New Motion (MM) (NASDAQ:NWMO)
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From May 2019 to May 2024
New Motion, Inc., doing business as Atrinsic, (NASDAQ:NWMO), a premier
online and mobile marketing services company, announced today that
revenues for the third quarter of 2008 were $30.8 million compared with
$10.5 million in the third quarter of 2007, an increase of 193%.
Revenues for the nine months ended September 30, 2008 and 2007 were
$91.0 million and $23.0 million, an increase of 295%. The increase in
revenues is primarily attributable to the Company’s
merger with Traffix, Inc., which was consummated on February 4, 2008,
that added $20.0 and $57.1 million in revenues for the three and nine
month periods ended September 30, 2008. The Company continues to
leverage the benefits of its cross media Internet and Mobile platforms,
vertically integrate its proprietary content and online distribution
network, and diversify its revenues with new service offerings. For the
third quarter of 2008, on a comparable basis, the Company experienced a
3.0% increase in revenues derived from its mobile offerings and a 100%
increase in revenues from its online service offerings as a result of
the Traffix acquisition, effective February 4, 2008. For the nine months
ended September 30, 2008, revenues derived from mobile and online
service offerings increased 47.0% and 100%, respectively.
Operating expenses for the third quarter of 2008 were $9.8 million
compared with operating expenses of $11.2 million in the third quarter
of 2007, a decrease of approximately $1.4 million, primarily
attributable to efficiencies gained through post merger integration,
decreased discretionary Selling & Marketing expenses, a reduction in non
cash equity based compensation, partially offset by an increase in
depreciation and amortization. The Company is continuing to achieve the
anticipated $4.1 million efficiencies gained from the merger while
simultaneously developing an appropriate infrastructure to support
anticipated growth. In addition, the Company is carefully monitoring its
performance expectations and market conditions relative to its
discretionary customer acquisition and lead generation activities.
Net loss for the third quarter of 2008 was ($6.0) thousand ($0.00 per
basic and diluted earnings per share) compared with a net loss of ($1.9)
million for the third quarter of 2007 (($0.16) per basic and diluted
loss per share). Net income for the nine months ended September 30, 2008
was $0.8 million ($0.04 per basic and diluted earnings per share)
compared with a net loss of ($3.2) million for the nine months ended
September 30, 2007 (($0.29) per basic and diluted loss per share).
As of September 30, 2008, the Company had cash and cash equivalents of
$21.9 million, marketable securities of approximately $7.9 million
coupled with significant working capital to support future growth,
business development initiatives, and capital activities. The Company
repurchased 387,072, and 619,372 shares of Common stock for the three
and nine months ended September 30, 2008 at a cost of approximately $2.6
million pursuant to its stock repurchase program previously announced on
April 9, 2008. To date, since inception of the plan, the company has
repurchased 1,695,325 shares at a cost of approximately $3.7 million.
Non-GAAP1 Adjusted EBITDA for the third quarter
2008 was $1.0 million as compared with $(1.7) million loss for the third
quarter of 2007. On a non-GAAP per diluted share basis, Adjusted EBITDA
per share for the third quarter of 2008 was $0.05 as compared to ($0.15)
for the third quarter of 2007.
Company Goals
During 2008, the Company consummated two significant business
combinations and taken significant actions to maximize the efficiencies
related to those transactions. In addition, management has reduced
operating expenses, launched numerous operational initiatives, and
continues to monitor the marketplace for additional opportunities. The
nature, timing, and magnitude of future activities will depend on, among
other things, operating performance, post merger integration activities,
and market conditions. Management continuously seeks to build long term
shareholder value by prudently deploying capital with expectations for
an anticipated risk adjusted return.
Management will continue to identify, and execute, additional strategic
initiatives, however, as a result of market conditions, there are
limited opportunities that meet our investment criteria. We currently do
not expect to consummate additional business combinations during 2008.
In addition, the Company is committed to capital preservation and
continuing to generate positive cash flows and expects to finish 2008
with sufficient capital resources enabling continued development and
growth into the future.
The Company continues to execute on its long term strategic plans;
however, the near term business climate, volatile pricing trends,
limited or unstable demand, (particularly in the financial services and
retail sectors) and uncertainties in discretionary consumer spending
patterns will negatively impact our operating performance. Despite these
challenges, management remains committed to reducing discretionary
operating expenses and reevaluating new initiatives in order to preserve
operating margins and generate positive cash flow.
1 All non-GAAP amounts have been adjusted from
comparable GAAP measures. A description of all adjustments and
reconciliations to comparable GAAP measures for all periods presented
are included within this communication.
About New Motion, Inc. (doing business
as Atrinsic)
New Motion, Inc., doing business as Atrinsic, is one of the leading
digital advertising and entertainment networks in the United States.
