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Mandalay Media Reports Second Quarter Fiscal 2010 Financial Results
Achieves 20% Growth in EBITDA and narrows operating loss by 67% compared to Q2 in prior year
LOS ANGELES, Nov. 16 /PRNewswire-FirstCall/ -- Mandalay Media, Inc. (OTC Bulletin Board: MNDL) (the "Company" or "Mandalay Media") announced today results for its 2010 fiscal year second quarter ended September 30, 2009.
For the quarter ended September 30, 2009, Mandalay Media recorded EBITDA, excluding stock option expense and restructuring charges ("Adjusted EBITDA"), a non-GAAP measure, of $1.2 million. This compares to Adjusted EBITDA loss of $1.4 million for the second quarter of fiscal 2009.
Second Quarter Financial Highlights:
- Revenues of $10.1 million compared to $5.0 million in the second quarter of fiscal 2009;
- GAAP loss from operations and net loss were $0.4 million and $1.2 million, respectively, compared to GAAP loss from operations and net loss of $2.4 million and $3.0 million, respectively, in the second quarter of fiscal 2009; and
- GAAP loss per basic share was $0.03 for the second quarter of fiscal 2010 compared with a GAAP loss per basic share of $0.09 in the same period last year.
"We were extremely pleased with the progress made in this quarter," said Ray Schaaf, President of Mandalay Media. "We are in the process of a number of major initiatives to bring Mandalay to profitability and to create new revenue streams by launching new products. We will build the business both organically as well as through targeted strategic acquisitions."
Second Quarter Operating Highlights:
- Revenue Growth: more than 100% growth over prior year with the acquisition of AMV Holdings;
- Direct to Consumer Market Expansion: Expansion of direct-to-consumer services in key markets including US, Canada, Spain and Italy;
- Services: Aggressive migration to subscription services within product offering; and
- Improved Operating Efficiencies: Further integration of operating teams to yield improvements in operating expenses with full impact in the balance of the fiscal year.
A reconciliation of GAAP to non-GAAP results has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."
Business Outlook
The following forward-looking statements reflect expectations as of November 16, 2009. Results may be materially different and are affected by many factors, such as: consumer demand for mobile entertainment and specifically the Company's mobile products; consumer demand for mobile handsets, including the next-generation platforms; carriers' and distributors' marketing to consumers, including premium deck placement; continued uncertainty in the global economic environment; carriers' and other distributors' maintaining their networks and provisioning systems to enable consumer purchases; development delays on the Company's products; competition in the industry; changes in foreign exchange rates; the effective tax rate and other factors detailed in this release and in the Company's SEC filings.
Fiscal 2010 Outlook:
As previously stated, for the fiscal year ending March 31, 2010, the Company is currently on a run rate to generate revenue in excess of $40 million and Adjusted EBITDA, as defined above, in excess of $4 million. The Company expects organic growth, operating efficiencies and cost reductions throughout the year to deliver improved results for fiscal 2010.
Use of Non-GAAP Financial Measures
To supplement the Company's unaudited consolidated financial statements presented in accordance with GAAP, Mandalay Media uses certain non-GAAP measures of financial performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP. The primary non-GAAP financial measures used by the Company is Adjusted EBITDA. These non-GAAP financial measures exclude the following items from Mandalay Media's unaudited consolidated statements of operations:
- Amortization of intangible assets
- Stock-based compensation expense
- Restructuring charges
- Impairment of goodwill
Mandalay Media may consider whether other significant non-recurring items that arise in the future should also be excluded in calculating the non-GAAP financial measures it uses.
The Company believes that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding Mandalay Media's performance by excluding certain items that may not be indicative of the Company's core business, operating results or future outlook. Mandalay Media's management uses, and believes that investors benefit from referring to, these non-GAAP financial measures in assessing the Company's operating results, as well as when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate comparisons of Mandalay Media's performance to prior periods.
In the financial tables below, Mandalay Media has provided a reconciliation of the most comparable GAAP financial measure to each of the historical non-GAAP financial measures used in this press release.
