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121Media Inc (OTO)

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Tuesday 24 April, 2007

121Media Inc

Annual Results

121Media Inc
24 April 2007


                                    
                                 121Media, Inc
                         (the "Company" or the "Group")
                  Results for the year ended 31 December 2006

Chairman's Statement

Results and dividends / financials

I am pleased to announce the results of 121Media, Inc. ("121Media" or the
"Group") for the year ending 31 December 2006. During 2006, we made a strategic
shift away from the desktop based business in order to fully pursue our ISP
relationship strategy. As anticipated, this move has impacted our short-term
financial performance and thus the results we are now publishing do not reflect
the prospects that our recent investments in people and technology represent.

Turnover for the Group for the year to 31 December 2006 decreased by 76% to
$1.27 million (2005: $5.2 million). Operating losses were $11.5 million (2005
loss: $3.5 million), as a result of the business model shift to online
behavioural and contextual advertising through arrangements with global ISP's.

Losses before taxation were $11.5 million (2005 loss: $3.5 million). Losses per
share were 1.12 cents (2005: 0.47 cents).

The Board is not recommending the payment of a dividend with respect to 2006. It
is the Board's intention to pursue a prudent dividend policy, taking into
account the Group's business objectives.

Strategy and business update

We announced at the end of 2005 that the Group would focus on its ISP strategy
for the financial year ended 31 December 2006. The decision to concentrate
management effort and financial resource has enabled 121Media to make
significant progress in its talks with global ISP providers, most notably in the
UK and the US.

We look forward to updating the market once more formal agreements with ISPs
have been set in place.

People

We have continued to invest in our management infrastructure during 2006, in
particular building out our global operations, planning and business development
presence. Senior appointments in 2006 included David Dorman, Virasb Vahidi, Hugo
Drayton and Marc Rothschild. 121Media now has a world-class team on which to
build and with whom it will deliver on the ISP opportunity globally.

David Dorman, former chairman and chief executive officer of AT&T Corp. joined
the company in July 2006 as an advisor. In September the Group was also
delighted to welcome Marc Rothschild as senior vice president, Strategic
Alliances, and Hugo Drayton, formerly managing director of advertising.com, as
CEO of the UK business. The year was completed with the appointment of Virasb
Vahidi, a former senior AT&T executive, who joined as group chief operating
officer.

The Group is immensely proud to have attracted leading industry executives of
such high calibre and, on behalf of the Board, I would like to thank them all
for their significant contribution to 121Media's progress during 2006.

Prospects

Investment in the business has continued during 2006 and we have received
tremendous support from our investors for our ongoing programme of strengthening
ties with the ISP community and developing our technology.

During 2006 we raised over £5.9m ($10.2m) (before expenses) via three share
placings with UK and US-based institutional investors. These have enabled the
Group to continue development of its behavioural advertising platform and its
prospects for use amongst global ISPs.

Since the year end, the Group has received significant further endorsement of
its strategy, with Morgan Stanley Principal Investments investing £2.56m ($5m)
to strengthen the Company's capital structure and underpin its global
development. This development has been very well received by the ISP community
and 121Media's other investors.

This is my last statement as Chairman of the Company since I will step down from
the Board at our forthcoming annual general meeting.

It has been a Chairmanship of which I am immensely proud. The company's growth
and evolution from its IPO in 2004, to where it is now, with the opportunity of
being a potential significant force in the next phase of revenues for ISPs has
been impressive, well managed and inspiring.

I have greatly enjoyed my time working in such a forward-looking company within
such a dynamic Industry. I hand the reins over to Kent and his extremely capable
team and look forward to watching the Group's progress over the coming years,
which I am sure will see it well placed to capture the heart of the global
digital advertising space.

David Svendsen
Chairman
23 April 2007

CHIEF EXECUTIVE OFFICER'S REPORT

The Company continues to strengthen its relationships with global ISPs in order
to reach agreements to deploy the Company's innovative behavioural advertising
technology platform. The Company is pleased to report its platform is in the
final stage of evaluation by numerous major global ISPs. This significant
development advances our objective of playing a major role in reshaping ISP
revenue models.

