Salon City, Inc. Projects Growth From Salon City Magazine in 2008

April 23, 2007 | 10:00 am

WEST HOLLYWOOD, Calif., April 23 /PRNewswire-FirstCall/ -- Salon City, Inc. (Pink Sheets: SLON) today announced its initial 2008 plans for Salon City Magazine's circulation as it begins the development of its marketing message for 2008's upcoming media-buying season, beginning in July. This represents the company's first opportunity to sell-in its new magazine, which launched February 27, 2007, and to outline anticipated revenues as a publicly traded company.

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Salon City Magazine is now nationally distributed by Time Warner Retail, a Time Warner Company (NYSE: TWX), and Kable News Distribution, an Amfar company (NYSE: AXR), in more than 20 countries around the world.

Steven Casciola, SCI's President and CEO, stated, "2008 is a potential breakout year for revenues and profits. We have a much stronger media program to offer advertisers with our new look, increased circulation, worldwide consumer reach and prime placement on retailers' shelves. Based on our current circulation alone, we are in position to realize increases in 2008's revenues and profits."

Salon City's current circulation, approximately 75,000 copies, is increasing due to Time Warner's and Kable's "ramp up" with national buyers for major retail chains. In 2008, the company expects to sell up to 300 ad pages at average page rates of $8,500 or more. Using existing circulation and a 10- time frequency as a base line, this represents $2.5 million dollars a year in revenues, with gross profits in excess of 50 percent. The company's projected break-even point, based on maintaining current circulation and a 10-time frequency, is $1.2 million dollars. Added revenue, not currently projected, will come from subscriptions, newsstand sales, online sales, web memberships, events and special promotions.

Advertisers typically plan yearly budgets during the July through November window. Because of Salon City's new distribution and increasing circulation, SCI is preparing several buying programs reflecting circulation options and its success in launching America's newest lifestyle publication.

SCI plans to reinforce the magazine's marketing advantage; advertisers gain global consumer exposure at very attractive pricing; often 10 percent of the other brand-name publications, such as Vogue, Elle, Glamour, Allure and Vanity Fair that Salon City is placed alongside on bookstore shelves. Typical page rates for these magazines are $100,000 or more. SCI's cost/benefit programs will attract larger ad agencies seeking to add value to their client's media buys.

Casciola cited additional competitive advantages: "Younger readers are tiring of older, slick, 'line extension' magazines that look like nothing more than cluttered product catalogs. Salon City's strength is fresh content, and that we are reaching and energizing a coveted demographic group of trendsetters, ages 18-29 and up. Our company's original ties to the salon industry are another unique advantage that other major titles do not have, and this is an additional strong reason why buyers and agencies are looking at SCI."

Casciola notes that base-line projections are drawn from current circulation and the company's existing capital structure. Salon City is still preparing for July's start of the media-buying season, and final results will vary. As SCI's capital structure improves in the coming months, the company expects to be able to increase circulation, ad rates and revenues. As audited circulation increases to 150,000 copies per issue, ad rates will also increase to $15,000 per page, resulting in higher revenues and gross profits.

SCI's corporate summary suggests that as the company expands its own worldwide branding awareness with consumers, it will be able to launch new products and services within SCI's media distribution network. Says Casciola, "Salon City promised the marketplace a new magazine seen by consumers around the world -- and it delivered."

To learn more about Salon City, Inc.'s plans, investors are invited to listen in on the company's weekly conference calls, most Thursdays at 4 p.m. EST. Investors should call 605-725-1900 (long-distance charge applies) and use code 010405.

For more information on the Company, please visit the Company's website at http://www.saloncity.com. To be added to Salon City's investor e-mail list, please send an e-mail to our Investors Relations Department at info@saloncity.com.

Certain information contained in these materials is "forward-looking" information, such as projections, estimates, pro formas, or statements of intentions, expectations or plans. All forward-looking information is subject to known and unknown risks and uncertainties, many of which are outside of the control of the Company. Consequently, actual results may, and probably will, differ materially from the results contemplated in such forward-looking information.