SOURCE: JumpTV Inc.

August 10, 2007 02:56 ET

JumpTV Increases Revenue 17%, Reduces Loss in Q2 2007 vs Q1 2007

TORONTO--(Marketwire - August 10, 2007) - JumpTV Inc. ("JumpTV" or the "Company") (AIM: JTV) (TSX: JTV) a leader in broadcasting international television and sports over the Internet, today announced quarterly results and selected financial metrics for the quarter ended June 30, 2007.

For the quarter ended June 30, 2007 revenue was US$1,175,924, an increase of 175% from US$426,998 in the same period a year ago. Sequentially, revenue increased 17% from US$1,003,146 in the first quarter 2007. Of the US$1.175 million in revenue approximately US$120,000 was advertising/syndication-related revenue.

The net loss for the three months ended June 30, 2007 was US$6,514,301 or US$0.13 per basic and diluted share, a 1% increase compared to US$6,449,005 or US$0.31 per basic and diluted share for the same period a year ago. Quarter over quarter net loss decreased by 8% from US$7,085,166 or US$0.18 per basic and diluted share in the quarter ended March 31, 2007.

The net loss during the quarter included approximately US$1.26 million of M&A and severance related expenses.

As of June 30, 2007 JumpTV had 302 channel partnerships compared to 204 channels as of June 30, 2006 and 280 channels as of March 31, 2007.

Subscriptions were 34,148 as at June 30, 2007 down 1% from 34,496 as at March 31, 2007 and subscribers were 29,968 as at June 30, 2007 down less than 1% from 30,062 as at March 31, 2007. The Company had expected a significantly higher reduction in subscriptions and subscribers during the period due to the free-to-consumer launch of approximately 100 of its heretofore subscription-based channels in the United States. However, the addition of new content and the growth in the Company's non-U.S. subscriber base compensated for the loss of U.S. subscribers.

Churn for the three months ended June 30, 2007 was 13.3%, up 6% from 12.5% for the three months ended March 31, 2007.

For the second quarter of 2007, JumpTV's subscriber acquisition costs (SAC) were US$33.69, a decrease of 34.9% compared to US$51.72 in the first quarter of 2007. The Company continues to test various marketing initiatives. An increased focus on search engine optimization (SEO) contributed to the decrease.

Average monthly revenue per user (ARPU) was US$11.42 in the quarter ending June 30, 2007, a less than 1% decrease from US$11.52 in the first quarter of 2007.

JumpTV chairman and chief executive officer G. Scott Paterson commented, "JumpTV is focused on our path to profitability. We believe we have put in place the strategic pieces and are focused now on execution and operations."

He added, "Our free-to-consumer launch has resulted in viewership of free channels reaching approximately 40 million minutes per month within two months of launch. We are confident that this has positioned JumpTV to obtain advertising revenues over the next several quarters."

The Company reports the following recent developments for JumpTV:

1. In late May 2007 we launched selected channels on a free-to-consumer, ad supported basis in the United States. As at June 30, 2007 we offered 108 channels free-to-consumers. During Q3 and Q4 2007 we intend to continue to add to the free offerings in the U.S. and assess the merits of offering selected content on a free-to-consumer basis in Canada and the United Kingdom (the Company's second and third largest markets).

2. Partially as a result of the free-to-consumer launch in the U.S., the Company has experienced, on average, 2.5 million viewing minutes per day, 2 million ad impressions per day while average duration of user session has remained at approximately 40 minutes.

3. We secured rights to additional cross-cultural content including channels in the Middle East, Sub-Saharan Africa and Europe, sporting properties such as the FIFA World Cup Matches in Canada and global production studios such as Arab Telemedia Services.

4. We signed and implemented distribution partnerships with AOL Video, which currently offers 108 JumpTV channels on a free-to-consumer basis in the U.S., and extended our relationship with Terra Networks to include Terra U.S., a leading Hispanic portal in the U.S., currently offering 50 JumpTV channels.

5. We launched and implemented our 'Jumper' API media player, introduced social networking features on JumpTV.com such as live chat alongside our channel feeds, built out our ad-serving infrastructure allowing us to serve video and banner ads from direct sales and third-party ad networks across the JumpTV website and deployed Jumpers on the Internet at large.

