SOURCE: Onstream Media

Onstream Media

February 14, 2011 16:30 ET

Onstream Media Corporation Reports First Quarter Fiscal 2011 Financial Results

POMPANO BEACH, FL--(Marketwire - February 14, 2011) - Onstream Media Corporation (NASDAQ: ONSM), a leading online service provider of live and on-demand Internet broadcasting, corporate web communications and virtual marketplace technology, announced today its financial results for the first quarter of fiscal 2011, the three months ended December 31, 2010 ("Q1 FY2011").

Q1 FY2011 Financial Highlights

    -- Total revenues were approximately $4.2 million for Q1 FY2011, an
       increase of approximately 4.1% compared to the first quarter of
       fiscal 2010 ("Q1 FY2010") and an increase of 4.4% sequentially
       (compared to the fourth quarter of fiscal 2010). The increase in
       revenues compared to the year-ago quarter was primarily attributable
       to higher revenues from Onstream's Audio and Web Conferencing
       Services Group.
    -- Audio and Web Conferencing Services Group revenues were
       approximately $2.3 million in Q1 FY2011, an increase of 10.3% as
       compared to Q1 FY2010.
    -- Webcasting revenues of approximately $1.5 million in Q1 FY2011
       represent an increase of 3.2% as compared to Q1 FY2010.
    -- Webcasting revenues for Q1 FY2011 from selected government contracts
       were approximately $136,000, an increase of 109.2% compared
       to Q1 FY2010.
    -- Gross margin was approximately $2.8 million in Q1 FY2011,
       representing 66.7% of total revenues and an increase of 6.1%
       compared to the year-ago quarter.
    -- Operating expenses were approximately $3.6 million in Q1 FY2011, a
       decrease of approximately $3.2 million, or 47.3%, compared to the
       year-ago quarter. The decrease was primarily due to a $3.1 million
       non-cash charge for the impairment of goodwill and other intangible
       assets in Q1 FY2010 versus no such charge in Q1 FY2011.
    -- Depreciation and amortization expense was approximately $386,000 in
       Q1 FY2011, a decrease of approximately $181,000, or 31.9%, compared
       to the year-ago quarter.
    -- Consolidated net loss was approximately $(898,000), or $(0.10) loss
       per share, in Q1 FY2011, representing a decrease of 79.3% as
       compared to a net loss of approximately $(4.3) million, or $(0.58)
       loss per share, in Q1 FY2010. The approximately $3.4 million
       decrease in the net loss was primarily due to the $3.1 million
       non-cash charge of impairment of goodwill and other intangible
       assets in Q1 FY2010 versus no such charge in Q1 FY2011,
       as discussed above.
    -- Onstream's Q1 FY2011 net loss of approximately $898,000 included
       approximately $910,000 of non-cash expenses and an approximately
       $139,000 non-cash gain for adjustment of derivative liability to
       fair value. The primary non-cash expenses included in the Q1 FY2011
       loss were depreciation and amortization, employee compensation
       expense arising from the issuance of stock and options, and
       amortization of deferred professional fee expenses paid for by
       issuing stock and options.

Key Developments

    -- Onstream is now in compliance with Nasdaq Listing Rule
       5550 (a)(2)(a) as a result of its common stock closing at a bid
       price of $1.00 per share or more for the ten consecutive business
       days ended January 27, 2011.
    -- Onstream has repaid the balance of the $1.0 million it borrowed
       during the first part of 2010, which had a remaining principal
       balance of $714,000 as of September 30, 2010. Of this balance,
       $503,000 was satisfied on October 1, 2010 by Onstream's payment of
       cash and the issuance of common shares and the remaining $211,000
       was satisfied by monthly principal payments during Q1 FY 2011, plus
       the issuance of common shares in January 2011.
    -- In January 2011, Onstream signed a MarketPlace365™ (MP365)
       promoter agreement with MedicExchange, which expects its new MP365
       to eventually include thousands of companies in the healthcare
       industry. MedicExchange provides technology-enabled tools and
       technical data to approximately 75,000 healthcare buyers
       representing approximately $12 billion in annual purchases.
    -- In February 2011, Onstream signed a promoter agreement with Tarsus
       Advon for the Trade Show News Network (TSNN) to power an MP365
       marketplace for the tradeshow industry, expected to be launched this
       March. TSNN is the world's leading online resource for the event,
       exhibition and event industry since 1996.

