JumpTV Inc.
AIM : JTV
TSX : JTV

JumpTV Inc.

November 08, 2006 09:05 ET

JumpTV Subscriptions Grow 32% in Third Quarter

Internet Broadcaster Announces 3rd Quarter Results and Performance Metrics

TORONTO--(CCNMatthews - November 08, 2006) - JumpTV Inc. ("JumpTV" or "the Company") (TSX: JTV) (AIM: JTV), the world's leading broadcaster of ethnic television over the Internet, today announced quarterly results and selected financial metrics for the quarter ended September 30, 2006.

Revenue for the third quarter 2006 increased 58% to US $534,671 from US $337,389 in the same period a year ago. Sequentially, revenue increased 25% from US $426,998 in the second quarter 2006.

Net loss for the quarter ended September 30, 2006 was US $6,494,411 or US $0.23 per basic and diluted share compared to US $1,086,525 or US $0.08 per basic and diluted share in the same period a year ago and US $6,449,005 or US $0.31 per basic and diluted share in the quarter ended June 30, 2006. During the quarter, the Company invested heavily in the development of its next generation product offering (JumpTV 3.0), and continued to invest in personnel dedicated to its global business development efforts in connection with obtaining additional channel partnerships and marketing partnerships with major ISPs and Internet portals.

JumpTV had 225 channels signed as of September 30, 2006, as compared to 204 channels as of June 30, 2006 and 59 channels as of September 30, 2005.

Subscriptions increased 32% to 23,885 from 18,119 in the second quarter 2006 and subscribers increased approximately 35% to 22,019 for the third quarter 2006 from 16,319 in the second quarter 2006. Average Monthly Churn was 22.8% compared to 15.8% for the quarter ended June 30, 2006. The $0.99 first-month subscriber promotion resulted in a high churn rate during the quarter as certain subscribers cycled in and out of the offer.

For the third quarter of 2006, JumpTV's subscriber acquisition cost (SAC) was US $21.80 compared to US $30.00 in the second quarter of 2006. The Company's natural search optimization initiatives and the increased number of subscribers acquired through affiliate marketing partners were the primary drivers of the 26% reduction in subscriber acquisition cost (SAC) during the quarter.

Average monthly Revenue per User (ARPU) was US $9.43 in the quarter ending September 30, 2006 compared to US $10.31(1) in the second quarter of 2006. The Company's ARPU declined due to the testing of a $0.99 first-month subscriber promotion and other test marketing initiatives. The Company expects to continue to introduce additional channel bundles at higher monthly subscription rates (e.g. approximately $15/month) which is expected to increase ARPU in future quarters.

G. Scott Paterson, Chairman & CEO of JumpTV, said:

"We are delighted with the growth in subscriptions in Q3 particularly in light of the fact that our focus has been and continues to be, in the near term, securing new channel partnerships, improving our user experience and developing marketing partnerships around the world (which are soon to be launched).

We have made significant strides in all aspects of our business. We have signed, on average, two new channel partnerships a week, bringing our total number of partners to 233 as of today's date. Among our recently announced channel partnerships are MBC, one of the top pan-Arab general entertainment channels, Al Arabiya News Channel, one of the leading Arabic language news channels worldwide and Television Broadcasts Limited (TVB), one of the world's largest producers of Chinese-language television programming.

Very significantly, we launched JumpTV 3.0, our new online television experience. JumpTV 3.0 adds video-on-demand, pay-per-view and social networking functionalities to our platform as well as enhanced digital rights management and pre-roll advertising capabilities.

We have recently entered into marketing agreements with Comcast, the largest broadband ISP in the United States, Que Pasa, a leading Hispanic oriented portal, and Maktoob, one of the world's most visited Arabic online destinations; each of which we expect to launch commercially prior to year-end.

We have worked diligently to put in place the requisite components of our business strategy necessary to drive subscriber growth in 2007 and beyond."

