (2,553) � (1,499) Loss before provision for income taxes (7,124) (6,744) � Provision for income taxes � 28 � 26 Net loss $ (7,152) $ (6,770) � Basic and diluted net loss per common share: Net loss per common share $ (0.10) $ (0.10) � Weighted average number of shares outstanding-basic and diluted 72,148 65,689 VIEWPOINT CORPORATION CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) (Unaudited) � June 30, 2007 December 31, 2006 Assets Current assets: Cash and cash equivalents $ 5,401 $ 4,154 Marketable securities 312 113 Accounts receivable, net 3,353 3,037 Prepaid expenses and other current assets � 593 � 543 Total current assets 9,659 7,847 � Restricted cash 194 190 Property and equipment, net 916 1,023 Goodwill 15,103 14,882 Intangible assets, net 4,086 3,689 Other assets � 59 � 56 Total assets $ 30,017 $ 27,687 � Liabilities and Stockholders� Equity Current liabilities: Accounts payable $ 1,853 $ 1,660 Accrued expenses 442 401 Deferred revenue 101 70 Current portion of notes payable 488 389 Accrued incentive compensation 545 545 Current liabilities related to discontinued operations � 231 � 231 Total current liabilities 3,660 3,296 � Accrued expenses - Deferred Rent 183 232 � Warrants to purchase common stock 4,131 467 Subordinate notes 2,446 2,456 Unicast notes 1,459 1,541 � Stockholders� equity Preferred stock - - Common stock 83 68 Paid-in capital 311,798 306,214 Treasury stock (1,015) (1,015) Accumulated other comprehensive loss 10 14 Accumulated deficit � (292,738) � (285,586) Total stockholders� equity � 18,138 � 19,695 Total liabilities and stockholders� equity $ 30,017 $ 27,687 VIEWPOINT CORPORATION RECONCILIATION OF INCOME (LOSS) FROM OPERATIONS TO ADJUSTED OPERATING INCOME (LOSS) (in thousands, except per share amounts) (Unaudited) � June 30, March 31, June 30, � 2007 � � 2006 � � 2007 � � 2007 � � 2006 � � Loss from Operations $ (2,589 ) $ (2,139 ) $ (1,982 ) $ (4,571 ) $ (5,245 ) Plus (Less): Stock based Compensation: COS-Ad Systems 4 2 4 8 5 COS � Services 9 46 7 16 101 Sales and marketing 91 119 86 177 291 Research and development 26 85 28 54 194 General and administrative 513 243 213 726 572 Depreciation: 140 133 141 281 278 Amortization: 258 139 156 414 277 Restructuring charges � - � � - � � - � � - � � 92 � Adjusted Operating Income (loss) $ (1,548 ) $ (1,372 ) $ (1,347 ) $ (2,895 ) $ (3,435 )