SOURCE: RMG Networks Holding Corporation

RMG Networks Holding Corporation

August 07, 2014 07:00 ET

RMG Networks Reports Second Quarter 2014 Results

Media and Enterprise Units Grew Adjusted Revenue(1,2) Sequentially With Strong Adjusted Gross Margin(1,2) Improvement; Sequential Media Unit Revenue Increase of 91%; Adjusted EBITDA Loss Narrowed Sequentially

DALLAS, TX--(Marketwired - Aug 7, 2014) -  RMG Networks Holding Corporation (NASDAQ: RMGN)

Second Quarter Highlights

  • Robert Michelson joins RMG Networks as interim President and interim Chief Executive Officer, subsequent to quarter-end
  • Consolidated revenue of $16.4 million, on an adjusted basis1,2, increased 29.9% from the first quarter 2014; consolidated adjusted revenue was comprised of $11.5 million in adjusted Enterprise revenue1,2 and $4.9 million in Media revenue,
  • Adjusted EBITDA loss of $2.8 million3 represented a $2.6 million improvement from the first quarter 2014
  • Won the largest Enterprise software sale in company history, with over 27,000 software licenses to a Tier 1 telecom provider
  • Completed reallocation of corporate resources that streamlined the business and is expected to reduce ongoing operating expense levels
  • Subsequent to quarter-end, amended the Senior Credit facility, adding $3.4 million in net cash proceeds to the balance sheet and eliminated financial covenants until at least mid-year 2015

RMG Networks Holding Corporation (NASDAQ: RMGN), or RMG Networks, a leading provider of technology-driven visual communications solutions, today announced its financial results for the second quarter ended June 30, 2014.

RMG Networks helps brands and organizations communicate more effectively using location-based video networks. The company builds enterprise video networks that empower organizations to visualize critical data to better run their business. The company also connects brands with target audiences using video advertising networks comprised of over 200,000 display screens, reaching over 100 million consumers each month.

Robert Michelson, Chief Executive Officer, commented, "Two weeks ago, I joined RMG Networks to head a recognized industry leader and innovator in intelligent visual communications solutions. I was attracted to the company by the strength of its growth platform as well as the truly differentiated solutions that offer customers a proprietary value proposition. As a growth-focused CEO, I see in RMG Networks an exciting opportunity to expand our leadership and put the company firmly on a profitable growth trajectory."

"Our second quarter results demonstrate sequential growth in revenue and gross margin in both units as sales execution improved and that costs were strictly controlled. We are focused on continuing to deliver sequential growth through the second half of the year. As previously announced, we have made some changes to our senior leadership team and are now refocusing our efforts on a limited number of strategic initiatives in key industries, products and solutions and plan to pursue our investments in a measured manner. We are managing the business with the goal of achieving profitable growth by measuring our performance against a refined set of benchmarked metrics. Finally, we will maintain clarity in our communications to all audiences through consistency and transparency. With momentum building in the business, refocused execution, and a bolstered balance sheet, we are prepared to achieve the company's growth potential and long-term strategic objectives."

Second Quarter Financial Review

RMG Networks completed the business combinations of Reach Media Group Holdings, Inc. and Symon Holdings Corporation, or Symon, on April 8 and April 19, 2013, respectively. Symon was determined to be the Predecessor Company for accounting purposes and accordingly Symon's historical financials are included for comparison in RMG Networks' "as-reported" financials. Because Symon recorded results of operations on a January 31 fiscal year and because the results of Reach Media Group Holdings, Inc. are included in Predecessor Company financials only as of the date of combination, second quarter 2014 results as-reported are not comparable with the Predecessor Company's results for second quarter 2013. In addition, "as-reported" results include certain items and the effects of purchase accounting which RMG Networks does not believe reflect the underlying performance of its business. Therefore, for ease of comparison, the following provides adjusted results for the second quarter of 2014 and pro forma combined results for the second quarter of 2013 as if the companies had existed as a combined entity for the relevant periods and adjusting for the items described above.