(1) The Company reported an ARPU of $9.91 in the prior quarter by dividing total subscriber-related revenues for the period by the average subscribers for that period. Average subscribers for the period were calculated by adding the total subscribers at the end of each month and by dividing by the number of months in the period. We have adjusted this figure to $10.31 to be consistent with the definition we disclosed in both our prospectus and prior quarters Management Discussion and Analysis. This definition states that ARPU is calculated by dividing total subscriber-related revenues for a period by JumpTV's average subscribers for that period. Average JumpTV subscribers for a period is calculated by adding the average JumpTV subscribers for each month and dividing by the number of months in the period. Average JumpTV subscribers for each month are calculated by adding the beginning and ending JumpTV subscribers for the month and dividing by two.

The company will hold a conference call to discuss its third quarter results at 8:00 a.m. PST, 11:00 a.m. EST and 4:00 p.m. GMT on Wednesday, November 8, 2006. A replay of the call will be available for 7 days using the following dial-in numbers: US - 1-877-519-4471 or International - 973-341-3080; conference code 8068898. The call will also be available via live audio cast on the JumpTV website, located at www.jumptv.com. The audio cast will be archived on the Company's website for a period of 30 days.

About JumpTV

JumpTV is the world's leading subscription based provider of ethnic television over the Internet. With over 230 channels from 65+ countries, JumpTV delivers to its subscribers full-screen news, sports and entertainment content on a real-time basis from all corners of the globe. JumpTV has subscribers from over 80 countries who view channels on the JumpTV online network via ordinary Internet connections on their home computers, laptops, Internet-enabled televisions and mobile phones.

Forward Looking Statements

JumpTV is not aware of any uniform standards for calculating subscriptions, subscribers, ARPU, SAC, Churn and channels signed and it is possible 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.

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 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 final prospectus and MD&A posted on www.sedar.com.



CONSOLIDATED INTERIM BALANCE SHEETS
(Expressed in U.S. dollars, unless otherwise noted)


As at As at
September 30, December 31,
2006 2005
$ $
---------- ----------
(unaudited)

ASSETS
Current
Cash and cash equivalents 54,020,499 5,475,052
Other receivables 487,040 78,309
Prepaid expenses and deposits 683,864 14,812
Funds held in trust 581,861 -
---------- ----------
Total current assets 55,773,264 5,568,173
---------- ----------
Equipment, net 977,093 379,694
Intangible assets 464,195 -
Other assets 227,922 105,216
Deferred direct broadcast
operating costs, net 262,094 96,803
---------- ----------

57,704,568 6,149,886
========== ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and other
accrued liabilities 2,230,796 1,008,845
Due to related parties 6,083 138,323
Current portion of accrued
license fees 65,696 79,592
Accrued professional fees 557,834 195,592
Accrued stock
appreciation rights 623,859 -
Deferred revenue 103,106 56,268
Income taxes payable 52,800 16,800
---------- ----------
Total current liabilities 3,640,174 1,495,420
---------- ----------
Accrued license fees 120,000 120,000
---------- ----------
Total liabilities 3,760,174 1,615,420
---------- ----------

Shareholders' equity
Share capital 73,556,678 9,744,084
Contributed surplus 3,127,795 609,908
Accumulated other comprehensive
loss (40,355) (40,355)
Accumulated deficit (22,699,724) (5,779,171)
---------- ----------
Total shareholders' equity 53,944,394 4,534,466
---------- ----------
57,704,568 6,149,886
========== ==========



CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS
(Expressed in U.S. dollars, unless otherwise noted)
(unaudited)

Three months Nine months
ended ended
September 30 September 30
2006 2005 2006 2005
$ $ $ $
------------ ----------- ----------- -----------
Revenue, net 534,671 337,389 1,312,167 970,162
Direct broadcast
operating costs (706,102) (97,757) (1,437,113) (1,273,636)
------------ ----------- ----------- -----------
(171,431) 239,632 (124,946) (303,474)
------------ ----------- ----------- -----------

