SOURCE: Onstream Media

Onstream Media

January 07, 2011 21:40 ET

Onstream Media Corporation Reports Fourth Quarter and Fiscal 2010 Financial Results

Achieves Positive Cash Flows From Operating Activities (Before Changes in Working Capital) for the Second Consecutive Quarter; Revenues Increase 8.9% to $4.1 Million in Q4

POMPANO BEACH, FL--(Marketwire - January 7, 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 three- and twelve-month periods ended September 30, 2010.

Q4 Financial Highlights:

--  For the first time in its history, Onstream achieved two consecutive
    quarters of positive cash flows from operating activities (before
    changes in current assets and liabilities).
--  Revenues for the fourth quarter of fiscal 2010 (Q4FY10) increased 8.9%
    to approximately $4.1 million from approximately $3.7 million in the
    fourth quarter of fiscal 2009 (Q4FY09).
--  Gross margin increased to approximately $2.7 million, or 66.3% of
    revenues, in Q4FY10 as compared to $2.3 million, or 62.7% of revenues,
    in Q4FY09.
--  Cash flow from operating activities (before changes in current assets
    and liabilities) was approximately $44,000 in Q4FY10 and $188,000 in
    the immediately preceding third quarter of fiscal 2010 as compared to
    a negative (cash used) of approximately $415,000 in Q4FY09.
--  Compensation and other general and administrative expenses (which
    excludes impairment loss on goodwill and depreciation and amortization
    expense) decreased 11.3% to approximately $2.9 million in Q4FY10 from
    approximately $3.3 million in Q4FY09.

Fiscal 2010 Financial Highlights:

--  Total revenues were approximately $16.7 million for the fiscal year
    ended September 30, 2010 (FY10), a decrease of approximately $233,000,
    or 1.4%, from fiscal 2009, primarily due to a decline in Audio and Web
    Conferencing Services Group revenues.
--  However, Digital Media Services Group revenues, which includes
    Webcasting and DMSP and hosting services, increased to approximately
    $7.9 million in fiscal 2010, a 1.6% increase from fiscal 2009.
--  Gross margin for fiscal 2010 was approximately $11.1 million, a 2.7%
    decrease compared to fiscal 2009, and mostly from the revenue decrease
    in the same period.
--  Consolidated operating expenses were approximately $19.2 million in
    fiscal 2010, a 15.5% decrease from fiscal 2009, primarily due to a
    reduction in compensation expense and depreciation and amortization
    expense.
--  Compensation expense and depreciation and amortization expense
    decreased by $1.5 million and $1.3 million, respectively, in fiscal
    2010 compared to the prior fiscal year.
--  Consolidated net loss for fiscal 2010 decreased 21% to approximately
    $9.3 million, or $1.20 loss per share, compared to a net loss of
    approximately $11.8 million, or $1.63 loss per share, in fiscal 2009.
--  The decreased net loss was primarily due to the reductions in
    compensation expense and depreciation and amortization expense.
--  Onstream's cash and cash equivalents were approximately $825,000 at
    September 30, 2010, up from approximately $541,000 at September 30,
    2009 (and approximately $337,000 at June 30, 2010).

Operational Developments

--  MarketPlace365™ (MP365), which enables the creation of on-line
    virtual marketplaces, trade shows and social communities, was
    officially launched in July 2010 and has four active customers -
    SUBWAY ®., Home Service Expo, Green Light Expo, and ProActive Capital
    Forum.
--  In addition to four active MP365 promoters, Onstream has entered into
    MP365 promoter contracts covering 18 other marketplaces, several of
    which we anticipate to launch in the coming weeks.
--  Onstream also has signed a number of MP365 resellers, including Tarsus
    Group plc, who agreed to market MP365 to more than 19,000 trade shows
    and 2,000 suppliers of its Trade Show News Network. Other MP365 agent
    agreements signed in fiscal 2010 include: Trade Show Exhibitors
    Association; AMC Institute; and Conventions.net.
--  Revenues from the government related contracts previously announced by
    Onstream increased in fiscal 2010, to an aggregate of approximately
    $509,000, a 58.1% increase compared to fiscal 2009.
--  In September 2010, Onstream received net cash proceeds of $824,044 from
    Lincoln Park Capital Fund, LLC ("LPC") in exchange for the issuance of
    securities equivalent to 770,000 shares of Onstream common stock.
--  In October 2010, Ari Kestin was appointed as Executive Vice President
    and General Manager of Onstream's Webcasting division. In his new role
    with the Webcasting division, Mr. Kestin will be responsible for all
    client-facing activities, sales and marketing, operations,
    partnerships, product and application development within the division.
    Mr. Kestin will also continue as President of the Infinite
    Conferencing, a wholly owned subsidiary of Onstream.