Adjusted and Pro Forma Combined Results4,5
Second Quarter Revenue. Total adjusted revenues in the second quarter of 2014 were $16.4 million, a sequential increase of 29.9% from $12.6 million in the first quarter of 2014.

  • Adjusted Enterprise revenue of $11.5 million increased 14.4% from $10.1 million in the first quarter of 2014, driven by an increase in product sales. Adjusted gross margin improved to 58.9% from 57.5% in the first quarter of 2014, due to a favorable product mix driven by a large software sale.
  • Media revenue of $4.9 million increased 91.3% from $2.5 million in the first quarter of 2014, due to a rebound in advertising demand and better sales execution. Adjusted gross margin improved to 13.8% from (16.8)% in the first quarter of 2014, due to increased revenue generation.

On a year over year basis, total adjusted revenues in the second quarter of 2014 represented a decrease of 13.3% from $18.9 million of pro forma combined revenues in the second quarter of 2013.

  • Adjusted Enterprise revenue decreased 3.8% from $12.0 million in the second quarter of 2013, due to a slight decrease in product sales and professional services. Adjusted Enterprise gross margin was 58.9% compared to 54.2% in the second quarter of 2013, increasing year over year due to a favorable sales mix resulting from a large software sale in the second quarter of 2014.
  • Media revenue decreased 29.6% from $6.9 million in the second quarter of 2013, primarily due to continued headwinds in the out-of-home advertising sector. Adjusted Media gross margin was 13.8% compared to 38.6% in the second quarter of 2013, due primarily to lower revenue generation failing to cover fixed costs of sales.

Second Quarter Adjusted EBITDA4. Adjusted EBITDA loss was $2.8 million, improving from a loss of $5.3 million in the first quarter of 2014, due to higher revenues, improved gross margins and lower cash operating expenses6.

On a year over year basis, adjusted EBITDA decreased in the second quarter from pro forma combined adjusted EBITDA of $0.8 million in the second quarter of 2013, due to the reasons described above.

During the second quarter of 2014, the company incurred approximately $14.0 million in non-recurring charges comprised of the following:

  • Impairment charges of $1.3 million and $5.9 million related to goodwill and intangible assets, respectively, within the Media Unit
  • A $6.2 million loss accrual charge on a long-term contract, resulting from a revised forecast of the revenue associated with the contract
  • Approximately $0.6 million in costs related to the departure of the company's former CEO and a reorganization of certain business operations

Reported Results
Second Quarter. Total reported revenue for the quarter ended June 30, 2014 was $13.4 million; total revenue for the successor company from April 20, 2013 through June 30, 2013 was $15.1 million.

Operating loss for the quarter ended June 30, 2014 was $19.6 million; operating loss for the successor company from April 20, 2013 through June 30, 2013, was $2.9 million.

Legal Matters

From time to time, the company has been and may become involved in legal proceedings arising in the ordinary course of its business. Although the results of litigation and claims cannot be predicted with certainty, RMG Networks is not presently involved in any legal proceeding in which the outcome, if determined adversely to the company, would be expected to have a material adverse effect on its business, operating results, or financial condition. Regardless of the outcome, however, litigation can have an adverse impact on the company because of defense and settlement costs, diversion of management resources, and other factors. The currently expected financial impact of ongoing legal proceedings is reflected in accruals in costs of revenues and in a reserve for legal expenses which was accrued in the second quarter of 2013 in the amount of $500,000.

Amended Senior Credit Facility

As previously disclosed, on July 16, 2014 the company successfully completed a Third Amendment to its senior credit facility. The amended term loan facility increased from $8 million to $12 million, adding approximately $3.4 million in net cash proceeds to the company's balance sheet. The amendment also eliminated financial covenants until at least mid-year 2015, providing the company with substantial operating flexibility. The amended 3-year facility, which matures in July 2017, bears interest at a fixed rate of 12% and continues to defer principal payments until maturity.