Cautions Regarding Forward-Looking Statements
This news release contains forward-looking statements, including those regarding our "Business Outlook" ("Fiscal 2010 Outlook"); our expectations for full year revenues and Adjusted EBITDA; our expectations regarding organic growth, operating efficiencies and cost reductions; our belief that we will remain well positioned in the mobile distribution space. These forward-looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Investors should consider important risk factors, which include: the risks identified under "Business Outlook"; the risk that the mobile are not growing at the rate that we anticipate or that we will be unable to capitalize on any such growth; the risk that our expense control initiatives will be insufficient to enable us to achieve positive cash flow from operations in the future; the risk that we may have insufficient working capital to effectively execute our business strategy; the risk that we may fall out of compliance with the financial and other covenants in our secured debt facility; the risk that we may lose a key intellectual property license or key carrier distribution agreement; the risk that growth of next-generation handsets and advanced networks does not grow as significantly as we anticipate; and other risks detailed under the caption "Risk Factors" in our Form 10-Q filed with the Securities and Exchange Commission on November 16, 2009 and our other SEC filings. You can locate these reports through our website at http://mandalaymediainc.com. We are under no obligation, and expressly disclaim any obligation, to update or alter our forward-looking statements whether as a result of new information, future events or otherwise.
About Mandalay Media, Inc.:
Managed by leading media and technology industry executives, the Company's mission is to build a unique combination of new media distribution and content companies through acquisitions with domestic and foreign businesses with strong management teams and historical financial performance. Through its wholly-owned subsidiary Twistbox Entertainment, Inc., the Company is a leading global producer and publisher of mobile entertainment. Twistbox has exclusive licenses with industry-leading brands, direct distribution with more than 120 wireless operators in over 45 countries and provides an extensive portfolio of award-winning games, WAP sites and mobile TV channels. Its wholly-owned subsidiary AMV Holding Limited is a European leader in direct-to-consumer mobile Internet content and services.
For more information, please visit www.mandalaymediainc.com.
MANDALAY MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
September 30, March 31,
2009 2009
(unaudited)
----------- ---------
ASSETS
Current assets
Cash and cash equivalents $2,807 $5,927
Accounts receivable, net of allowances of
$177 and $174, respectively 10,886 10,745
Prepaid expenses and other current assets 961 1,334
--- -----
Total current assets 14,654 18,006
Property and equipment, net 1,159 1,230
Intangible assets, net 15,511 16,121
Goodwill 55,833 55,833
------ ------
TOTAL ASSETS $87,157 $91,190
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $7,365 $9,557
Accrued license fees 2,387 2,795
Accrued compensation 603 592
Current portion of long term debt 24,506 23,296
Other current liabilities 4,463 5,899
----- -----
Total current liabilities 39,324 42,139
Other long-term liabilities - 27
--- ---
Total liabilities $39,324 $42,166
------- ------
Commitments and contingencies (Note 15)
Stockholders' equity
Preferred stock
Series A convertible preferred stock at
$0.0001 par value; 100,000 shares authorized,
issued and outstanding (liquidation preference
of $1,000,000) 100 100
Common stock, $0.0001 par value: 100,000,000 shares
authorized; 39,863,191 issued and outstanding at
September 30, 2009; 39,653,125 issued and
outstanding at March 31, 2009 4 4
Additional paid-in capital 95,048 93,918
Accumulated other comprehensive income/(loss) (288) (129)
Accumulated deficit (47,031) (44,869)
------- -------
Total stockholders' equity 47,833 49,024
------ ------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $87,157 $91,190
======= =======
MANDALAY MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
3 Months 3 Months 6 Months 6 Months
Ended Ended Ended Ended
September September September September
30 30 30 30
2009 2008 2009 2008
---- ---- ---- ----