Management Commentary & Outlook

Randy Selman, President and Chief Executive Officer of Onstream Media, said, "Despite historically lower fourth quarter revenues due to seasonality and overall challenging economic conditions, Onstream posted revenue increases in its fourth quarter, as compared to the comparable prior year period. We also achieved a new milestone -- for the first time in our history, we posted two consecutive quarters of positive cash flow from operating activities, before working capital changes. We continue to control our expenses, and are pleased to have closed on an equity financing that can help fuel the growth of our latest innovation, MarketPlace365. In addition to a number of reseller agreements for MP365, we have more than 50 promoter prospects in the pipeline with at least 15 expected to be added by the end of the second fiscal 2011 quarter. As our sales and marketing efforts reach a more global audience through our MP365 reseller agreements, we expect that revenues from MP365 will contribute a more meaningful part of our overall operating results, and can continue our trend of positive cash flows."

Selman added, "In addition to MarketPlace365, we are equally excited about our new Adobe Flash capability in our proprietary Visual Webcasting platform. We expect to increase sales by delivering webcasts to the growing and large numbers of Google Android-based mobile users as well as creating a dynamic new flash based webcasting application for our enterprise customers. Our goal is to create long term customers, generating recurring revenue, due to our comprehensive offering of digital media services, communications, social networking, lead generation and quality customer service, all provided by a single provider. Our business has seen a turning point in fiscal 2010, and we believe we will continue to improve our top, and bottom, line in 2011."

Teleconference

Onstream Media will hold a conference call to discuss its fourth quarter and fiscal 2010 financial results on Monday, January 10, 2011 at 4:30PM Eastern Time. Interested parties should dial 888-645-4404 or 201-604-0169 approximately 10 to 15 minutes prior to the start of the call and may also listen to and view the presentation live online at http://www.visualwebcaster.com/event.asp?id=75038. An audio rebroadcast of the conference call will be archived for one year online at http://www.visualwebcaster.com/event.asp?id=75038.

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.

Financial Tables Follow

                 ONSTREAM MEDIA CORPORATION AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS


                          Twelve Months Ended        Three Months Ended
                                Sept 30,                  Sept 30,
                            2010         2009         2010         2009
REVENUE:                                          (unaudited)  (unaudited)
Smart encoding - hosting  1,013,583      759,792      211,772      171,184
DMSP                      1,023,754      945,905      257,453      232,344
                        -----------  -----------  -----------  -----------
DMSP and hosting          2,037,337    1,705,697      469,225      403,528
                        -----------  -----------  -----------  -----------
Webcasting                5,741,022    5,670,364    1,290,808    1,184,837
Smart encoding
 (excluding hosting)         51,084      288,718        3,930       40,750
Travel production and
 distribution                31,675       75,576       10,325       10,950
                        -----------  -----------  -----------  -----------
DIGITAL MEDIA SERVICES    7,861,118    7,740,355    1,774,288    1,640,065
                        -----------  -----------  -----------  -----------
Infinite Conferencing     6,831,900    7,098,993    1,793,131    1,606,593
Network usage             1,876,116    1,992,935      460,181      460,431
Network equipment sales
 and rentals                124,972       94,670       32,941       21,176
                        -----------  -----------  -----------  -----------
AUDIO AND WEB
 CONFERENCING             8,832,988    9,186,598    2,286,253    2,088,200
                        -----------  -----------  -----------  -----------
                        -----------  -----------  -----------  -----------
Total revenue            16,694,106   16,926,953    4,060,541    3,728,265
                        -----------  -----------  -----------  -----------

COSTS OF REVENUE:
Smart encoding - hosting    691,644      267,643      152,451       82,673
DMSP                        206,628      289,628       32,153       61,318
Webcasting                1,541,171    1,676,937      375,883      347,531
Smart encoding
 (excluding hosting)        279,690      419,252       60,248       92,377
Travel production and
 distribution                11,447       14,120          175        5,115
Infinite Conferencing     1,986,328    1,928,103      529,940      594,182
Network usage               797,849      863,621      200,783      204,742
Network equipment sales
 and rentals                 56,883       34,229       15,947        3,075
Total costs of revenue    5,571,640    5,493,533    1,367,580    1,391,013