Outlook

For the remainder of 2014, RMG Networks expects to see continued sequential quarterly adjusted revenue increases with sequential reductions in quarterly cash operating expenses7, resulting in sequential quarterly Adjusted EBITDA increases. Over the long term, given the leadership positions the company holds in the growing industries in which its competes, the company continues to strongly believe in its prospects for generating revenue growth, for developing material operating leverage and for producing significant adjusted EBITDA.

Conference Call

Management will host a conference call to discuss these results today, Thursday, August 7, 2014 at 9:00 a.m. ET. To access the call, please dial 866-700-6293 (toll free) or 617-213-8835 and passcode # 69913925. The conference call will also be broadcast live over the Internet with an accompanying slide presentation, which can be accessed via the Investor Relations section of RMG Networks' web site at http://ir.rmgnetworks.com/phoenix.zhtml?c=251935&p=irol-calendar. All participants should call or access the website approximately 10 minutes before the conference begins. The webcast and slide presentation will be available for replay for 90 days.

A telephonic replay of this conference call will also be available by dialing 888-286-8010 (toll free) or 617-801-6888 (passcode: 81618153) from 2:00 p.m. ET on August 7, 2014 until midnight ET on August 11 2014. 

About RMG Networks

RMG Networks (NASDAQ: RMGN) helps brands and organizations communicate more effectively using location-based video networks. The company connects brands with target audiences using video advertising networks comprised of over 200,000 display screens, reaching over 100 million consumers each month. The company also builds enterprise video networks that empower organizations to visualize critical data to better run their business. RMG Networks works with over 70% of the Fortune 100. The company is headquartered in Dallas, Texas with offices in the United States, United Kingdom, China, India, Singapore and the U.A.E. For more information, visit http://www.rmgnetworks.com.

About Non-GAAP Financial Measures

This release includes certain non-GAAP financial measures as defined under SEC regulations, including Adjusted Revenue, Adjusted Gross Margin, and Adjusted EBITDA. In evaluating its business, RMG Networks considers and uses Adjusted Revenue, Adjusted Gross Margin, and Adjusted EBITDA as supplemental measures of its operating performance, and believes that many of the company's investors use these non-GAAP measures to monitor the company's performance. These measures should not be considered as a substitute for the most directly comparable GAAP measures and should not be used in isolation, but in conjunction with these GAAP measures. Definitions and reconciliations between non-GAAP measures and relevant GAAP measures are set forth in the tables at the end of this press release.

Cautionary Note Regarding Forward Looking Statements
This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding guidance relating to future financial performance, expected operating results, such as revenue growth, our ability to achieve profitability, our position within the markets that we serve, efforts to grow our business and the impact of litigation.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: the company's success in retaining or recruiting, or changes required in, its management and other key personnel; the limited liquidity and trading volume of the company's securities; Reach Media Group's ("RMG") history of incurring significant net losses and limited operating history; the competitive environment in the advertising markets in which the company operates; the risk that the anticipated benefits of the combination of RMG or Symon Holdings Corporation, or of other acquisitions that the company may complete, may not be fully realized; the risk that any projections, including earnings, revenues, margins or any other financial items are not realized; changing legislation and regulatory environments; business development activities, including the company's ability to contract with, and retain, customers on attractive terms; the general volatility of the market price of the company's common stock; risks and costs associated with regulation of corporate governance and disclosure standards (including pursuant to Section 404 of the Sarbanes-Oxley Act); and general economic conditions.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

   
RMG Networks Holding Corporation  
Consolidated Balance Sheets  
June 30, 2014 and December 31, 2013  
   