Atrinsic is organized as a single segment business with two principal
activities: (1) Networks services - offering full service online
marketing and distribution services which are targeted and measurable
online campaigns and programs for marketing partners, corporate
advertisers, or their agencies, generating qualified customer leads,
online responses and activities, or increased brand recognition, and (2)
Entertainment services - offering our portfolio of subscription-based
content applications direct to users working with wireless carriers and
other distributors.
Atrinsic brings together the power of the Internet, the latest in mobile
technology, and traditional marketing/advertising methodologies,
creating a fully integrated vehicle for the generation of qualified
leads monetized by the sale and distribution of entertainment content,
brand-based distribution and pay-for-performance advertising. Atrinsic’s
Entertainment service’s content is organized
into four strategic service groups - digital music, casual games,
interactive contests, and communities/lifestyles. The Atrinsic brands
include GatorArcade, a premium online and mobile gaming site,
Bid4Prizes, a low-bid mobile auction interactive game, and iMatchUp, one
of the first integrated web-mobile dating services. Feature-rich
advertising services include a mobile ad network, extensive search
capabilities, email marketing, one of the largest and growing publisher
networks, and proprietary entertainment content. Services are provided
on a variety of pricing models including cost per action, fixed fee, or
commission based arrangement.
Availability of Annual Report on
Form 10-KSB and Interim Report on Form 10-Q
On April 29, 2008, the Company filed an amendment on Form 10-KSB/A to
its Form 10-KSB for the sole purpose of including the Part III
information. A copy of the Form 10-KSB can be obtained at no cost on the
Company’s website, www.atrinsic.com,
or on the SEC’s website, www.sec.gov.
A copy of the Company’s Form 10-KSB is also
available in print at no cost to any Company shareholder upon request.
In addition, concurrent with the distribution of this press release the
Company is filing its interim report on Form 10Q for the second quarter
of 2008.
Forward-Looking Statements
This press release contains “forward-looking”
statements based on management’s current
expectations as of the date of this release. These statements are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward looking statements include the
Company’s expectations that it will have
sufficient capital resources to enable continued development and growth
into the future. Because such statements inherently involve risks and
uncertainties, actual results may differ materially from those expressed
or implied by such forward looking statements. Such risks include, among
others, the following: post merger integration issues associated with
the recently completed merger making it more difficult to maintain
relationships with customers, employees, or suppliers; risks related to
the successful offering of the combined company’s
products and services; the risk that the anticipated benefits of the
Traffix merger or the Ringtone.com acquisition may not be realized; and
other risks that may impact the Company’s
business, some of which are discussed in the Company’s
reports filed with the Securities and Exchange Commission (the “SEC”)
under the caption “Risk Factors”
and elsewhere, including without limitation, each of the Company’s
Quarterly and Annual Reports, as filed on Forms 10-Q or 10-QSB, 10-K,
10-KSB, or 10-KSB/A, respectively, and as applicable. All information in
this release is as of August 14, 2008. The Company does not undertake
any obligation to update or revise these forward-looking statements to
conform to actual results or changes in the Company’s
expectations.
Supplemental Disclosure regarding
Non-GAAP Measures
EBITDA and Adjusted EBITDA
The following tables set forth the Company’s
EBITDA and Adjusted EBITDA for the three and nine month periods ended
September 30, 2008 and 2007. The Company defines “EBITDA”
and “Adjusted EBITDA”
as net income adjusted to exclude the following line items presented in
its Statement of Operations: income taxes; interest expense, interest
and dividend income, net, minority interest, depreciation and
amortization, and in the case of Adjusted EBITDA non-cash equity based
compensation. While this non-Generally Accepted Accounting Principles (“GAAP”)
measure has been relabeled to more accurately describe in the title the
method of calculation of the measure, the actual method of calculating
the measure is presented below.
The Company uses Adjusted EBITDA, among other things, and possibly with
additional adjustments, to evaluate the Company’s
operating performance, to value prospective acquisitions, and as one of
several components of incentive compensation targets for certain
management personnel, and this measure is among the primary measures
used by management for planning and forecasting of future periods. This
measure is an important indicator of the Company’s
operational strength and performance of its business because it provides
one of several links between profitability and operating cash flow. The
Company believes the presentation of this measure is relevant and useful
for investors because it allows investors to view performance in a
manner similar to the method used by the Company’s
management, helps improve their ability to understand the Company’s
operating performance and makes it easier to compare the Company’s
results with other companies that have different financing and capital
structures or tax rates. In addition, it is our understanding that this
measure is also among the primary measures used externally by the Company’s
investors, analysts and peers in its industry for purposes of valuation
and comparing the operating performance of the Company to other
companies in its industry. The Company has elected to not adjust EBITDA
for the impact of the adoption of Financial Accounting Standards Board
Statement of Financial Accounting Standards No. 123 “Share-Based
Payment” (“FAS 123R”)
and the Company has provided what it believes to be relevant
supplemental information in this communication for analysis by others to
fit their particular needs.