Net revenues $10,141 $5,003 $20,224 $10,349
------- ------ ------- -------
Cost of revenues
License fees 857 1,785 1,876 3,934
Other direct cost of
revenues 2,149 102 3,986 204
----- --- ----- ---
Total cost of revenues 3,006 1,887 5,862 4,138
----- ----- ------ ------
Gross profit 7,135 3,116 14,362 6,211
----- ----- ------ ------
Operating expenses
Product development 1,358 1,800 2,780 3,567
Sales and marketing 3,024 1,004 6,405 2,283
General and administrative 2,956 2,559 5,344 5,372
Amortization of intangible
assets 177 137 354 274
--- --- --- ---
Total operating expenses 7,515 5,500 14,883 11,496
----- ----- ------ ------
Loss from operations (380) (2,384) (521) (5,285)
Interest and other income/(expense)
Interest income 3 44 7 121
Interest expense (737) (468) (1,406) (952)
Foreign exchange transaction
gain/(loss) 139 (57) 294 73
Other income /(expense) 154 (102) 149 (187)
--- ---- --- ----
Interest and other
income/(expense) (441) (583) (956) (945)
---- ---- ---- ----
Loss from operations before
income taxes (821) (2,967) (1,477) (6,230)
Income tax provision (380) (74) (685) (148)
---- --- ---- ----
Net loss $(1,201) $(3,041) $(2,162) $(6,378)
======= ======= ======= =======
Comprehensive loss $(1,563) $(3,147) $(2,321) $(6,494)
======= ======= ======= =======
Basic and diluted net
loss per common share $(0.03) $(0.09) $(0.05) $(0.20)
====== ====== ====== ======
Weighted average common
shares outstanding, basic
and diluted 39,863 32,423 39,836 32,377
====== ====== ====== ======
MANDALAY MEDIA, INC. AND SUBSIDIARIES
Reconciliation of GAAP Net Loss to Adjusted EBITDA
(In thousands, except per share amounts)
3 Months 3 Months 6 Months 6 Months
Ended Ended Ended Ended
September September September September
30 30 30 30
2009 2008 2009 2008
---- ---- ---- ----
Net loss (1,201) (3,041) (2,162) (6,378)
Non-GAAP adjustments
affecting net loss
Net interest expense 734 424 1,399 831
Income tax 380 74 685 148
Restructuring charges (a) 173 - 173 -
Depreciation (a) 116 90 233 176
Amortization (a) 364 331 728 640
Stock based compensation (a) 513 743 1,014 1,965
Warrant expense (a) 134 - 134 -
--- --- --- ---
Adjusted EBITDA 1,213 (1,379) 2,203 (2,618)
===== ====== ===== ======
Notes:
(a) See table below for further details related to income statement
classification of these adjustments
3 Months 3 Months 6 Months 6 Months
Ended Ended Ended Ended
September September September September
30 30 30 30
2009 2008 2009 2008
---- ---- ---- ----
Restructuring charges
Product development 33 - 33 -
General and administrative 140 - 140 -
--- --- --- ---
173 - 173 -
=== === === ===
Depreciation
General and administrative 116 90 233 176
=== === === ===
Amortization
Cost of revenues 187 194 373 366
Amortization of
intangible assets 177 137 354 274
--- --- --- ---
364 331 728 640
=== === === ===
Stock Based Compensation
Product development 3 9 6 19
Sales and marketing 7 7 14 14
General and administrative 503 728 995 1,933
--- --- --- -----
513 744 1,014 1,966
=== === ===== =====
Warrant expense
Cost of revenues 134 - 134 -
=== === === ===
Safe Harbor:
This press release contains forward-looking statements about the Company within the meaning of the Private Securities Litigation Reform Act of 1995. Statements including words such as "estimate", "expect", "anticipate" or "believe" and statements in the future tense are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual events or actual future results to differ materially from the expectations set forth in the forward-looking statements. Some of the factors which could cause the Company's results to differ materially from the expectations include the following: consumer demand for the Company's products; consumer spending trends; fluctuations in the currencies of the countries in which the Company operates against the US dollar; timely development and release of the Company's products; competition in the industry; the Company's ability to manage expenses; the Company's ability to manage and sufficiently integrate acquisitions of other companies; adverse changes in the securities markets; and other factors described in our filings with the SEC, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2009. The Company does not undertake, and specifically disclaims any obligation, to release publicly the results of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.
SOURCE Mandalay Media, Inc.
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