Management Commentary

Randy Selman, President and Chief Executive Officer of Onstream Media, said, "We were pleased to report the 10.3% revenue increase in our Audio and Web Conferencing Services Group as well as a revenue increase in our webcasting division, which included the impact of a 109.2% gain in revenues from selected government sector contracts."

Mr. Selman continued, "As expected, during the first quarter of fiscal 2011 and continuing into the second quarter, we have signed a number of new MP365 promoter agreements. In addition to our four active marketplaces, we have 20 signed MP365 promoter contracts in hand and other exciting prospect companies are in the pipeline. Several of these existing contracts are expected to launch and become active in the coming weeks and months. Due to the anticipated increases in conferencing, webcasting and DMSP and hosting revenues, as well as our anticipation of the start of meaningful revenues from our MP365 platform, we expect revenue increases to continue throughout 2011."

Mr. Selman added, "Although we reported cash used in operating activities (before changes in current assets and liabilities) for Q1 FY2011, versus net cash provided by operating activities (before changes in current assets and liabilities) for Q3 and Q4 FY2010, this change was primarily related to certain expenses being seasonally higher in Q1 FY2011 as compared to Q3 and Q4 FY2010, including vacation expense and audit fee expense. Accordingly, we still expect to report net cash provided by operating activities (before changes in current assets and liabilities) for the balance of fiscal 2011.We were also pleased to repay the balance of the $1.0 million that we borrowed during the first part of 2010 without incurring any additional debt to do so. We will continue to strengthen our balance sheet, subject of course to equity market conditions as well as the increased revenues levels that we are expecting."

Teleconference

Onstream Media will hold a conference call to discuss its fiscal 2011 first quarter financial results on Tuesday, February 15, 2011 at 4:30PM Eastern Time. Interested parties may listen to the presentation live online at http://www.visualwebcaster.com/event.asp?id=76487 or by calling 1-888-645-4404 or 201-604-0169. It is recommended to dial in approximately 10 to 15 minutes prior to the scheduled start time. An audio rebroadcast of the conference call will be archived for one year online at http://www.visualwebcaster.com/event.asp?id=76487.

About Onstream Media

Onstream Media Corporation (NASDAQ: ONSM) is a leading, online, service provider of live and on-demand Internet broadcasting, corporate web communications and virtual marketplace technology. Onstream Media's innovative Digital Media Services Platform (DMSP) provides customers with cost-effective tools for encoding, managing, indexing, and publishing content via the Internet. The company's MarketPlace365™ solution enables publishers, associations, tradeshow promoters and entrepreneurs to rapidly and cost-effectively self-deploy their own online virtual marketplaces. In addition, Onstream Media provides live and on-demand webcasting, webinars, web and audio conferencing services. To date, almost half of the Fortune 1000 companies and 78% of the Fortune 100 CEOs and CFOs have used Onstream Media's services. Select Onstream Media customers include: AAA, Dell, Disney, Georgetown University, National Press Club, PR Newswire, Shareholder.com (NASDAQ), Sony Pictures and the U.S. Government. Onstream Media's strategic relationships include Akamai, Adobe, BT Conferencing, Qwest and Trade Show News Network (TSNN). For more information, visit Onstream Media at www.onstreammedia.com or call 954-917-6655.

Cautionary Note Regarding Forward Looking Statements

Certain statements in this document and elsewhere by Onstream Media are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such information includes, without limitation, the business outlook, assessment of market conditions, anticipated financial and operating results, strategies, future plans, contingencies and contemplated transactions of the company. Such forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors which may cause or contribute to actual results of company operations, or the performance or achievements of the company or industry results, to differ materially from those expressed, or implied by the forward-looking statements. In addition to any such risks, uncertainties and other factors discussed elsewhere herein, risks, uncertainties and other factors that could cause or contribute to actual results differing materially from those expressed or implied for the forward-looking statements include, but are not limited to fluctuations in demand; changes to economic growth in the U.S. economy; government policies and regulations, including, but not limited to those affecting the Internet. Onstream Media undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Actual results, performance or achievements could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including those set forth in Onstream Media Corporation's filings with the Securities and Exchange Commission.


