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Onstream Media Corporation Announces Final Third Quarter Fiscal 2013 Financial Results

- Company Reports Higher Audio and Web Conferencing Revenues -

- Conference Call for Investment Community confirmed for Tuesday, August 20, 2013 at 4:30pm ET -

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POMPANO BEACH, Fla., Aug. 19, 2013 /PRNewswire/ -- Onstream Media Corporation (OTCQB: ONSM), a leading online service provider of corporate audio and web communications, including webcasting, webinar, conferencing and virtual event technology, announced today its final financial results for the third quarter ended June 30, 2013, supplementing but not changing the information already released on August 15, 2013.

Highlights

  • Revenues for the third quarter of fiscal 2013 were approximately $4.5 million as compared to approximately $4.8 million for the comparable quarter of fiscal 2012. This decrease was the result of an unexpected reduction in webcasting revenues from both government and commercial clients as well as the loss of a single customer that we were providing streaming services to at very little margin.
  • Audio and Web Conferencing Services Group revenues were approximately $2.9 million for the three months ended June 30, 2013, an increase of approximately $247,000 (9.3%) from the corresponding period of the prior fiscal year. This increase was the result of revenues from the operations of Intella2, a San Diego-based communications company, which Onstream acquired on November 30, 2012.
  • Consolidated gross margin percentage was 72.1% for the three months ended June 30, 2013, versus 66.6% for the corresponding period of the prior fiscal year. This improvement was due to reductions in Infinite and webcasting cost of sales and the impact of the acquired Intella2 operations, as well as the discontinuance of a single low margin Digital Media Services Platform ("DMSP") and hosting customer as noted above.
  • Onstream's EBITDA, as adjusted, for the three months ended June 30, 2013 was approximately $257,000 as compared to EBITDA, as adjusted, of approximately $361,000 for the third quarter of fiscal 2012. Although this represents a decrease as compared to the comparable quarter of the prior year, it represents an approximately $367,000 increase from EBITDA, as adjusted, of approximately negative $110,000 for the second quarter of fiscal 2013.
  • Cash provided by operating activities (before changes in current assets and liabilities other than cash) for the three months ended June 30, 2013 was approximately $110,000, compared to cash provided by operating activities (before changes in current assets and liabilities other than cash) of approximately $372,000 for the three months ended June 30, 2012. Although this represents a decrease as compared to the comparable quarter of the prior year, it represents an approximately $325,000 increase from cash used in operating activities (before changes in current assets and liabilities other than cash) of approximately $215,000 for the second quarter of fiscal 2013. 

Management Commentary

Randy Selman, President and Chief Executive Officer of Onstream Media, stated, "Although we did experience an overall revenue decline in the third quarter, as compared to the same quarter of the prior fiscal year, this was the result of an unexpected reduction in webcasting revenues and the loss of a single DMSP and hosting customer whose revenues were resulting in very little margin. In fact, our consolidated gross margin for the quarter was greater than the consolidated gross margin for the same quarter of the previous year."

Mr. Selman continued, "We continue to believe that our webcasting division revenues will be favorably impacted during the remainder of fiscal 2013 and into fiscal 2014 as a result of a comprehensive update to our webcasting platform (V4), which we launched in January 2013. We also expect to eventually see increased webcasting sales as a result of additional sales personnel, increased sales efforts by our resellers as a result of the new platform and our new Virtual Conference Center which is a multiple event conference solution with integrated webcasting that is a subset of the MarketPlace365 service."

Mr. Selman concluded, "Looking towards the remainder of the fiscal year and into the beginning of fiscal 2014 we believe we are on track to show improvement in our revenues, EBITDA and our cash flow. Based on our preliminary look at July 2013 revenues we believe that our fourth quarter revenues are on a pace thus far to hopefully match revenues for the immediately preceding third quarter, which would represent an improvement over the traditional seasonal revenue decline from the third to the fourth quarter seen in prior years. We are optimistic about continued growth through the remainder of the quarter and into fiscal 2014 based on our current pipeline of prospective deals."

Financial Discussion

Consolidated operating revenue was approximately $4.5 million for the three months ended June 30, 2013, a decrease of approximately $337,000 (7.0%) from the corresponding period of prior fiscal year, due to decreased revenues of the Digital Media Services Group. However, Audio and Web Conferencing Services Group revenues were approximately $2.9 million for the three months ended June 30, 2013, which was an increase of approximately $247,000 (9.3%) from the corresponding period of the prior fiscal year. This increase was a result of the Intella2 operations which we acquired on November 30, 2012, which had revenues of approximately $306,000, including free conferencing business revenues of approximately $61,000.

