SOURCE: MediaNet Group Technologies, Inc.

August 13, 2012 10:33 ET

MediaNet Group Technologies Announces Results for the Third Quarter of 2012

Expanding Upon Unprecedented Growth

BOCA RATON, FL--(Marketwire - Aug 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, online shopping and entertainment opportunities, today announced financial results for the fiscal third quarter and nine months ended June 30, 2012.

Michael Hansen, President and Chief Executive Officer of MediaNet Group, stated, "We are satisfied with our results for the quarter. Our quarterly sales topped $151.9 million, three times greater than the first and second quarter combined sales of $49.5 million resulting in total sales for the nine months ended June 30 of $201.4 million. This quarter was 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 marketing programs. The continued enthusiasm for our recently expanded Xpress Gift Card auctions is also in line with our expectations. In addition, we experienced significant growth in our DubLi Network business and have seen increased acceptance of our international shopping malls, which continue to gain traction with many DubLi customers worldwide who appreciate the unique value proposition DubLi offers. The expansion of our customer acquisition program continues to increase traffic and build our DubLi brand. We expect our growth to continue to increase in the fourth quarter of 2012. Our investment in building our infrastructure is continuous and designed to support our future growth and development."

For the third quarter ended June 30, 2012, revenues increased 1,770.5% to $151.9 million compared to $8.1 million for the third quarter ended June 30, 2011.This is in line with the company's marketing strategy to attract traffic and business to our websites in order to drive overall sales volumes and incremental revenue from advertising and partner programs. Gross profit for the quarter was $0.9 million, or 0.6% of revenue, down 75% compared to $3.5 million, or 43.0% of revenue, in the same period of 2011 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. Net loss for third quarter was $2.3 million resulting in a loss per basic and fully diluted share of $0.01, as compared to a net income of $0.8 million, or net income per basic and fully diluted share of $0.00 in the third quarter of 2011. For the third quarter 2012, the weighted average number of basic and fully diluted shares outstanding was 366,506,095 and 381,089,154, respectively as compared to the same period of 2011, when the weighted average number of basic and fully diluted shares outstanding was 319,741,435 and 324,735,748, respectively. Net income or 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.

For the nine months ended June 30, 2012, revenues increased 1320.7% to $201.4 million compared to $14.2 million for the nine months ended June 30, 2011. Gross profit for the nine months was $1.5 million, or 0.8% of revenue, compared to $7.2 million, or 50.5% of revenue, in the same period of 2011. Net loss for the first nine months of fiscal 2012 was $8.2 million resulting in a loss per basic and fully diluted share of $0.02, as compared to a net loss of $1.3 million, or a loss per basic and fully diluted share of $0.00 in the first nine months of 2011. For the first nine months of fiscal 2012, the weighted average number of basic and fully diluted shares outstanding was 362,624,526 and 374,144,697, respectively as compared to the same period of 2011, when the weighted average number of basic and fully diluted shares outstanding was 270,679,678 and 274,008,730, 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 third fiscal quarter 2012, the charge related to SBC was $1.3 million, compared to $0.9 in the third quarter of 2011 Depreciation and amortization was $0.02 million in the third quarter of 2012, compared to $0.2 million in 2011. The result is that Non-GAAP net loss for the third quarter ended June 30, 2012 was $0.9 million compared to Non-GAAP net income of $2.0 million for the same period in 2011 or 0.6% and 24.7% of revenues, respectively. The non-GAAP measure is reconciled to the corresponding GAAP measures in the accompanying financial tables.

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 and nine months ended June 30, 2012 filed with the Securities and Exchange Commission.

MediaNet Group Technologies, Inc. and Subsidiaries  
Condensed Consolidated Balance Sheets - Unaudited  
   
    June 30,
2012
    September 30,
2011
 
Assets:                
Current Assets:                
  Cash and cash equivalents   $ 6,815,912     $ 1,503,234  
  Restricted cash     1,546,776       448,161  
  Accounts receivable     153,062       253,095  
  Finished goods inventories     130,020       168,846  
  Prepaid customer acquisition costs     6,356,409       6,958,894  
  Prepaid expenses     577,319       2,060,468  
Total Current Assets     15,579,498       11,392,698  
                 
Property and Equipment, net     426,162       207,419  
                 
Other Assets:                
  Restricted cash, net     -       1,864,293  
  Real estate contract, net     3,129,345       3,203,847  
  Other     115,677       74,651  
Total Other Assets     3,245,022       5,142,791  
Total Assets   $ 19,250,682     $ 16,742,908  
                 
Liabilities and Stockholders' Equity:                
Current Liabilities:                
  Accounts payable   $ 910,770     $ 1,308,387  
  Accrued and other liabilities     307,860       229,118  
  Loyalty points payable     153,915       318,653  
  Commissions payable     2,764,002       1,128,355  
  Customer deposits     1,591,928       342,153  
  Deferred revenue     18,130,555       13,830,389  
Total Current Liabilities     23,859,030       17,157,055  
                 
Stockholders' Equity:                
  Preferred stock - $0.01 par value, 50 million shares authorized, -0- and -0- outstanding, respectively     -       -  
  Common stock - $.001 par value, 500 million shares authorized 371,864,326 and 359,802,057 issued and outstanding, respectively     371,864       359,802  
  Additional paid-in capital     15,784,110       11,953,103  
  Accumulated other comprehensive income (loss)     49,343       (85,923 )
  Retained earnings (deficit)     (20,813,665 )     (12,641,129 )
Total Stockholders' Equity     (4,608,348 )     (414,147 )
Total Liabilities and Stockholders' Equity   $ 19,250,682     $ 16,742,908  
   