    June 30,
2014
    December 31,
2013
 
    (Unaudited)        
Assets                
Current assets:                
  Cash and cash equivalents   $ 3,087,094     $ 8,235,566  
  Accounts receivable, net     16,206,437       22,731,678  
  Inventory, net     3,587,266       4,633,213  
  Deferred tax assets     16,782       63,617  
  Other current assets     1,326,635       2,224,547  
Total current assets     24,224,214       37,888,621  
Property and equipment, net     4,638,301       3,548,985  
Intangible assets, net     29,649,000       38,782,000  
Goodwill     27,927,027       28,642,398  
Loan origination fees     857,404       971,726  
Other assets     225,522       496,879  
Total assets   $ 87,521,468     $ 110,330,609  
Liabilities and Stockholders' equity                
Current liabilities:                
  Accounts payable   $ 4,637,157     $ 8,009,380  
  Revenue share liabilities     2,142,605       2,595,614  
  Accrued liabilities     4,481,651       4,423,896  
  Accrued loss on long-term contract     2,036,000       -  
  Deferred revenue     10,205,163       10,074,420  
  Capital leases and other     103,508       86,952  
Total current liabilities     23,606,084       25,190,262  
Notes payable - non current     8,000,000       8,000,000  
Warrant liability     2,701,641       4,573,123  
Accrued loss on long-term contract-non current     4,164,000       -  
Deferred revenue - non current     1.575.429       990,989  
Deferred tax liabilities     6,567,609       6,430,853  
Capital leases and other     670,123       392,558  
Total liabilities     47,284,886       45,577,785  
Commitments and Contingencies                
Stockholders' equity:                
  Common stock, $.0001 par value, (250,000,000 shares authorized; 12,367,756 and 11,920,583 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively)     1,237       1,192  
  Additional paid-in capital     81,773,063       77,452,317  
  Accumulated comprehensive income     401,406       299,618  
  Retained earnings (accumulated deficit)     (41,459,124 )     (13,000,303 )
  Treasury stock (300,000 shares)     (480,000 )     -  
Total stockholders' equity     40,236,582       64,752,824  
Total liabilities and stockholders' equity   $ 87,521,468     $ 110,330,609  
 
 
 
RMG Networks Holding Corporation
Consolidated Statements of Comprehensive Income (Loss)
For The Six Months Ended June 30, 2014 and the Period April 20 through June 30, 2013
 
    Successor     Successor     Predecessor  
    Company     Company     Company  
    Six Months
Ended
June 30,
2014
    April 20, 2013
Through
June 30,
2013
    February 1, 2013
Through
April 19,
2013
 
    (Unaudited)              
Revenue:                        
  Advertising   $ 7,417,237     $ 5,556,557     $ -  
  Products     5,589,302       5,069,160       2,239,236  
  Maintenance and content services     7,904,287       2,572,555       3,594,520  
  Professional services     4,240,689       1,851,755       1,323,559  
Total Revenue     25,151,515       15,050,027       7,157,315  
                         
Cost of Revenue:                        
  Advertising     5,789,910       3,355,883       -  
  Products     4,421,768       3,261,492       1,498,135  
  Maintenance and content services     1,516,084       572,433       611,692  
  Professional services     3,084,968       1,197,304       861,640  
      14,812,730       8,387,112       2,971,467  
  Loss on long-term contract     4,130,104       -       -  
Total Cost of Revenue     18,942,834       8,387,112       2,971,467  
Gross Profit     6,208,681       6,662,915       4,185,848  
                         
Operating expenses:                        
    Sales and marketing     10,636,104       3,351,286       1,729,871  
    General and administrative     10,490,344       2,585,983       1,739,348  
    Research and development     2,120,037       806,401       512,985  
    Acquisition expenses     -       1,485,566       3,143,251  
    Depreciation and amortization     3,800,818       1,292,276       140,293  
    Impairment of intangible assets and goodwill     7,245,359       -       -  
Total operating expenses     34,292,662       9,521,512       7,265,748  
Operating income (loss)     (28,083,981 )     (2,858,597 )     (3,079,900 )
Other Income (Expense):                        
  Warrant liability expense     (589,009 )     (3,920,000 )     -  
  Interest expense and other - net     (114,691 )     (495,880 )     (14,553 )
Income (loss) before income taxes     (28,787,681 )     (7,274,477 )     (3,094,453 )
Income tax expense (benefit)     (328,860 )     -       (540,897 )
Net income (loss)     (28,458,821 )     (7,274,477 )     (2,553,556 )
Other comprehensive income (loss) -                        
  Foreign currency translation adjustments     101,788       13,157       (121,144 )
Total comprehensive income (Loss)   $ (28,357,033 )   $ (7,261,320 )   $ (2,674,700 )
                         