GROSS MARGIN             11,122,466   11,433,420    2,692,961    2,337,252

OPERATING EXPENSES:
General and
 administrative:
Compensation              8,276,677    9,803,158    1,908,477    2,380,084
Professional fees         2,015,249    1,268,608      482,843      363,933
Other                     2,262,848    2,436,101      531,130      551,664
G/A Subtotal             12,554,774   13,507,867    2,922,450    3,295,681
Impairment loss on
 goodwill                 4,700,000    5,500,000    1,600,000            -
Write off deferred
 acquisition costs                -      504,738            -      (35,269)
Depreciation and
 amortization             1,923,460    3,195,291      385,731      639,455
Total operating
 expenses                19,178,234   22,707,896    4,908,181    3,899,867

Loss from operations     (8,055,768) (11,274,476)  (2,215,220)  (1,562,615)

OTHER (EXPENSE) INCOME:
Interest expense         (1,376,176)    (651,464)    (413,532)    (198,697)
Other (expense) income,
 net                        151,372       95,155       23,271       61,090

Total other (expense)
 income, net             (1,224,804)    (556,309)    (390,261)    (137,607)

NET LOSS                 (9,280,572) (11,830,785)  (2,605,481)  (1,700,222)

Weighted Average Common
 shares                   7,726,575    7,246,080    7,997,154    7,346,378
Ending Common Shares      8,384,570    7,388,783    8,384,570    7,388,783
Loss per share          $     (1.20) $     (1.63) $     (0.33) $     (0.23)




                 ONSTREAM MEDIA CORPORATION AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS


                                              September 30,  September 30,
                                                  2010           2009
                                              -------------  -------------

                                              -------------  -------------
                         ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                   $     825,408  $     541,206
  Accounts receivable, net of allowance for
   doubtful accounts                              2,805,420      2,189,252
  Prepaid expenses                                  316,591        356,963
  Inventories and other current assets              125,000        198,960
                                              -------------  -------------
Total current assets                              4,072,419      3,286,381

PROPERTY AND EQUIPMENT, net                       2,854,263      3,083,096
INTANGIBLE ASSETS, net                            1,284,524      2,499,150
GOODWILL, net                                    12,396,948     16,496,948
OTHER NON-CURRENT ASSETS                            104,263        118,398
                                              -------------  -------------
Total assets                                  $  20,712,417  $  25,483,973
                                              =============  =============


        LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accounts payable                            $   2,553,366  $   2,384,344
  Accrued liabilities                             1,199,019      1,199,843
  Amounts due to directors and officers             242,065        229,908
  Deferred revenue                                  141,788        163,198
  Notes and leases payable - current portion,
   net of discount                                1,904,214      1,615,891
  Convertible debentures, net of discount         1,626,796              -
  Series A-12 Convertible Preferred stock -
   redeemable portion, net                                -         98,000
                                              -------------  -------------
Total current liabilities                         7,667,248      5,691,184
Notes and leases payable, net of current
 portion and discount                               120,100        505,061
Convertible debentures, net of discount             815,629      1,109,583
Detachable warrants, associated with sale of
 common shares and Series A-14                      386,404              -
                                              -------------  -------------
Total liabilities                                 8,989,381      7,305,828
                                              -------------  -------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
Series A-12 Redeemable Convertible Preferred
 stock, par value $.0001 per share,
 authorized 100,000 shares, -0- and 70,000
 issued and outstanding, respectively                     -              7
Series A-13 Convertible Preferred stock, par
 value $.0001 per share, authorized 170,000
 shares, 35,000 and -0- issued and
 outstanding, respectively                                3              -
Series A-14 Convertible Preferred stock, par
 value $.0001 per share, authorized 420,000
 shares, 420,000 and -0- issued and
 outstanding, respectively                               42              -
Common stock, par value $.0001 per share;
 authorized 75,000,000 shares, 8,384,570 and
 7,388,783 issued and outstanding,
 respectively                                           838            739
Additional paid-in capital                      135,453,812    132,299,589
Unamortized discount                               (297,422)       (12,000)
Accumulated deficit                            (123,434,237)  (114,110,190)
                                              -------------  -------------
Total stockholders' equity                       11,723,036     18,178,145
                                              -------------  -------------

Total liabilities and stockholders' equity    $  20,712,417  $  25,483,973
                                              =============  =============

Contact Information

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

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