Digital Media Services Group revenues were approximately $1.6 million for the three months ended June 30, 2013, a decrease of approximately $584,000 (27.2%) from the corresponding period of the prior fiscal year, primarily due to a decrease in in webcasting revenues as well as DMSP and hosting division revenues.

Revenues of the webcasting division decreased by approximately $332,000 (20.8%) for the three months ended June 30, 2013 as compared to the corresponding period of the prior fiscal year. The approximately 1,300 webcasts we produced during the three months ended June 30, 2013 was approximately 100 less than the number of webcasts we produced during the corresponding period of the prior fiscal year. In addition, the webcasts for the three months ended June 30, 2013 had a higher proportion of lower priced audio-only events, versus higher priced video events.

DMSP and hosting division revenues decreased by approximately $276,000 (53.3%) for the three months ended June 30, 2013 as compared to the corresponding period of the prior fiscal year. This decrease was primarily the result of the loss of a single customer that we were providing streaming services to at very little margin, as part of a larger business relationship that is still in place. Therefore, the loss of this customer and the related revenues did not have a material impact on our net operating results.

Consolidated gross margin was approximately $3.2 million for the three months ended June 30, 2013, an increase of approximately $18,000 (0.6%) from the corresponding period of the prior fiscal year. Our consolidated gross margin percentage was 72.1% for the three months ended June 30, 2013, versus 66.6% for the corresponding period of the prior fiscal year. This was due to reductions in Infinite and webcasting cost of sales as well as the discontinuance of a single low margin DMSP and hosting customer, as discussed above. During the third quarter of fiscal 2012, we renegotiated a supplier contract which reduced our Infinite division cost of sales by approximately $36,000 for the three months ended June 30, 2013. During the third quarter of fiscal 2013, we renegotiated a supplier contract representing approximately $132,000 in annualized savings, which we expect will reduce our cost of sales by approximately $122,000 for the final quarter of fiscal 2013 and the first three quarters of fiscal 2014, as compared to the corresponding periods of fiscal 2012 and 2013. During fiscal 2013, we renegotiated various supplier contracts representing approximately $203,000 in annualized savings, which we expect will cumulatively reduce our cost of sales and other general and administrative expenses by approximately $193,000 for the final quarter of fiscal 2013 and the first three quarters of fiscal 2014, as compared to the corresponding periods of fiscal 2012 and 2013.

Consolidated operating expenses were approximately $3.4 million for the three months ended June 30, 2013, an increase of approximately $90,000 (2.7%) from the corresponding period of the prior fiscal year. The increase was primarily due to an approximately $251,000, or 13.8%, increase in compensation (excluding equity), partially offset by an approximately $161,000, or 38.2%, decrease in professional fee expense, both as compared to the corresponding period of the prior fiscal year.

Cash provided by operating activities (before changes in current assets and liabilities other than cash) for the three months ended June 30, 2013 was approximately $110,000, compared to cash provided by operating activities (before changes in current assets and liabilities other than cash) of approximately $372,000 for the three months ended June 30, 2012. Cash provided in the current quarter for operating activities, as compared to the corresponding previous year quarter, was adversely affected by an increase in interest expense arising from the debt financing used to acquire Intella2 and for general working capital. Although the current quarter number represents a decrease as compared to the comparable quarter of the prior year, it represents an approximately $325,000 increase from cash used in operating activities (before changes in current assets and liabilities other than cash) of approximately $215,000 for the second quarter of fiscal 2013.

Onstream's third quarter fiscal 2013 net loss of approximately $520,000, or $(0.03) loss per share, was based on approximately 20.7 million weighted average shares outstanding, as compared to a third quarter fiscal 2012 net loss of approximately $244,000, or $(0.02) loss per share, which was based on approximately 12.7 million weighted average shares outstanding. The increased net loss was primarily due to an approximately $160,000, or 88.4%, increase in interest expense, as compared to the corresponding period of the prior fiscal year.

Onstream's EBITDA, as adjusted, for the three months ended June 30, 2013 was approximately $257,000 as compared to EBITDA, as adjusted, of approximately $361,000 for the third quarter of fiscal 2012. Although this represents a decrease as compared to the comparable quarter of the prior year, it represents an approximately $367,000 increase from EBITDA, as adjusted, of approximately negative $110,000 for the second quarter of fiscal 2013.

