BIDZ Bidz.Com, Inc. (MM)

Bidz.com (Nasdaq:BIDZ), a leading online retailer of jewelry, announced results for the fourth quarter and full year ended December 31, 2011.

Net revenues for the fourth quarter of 2011 were $21.2 million, a decrease of 27.1% from the $29.0 million reported in the fourth quarter of 2010. During the fourth quarter Bidz.com represented $16.5 million of the total net revenue, and Modnique.com represented $4.7 million, compared with $27.2 million, and $1.8 million, respectively, in the same periods last year. The significant 158% year-over-year increase in net revenues for Modnique.com indicates the overall growth in demand for its affordable brand name merchandise including apparel, home, beauty, accessories and footwear products. Bidz.com revenues declined as a result of lower demand for discretionary items, specifically jewelry.

The percentages of the Company's domestic and international sales for the fourth quarter 2011 were 52.6% and 47.4%, respectively. Canada and Australia were the Company's top two international markets representing 20.0% and 15.3%, respectively.

Gross profit for the fourth quarter was approximately $6.4 million, compared with $7.2 million in the fourth quarter of 2010. Gross margin increased to 30.4% compared to 24.6% in the fourth quarter of 2010, representing an increase of approximately 580 basis points. The significant increase in gross margin percentage was due to several factors including improved quality of the inventory, higher margin product mix and reduced free shipping promotions.

"Fiscal 2011 continued to be a challenging year for the Company, and in particular, for Bidz.com," said David Zinberg, the Company's Chief Executive Officer. "The Modnique.com website continued to grow significantly and gain both awareness and popularity, particularly through social media and viral force. The Modnique business showed strong momentum and we see many opportunities to further grow this business."

Mr. Zinberg, continued, "Over the past year, we've been working hard to manage expenses and improve margins, and during the quarter we started to see the positive impact of these efforts. Operating results improved significantly due to improved higher gross profit margin and lower operating expenses resulting in net income of approximately $98,000, our first profitable quarter in 2011. We remain focused on gaining momentum for our Modnique.com website, and are working on improving our product assortment with current demand, enhancing our customer service and overall shopping experience, as well as concentrating on all the initiatives we have in place to ensure growth in 2012 and beyond."

Sales Metrics (1)	Three Months Ended December 31,
	2011	2010	% Change
Average selling price per order (gross)	$170	$180	-5.6%
Gross Margin $ per average order	$52	$44	16.7%
Number of new buyers	37,607	54,271	-30.7%
Average orders per day	1,539	1,883	-18.2%
Average items sold per day	4,782	6,899	-30.7%
Average items sold per transaction	3.1	3.7	-16.2%
Acquisition cost per new buyer	$45	$32	40.6%
(1)  Wholesale merchandise sales and Modnique.com sales are included in the sales metrics

General and administrative expenses for the fourth quarter 2011 decreased 8.7% to $4.5 million compared with $5.0 million in the fourth quarter of 2010. Sales and marketing expense for the fourth quarter 2011 were relatively flat at $1.7 million compared with the fourth quarter of 2010. Total operating expenses in the fourth quarter 2011 decreased 7.5% to $6.3 million compared with $6.9 million in the prior year period.

Net income for the fourth quarter of 2011 was $98,000, or $0.01 per fully diluted share, on 19.0 million weighted average diluted shares outstanding. This is compared to net income of $15,000, or break-even per fully diluted share, on 19.5 million weighted average diluted shares outstanding in the same period of 2010.

Subsequent Events:

The Company also recently announced that it received notice from the United States Securities and Exchange Commission ("SEC") that the investigation of the Company has been completed. The SEC does not intend to recommend any enforcement action against the Company.

The Company also announced that on February 9, 2012, it received a letter from The NASDAQ Stock Market LLC that the Company is eligible for an additional 180 calendar day period, or until August 6, 2012, to regain compliance with NASDAQ's minimum $1 bid price per share requirement for continued listing.  The staff's determination was based on the Company meeting the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing on the Capital Market, with the exception of the bid price requirement, and the Company's written notice of its intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary.

Mr. Zinberg continued, "We are pleased to share that after four years, the SEC has concluded its investigation and we are happy to put this chapter behind us. Additionally, NASDAQ has also extended our eligibility to regain compliance until August 6, 2012.  We intend to actively monitor the bid price and will consider all available options to resolve the deficiency and regain compliance."