    Net income(loss) per share:                        
    Basic and dilutive net income (loss) per share of Common Stock   $ (2.34 )   $ (1.16 )   $ -  
    Basic and dilutive net income (loss) per share of Class L Common Stock   $ -     $ -     $ (2.55 )
    Basic and dilutive net income (loss) per share of Class A Non-Voting Common Stock   $ -     $ -     $ -  
    Weighted average shares used in computing basic and dilutive net income (loss) per share of Common Stock     12,161,112       6,285,583       -  
    Weighted average shares used in computing basic and dilutive net income (loss) per share of Class L Common Stock     -       -       1,000,000  
    Weighted average shares used in computing basic and dilutive net income (loss) per share of Class A Non-Voting Common Stock     -       -       68,889  
   
   
   
RMG Networks Holding Corporation  
Consolidated Statements of Comprehensive Income (Loss)  
For The Three Months Ended June 30, 2014 and The Period April 20 Through June 30, 2013  
   
    Successor
Company
    Successor
Company
 
    Three Months
Ended
June 30,
2014
    April 20, 2013
Through
June 30,
2013
 
    (Unaudited)        
Revenue:                
  Advertising   $ 4,871,146     $ 5,556,557  
  Products     3,301,555       5,069,160  
  Maintenance and content services     3,601,562       2,572,555  
  Professional services     1,602,123       1,851,755  
Total Revenue     13,376,386       15,050,027  
Cost of Revenue:                
  Advertising     3,454,167       3,355,883  
  Products     2,511,845       3,261,492  
  Maintenance and content services     755,938       572,433  
  Professional services     1,475,138       1,197,304  
      8,197,088       8,387,112  
  Loss on long-term contract     4,130,104       -  
Total Cost of Revenue     12,327,192       8,387,112  
Gross Profit     1,049,194       6,662,915  
Operating expenses:                
  Sales and marketing     5,402,824       3,351,286  
  General and administrative     5,084,576       2,585,983  
  Research and development     1,028,111       806,401  
  Acquisition expenses     -       1,485,566  
  Depreciation and amortization     1,880,785       1,292,276  
  Impairment of intangible assets and goodwill     7,245,359       -  
Total operating expenses     20,641,655       9,521,512  
Operating income (loss)     (19,592,461 )     (2,858,597 )
Other Income (Expense):                
  Warrant liability expense     4,052,462       (3,920,000 )
  Interest expense and other - net     134,048       (495,880 )
Income (loss) before income taxes     (15,405,951 )     (7,274,477 )
Income tax expense (benefit)     621,219       -  
Net income (loss)     (16,027,170 )     (7,274,477 )
Other comprehensive income -                
  Foreign currency translation adjustments     97,182       13,157  
Total comprehensive income (loss)   $ (15,929,988 )   $ (7,261,320 )
  Net income (loss) per share:                
    Basic and diluted net income (loss) per share of Common Stock   $ (1.32 )     (1.16 )
    Weighted average shares used in computing basic and diluted net income (loss) per share of Common Stock     12,161,112       6,285,583  
   
   
   
RMG Networks Holding Corporation  
Consolidated Statements of Cash Flows  
For The Six Months Ended June 30, 2014 and The Period April 20 through June 30, 2013  
   