   
MediaNet Group Technologies, Inc. and Subsidiaries  
Consolidated Statements of Operations - Unaudited  
                         
    For the Three Months ended June 30,     For the Nine Months ended June 30,  
    2012     2011     2012     2011  
                                 
Revenues   $ 151,944,510     $ 8,123,050     $ 201,416,736     $ 14,177,569  
Direct cost of revenues     151,062,362       4,626,296       199,897,997       7,017,384  
Gross profit     882,148       3,496,754       1,518,739       7,160,185  
                                 
Selling, general and administrative     3,169,903       2,608,592       9,688,451       8,398,227  
Loss from operations     (2,287,755 )     888,162       (8,169,712 )     (1,238,042 )
                                 
Interest expense     (552 )     (13,888 )     (2,824 )     (17,689 )
                                 
(Loss) income from operations before income taxes     (2,288,307 )     874,274       (8,172,536 )     (1,255,731 )
                                 
Income taxes     -       -       -       -  
                                 
Net (loss) income     (2,288,307 )     874,274       (8,172,536 )     (1,255,731 )
                                 
Foreign currency translation adjustment     120,538       (3,713 )     135,266       325,705  
                                 
Comprehensive (loss) income   $ (2,167,769 )   $ 870,561     $ (8,037,270 )   $ (930,026 )
                                 
Net loss per common share                                
Basic   $ (0.01 )   $ 0.00     $ (0.02 )   $ (0.00 )
Diluted   $ (0.01 )   $ 0.00     $ (0.02 )   $ (0.00 )
                                 
Weighted average shares outstanding:                                
Basic     366,506,095       319,741,435       362,624,526       270,679,678  
Diluted     381,089,154       324,735,748       374,144,697       274,008,730  
   
   
MediaNet Group Technologies, Inc. and Subsidiaries  
Consolidated Statements of Cash Flows - Unaudited  
For the Nine Months Ended June 30,  
   
    2012     2011  
Cash flows from operating activities                
Net loss   $ (8,172,536 )   $ (1,255,731 )
 Reconcile net income (loss) to net cash from operating activities:                
  Depreciation and amortization     76,825       683,321  
  Real estate impairment     -       367,292  
  Recovery of impairment of restricted cash     (289,863 )     -  
  Option agreement written off     -       250,000  
  Stock based compensation     4,249,634       1,483,519  
  Promotional DubLi Credits     194,754       113,780  
Changes in operating assets and liabilities:                
  Restricted cash     893,850       (67,516 )
  Accounts receivable     84,497       (166,337 )
  Inventory     26,080       154,339  
  Prepaid expenses     (265,127 )     83,472  
  Prepaid customer acquisition costs     22,189       (9,876,824 )
  Accounts payable     204,012       (226,007 )
  Accrued and other liabilities     (347,288 )     566,999  
  Loyalty points payable     (164,738 )     (46,547 )
  Commission payable     1,630,447       (314,118 )
  Customer deposits     1,348,769       113,913  
  Deferred revenue     5,756,241       6,205,682  
Net cash provided (used in) by operations     5,247,746       (1,930,763 )
                 
Investing activities:                
  Purchases of equipment and software     (301,400 )     (78,988 )
  Sale of equipment and software     2,642       -  
  Payments on real estate contract     (266,726 )     (480,863 )
  Payments on land investment     (20,200 )     -  
  Other assets     (20,826 )     (72,727 )
  Restricted cash     -       302,055  
Net cash used in investing activities     (606,510 )     (330,523 )
                 
Financing activities                
  Proceeds from note payable - related party     -       453,208  
  Repayments of note payable - related party     (225,144 )     (1,205,364 )
  Proceeds from stock subscriptions     1,247,848       3,368,572  
Net cash provided by financing activities     1,022,704       2,616,416  
                 
Effect of exchange rate changes on cash     (351,262 )     87,951  
                 
Net increase (decrease) in cash and equivalents     5,312,679       443,081  
Cash at beginning of period     1,503,234       487,171  
Cash at end of period   $ 6,815,912     $ 930,252  
                 
Supplemental cash flow information:                
  Cash paid for interest   $ 2,824     $ 17,689  
  Cash paid for income taxes     31,685       -  
Non-cash transactions                
  Foreign currency translation adjustment     135,266       325,705  
  Two step common share transfer     -       63,394  
  Real estate loan from officer     223,000       -  
  Stock issued for future consulting services     36,537       -  
                   

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

           
    For the Three Months ended June 30,   For the Nine Months ended June 30,  
    2012     2011   2012     2011  
Non-GAAP Measures                              
Net income (loss)   $ (2,288,307 )   $ 874,274   $ (8,172,536 )   $ (1,255,731 )
Depreciation and amortization     20,676       209,632     76,825       683,321  
Stock based compensation     1,312,867       922,643     4,249,634       1,483,519  
Non-GAAP net income (loss)   $ (954,764 )   $ 2,006,549   $ (3,845,491 )   $ 911,109  

Contact Information

  • MediaNet Group Technologies Contact:
    Stefanie Kitzes
    Email Contact
    561-417-1500