SOURCE: MediaNet Group Technologies, Inc.

MediaNet Group Technologies, Inc.

March 13, 2012 14:54 ET

MediaNet Group Technologies Announces Results for the First Quarter of 2012

Charles Arizmendi to Assume Role of Interim Chief Operating Officer

BOCA RATON, FL--(Marketwire - Mar 13, 2012) - MediaNet Group Technologies, Inc. (OTCQB: MEDG) (PINKSHEETS: MEDG), a global marketing company that provides consumers around the world with a variety of innovative shopping and entertainment opportunities, today announced financial results for the fiscal first quarter ended December 31, 2011.

Michael Hansen, President and Chief Executive Officer of MediaNet Group, stated, "We continued to experience strong revenue growth during the first quarter as a result of the continued enthusiasm for our new Xpress auction format. Our business plan has been to use the Xpress auction platform to increase traffic and build our DubLi brand, which we are doing successfully. The sales growth that began in the third and fourth quarters of 2011 with $8.1 million and $9.6 million in revenue has now grown to $20.1 million in the first quarter of 2012. We are optimistic that our growth will continue through the balance of 2012 due to the increase in sales and marketing efforts. Our strategy, to build sales volume and increase web traffic, is expected to attract greater opportunities with advertisers and business partners. We are investing heavily in marketing including discounts and bonuses to consumers to build our sales volume. Additionally, we have invested heavily in building our infrastructure, new technologies and attracting highly skilled employees to support our future growth and development. Although these tactics have resulted in current losses, we intend to recover our investment as the business grows and matures. We believe that our marketing efforts during 2012 will drive conversion to higher margin products and increased profitability."

For the first quarter ended December 31, 2011, revenues increased 980% to $20.1 million compared to $1.9 million for the first quarter ended December 31, 2010 as a direct result of changing the format of the Xpress auction from low volume high margin goods, to high volume, low margin electronic gift cards. This is in line with the company's marketing strategy to attract traffic and business to our websites in order to drive incremental revenue from advertising and partner programs. Gross profit for the quarter was $0.4 million, or 2.0% of revenue, down 82.7% compared to $1.5 million, or 82.7% of revenue, in the same period of 2010. Net loss for first quarter was $3.0 million resulting in a loss per basic and fully diluted share of $0.01, as compared to a net loss of $0.7 million, or a loss per basic and fully diluted share of $0.01 in the first quarter of 2011. For the first quarter 2012, the weighted average number of basic and fully diluted shares outstanding was 359,916,187 and 366,861,687, respectively as compared to the same period of 2011, when the weighted average number of basic and fully diluted shares outstanding was 244,211,496 and 246,623,881, respectively. Net loss per share for both basic and fully diluted is computed on the weighted average number of basic shares outstanding because derivatives are considered anti-dilutive to net loss.

MediaNet reports net income or loss on a GAAP and non-GAAP basis. Non-GAAP net income or loss excludes non-cash expenses for depreciation, amortization and for stock-based compensation ("SBC"). In the first fiscal quarter 2012, the charge related to SBC was $1.4 million, compared to $0.2 in the first quarter of 2011. Depreciation and amortization was $0.03 million in the first quarter of 2012, compared to $0.3 million in 2011. The result is that Non-GAAP net loss for the first quarter ended December 31, 2011 was $1.5 million compared to Non-GAAP net loss of $0.8 million for the same period in 2011 or 7.6% and 42.4% of revenues, respectively. The non-GAAP measure is reconciled to the corresponding GAAP measures in the accompanying financial tables.

The Company also announced on February 15, 2012 that Charles Arizmendi has been named interim Chief Operating Officer as result of the resignation of Alessandro Annoscia who has resigned to attend to a personal situation.

Commenting on Mr. Annoscia's efforts on behalf of the Company, Mr. Hansen stated, "During his tenure at MediaNet, Alessandro made significant contributions to the Company's organizational development and technology infrastructure for which we will reap the benefits for many years to come. We are grateful to have had him as part of our leadership team and wish him well in his future endeavors. Since joining MediaNet in the later part of 2011, Charles Arizmendi has assumed tremendous responsibility for not only our Partner Program but also several other key areas of our business, which made him the natural interim successor to Alessandro. The Company's Board and management team are confident in Charles' ability to continue the implementation and execution of the plans and strategies that were launched during 2011. We look forward to his ongoing contributions to our organization."

About MediaNet Group Technologies, Inc.:

MediaNet Group Technologies, Inc. (OTCQB: MEDG) (PINKSHEETS: MEDG), through its wholly-owned subsidiaries under the DubLi brand, addresses consumer needs both online and offline through innovative engagement models, as well as virtual shopping experiences. Through its DubLi.com website, the company also creates tremendous opportunities by helping entrepreneurs both large and small create micro-distributor organizations by joining Dublinetwork.com. MediaNet Group Technologies main focus is to provide consumers around the world with the highest online value for their shopping and entertainment opportunities. The foundation of MediaNet Group was built upon an innovative business concept, a global presence and a consumer-centric business model that seeks to capitalize on global economic trends and changing consumer behaviors. The central hub of the MediaNet Group universe is DubLi.com, a comprehensive online shopping and entertainment community. DubLi Network is the sales and marketing engine for DubLi.com that is driven by a marketing network of Business Associates who use word-of-mouth advertising, the most effective form of direct selling, to sell a variety of memberships and packages that generate traffic to DubLi.com. DubLi Partner offers a white-label version of its DubLi.com platform giving participating organizations a professional, reliable web presence while providing access to DubLi's global online shopping and entertainment community. BSP Rewards, also known as DubLi Shopping, is responsible for the management and operations of DubLi's Shopping Mall platforms around the world. MediaNet Group is emerging as a leading provider of innovative shopping and entertainment solutions to consumers in over 100 countries.