    Successor     Successor     Predecessor  
    Company     Company     Company  
    Six Months     April 20, 2013     February 1, 2013  
    Ended     Through     Through  
    June 30,     June 30,     April 19,  
    2014     2013     2013  
    (Unaudited)              
Cash flows from operating activities:                        
  Net income (loss)   $ (28,458,821 )   $ (7,274,477 )   $ (2,553,556 )
  Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:                        
    Depreciation and amortization     3,800,818       1,292,276       140,293  
    Change in warrant liability     589,009       3,920,000       -  
    Impairment of intangible assets and goodwill     7,245,359       -       -  
    Stock-based compensation     1,743,836       -       -  
    Non-cash treasury stock     (480,000 )     -       -  
    Non-cash loan origination fees     114,322       -       -  
    Non-cash consulting fees     264,750       -       -  
    Non-cash directors' fees     116,464       -       -  
    Non-cash interest expense     -       60,000       140,293  
    Deferred tax (benefit)     (433,231 )     -       (12,294 )
    Other non-cash expense (income), net     -       -       (2,054 )
    Changes in operating assets and liabilities:                        
      Accounts receivable     6,525,241       (4,412,699 )     2,846,332  
      Inventory     1,045,947       (74,919 )     (488,722 )
      Other current assets     897,912       211,440       (154,529 )
      Other assets, net     6,606       (1,073 )     12,572  
      Accounts payable     (3,404,430 )     1,708,576       (2,978,808 )
      Accrued liabilities     6,130,908       362,830       (765,937 )
      Deferred revenue     715,184       330,532       (372,579 )
Net cash provided by (used in) operating activities     (3,580,126 )     (3,877,514 )     (4,329,282 )
                         
Cash flows from investing activities:                        
  Acquisition of Symon Holdings Corporation     -       (209,079 )     -  
  Purchases of property and equipment     (1,670,134 )     (172,244 )     (86,470 )
Net cash provided by (used in) investing activities     (1,670,134 )     (381,323 )     (86,470 )
                         
Cash flows from financing activities:                        
  Repayment of debt     -       (600,000 )     -  
Net cash provided by (used in) financing activities     -       (600,000 )     -  
                         
Effect of exchange rate changes on cash     101,788       13,157       (121,144 )
                         
Net increase (decrease) in cash and cash equivalents     (5,148,472 )     (4,845,680 )     (4,536,896 )
                         
Cash and cash equivalents, beginning of period     8,235,566       10,824,943       10,203,169  
                         
Cash and cash equivalents, end of period   $ 3,087,094     $ 5,979,263     $ 5,666,273  
                         
Supplemental disclosures of cash flow information:                        
  Cash paid during the year for interest   $ 294,570     $ -     $ 2,053  
  Cash paid during the year for income taxes   $ -     $ -     $ 150,000  
 
 
 
RMG Networks Holding Corporation
Reconciliation of Gross Profit
For The Three Months Ended June 30, 2014
 
                     
  Successor Company
Three Months Ended
June 30, 2014
(GAAP)
  Purchase Price Accounting Adjustment   Cost of Revenue Reclassification   Loss on Long-Term Contract     Adjusted
(Non-GAAP)
  (Unaudited)                  
Revenue:                              
  Advertising $ 4,871,146   $ -   $ -   $ -     $ 4,871,146
  Product sales   3,301,555     -     742,417     987,542       5,031,514
  Maintenance and content services   3,601,562     209,913     -     394,565       4,206,040
  Professional services   1,602,123     -     -     687,789       2,289,912
Total Revenue   13,376,386     209,913     742,417     2,069,896       16,398,612
                               
Cost of Revenues:                              
  Advertising   3,454,167     -     742,417     -       4,196,584
  Product sales   2,511,845     -     -     -       2,511,845
  Maintenance and content services   755,938     -     -     -       755,938
  Professional services   1,475,138     -     -     -       1,475,138
  Loss on long-term contract   4,130,104     -     -     (4,130,104 )     -
Total Cost of Revenue   12,327,192     -     742,417     (4,130,104 )     8,939,505
                               
Gross Profit $ 1,049,194   $ 209,913   $ -   $ 6,200,000     $ 7,459,107
                               
 
 
RMG Networks Holding Corporation
Reconciliation of Gross Profit
For The Three Months Ended June 30, 2013
 