Full-Year Results

The Company's revenues for the twelve months ended December 31, 2011 decreased 17.6% to $86.4 million, compared with $104.8 million reported for the twelve months ended December 31, 2010. The overall decrease in net revenues was primarily a result of declines in consumer spending for discretionary products caused by the ongoing weak economic climate, which affected jewelry spending. The Company's domestic and international sales in 2011 represented 54.9% and 45.1%, respectively, versus 2010 domestic and international sales of 59.1% and 40.9%, respectively.

Gross profit for the full year ended December 31, 2011 was $22.7 million, compared with $26.1 million in the prior year period. Gross margin for the full year ended December 31, 2011 improved to 26.3% compared with 24.9% for the same period last year.

Net loss for the full year 2011 was $7.0 million, or ($0.36) per fully diluted share, on 19.3 million weighted average shares outstanding. This is compared to net loss of $(1.4) million, or $(0.07) per fully diluted share, on 20.8 million weighted average shares outstanding in the same period of 2010.

The Company ended the fourth quarter 2011 with $1.2 million in cash and $22.2 million in working capital with a zero debt balance. The Company believes that cash currently on hand and cash flows from operations will be sufficient sources of capital to continue funding its operations for the foreseeable future.

Investor Conference Call

Bidz.com will not conduct an earnings conference call for the fourth quarter ending December 31, 2011. For further questions, please contact Andrew Greenebaum at andrewg@addocommunications.com.

About Bidz.com

Bidz.com, founded in 1998, is a leading online retailer of jewelry. Bidz offers its products through a live auction format as well as a fixed price online retail store, Buyz.com. Bidz also operates Modnique.com, a division of Bidz.com, a flash sale shopping website, offering authentic premium brand name merchandise. Modnique offers its members exclusive access to 24-72 hour sales events on designer apparel, accessories, shoes, and housewares and much more at price points up to 85% below traditional retail prices.

Safe Harbor Statement

This press release includes forward-looking statements about the Company's estimated revenue and earnings within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this release, including statements regarding the Company's future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," and similar expressions, as they relate to the Company, are intended to identify forward-looking statements. We have based these forward-looking statements largely on current expectations and projections about future events and financial trends that we believe may affect the Company's financial condition, results of operations, business strategy and financial needs. Risks and uncertainties include that our common stock is subject to short-selling and trading, and prices of our stock may be volatile; that we are subject to "prank" bidding; that we may face increasing costs to acquire new customers; the ability of the Company to attract customers to its website and offer attractive products; the ability to maintain profit levels while expanding international sales; the ability to detect fraud if we fail to maintain an effective system of internal controls; the ability to maintain our website, electronic data processing systems, and systems hardware; the ability to forecast accurately net revenue and plan for expenses; that we do not have a guaranteed supply of jewelry products and that we have a heavy concentration of inventory purchased from our top two suppliers; the ability to protect our intellectual property rights; and potential litigation and government enforcement actions that may result from our prior securities offerings. Please refer to Bidz.com's reports and filings with the Securities and Exchange Commission for a further discussion of these risks and uncertainties. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made. Bidz.com undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made or to reflect the occurrence of unanticipated events.

Tables to follow

Bidz.com, Inc. and Subsidiary
Consolidated Statements of Income (Operations)
(in thousands, except share and per share data)
	Years Ended December 31,			Three Months Ended December 31,
	2009	2010	2011	2010	2011
Net revenue:
Merchandise sales	$ 106,043	$ 98,112	$ 79,064	$ 27,259	$ 21,017
Wholesale merchandise sales (includes related party amounts of $2,403, $4,827 and $3,968 for the years ended December 31, 2009, 2010 and 2011, respectively)	4,009	6,267	6,805	1,616	29
Other revenue	342	393	498	170	119
	110,394	104,772	86,367	29,045	21,165
Cost of revenue	76,667	78,659	63,675	21,888	14,732
Gross Profit	33,727	26,113	22,692	7,157	6,433
Operating expenses:
General and administrative	19,165	20,824	20,294	4,978	4,549
Sales and marketing	9,140	6,241	7,938	1,729	1,679
Depreciation and amortization	795	685	487	144	110
Total operating expenses	29,100	27,750	28,719	6,851	6,338
Income (loss) from operations	4,627	(1,637)	(6,027)	306	95
Other expense - interest income	1	1	--	--	--
Other expense - interest (expense)	(74)	(11)	--	--	--
Income (loss) before income tax benefit (expense )	4,554	(1,647)	(6,027)	306	95
Income tax benefit (expense)	(2,026)	284	(1,022)	(291)	3
Net income (loss )	$ 2,528	$ (1,363)	$ (7,049)	$ 15	$ 98
Net income (loss) per share available to common shareholders - basic and diluted	$ 0.11	$ (0.07)	$ (0.36)	$0.00	$ 0.01
Weighted average number of shares outstanding - basic and diluted	22,363,367	20,829,419	19,334,374	19,522,036	19,013,026