Teleconference

Onstream's leadership team will conduct a conference call at 4:30 p.m. ET on Tuesday, August 20, 2013, to discuss these financial results. During this teleconference, Mr. Randy Selman, President and Chief Executive Officer of Onstream and Mr. Robert Tomlinson, the Company's Chief Financial Officer, will also update the outlook for the remainder of fiscal 2013 and the beginning of fiscal 2014. The discussion will be followed by an open Q&A session. Interested parties may listen to the presentation live online at http://www.webcaster4.com/Webcast/Page/1/1912 or by calling 1-888-645-4404 or 1-862-255-5395 (toll). 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.webcaster4.com/Webcast/Page/1/1912.

About Onstream Media:

Onstream Media Corporation (OTCQB: ONSM), is a leading online service provider of corporate audio and web communications, including webcasting, webinar, conferencing and virtual event technology. Onstream Media's innovative webcasting platform has recently been ranked #1 by TopTenREVIEWS. The company's video streaming, hosting and publishing platform  - Streaming Publisher, provides customers with cost effective tools for encoding, managing, indexing, and publishing content to the Internet or virtually any mobile device. 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 Dell, GE Capital, Georgetown University, IRS, KPMG, National Press Club, Nuclear Regulatory Commission, PR Newswire and Shareholder.com (NASDAQ). Onstream Media's strategic relationships include Akamai, BT Conferencing, Telefonica and Trade Show News Network. For more information, visit Onstream Media at http://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
(unaudited)

 


 

Nine months Ended
June 30,


 

Three Months Ended

June 30,


2013


2012


2013


2012

REVENUE:








    Audio and web conferencing

$        6,849,678


$        6,393,755


$        2,369,937


$       2,131,118

    Webcasting

3,863,667


4,539,336


1,268,936


1,601,266

    DMSP and hosting

718,607


1,439,437


242,069


517,883

    Network usage

1,529,051


1,472,305


521,086


523,190

    Other

184,438


133,343


68,374


34,265

Total revenue

13,145,441


13,978,176


4,470,402


4,807,722









COSTS OF REVENUE:








    Audio and web conferencing

1,913,242


1,906,838


660,557


583,094

    Webcasting

1,074,188


1,351,731


319,894


482,172

    DMSP and hosting

103,071


758,965


34,185


297,231

    Network usage

744,031


697,688


220,968


234,117

    Other

49,665


41,970


12,878


7,235

Total costs of revenue

3,884,197


4,757,192


1,248,482


1,603,849









GROSS MARGIN

9,261,244


9,220,984


3,221,920


3,203,873









OPERATING EXPENSES:








    General and administrative:








         Compensation (excluding equity)

6,030,654


5,608,317


2,074,773


1,823,851

         Compensation paid with

           common shares and other equity

1,551,138


 

437,752


 

133,569


 

115,949

         Professional fees

1,054,628


1,568,340


260,529


421,817

         Other          

1,899,478


1,692,581


629,800


610,145

    Depreciation and amortization

1,008,193


1,054,721


303,512


340,099

Total operating expenses

11,544,091


10,361,711


3,402,183


3,311,861









Loss from operations

(2,282,847)


(1,140,727)


(180,263)


(107,988)









OTHER EXPENSE, NET:








    Interest expense

(975,796)


(565,795)


(340,197)


(180,598)

    Debt extinguishment loss

(143,251)


-


-


-

    Gain (loss) from adjustment of    

       derivative liability to fair value

 

27,480


 

46,818


 

-


 

31,867

    Other (expense) income, net

(30,418)


42,210


217


12,657

Total other expense, net

(1,121,985)


(476,767)


(339,980)


(136,074)









Net loss

$      (3,404,832)


$      (1,617,494)


$        (520,243)


$        (244,062)









Loss per share – basic and diluted:








Net loss per share

$               (0.20)


$               (0.13)


$               (0.03)


$              (0.02)

Weighted average shares of common stock outstanding – basic and diluted

17,448,815


12,431,065


20,704,496


12,711,394

 

 

ONSTREAM MEDIA CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET LOSS TO EBITDA AND EBITDA, AS ADJUSTED
(unaudited)

 


Nine months Ended
June 30,


Three Months Ended
June 30,


2013


2012


2013


2012









Net loss

$      (3,404,832)


$      (1,617,494)


$         (520,243)


$        (244,062)

Add: Depreciation and amortization

1,008,193


1,054,721


303,512


340,099

Add: Interest expense

975,796


565,795


340,197


180,598

EBITDA

$       (1,420,843)


$               3,022


$           123,466


$          276,635









EBITDA

$       (1,420,843)


$               3,022


$           123,466


$          276,635

Add: Compensation paid with

    common shares and other equity

1,551,138


 

437,752


133,569


 

115,949

Add: Debt extinguishment loss

143,251


-


-


-

(Less: Gain) / Add: Loss from

   adjustment of derivative liability

   to fair value

 

 

(27,480)


 

 

(46,818)


 

 

-


 

 

(31,867)

EBITDA, as adjusted

$            246,066


$           393,956


$           257,035


$         360,717

EBITDA is defined as earnings (loss) before interest expense, depreciation, income taxes and amortization.

