SOURCE: MediaNet Group Technologies, Inc.

MediaNet Group Technologies, Inc.

March 31, 2011 08:00 ET

MediaNet Group Technologies Announces Results for Fiscal Year 2010 and First Quarter 2011

BOCA RATON, FL--(Marketwire - March 31, 2011) - MediaNet Group Technologies, Inc. (PINKSHEETS: MEDG), a global shopping and entertainment community, today announced financial results for the year ended September 30, 2010 and the first quarter ended December 31, 2010.

Fiscal Year 2010

For the year ended September 30, 2010, revenues increased 98% to $24.5 million compared to $12.4 million for the year ended September 30, 2009. Gross profit for the year was $12.7 million, or 52% of revenue, up 263% compared to $3.5 million, or 28% of revenue, in the same period of 2009. Net income for fiscal year 2010 was $2.2 million resulting in earnings per basic share of $0.08 and per fully diluted share of $0.01, as compared to a net loss of $2.8 million, or a loss per basic and fully diluted share of $0.01. For the full year of 2010, the weighted average number of basic and fully diluted shares outstanding was 28,822,142 and 272,326,574, respectively, as compared to the same period of 2009, when the weighted average number of shares outstanding was 301,261,106 both on a basic and fully diluted basis.

Michael Hansen, President and Chief Executive Officer, stated, "Our financial performance during fiscal 2010 indicates that our business model has mass appeal on global levels. However, as a company, we faced typical post-merger challenges during the process of integrating our combined accounting staff, systems and procedures. As part of that process we undertook a thorough review of all our reporting and internal control procedures. This process took longer than planned and resulted in delayed reporting of our financial performance. We have since taken significant steps to solidify our infrastructure to support our future growth, which included making some difficult decisions now that will benefit the Company and our shareholders over the long-term."

On December 16, 2010, the CFO and Company's Board of Directors concluded, following a thorough review of the Company's reporting, accounting and monitoring procedures, that the previously issued financial statements for the year ended September 30, 2009 and the first three quarters of 2010 required restatement to correct the published reports. As a result, the Company has taken a number of steps to build its business and strengthen its internal controls and procedures, including:

-- Hired a new Chief Financial Officer.
-- Hired a Chief Technology Officer.
-- Hired a new Controller and additional accounting staff.
-- Engaged a nationally recognized law firm.
-- Recapitalized the Company.
-- Upgraded and improved our online and backend computer systems.
-- Developed new processes and procedures to ensure timely and accurate
   future financial reporting.

These improvements have been costly: system improvements, employee transitions, new offices, new web portals, and development and maintenance of new and existing features, enhancements, and functionality for our proprietary services, have all contributed to increases in selling, as well as general and administrative costs. In this connection, our selling, general and administrative expenses increased by $5.7 million, of which $1.1 million relates to increased legal, accounting and SEC compliance costs resulting from our merger.

"As we build, grow and better understand our markets, our customers and our opportunities, we will enhance and refine our products, their delivery and the resources required to support our businesses. We are in a dynamic marketplace, and MediaNet must and will be flexible and creative in meeting its ever changing needs and demands. We believe this year of growing pains has and will position us for considerable success in the future," continued Mr. Hansen.

First Quarter Fiscal 2011

For the first quarter ended December 31, 2010, revenues were $3.4 million compared to $4.3 million for the first quarter ended December 31, 2009. Gross profit for the quarter was $1.7 million, or 51% of revenue, compared to $1.1 million, or 25% of revenue, in the same period of 2009. The net loss in the first quarter was $570,054 resulting in a loss per basic share and fully diluted share of $0.00, as compared to net income of $460,204, or earnings per basic share of $0.02 and fully diluted share of $0.00. For the first fiscal quarter of 2011, the weighted average number of basic and fully diluted shares outstanding was 244,211,496 and 246,623,881, respectively, as compared to the same period of 2009, when the weighted average number of shares outstanding was 27,309,639 on a basic basis.

Mr. Hansen continued, "We are continuing to strengthen our internal processes during the first and second quarter including rebuilding the entire accounting department under our new CFO, hiring consultants to assist in the improvement and upgrades to our systems and processes and extensive legal work to improve our SEC filings. To better incent and retain our highly qualified team of executives, we instituted a stock based compensation plan and incurred a non-cash expense of approximately $330,000 in the first quarter."

Furthermore, Mr. Hansen stated "We expect revenue during the second fiscal quarter to remain in-line with the first quarter. We have introduced several new product releases during the last six months, but, before our products can reach consumers we require significant training, development and education of our global sales force."