Bidz.com, Inc. and Subsidiary
Consolidated Balance Sheets
(in thousands, except share and per share data)
	December 31,	December 31,
	2010	2011
Assets
Current assets:
Cash	$ 8,074	$ 1,192
Accounts receivable	682	2,746
Inventories, net of reserves of $1,694 and $1,112 at December 31, 2010 and December 31, 2011, respectively	32,136	29,714
Other receivables (includes related party amounts of $363 and $186 at December 31, 2010 and December 31, 2011, respectively)	1,824	796
Current deferred tax assets	2,516	--
Other current assets	673	2,487
Total current assets	45,905	36,935
Long term deferred tax assets	662	--
Property and equipment, net	637	369
Intangible assets, net	235	319
Deposits	157	--
Total assets	$ 47,596	$ 37,623
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable (includes related party amounts of $3,119 and $2,884 at December 31, 2010 and December 31, 2011, respectively)	$ 14,188	$ 11,013
Accrued expenses	2,494	2,273
Deferred revenue	1,521	1,457
Total current liabilities	18,203	14,743
Commitments and Contingencies	--	--
Stockholders' equity:
Preferred stock: par value $0.001; authorized 4,000,000 shares; none issued and outstanding at December 31, 2010 and December 31, 2011, respectively	--	--
Common stock: par value $0.001; authorized 100,000,000 shares; issued 19,708,991 and 18,379,045 and outstanding 19,379,177 and 18,379,045 at December 31, 2010 and December 31, 2011, respectively	20	18
Additional paid in capital	18,202	18,528
Shares held in treasury, at cost; 175,814 and 0 shares at December 31, 2010 and December 31, 2011, respectively	(212)	--
Retained earnings	11,383	4,334
Total stockholders' equity	29,393	22,880
	$ 47,596	$ 37,623

Bidz.com, Inc. and Subsidiary
Consolidated Statements of Cash Flows
(in thousands)
	Years Ended December 31,
	2009	2010	2011
Cash flows provided by (used for) operating activities:
Net income (loss)	$ 2,528	$ (1,363)	$ (7,049)
Adjustments to reconcile net loss to net cash provided by (used for) operating activities:
Depreciation and amortization	795	685	487
Stock-based compensation	965	1,027	758
Loss on disposal of property and equipment	--	38	--
Deferred taxes	(29)	(1,115)	3,178
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable	251	(235)	(2,064)
Inventories	(3,304)	8,825	2,422
Other receivable	(520)	(370)	1,404
Other current assets	(2,554)	2,287	(1,814)
Deposits	(53)	--	157
Increase (decrease) in liabilities:
Accounts payable	2,523	2,028	(3,175)
Accrued expenses	(1,119)	203	(221)
Deferred revenue	(240)	889	(64)
Net cash provided by (used for) operating activities	(757)	12,899	(5,981)
Cash flows (used for) investing activities:
Capital expenditures	(404)	(152)	(303)
Net cash (used for) investing activities	(404)	(152)	(303)
Cash flows (used for) financing activities:
Revolving credit line	2,898	(2,898)	--
Repurchase of common stock from net vesting of restricted shares	(8)	(135)	(91)
Tax benefit from stock based compensation	(70)	--	(8)
Purchase of treasury shares	(4,994)	(2,761)	(499)
Net cash (used for) financing activities	(2,174)	(5,794)	(598)
Net increase (decrease) in cash	(3,335)	6,953	(6,882)
Cash, beginning of period	4,456	1,121	8,074
Cash, end of period	$ 1,121	$ 8,074	$ 1,192
Supplemental disclosure of cash flow information:
Interest paid	$ 74	$ 11	$ --
Income taxes paid	$ 2,550	$ --	$ --
Supplemental disclosure of non-cash investing and financing activities:
Retirement of treasury shares	$ 4,994	$ 2,549	$ 212

CONTACT: IR Contact:
         Addo Communications, Inc.
         Andrew Greenebaum, (310) 829-5400
         andrewg@addocommunications.com