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 productive 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; (v) a failure to comply with governmental laws and regulations applicable to our business; and (vi) a failure to maintain 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 fiscal year ended September 30, 2011.

Presented below is selected financial information. Readers are encouraged to read the Company's Quarterly Report on Form 10-Q for the three months ended December 31, 2011 filed with the Securities and Exchange Commission.

MediaNet Group Technologies, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets - Unaudited
December 31, September 30,
Assets: 2011 2011
Current Assets:
Cash and cash equivalents $ 785,590 $ 1,503,234
Restricted cash 936,422 448,161
Accounts receivable 106,854 253,095
Inventories 157,962 168,846
Prepaid customer acquisition costs 6,710,127 6,958,894
Prepaid expenses 1,421,483 2,060,468
Total Current Assets 10,118,438 11,392,698
Property and Equipment, net 240,586 207,419
Other Assets:
Restricted cash, net 1,864,073 1,864,293
Real estate contract, net 3,129,346 3,203,847
Other 95,476 74,651
Total Other Assets 5,088,895 5,142,791
Total Assets $ 15,447,919 $ 16,742,908
Liabilities and Stockholders' Equity (Deficit):
Current Liabilities:
Accounts payable $ 1,851,400 $ 1,650,540
Accrued and other liabilities 166,963 229,118
Loyalty points payable 280,366 318,653
Commissions payable 1,380,690 1,128,355
Deferred revenue 14,037,163 13,830,389
Note payable - related party 223,000 -
Total Current Liabilities 17,939,582 17,157,055
Stockholders' Equity (Deficit):
Preferred stock- $0.01 par value, 50 million shares authorized, -0- and -0- outstanding, respectively - -
Common stock- $.001 par value, 500 million shares authorized 361,402,057 and 359,802,057 issued and outstanding, respectively 361,402 359,802
Additional paid-in capital 12,797,698 11,953,103
Accumulated other comprehensive loss (9,374 ) (85,923 )
Accumulated deficit (15,641,389 ) (12,641,129 )
Total Stockholders' Equity (Deficit) (2,491,663 ) (414,147 )
Total Liabilities and Stockholders' Equity (Deficit) $ 15,447,919 $ 16,742,908
MediaNet Group Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations -
Unaudited
For the Three Months ended December 31,
2011 2010
(Restated)
Revenues $ 20,110,564 $ 1,861,338
Direct cost of revenues 19,701,663 322,068
Gross profit 408,901 1,539,270
Selling, general and administrative 3,407,908 2,836,776
Loss from operations (2,999,007 ) (1,297,506 )
Interest (expense) income - net (1,253 ) 968
Loss from operations before income taxes (3,000,260 ) (1,296,538 )
Income taxes - benefit (expense) - -
Net loss (3,000,260 ) (1,296,538 )
Foreign currency translation adjustment 76,549 581,053
Comprehensive loss $ (2,923,711 ) $ (715,485 )
Net loss per common share
Basic $ (0.01 ) $ (0.01 )
Diluted $ (0.01 ) $ (0.01 )
Weighted average shares outstanding:
Basic 359,916,187 244,211,496
Diluted 366,861,687 246,623,881
MediaNet Group Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows -
Unaudited
For the Three Months Ended December 31,
2011 2010
Cash flows from operating activities (Restated)
Net loss $ (3,000,260 ) $ (1,296,538 )
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation and amortization 33,641 277,623
Real estate impairment - 367,292
Option Agreement written off - 250,000
Stock based compensation 1,431,681 230,438
Promotional DubLi Credits 9,879 86,749
Changes in operating assets and liabilities:
Restricted cash (533,082 ) (114,555 )
Accounts receivable 140,656 16,197
Inventory 2,636 63,918
Prepaid expenses (21,053 ) (39,018 )
Prepaid customer acquisition costs (100,055 ) (12,881,885 )
Accounts payable 835,709 (20,537 )
Accrued liabilities (223,510 ) 97,421
Accrued loyalty points (38,287 ) (26,233 )
Commission payable 311,992 (263,310 )
Deferred revenue 931,122 12,979,008
Net cash used in operations (218,931 ) (273,430 )
Investing activities:
Purchases of equipment and software (68,682 ) (281 )
Payments on real estate contract (273,817 ) (150,000 )
Other assets (20,826 ) (45,047 )
Restricted cash (96,174 ) 130,588
Net cash used in investing activities (459,499 ) (64,740 )
Financing activities
Proceeds from note payable - related party - 207,707
Repayments of note payable - (37,895 )
Net cash provided by financing activities - 169,812
Effect of exchange rate changes on cash (39,214 ) 40,724
Net decrease in cash and equivalents (717,644 ) (127,634 )
Cash and cash equivalents at beginning of period 1,503,234 487,171
Cash and cash equivalents at end of period $ 785,590 $ 359,537
Supplemental cash flow information:
Cash paid for interest $ 1,253 $ 2,498
Cash paid for income taxes - -
Non-cash transactions
Foreign currency translation adjustment 76,549 581,053
Proceeds from note payable - related party 223,000 -

The following table reconciles the non-GAAP measures to the corresponding GAAP measures:

For the Three Months ended December 31,
2011 2010
Non-GAAP Measures
Net income (loss) (3,000,260 ) (1,296,538 )
Depreciation and amortization 33,641 277,623
Stock based compensation 1,431,681 230,438
Non-GAAP net income (loss) (1,534,938 ) (788,477 )

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