Other costs and expenses
Selling, general
and administrative 5,318,685 1,258,342 14,538,882 1,615,077
Stock-based compensation 1,417,321 74,530 2,744,701 184,833
Amortization 34,225 6,335 82,076 15,644
------------ ----------- ----------- -----------
6,770,231 1,339,207 17,365,659 1,815,554
------------ ----------- ----------- -----------
(6,941,662) (1,099,575) (17,490,605) (2,119,028)
Gain on foreign
exchange (107,548) (13,791) (99,247) (3,190)
Interest income (350,703) (4,859) (506,805) (5,759)
------------ ----------- ----------- -----------
Loss before income
taxes (6,483,411) (1,080,925) (16,884,553) (2,110,079)
Provision for income
taxes 11,000 5,600 36,000 11,200
------------ ----------- ----------- -----------
Net loss for the period (6,494,411) (1,086,525) (16,920,553) (2,121,279)
============ =========== =========== ===========

Loss per weighted
average number of
shares outstanding -
basic and diluted (0.23) (0.08) (0.74) (0.20)
============ =========== =========== ===========

Weighted average
number of shares
outstanding - basic
and diluted 28,848,119 13,469,599 22,913,150 10,574,769
============ =========== =========== ===========



CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(Expressed in U.S. dollars, unless otherwise noted)
(unaudited)

Three months Nine months
ended ended
September 30 September 30
2006 2005 2006 2005
$ $ $ $
----------- ----------- ----------- -----------

OPERATING ACTIVITIES
Net loss for the
period (6,494,411) (1,086,525) (16,920,553) (2,121,279)
Adjustments to
reconcile net loss
to net cash provided
by (used in)
operating activities
Amortization 76,069 6,698 174,310 16,007
Stock based
compensation,
excluding change
in accrued stock
appreciation
rights as noted
below 793,462 74,530 2,120,842 184,833
Amortization of
deferred direct
broadcast operating
costs 8,799 - 26,399 -
----------- ----------- ----------- -----------
(5,616,081) (1,005,297) (14,599,002) (1,920,439)
Changes in operating
assets and
liabilities
Other receivables (197,586) (41,530) (408,731) (62,530)
Prepaid expenses,
deposits and other
assets (312,815) 2,295 (791,758) (23,693)
Funds held in trust (581,861) - (581,861) -
Deferred direct
broadcast
operating costs (191,690) - (191,690) -
Accounts payable
and other accrued
liabilities (1,020,553) 723,443 1,221,951 873,127
Due to related
parties (22,342) (1,590) (132,240) (15,848)
Accrued license fees 23,899 63,680 (13,896) 100,292
Accrued stock
appreciation rights 623,859 - 623,859 -
Accrued professional
fees (2,750,880) - 362,242 -
Deferred revenue 22,253 (3,564) 46,838 15,167
Income taxes
payable 11,000 5,600 36,000 11,200
----------- ----------- ----------- -----------
Cash used in
operating
activities (10,012,797) (256,963) (14,428,288) (1,022,724)
----------- ----------- ----------- -----------

INVESTING ACTIVITIES
Redemption of
short-term
investment - - - 36,728
Purchase of
equipment (118,835) (53,600) (771,709) (103,829)
Purchase of HVMedia
Limited assets,
including
transaction costs 333 - (444,973) -
----------- ----------- ----------- -----------
Cash used in investing
activities (118,502) (53,600) (1,216,682) (67,101)
----------- ----------- ----------- -----------

FINANCING ACTIVITIES
Proceeds from share
issuances, net 55,566,287 3,864,036 63,564,934 4,823,036
Deferred share
issue costs 3,449,672 - - -
Redemption of
Class C common
share - - (1) -
Proceeds from
exercise of
stock options 25,438 - 625,484 -
Proceeds from
issuance of
convertible
promissory note - - - 20,000
Proceeds from
issuance of
special warrants - - - 750,000
----------- ----------- ----------- -----------
Cash provided by
financing
activities 59,041,397 3,864,036 64,190,417 5,593,036
----------- ----------- ----------- -----------
Net increase in cash
and cash equivalents
during the period 48,910,098 3,553,473 48,545,447 4,503,211
Cash and cash
equivalents,
beginning of period 5,110,401 1,186,169 5,475,052 236,431
----------- ----------- ----------- -----------
Cash and cash
equivalents, end of
period 54,020,499 4,739,642 54,020,499 4,739,642
=========== =========== =========== ===========




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