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Escala Group and Its North American Philatelic Division Report Strong 'Stamp Auction Week' Sales.

Aggregate Sales Total $5.8 Million, 26% Over Pre-Sale Estimates

NEW YORK -- Escala Group (Nasdaq: ESCL), a global collectibles company in stamps, coins, and art and antiques, and its North American Philatelic Auction subsidiaries Greg Manning Auctions, H.R. Harmer and Nutmeg Stamp Sales, announced that the five auctions conducted during "Stamp Auction Week" held September 25-30, 2006, realized $5.8 million in aggregate sales, well over their pre-sale estimates of $4.6 million. Each of the auction's results exceeded expectations, and the broad range of material offered - Specialized Hawaii and Canal Zone, scarce and rare United States individual stamps and collections, and Worldwide single stamps and collections - exhibited strength across multiple specialty areas, with bidding activity from around the globe.

The initial auction, conducted by H.R. Harmer on September 27, was the first of three important Harmer sales held during "Stamp Auction Week." This auction was comprised of specialized collections of Hawaii and Canal Zone stamps and postal history. Highlights of this auction included the sale of an 1851-era 5o used Hawaiian Missionary stamp, which, despite faults and repairs, sold for $8,625 (all realizations include the Buyer's Premium). Another rare Hawaiian issue, a mint 2o Numeral stamp of 1859, opened at $6,750 and eventually sold for $21,850 despite not having original gum, and with a Scott catalogue value of only $12,000. A rare Canal Zone inverted center issue of 1906 in mint condition commenced bidding at $3,000 and sold to an agent for $8,050 against its $3,500 catalogue value.

Harmer's second auction on September 28 was comprised of a number of significant consignments of United States individual stamps and postal history. A lovely copy of the United States 10o 1847 issue in rare unused condition sold for $12,650 to a mail bidder. An exceptional mint 90o issue of 1870 opened at $6,500 and sold for $9,775, well over its catalogue value of $4,750. Another rare stamp, the mint 8o Bluish Paper, issued in 1909 with fewer than 90 copies known, sold for $28,750 to an Internet bidder.

The third Harmer auction, conducted on September 29, was comprised of exclusively worldwide stamps. A Great Britain Post Office fresh [pounds sterling]5 Orange of 1882 in mint, Never Hinged quality sold for $12,650 against its $9,000 Scott value, and was a highlight of the excellent section of Great Britain and the Commonwealth. A rare Canadian 5o St. Laurence Seaway mint stamp with an inverted center also realized over its Scott value of $9,250 when it sold for $12,075. The Falkland Islands 1933 Centenary issue in mint blocks of four catalogued $14,216 in Scott and realized a very strong $25,300 when the gavel fell.

The Greg Manning Auctions sale of stamp collections held on September 30, 2006, drew bidders to the auction site from Argentina, Canada, Denmark, Holland, Great Britain, Spain, and across the United States. This auction of intact collections is a specialty of the firm, which sells more collection lots, with four major sales per year, than any other philatelic auction firm in the world. The United States section included a U.S. Revenue Collection estimated to realize $16,000 to $20,000, which opened at $11,000 and finally sold to an agent for $37,375. A significant holding of mint U.S. stamps estimated to bring $20,000-$25,000 sold for $28,750. Another lot of miscellaneous mint and used United States stamps housed in two cartons was the subject of much bidder interest as it opened for $10,000 and sold to a floor bidder for $21,850, again well over its pre-sale estimate of $10,000-$15,000.

Greg Manning, President of the North American and Asian Philatelic Auction Division, stated, "Normally September is the beginning of our philatelic auction season, and typically not the busiest month, however this September's excellent results are indicative of a strong worldwide market. We are looking forward to our October 28-29, 2006 John Bull Stamp Auctions, Ltd. sale in Hong Kong, which contains a plethora of interesting material, and based on these recent results, should also benefit from this major demand for quality stamps. All of our September live floor auctions were available on the Internet through an on-line bidding interface."

Nutmeg Stamp Sales has recently announced that the firm will begin to conduct a series of monthly live and on-line auctions of United States graded stamps, beginning on November 11, 2006. The market for numerically third-party graded U.S. stamps has grown significantly over the past three years. Nutmeg's goal is to create the largest and most dependable auction market for collectors and dealers of graded U.S. stamps. The first auction will be comprised of hundreds of very high-grade U.S. stamps, and the live sale will be linked to the Internet for bidding on-line. Numerical coin grading began in 1986 and has had a profound positive impact on the coin business, giving greater market liquidity and quality assurance to all coin collectors and investors. The impact of numerical grading on the U.S. stamp market has also been very positive for the same reasons, and interest has expanded rapidly in stamp grading.

About Escala Group, Inc.

Escala Group is a consolidated global collectibles network. The Company is a leading auctioneer of stamps, coins, arms, armor and militaria, and other memorabilia, targeting both collectors and dealers. Escala is also a merchant/dealer of certain collectibles and trader of precious metals. The Company's collectibles offerings span the modest to ultra high-end price spectrum. Escala conducts its operations in two business segments: collectibles and trading.