6. We further invested in and improved our global content delivery network (CDN), lighting up teleports/distribution points in Hong Kong, Singapore and Los Angeles while upgrading London and Miami hubs.

7. We filled executive roles in network operations, marketing and ad sales operations.

8. We went through a comprehensive operational review, resulting in process improvement, reduction in headcount and an approximate 30% cut in structural operating costs.

Kaleil Isaza Tuzman, president & COO of JumpTV, stated, "JumpTV has gone through a number of changes over the last quarter, launching nearly a third of our ethnic TV channels for free in the United States, introducing the first-generation 'Jumper' on distribution partners' sites and reducing our structural operating costs by approximately 30% -- which should be clearer in Q3 and Q4 results given the cost reduction process was completed at the end of Q2."

Isaza Tuzman continued, "We reduced our go-forward overhead expenses while improving network quality and making product development advances during the quarter. We are pleased that through this period of transition revenues have expanded modestly."

Subsequent to the June 30 quarter close, JumpTV announced that it had entered into a definitive agreement to acquire the Broadband Network business unit of XOS Technologies Inc., based in Sanford, Florida, through an asset purchase agreement for US$60.25 million in cash.

The Broadband Network business unit of XOS is one of the largest online global sports networks streaming thousands of NCAA games including football, men's and women's basketball, volleyball, baseball and track & field events. The Broadband Network business unit currently has more than 150 official and exclusive broadband relationships with U.S. colleges, universities, conferences and professional sports teams including programs within the SEC, Big 12 and Big 10, amongst other NCAA Division I conferences. In addition to live streaming, the XOS Broadband Network specializes in custom-brand site design and Web hosting for its partner teams and athletic departments with a technology platform that includes Internet publishing tools, streaming video and audio on demand, e-commerce solutions, online ticketing, mobile capabilities, and social networking technologies.

The Company announced yesterday that an agreement has been reached to acquire Cycling TV (Cycling.tv), an online video network offering dedicated cycling content to the global cycling audience.

Paterson commented on the recent acquisitions, "We have consistently stated that selected strategic acquisitions were part of our operating plan in order to augment relevant content, product capabilities and audience reach. The XOS Broadband Network and Cycling TV acquisitions underline our focus as a Company on hard-to-find live content, like sports and news, for out-of-market audiences."

Isaza Tuzman continued, "Now whether you are a Peruvian living in Madrid, an Ohio State grad living in Oregon, or a professional cycling fan in Singapore, JumpTV is always on for you, delivering the content you love, on any IP-enabled device."

In future quarterly financial releases, JumpTV anticipates augmenting its key performance indicators (KPIs) to better reflect its hybrid, subscription and ad-based business model. This will likely involves disclosure of quarter over quarter stream views and minutes watched, and may result in the elimination of one or more subscription-only operating metrics.

The Company will hold a conference call to discuss Q2 results, as well as the details of its acquisition of Cycling TV today, August 10, 2007, at 9:00am EDT and 2:00pm GMT. To participate in the call, interested parties can use the following dial-in numbers: U.S. and Canada -- 800.657.1263 or International -- +1 973.633.8200; conference code -- 9123576. Callers are suggested to dial-in at least 5 minutes prior to the call.

About JumpTV

Live Television From Around the World -- online, anytime, anywhere.

JumpTV (AIM: JTV) (TSX: JTV) is a leading distributor of live Internet television. With over 300 TV channels from 75+ countries, JumpTV delivers full-screen sports, news and entertainment content on a real-time basis from all corners of the globe to computers, Internet-enabled TV sets, IP set-top-boxes and cell phones with browser access.

Forward Looking Statements

This news release contains forward-looking statements that involve significant risk, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking statements. These factors should be considered carefully and readers should not place undue reliance on the forward looking statements. These forward looking statements are made as of the date of this news release, and the Company assumes no obligation to update or revise them to reflect new events or circumstances. Many factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance and achievements that may be expressed or implied by such forward looking statements, including: general economic and market segment conditions, competitor activity, product capability and acceptance, international risk and currency exchange rates and technology changes. More detailed assessment of the risks that could cause actual results to materially differ from current expectations is contained in the "Risk Assessment" section included in the Company's MD&A in respect of the year ended December 31, 2006 posted on www.sedar.com.

