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
http://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. DATASOURCE: Mandalay Media, Inc. CONTACT: Ray Schaaf,
President for Mandalay Media, +1-310-601-2500 Web Site:
http://www.mandalaymediainc.com/
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