Escala's Group Companies focused on philately are Greg Manning Auctions, Ivy & Manning Philatelic Auctions, H.R. Harmer, and Nutmeg Stamp Sales, all of North America; Corinphila Auktionen of Zurich, Switzerland and the Kohler group of auction companies of Berlin and Wiesbaden, Germany from our European division; and John Bull Stamp Auctions, Ltd, the oldest philatelic auction house in Hong Kong in our Asia division. Escala's Group Companies in its numismatics division include Teletrade, Bowers and Merena Auctions, North American Certified Trading, and Spectrum Numismatics International, one of the largest wholesalers of rare coins in the U.S. Greg Martin Auctions is in the Company's art and antiques division.

The trading activities of Escala Group are conducted through A-Mark Precious Metals, one of the largest private sellers of bullion coins and bullion gold, silver and platinum to the wholesale marketplace.

SAFE HARBOR STATEMENT

Statements in this press release that relate to future plans, objectives, expectations, performance, events and the like are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange Act of 1934. Future events, risks and uncertainties, individually or in the aggregate, could cause actual results to differ materially from those expressed or implied in these statements. Factors that may cause such differences include changes in market conditions, changes in economic environment, competitive factors and the other factors discussed in the "forward-looking information" or "risk factors" sections included in Escala Group's filings with the Securities and Exchange Commission, including Escala Group's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, prospectuses and other documents that Escala Group has filed with the Commission. In particular, any statement related to Escala Group's expected revenues or earnings or Escala Group's being well positioned for future profitability and growth are forward-looking statements.

In addition, the Company faces substantial uncertainty as a result of recent events surrounding Afinsa. In particular, readers should note the following: (1) Since May 9, 2006, Afinsa and certain of its executives have been the subject of a criminal investigation in Spain. The Company has not been informed by the Spanish authorities as to whether the Company or any of its subsidiaries, including CdC, or any of their respective executives, is a target of the investigation in Spain or will be the subject of any criminal charges in the future. The Company is aware that the Spanish authorities are seeking to obtain information from the SEC that it has regarding the Company (as a result of the SEC's formal investigation of the Company or otherwise), including copies of certain specified documents (primarily relating to the Company's transactions with Afinsa) that we have previously provided to the SEC in response to various document requests. (2) In addition to the Audit Committee's internal review, on or about June 5, 2006, the Company received notification of a formal order of investigation from the SEC. Although the order is not confined to a particular subject matter, the Company believes that the matters being investigated relate primarily to the Company's transactions with Afinsa. Both the Audit Committee and SEC inquiries are continuing, and the outcome of either cannot be determined at this time. (3) Afinsa is currently involved in insolvency proceedings before a commercial court in Madrid. The court has appointed three trustees to oversee the operations of Afinsa. The Company believes, based on its understanding of Spanish insolvency law, that there are two possible outcomes of Afinsa's bankruptcy: (a) a settlement with the creditors is reached, which assumes Afinsa can resume operations under a reorganization plan, or (b) all of Afinsa's assets are liquidated in order to pay off its debts. The effect of Afinsa's bankruptcy proceedings on the Company, approximately 67% of whose stock is owned collectively by Afinsa and its wholly owned subsidiary, Auctentia, S.L., cannot be determined at this time. (4) As a result of the events of May 9, 2006, Escala and certain of its officers and directors have been named in eight putative class action lawsuits (now consolidated) and two shareholder derivative actions (now consolidated). We do not know what the outcome of these proceedings will be, and if we do not prevail in the class actions, we may be required to pay substantial damages or settlement amounts. Further, regardless of the outcome, we may incur significant defense costs. If we are ultimately required to pay significant defense costs, damages or settlement amounts, such payments could materially and adversely affect our liquidity and results of operations. (5) The Company has incurred significant expenses in connection with the SEC and Audit Committee investigations and the class actions and derivative lawsuits and is expected to continue to incur significant additional expenses to the extent these matters are not settled and otherwise resolved. The Company also expects to incur legal fees in connection with matters relating to Afinsa, including making a claim in Afinsa's bankruptcy proceedings. Responding to these inquiries and proceedings has in the past diverted, and is likely to continue to diver, the time and attention of our management from regular business operations. (6) The Company faces substantial business and financial risks and uncertainties as a result of the loss of Afinsa as its major customer. (7) As a result of the failure to file, the Company is not in compliance with the continued listing requirements of the Nasdaq Stock Market and has received a delisting determination letter from Nasdaq. If the Company does not make all required filings prior to a negative determination from a Nasdaq Hearing Panel, or prior to the expiration of any conditional listing exception the Company is able to obtain from a Nasdaq Hearing Panel, the Company's securities will be delisted from the Nasdaq Stock Market. Delisting, or potential delisting, of the Company's securities may have a material adverse effect on the liquidity and/or trading price of the Company's common stock and the Company's ability to access capital markets.

The words "should," "believe," "estimate," "expect," "intend," "anticipate," "foresee," "plan" and similar expressions and variations thereof identify certain of such forward- looking statements, which speak only as of the dates on which they were made. Additionally, any statements related to future improved performance and estimates of revenues and earnings per share are forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements.

(ESCL)
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Publication:Business Wire
Date:Oct 11, 2006
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