It has been a year of significant progress on the technology front. The Company
has built on its existing PageSense platform to create a new server-based
architecture called ProxySense. In Q4 of 2006, we conducted a live user trial of
PageSense with a UK ISP, and we are about to start a larger trial of ProxySense
with a test base of several hundred thousand users.

We have developed the first version of a user interface that connects
advertisers, agencies, ad networks and publishers into a global, real-time
advertising exchange. We have completed a major development of our ad server
system to support the interface and we are trialling the system with partners
from all of these sectors and working with them to develop future versions.

In order to facilitate our anticipated growth the Company has continued to build
its infrastructure and invest in senior management - attracting leading industry
figures from AT&T and AOL, amongst others.

I would like to thank David Svendsen for his outstanding contribution to the
Group ever since its IPO in 2004. We wish him well in his future endeavours. I
am looking forward to assuming the responsibilities of chairman and to steering
121Media's expansion and growth.

I would like to pay tribute to all our staff who have helped to build the
company to the strong position in which we now find ourselves. We enter 2007
with a high level of excitement and confidence.


Kent Ertugrul
Chief Executive Officer
23 April 2007


For enquiries:

121Media, Inc.
Kent Ertugrul (Chief Executive)                     Tel: + 44 (0)870 405 7722

Canaccord Adams
Mark Williams / Andrew Chubb                         Tel: +44 (0)20 7050 6500

Edelman Financial PR
Paul Lockstone                                       Tel: +44 (0)20 7344 1325
Sorrel Beynon                                        Tel: +44 (0)20 7344 1253





CONSOLIDATED PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 31 DECEMBER 2006

                                              Notes           2006          2005
                                                                    (As Restated)
                                                                 $             $

Turnover                                                 1,272,254     5,207,136

Cost of Sales                                             (403,306)   (2,171,486)

Gross Profit                                               868,948     3,035,650

Sales and Administrative Expenses

- General                                              (10,498,913)   (6,352,667)

- Share Based Payments                                  (1,906,674)     (195,848)

Operating Loss                                         (11,536,639)   (3,512,865)

Other Income                                                82,312        15,695

Interest Payable and Similar Charges                       (16,186)      (27,962)

Loss on Ordinary Activities Before Taxation            (11,470,513)   (3,525,132)

Taxation on Loss on Ordinary Activities                    (12,705)            -

Loss on Ordinary Activities After Taxation             (11,486,218)   (3,525,132)

Standard / Diluted Loss per Share - Basic       2            (1.12)        (0.47)


CONSOLIDATED BALANCE SHEET

AS AT 31 DECEMBER 2006
                                                              2006          2005
                                                                    (As Restated)
                                                                 $             $

Fixed Assets

Intangible assets                                           48,827             -

Tangible assets                                            384,857       504,803

                                                           433,684       504,803

Current Assets
Debtors                                                    594,063     1,975,086

Cash at bank and in hand                                 3,804,771       570,533

                                                         4,398,834     2,545,619

Creditors: Amounts Falling Due Within One Year          (1,495,420)   (1,002,472)

Net Current Assets                                       2,903,414     1,543,147

Total Assets Less Current Liabilities                    3,337,098     2,047,950

Creditors: Amounts Falling Due After One Year              (11,303)      (76,714)

Net Assets                                               3,325,795     1,971,236

Capital and Reserves
Called Up Share Capital                                     11,217         8,190

Share Premium Account                                   18,706,233     6,734,601

Other Reserves                                           1,128,838       663,576

Profit and Loss Account                                (16,520,493)   (5,435,131)

Shareholders' Funds                                      3,325,795     1,971,236





CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2006

                                          Notes              2006           2005
                                                                    (As Restated)
                                                                $              $
Net Cash Outflow from Operating Activities   a         (7,898,599)    (1,821,605)

Returns on Investments and Servicing 
of Finance                                   b             66,126        (12,267)

Taxation                                     c            (12,705)             -

Capital Expenditure and Financial Investment d           (566,211)      (288,321)

Net Cash Outflow Before Financing                      (8,411,389)    (2,122,193)