                 
    Successor Company
April 20 Through
June 30, 2013
(GAAP)
  Predecessor Company and Reach Media
April 1 Through
April 19, 2013
  Purchase Price Accounting Adjustment   Pro Forma Combined Adjusted
(Non-GAAP)
    (Unaudited)            
Revenue:                        
  Advertising   $ 5,556,557   $ 1,361,245   $ -   $ 6,917,802
  Product sales     5,069,160     224,690     -     5,293,850
  Maintenance and content services     2,572,555     884,207     675,110     4,131,872
  Professional services     1,851,755     710,463     -     2,562,218
Total Revenue     15,050,027     3,180,605     675,110     18,905,742
                         
Cost of Revenues:                        
  Advertising     3,355,883     890,789     -     4,246,672
  Product sales     3,261,492     130,527     -     3,392,019
  Maintenance and content services     572,433     152,251     -     724,684
  Professional services     1,197,304     180,745     -     1,378,049
  Loss on long-term contract     -     -     -     -
Total Cost of Revenue     8,387,112     1,354,312     -     9,741,424
                         
Gross Profit   $ 6,662,915   $ 1,826,293   $ 675,110   $ 9,164,318
                         
   
   
RMG Networks Holding Corporation  
Reconciliation of Operating Income (Loss) to Adjusted EBITDA  
   
             
             
    Second Quarter  
    2014     2013  
                 
Operating income (loss) per Statements of Comprehensive Income   $ (19,592,461 )   $ (2,858,597 )
                 
Predecessor Company and Reach Media operating income (loss) for the period                
    April 1 through April 19, 2013     -       (2,333,740 )
                 
Revenues that would have been recognized in the period had the balance in deferred revenue at the acquisition date not been required to be adjusted to market value at the acquisition date in accordance with GAAP purchase accounting guidelines     209,913       675,110  
                 
Pro-Forma Operating Income (Loss)     (19,382,548 )     (4,517,227 )
                 
Depreciation and amortization     1,880,785       1,342,689  
Acquisition expenses     -       4,013,757  
Stock-based compensation     714,148       -  
Impairment of intangible assets and goodwill     7,245,359       -  
Loss on long-term contract     6,200,000       -  
Reorganization expenses     579,029       -  
                 
      Adjusted EBITDA   $ (2,763,227 )   $ 839,219  
                 

1 2014 adjusted results; Enterprise revenues represent Products, Maintenance and Content Services, and Professional Services revenue line items; Media revenues represent Advertising revenue line item.

2 Q1 & Q2 2014 GAAP consolidated revenue was $11.8 million and $13.4 million, respectively, and Q1 & Q2 2014 GAAP Enterprise revenue was $9.2 million and $8.5 million, respectively. Please see the tables at the end of this press release for a reconciliation of GAAP results to adjusted results.

3 Q1 & Q2 2014 GAAP operating loss was $8.5 million and $19.6 million, respectively. Please see the tables at the end of this press release for a reconciliation of GAAP results to adjusted results.

4 Q1 & Q2 2014 GAAP consolidated revenue was $11.8 million and $13.4 million, respectively, and Q1 & Q2 2014 GAAP Enterprise revenue was $9.2 million and $8.5 million, respectively. Q1 & Q2 2014 GAAP operating loss was $8.5 million and $19.6 million, respectively. Please see the tables at the end of this press release for a reconciliation of GAAP results to adjusted results.

5 2014 adjusted results; 2013 pro forma combined results; Enterprise revenues represent Products, Maintenance and Content Services, and Professional Services revenue line items; Media revenues represent Advertising revenue line item.

6 Cash operating expenses exclude depreciation & amortization, stock-based compensation and other one-time or non-recurring charges.

7 Cash operating expenses exclude depreciation & amortization, stock-based compensation and other one-time or non-recurring charges.

Contact Information

  • Contact:
    For RMG Networks Holding Corporation
    Investor
    Carolyn M. Capaccio, CFA
    LHA
    212-838-3777
    Email Contact

    or

    Media
    Julie Rasco
    800-827-9666
    Email Contact