                ONSTREAM MEDIA CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF OPERATIONS
                               (unaudited)

                                                    Three months ended
                                                December 31,  December 31,
                                                    2010          2009
                                                 (unaudited)   (unaudited)
                                                ------------  ------------
REVENUE:
  DMSP and hosting                              $    488,809  $    552,225
  Webcasting                                       1,454,837     1,410,007
  Audio and web conferencing                       1,809,460     1,589,961
  Network usage                                      465,120       456,213
  Other                                               19,027        60,707
                                                ------------  ------------
Total revenue                                      4,237,253     4,069,113
                                                ------------  ------------

COSTS OF REVENUE:
  DMSP and hosting                                   221,505       253,008
  Webcasting                                         359,277       326,911
  Audio and web conferencing                         600,107       535,697
  Network usage                                      208,706       187,642
  Other                                               21,639       103,218
                                                ------------  ------------
Total costs of revenue                             1,411,234     1,406,476
                                                ------------  ------------

GROSS MARGIN                                       2,826,019     2,662,637
                                                ------------  ------------

OPERATING EXPENSES:
  General and administrative:
    Compensation                                   2,110,509     2,076,377
    Professional fees                                541,925       478,059
    Other                                            530,814       545,293
  Impairment loss on goodwill  and other
   intangible assets                                       -     3,100,000
  Depreciation and amortization                      386,197       567,361
                                                ------------  ------------
Total operating expenses                           3,569,445     6,767,090
                                                ------------  ------------

Loss from operations                                (743,426)   (4,104,453)
                                                ------------  ------------

OTHER EXPENSE, NET:
  Interest expense                                  (300,340)     (235,400)
  Gain for adjustment of derivative liability
   to fair value                                     138,661             -
  Other income (expense), net                          7,412        (1,188)
                                                ------------  ------------

Total other expense, net                            (154,267)     (236,588)
                                                ------------  ------------

Net loss                                        $   (897,693) $ (4,341,041)
                                                ============  ============

Loss per share - basic and diluted:

Net loss per share                              $      (0.10) $      (0.58)
                                                ============  ============

Weighted average shares of common stock
 outstanding - basic and diluted                   8,742,092     7,430,814
                                                ============  ============




                ONSTREAM MEDIA CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS

                                                December 31,
                                                    2010      September 30,
                     ASSETS                      (unaudited)      2010
                                                ------------  ------------
CURRENT ASSETS:
  Cash and cash equivalents                     $    137,708  $    825,408
  Accounts receivable, net of allowance
   for doubtful accounts of $359,739 and
   $363,973, respectively                          2,486,899     2,805,420
  Prepaid expenses                                   342,007       316,591
  Inventories and other current assets               122,352       125,000
                                                ------------  ------------
Total current assets                               3,088,966     4,072,419
PROPERTY AND EQUIPMENT, net                        2,824,947     2,854,263
INTANGIBLE ASSETS, net                             1,160,942     1,284,524
GOODWILL, net                                     12,396,948    12,396,948
OTHER NON-CURRENT ASSETS                             104,263       104,263
                                                ------------  ------------
Total assets                                    $ 19,576,066  $ 20,712,417
                                                ============  ============

      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                              $  2,249,104  $  2,553,366
  Accrued liabilities                              1,192,803     1,066,960
  Amounts due to directors and officers              395,742       374,124
  Deferred revenue                                   142,628       141,788
  Notes and leases payable -  current portion,
   net of discount                                 1,766,762     1,904,214
  Convertible debentures, net of discount          1,134,102     1,626,796
                                                ------------  ------------
Total current liabilities                          6,881,141     7,667,248
Notes and leases payable, net of current
 portion and discount                                101,137       120,100
Convertible debentures, net of discount              836,343       815,629
Detachable warrants, associated with sale of
 common shares and Series A-14 Preferred             247,743       386,404
                                                ------------  ------------
Total liabilities                                  8,066,364     8,989,381
                                                ------------  ------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
Series A-13 Convertible Preferred stock, par
 value $.0001 per share, authorized 170,000
 shares, 35,000 issued and outstanding                     3             3
Series A-14 Convertible Preferred stock, par
 value $.0001 per share, authorized 420,000
 shares, 420,000 issued and outstanding                   42            42
Common stock, par value $.0001 per share;
 authorized 75,000,000 shares, 8,976,740 and
 8,384,570 issued and outstanding, respectively          898           838
Additional paid-in capital                       136,151,674   135,453,812
Unamortized discount                                (258,406)     (297,422)
Accumulated deficit                             (124,384,509) (123,434,237)
                                                ------------  ------------
Total stockholders' equity                        11,509,702    11,723,036
                                                ------------  ------------
Total liabilities and stockholders' equity      $ 19,576,066  $ 20,712,417
                                                ============  ============

Contact Information

  • Media Relations:
    Chris Faust
    FastLane Communications
    973-582-3498
    Email Contact

    Investor Relations:
    Alon Kutai
    ProActive Newsroom
    212-828-7373
    Email Contact