EBITDA, as adjusted, represents EBITDA, as defined above, adjusted for compensation paid with common shares and other equity, debt extinguishment loss and gain/loss from adjustment of derivative liability to fair value.

EBITDA and EBITDA, as adjusted, are non-U.S. GAAP financial measures.

Management believes EBITDA and EBITDA, as adjusted, to be meaningful indicators of our performance that provides useful information to investors regarding our financial condition and results of operations. Presentation of EBITDA and EBITDA, as adjusted, is commonly used by financial analysts and others who follow our industry to measure operating performance. While management considers EBITDA and EBITDA, as adjusted, to be an important measure of comparative operating performance, it should be considered in addition to, but not as a substitute for, net income and other measures of financial performance reported in accordance with U.S. Generally Accepted Accounting Principles (GAAP). EBITDA and EBITDA, as adjusted, do not reflect cash available to fund cash requirements. Not all companies calculate EBITDA or EBITDA, as adjusted, in the same manner and the measure as presented may not be comparable to similarly-titled measures presented by other companies.


ONSTREAM MEDIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

 


June 30,

2013


September 30,

2012



 ASSETS

 (unaudited)



CURRENT ASSETS:




    Cash and cash equivalents

$             372,466


$             359,795

    Accounts receivable, net of allowance for doubtful accounts

  of $209,489 and $195,737, respectively

 

2,185,061


 

2,357,726

    Prepaid expenses

240,244


293,294

    Inventories and other current assets

136,320


146,159

Total current assets

2,934,091


3,156,974

PROPERTY AND EQUIPMENT, net

3,120,459


2,841,115

INTANGIBLE ASSETS, net

697,592


277,579

GOODWILL, net

10,558,604


10,146,948

OTHER NON-CURRENT ASSETS

136,215


146,215

Total assets

$       17,446,961


$        16,568,831





LIABILITIES AND STOCKHOLDERS' EQUITY




CURRENT LIABILITIES:




    Accounts payable

$         1,728,400


$         1,634,110

    Accrued liabilities

1,615,842


1,398,668

    Amounts due to directors and officers

337,766


669,697

    Deferred revenue

160,106


138,856

    Notes and leases payable –  current portion, net of discount

2,360,843


1,650,985

    Convertible debentures – current portion,  net of discount

427,299


407,384

Total current liabilities

6,630,256


5,899,700

Accrued liabilities – non-current portion

196,790


-

Notes and leases payable, net of current portion and discount

674,530


189,857

Convertible debentures, net of current portion and discount

641,440


801,844

Detachable warrant, associated with sale of common/preferred shares

-


81,374

Total liabilities

8,143,016


6,972,775

COMMITMENTS AND CONTINGENCIES




STOCKHOLDERS' EQUITY:




Series A-13 Convertible Preferred stock, par value $.0001 per share,

  authorized 170,000 shares, zero and 17,500 issued and outstanding, respectively

 

-


 

2

Series A-14 Convertible Preferred stock, par value $.0001 per share,

  authorized 420,000 shares, zero and 160,000 issued and outstanding, respectively

 

-


 

16

Common stock, par value $.0001 per share; authorized 75,000,000 shares,

    18,800,744 and 12,902,217 issued and outstanding, respectively

 

1,879


 

1,289

Common stock committed for issue – 2,541,667 and 366,667 shares,

    respectively

 

254


 

37

Additional paid-in capital

144,300,234


141,199,589

Accumulated deficit

(134,998,422)


(131,604,877)

Total stockholders' equity

9,303,945


9,596,056

Total liabilities and stockholders' equity

$       17,446,961


$       16,568,831

     

    

Media Relations:  



Investor Relations:





FastLane  



Wolfe Axelrod Weinberger Associates, LLC

Chris Faust   



Donald C. Weinberger; Adam Lowensteiner

(973) 906-5553  



(212) 370-4500; (212) 370-4505

cfaust@fast-lane.net   



don@wolfeaxelrod.com




adam@wolfeaxelrod.com

 

SOURCE Onstream Media Corporation



RELATED LINKS
http://www.onstreammedia.com

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