About MediaNet Group Technologies, Inc.:

MediaNet Group Technologies, Inc. has created a global online shopping community that includes its reverse auction concept, shopping mall platform and entertainment portal. The Company's unique operating strategy combines online shopping with its distribution network to reach customers directly on a global scale.

The foundation of MediaNet is grounded in innovative technology, a global platform and an expertise in understanding and capitalizing on global economic trends and changing consumer behaviors. The central hub of the MediaNet Group community is DubLi.com from which all other components of the business model are derived. Additional information about the Company is available in its filing with the Securities and Exchange Commission at www.sec.gov.

Except for historical matters contained herein, statements made in this press release are forward-looking. Without limiting the generality of the foregoing, words such as "may," "will," "to," "plan," "expect," "believe," "anticipate," "intend," "could," "would," "estimate," or "continue" or the negative other variations thereof or comparable terminology are intended to identify forward-looking statements.

Investors and others are cautioned that a variety of factors, including certain risks, may affect our business and cause actual results to differ materially from those set forth in the forward-looking statements. These risk factors include, without limitation, the risk of (i) an inability to establish and/or maintain a large, growing base of business associates; (ii) an inability to develop and/or maintain brand awareness for our online auctions; (iii) a failure to maintain the competitive bidding environment for our online auctions; (iv) a failure to adapt to technological change; and (v) a failure to improve our internal controls. The Company is also subject to the risks and uncertainties described in its filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended September 30, 2010.

The following Table summarizes the Company's results of operations for the fiscal years ended September 30, 2010 and 2009:

                                                   2010           2009
                                               ------------   ------------
                                                                Restated

Revenues                                       $ 24,473,731   $ 12,355,164
Direct cost of revenues                          11,769,501      8,856,973
                                               ------------   ------------
Gross profit                                     12,704,231      3,498,191

Selling, general and administrative              10,464,747      4,717,119
                                               ------------   ------------
Income (loss) from operations                     2,239,483     (1,218,928)

Interest income (expense) - net                     (12,654)        (3,425)
                                               ------------   ------------

Income (loss) from continuing operations
 before income taxes                              2,226,830     (1,222,353)

Income taxes - benefit (expense)                          -              -
                                               ------------   ------------

Income (loss) from continuing operations          2,226,830     (1,222,353)
Discontinued Operations:
(Loss) from discontinued segment                          -     (1,659,173)
Gain from sale of subsidiary                              -         74,990
                                               ------------   ------------

Net Income (loss)                                 2,226,830     (2,806,536)

Foreign currency translation adjustment            (348,973)       (96,014)

                                               ------------   ------------
Comprehensive Income (Loss)                    $  1,877,857   $ (2,902,550)
                                               ------------   ------------

Net income (loss) per common share from
  Continuing operations:
    Basic                                      $       0.08   $      (0.00)
    Diluted                                    $       0.01   $      (0.00)
  Discontinued operation:
    Basic and diluted                          $          -   $      (0.01)
  Net Income
    Basic                                      $       0.08   $      (0.01)
    Diluted                                    $       0.01   $      (0.01)

Weighted average shares outstanding:
    Basic                                        28,822,142    301,261,106
    Diluted                                     272,326,574    301,261,106

The following Table summarizes the Company's results of operations for the quarters ended December 31, 2010 and 2009:

                                                   2010           2009
                                               ------------   ------------
                                                               (Restated)

Revenues                                       $  3,430,881   $  4,283,935
Direct cost of revenues                           1,686,203      3,214,364
                                               ------------   ------------
Gross profit                                      1,744,678      1,069,571

Selling, general and administrative               2,315,700        607,740
                                               ------------   ------------
(Loss) income from operations                      (571,022)       461,831

Interest income (expense) - net                      (2,498)        (1,627)
Gain on sale of asset                                 3,466              -
                                               ------------   ------------
(Loss) income from operations before
 income taxes                                      (570,054)       460,204

Income taxes - benefit (expense)                          -              -
                                               ------------   ------------

Net (loss) income                                  (570,054)       460,204

Foreign currency translation adjustment             339,549        (16,317)

                                               ------------   ------------
Comprehensive (loss) income                    $   (230,505)  $    443,887
                                               ------------   ------------

Net (loss) income per common share
    Basic                                      $      (0.00)  $       0.02
    Diluted                                    $      (0.00)  $      (0.00)

Weighted average shares outstanding:
Basic                                           244,211,496     27,309,639
Diluted                                         246,623,881              -

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