Financing                                    e         11,645,627      1,814,399

Increase / (Decrease) in Cash in the Period  f          3,234,238       (307,794)



Notes to the cash flow statement for the year ended 31 December 2006

a. Reconciliation of operating loss to net cash outflow from operating
activities

                                                            2006            2005
                                                               $               $
Operating Loss                                       (11,536,639)     (3,512,865)

Amortization                                               1,395               -

Depreciation Charges                                     593,106         560,109

Loss on Disposal                                          42,829               -

Transfer to Option Reserve                             1,254,065         203,299

Exchange Difference Taken to Reserves                   (106,675)       (174,221)

Decrease in Debtors                                    1,381,023         666,843

Increase in Creditors                                    472,297         435,230

Net cash Outflow from Operating Activities            (7,898,599)     (1,821,605)


b. Returns on investments and servicing of finance

                                                            2006            2005
                                                               $               $

Interest received                                         82,312          15,695

Interest paid                                            (16,186)        (27,962)
Net cash inflow/(outflow) from returns 
on investments and servicing of finance                   66,126         (12,267)

c. Taxation

                                                            2006            2005
                                                               $               $

Taxation                                                  12,705               -


d. Capital expenditure

                                                           2006             2005
                                                              $                $

Payments to acquire tangible fixed assets              (515,989)        (388,321)

Payments to acquire intangible fixed assets             (50,222)               -

Receipts from sale and leaseback                              -          100,000

Net cash outflow from capital expenditure              (566,211)        (288,321)

e. Financing

                                                           2006             2005
                                                              $                $

Issue of equity share capital                        11,690,387        1,819,259

Capital element of finance lease                        (44,760)          (4,860)

Net cash inflow from financing                       11,645,627        1,814,399

f. Analysis of change in net funds

                                            At 1 Jan   Cash Flows   At 31 December
                                                2006                          2006
                                                   $            $                $

Cash in hand and at bank                     570,533    3,234,238        3,804,771

                                             570,533    3,234,238        3,804,771

Debt:

Finance leases and hire purchase contracts   (95,140)      44,760          (50,380)

Net funds                                    475,393    3,278,998        3,754,391


Notes to the Audited Results for the year ended 31 December 2006

1. Publication of non-statutory financial statements

The financial information set out in this announcement does not constitute
statutory financial statements.

The Company is incorporated in the US state of Delaware and is not subject to
the requirements of the Companies Act 1985; however the financial statements 
have been prepared in accordance with United Kingdom Generally Accepted 
Accounting Practice.

The consolidated balance sheet as at 31 December 2006 and the consolidated
profit and loss account, consolidated cash flow statement
and associated notes for the year have been extracted from the Group's audited
financial statements on which the auditors provided an unqualified report.

2. Loss per share

The calculation of the basic loss per share and diluted loss per share is based
on the loss attributable to ordinary shareholders of $11,483,218 (2005: 
$3,525,132) divided by the weighted average number of shares in issue during the 
year.

The weighted average number of shares used in the calculation are set out below:

Year ended 31 December 2006                      Year ended 31 December 2005
   Number of shares                                    Number of shares

      10,257,408                                            7,491,507

3. Prior year adjustment

The group issues equity-settled share-based payments to certain employees and
has applied Financial Reporting Standard No. 20 (IFRS2)
'Share-based payments' for the first time. As a result the comparative figures
were restated, resulting in an increase in the loss for the year ended 31 
December 2005 by $191,533, comprising the FRS 20 charge of $203,299, employers' 
NIC of $(7,451) and gain on foreign currency translation of $(4,315). The 
deficit in the Profit and Loss Reserve increased by $282,275, with a 
corresponding increase in employers' NIC accrual of $29,050 and an increase of 
$253,225 in the option reserve.

4. Dividends

The Directors are not proposing the payment of a dividend in respect of the year
ended 31 December 2006.

5. Copies of the annual report and financial statements will be sent to the
shareholders shortly and will also be available at the Company's UK principle 
office, Golden Cross House, 8 Duncannon Street, London WC2N, 4JF.



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