Key Performance Indicators and Other Measures

JumpTV is not aware of any uniform standards for calculating subscriptions, subscribers, ARPU, SAC, Churn and channels signed and we believe that JumpTV's presentation of these measures may not be calculated consistently with other companies in the same or similar business. Moreover, these measures are of operational performance and not measures of financial performance under generally accepted accounting principles. All other financial measures referenced herein have been prepared in accordance with Canadian generally accepted accounting principles.


JumpTV Inc.

                       CONSOLIDATED BALANCE SHEETS
                               [unaudited]
                       [Expressed in U.S. dollars]

As at                                             June 30,     December 31,
                                                    2007           2006
                                                     $               $
                                                -----------     ----------
ASSETS
Current
Cash                                            127,638,918     21,936,878
Short-term investments                              117,325     28,115,378
Accounts receivable                                 126,300             --
Other receivables                                 1,003,273        723,621
Prepaid expenses and deposits                     1,213,844      1,178,119
Funds held in trust                                  14,884             --
Due from related party                                6,863             --
                                                -----------     ----------
Total current assets                            130,121,407     51,953,996
                                                -----------     ----------
Property, plant and equipment, net                3,486,958      1,269,488
Intangible assets                                 1,594,270        312,140
Goodwill                                            116,621        102,069
Other assets                                        729,401        161,246
Deferred direct broadcast operating
 costs, net                                          44,007         61,605
                                                -----------     ----------
                                                136,092,664     53,860,544
                                                ===========     ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities          2,490,003      3,950,284
Bank loan                                                --      1,287,150
Due to related party                                     --         14,676
Accrued license fees                                192,498        106,916
Accrued professional fees                         1,176,751        371,782
Accrued stock appreciation rights                   449,653      1,087,760
Deferred revenue                                    280,604        205,314
Income taxes payable                                 86,750         61,800
                                                -----------     ----------
Total current liabilities                         4,676,259      7,085,682
                                                -----------     ----------
Deferred rent                                       277,092         18,502
                                                -----------     ----------
Total liabilities                                 4,953,351      7,104,184
                                                -----------     ----------

Shareholders' equity
Share capital                                   171,689,822     75,227,648
Contributed surplus                               4,465,580      2,937,219
Accumulated other comprehensive loss                (40,355)       (32,240)
Accumulated deficit                             (44,975,734)   (31,376,267)
                                                -----------     ----------
Total shareholders' equity                      131,139,313     46,756,360
                                                -----------     ----------
                                                136,092,664     53,860,544
                                                ===========     ==========

JumpTV Inc.

                   CONSOLIDATED STATEMENTS OF OPERATIONS
                                [unaudited]
                        [Expressed in U.S. dollars]

                                 Three months             Six months
                                    ended                   ended
                                   June 30,                June 30,
                               2007       2006        2007         2006
                                 $          $           $            $
                          ----------  ----------   ----------   ----------

Revenue                    1,175,924     426,988    2,179,070      777,496
Direct broadcast
 operating costs          (1,551,330)   (480,681)  (2,911,589)    (731,011)
                          ----------  ----------   ----------   ----------
                            (375,406)    (53,693)    (732,519)      46,485
                          ----------  ----------   ----------   ----------
Other costs and expenses
Selling, general
 and administrative        6,739,486   5,864,555   13,268,378    9,220,197
Stock-based compensation     793,737     561,199    1,949,839    1,327,380
Amortization of property,
 plant and equipment         136,707      25,918      215,883       47,851
Amortization of
 intangible assets             9,908          --       19,816           --
                          ----------  ----------   ----------   ----------
                           7,679,838   6,451,672   15,453,916   10,595,428
                          ----------  ----------   ----------   ----------
Loss before the
 following:               (8,055,244) (6,505,365) (16,186,435) (10,548,943)

Loss on foreign exchange    (132,117)    (16,625)     (86,303)      (8,301)
Investment income, net     1,682,560      84,985    2,698,221      156,102
                          ----------  ----------   ----------   ----------
Loss before income taxes  (6,504,801) (6,437,005) (13,574,517) (10,401,142)
Provision for income taxes     9,500      12,000       24,950       25,000
                          ----------  ----------   ----------   ----------
Net loss for the period   (6,514,301) (6,449,005) (13,599,467) (10,426,142)
                          ==========  ==========   ==========   ==========

Loss per weighted average
 number of shares
 outstanding - basic and
 diluted                       (0.13)      (0.31)       (0.31)       (0.52)
                          ==========  ==========   ==========   ==========

Weighted average number
 of shares outstanding -
 basic and diluted        48,531,087  21,054,579   44,326,196   19,871,859
                          ==========  ==========   ==========   ==========

JumpTV Inc.

                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 [unaudited]
                         [Expressed in U.S. dollars]

                                 Three months             Six months
                                    ended                   ended
                                   June 30,                June 30,
                               2007       2006        2007         2006
                                 $          $           $            $
                         -----------  ----------  -----------   ----------

OPERATING ACTIVITIES
Net loss for the period   (6,514,301) (6,449,005) (13,599,467) (10,426,142)
Adjustments to reconcile
 net loss to net cash
 provided by (used in)
 operating activities
   Amortization              260,978      58,213      437,008       98,745
   Unrealized gain on
    short-term
    investments               (9,062)         --      (10,062)          --
   Stock based
    compensation,
    excluding change
    in accrued stock
    appreciation rights
    as noted below         1,484,267     561,199    2,588,752    1,327,380
   Amortization of
    deferred direct
    broadcast operating
    costs                     31,396       8,800       62,790       17,599
                         -----------  ----------  -----------   ----------
                          (4,746,722) (5,820,793) (10,520,979)  (8,982,418)
Changes in operating
 assets and liabilities
   Accounts receivables     (126,300)         --     (126,300)          --
   Other receivables        (266,041)   (196,721)    (306,093)    (211,145)
   Prepaid expenses,
    deposits and other
    assets                    43,957    (325,844)     329,021     (478,943)
   Funds held in trust       216,191          --      (14,884)          --
   Accounts payable and
    other accrued
    liabilities           (1,253,887)  1,697,951   (1,613,228)   2,208,303
   Due to related
    parties                      558    (102,535)     (21,539)    (109,898)
   Accrued license fees       41,920      (3,513)      85,582      (37,795)
   Accrued stock
    appreciation rights     (699,459)         --     (638,107)          --
   Accrued professional
    fees                    (359,896)    (68,264)     804,969      (65,675)
   Deferred revenue            3,709      13,889       75,290       24,585
   Income taxes payable        9,500      12,000       24,950       25,000
   Deferred rent             141,056          --      258,590           --
                         -----------  ----------  -----------   ----------
Cash used in operating
 activities               (6,995,414) (4,793,830) (11,662,728)  (7,627,986)
                         -----------  ----------  -----------   ----------

INVESTING ACTIVITIES
   Redemption of
    short-term
    investments, net              --          --   28,000,000           --
   Purchase of equipment    (359,904)   (445,306)  (2,439,840)    (703,721)
   Acquisition, net of
    cash acquired of
    $3,308                     4,202    (360,760)    (147,638)    (360,760)
                         -----------  ----------  -----------   ----------
Cash provided by
 (used in) investing
  activities                (355,702)   (806,066)  25,412,522   (1,064,481)
                         -----------  ----------  -----------   ----------

FINANCING ACTIVITIES
   Proceeds from share
    issuances, net            (7,973)         --   93,096,698    7,998,646
   Repayment of bank loan         --          --   (1,287,150)          --
   Deferred share issue
    costs                         --    (270,875)          --     (270,875)
   Redemption of Class C
    common share                  --          --           --           (1)
   Proceeds from exercise
    of stock options          51,634      12,500      127,898      600,046
   Proceeds from exercise
    of warrants               14,800          --       14,800           --
   Other                          --      (5,317)          --           --
                         -----------  ----------  -----------   ----------
Cash provided by
 (used in) financing
  activities                  58,461    (263,692)  91,952,246    8,327,816
                         -----------  ----------  -----------   ----------
Net increase (decrease)
 in cash during the
 period                   (7,292,655) (5,863,588) 105,702,040     (364,651)
Cash, beginning of
 period                  134,931,573  10,973,989   21,936,878    5,475,052
                         -----------  ----------  -----------   ----------
Cash, end of period      127,638,918   5,110,401  127,638,918    5,110,401
                         ===========  ==========  ===========   ==========

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