Since EBITDA and Adjusted EBITDA are not measures of performance
calculated in accordance with GAAP, it should not be considered in
isolation of, or as a substitute for, net income as an indicator of
operating performance. EBITDA and Adjusted EBITDA, as the Company
calculates it, may not be comparable to similarly titled measures
employed by other companies. In addition, this measure does not
necessarily represent funds available for discretionary use, and is not
necessarily a measure of the Company’s
ability to fund its cash needs. As EBITDA and Adjusted EBITDA exclude
certain financial information compared with net income, the most
directly comparable GAAP financial measure, users of this financial
information should consider the types of events and transactions which
are excluded. As required by the SEC, the Company provides below a
reconciliation of EBITDA and Adjusted EBITDA to net income, the most
directly comparable amount reported under GAAP.
Reconciliation of Reported Net Income/(Loss)
to EBITDA and Adjusted EBITDA
(In thousands, except share and per share amounts)
Three Months Ended
Nine Months Ended
September 30, 2008
September 30, 2007
September 30, 2008
September 30, 2007
Net (Loss) Income
$
(6
)
$
(1,949
)
$
793
$
(3,208
)
Reconciliation Items:
Minority interest
(15
)
(156
)
(92
)
291
Income tax expense (benefit)
(77
)
(206
)
517
(1,111
)
Other expense
(22
)
-
144
21
Interest income, net
(125
)
(121
)
(485
)
(342
)
Depreciation and amortization
1,339
415
2,619
929
EBITDA
1,094
(2,017
)
3,496
(3,420
)
Non-cash equity based compensation
(71
)
278
1,009
472
Adjusted EBITDA
$
1,023
$
(1,739
)
$
4,505
$
(2,948
)
Diluted Adjusted EBITDA per common share
$
0.05
$
(0.15
)
$
0.21
$
(0.27
)
Condensed Pro Forma Summary
The following table set forth the Company’s
Condensed Proforma results for the three and nine month periods ended
September 30, 2008 and 2007. The following pro forma consolidated
amounts give effect to the merger with Traffix, Inc. and the acquisition
of Ringtone.com, with both being accounted for by the purchase method of
accounting as if they had occurred as at January 1, 2007, the beginning
of the periods presented. The pro forma consolidated results are not
necessarily indicative of the operating results that would have been
achieved had the transaction been in effect as of the beginning of the
periods presented and should not be construed as being representative of
future operating results.
Pro Forma Consolidated Statement of Operations
For the Three and Nine Months Ending September 30, 2008 and 2007
(In thousands)
Three Months Ended
Nine Months Ended
September 30, 2008
September 30, 2007
September 30, 2008
September 30, 2007
Net revenues
$
30,819
$
32,836
$
105,545
$
85,628
Cost of revenues
21,217
23,025
65,781
53,109
Gross profit
9,602
9,811
39,765
32,519
Operating expense net of interest income and other expense
9,685
10,911
36,494
35,568
Income tax expense (benefit)
(77
)
(206
)
517
(1,111
)
Net income (loss)
$
(6
)
$
(894
)
$
2,754
$
(1,938
)
Basic and Diluted earnings per share
$
0.00
$
(0.04
)
$
0.07
$
(0.09
)
Pro Forma EBITDA and Adjusted EBITDA
The following table sets forth pro forma EBITDA and pro forma Adjusted
EBITDA amounts after giving effect to the merger with Traffix, Inc. and
the acquisition of Ringtone.com as if they had occurred as of January 1,
2007, the beginning of the periods presented. The pro forma consolidated
results are not necessarily indicative of the operating results that
would have been achieved had the transactions been in effect as of the
beginning of the periods presented and should not be construed as being
representative of future operating results.
Reconciliation of Pro Forma Net Income/(Loss)
to Pro Forma EBITDA and Pro Forma Adjusted EBITDA
(In thousands)
Three Months Ended
Nine Months Ended
September 30, 2008
September 30, 2007
September 30, 2008
September 30, 2007
Pro Forma Net Income (loss)
$
(6
)
$
(894
)
$
2,754
$
(1,938
)
Reconciliation Items:
Minority interest
(15
)
(156
)
(92
)
291
Income tax expense (benefit)
(77
)
(206
)
517
(1,111
)
Other expense
(22
)
-
175
21
Interest income and dividends, net
(125
)
(121
)
(485
)
(342
)
Depreciation and amortization
1,339
1,743
2,926
5,160
Pro Forma EBITDA
1,094
365
5,794
2,081
Non-cash equity based compensation
(71
)
654
1,009
1,379
Adjusted Pro Forma EBITDA
$
1,023
$
1,109
$
6,803
$
3,460
Diluted Pro Forma Adjusted EBITDA per common share
$
0.04
$
0.08
$
0.31
$
0.31
NEW MOTION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
September 30,
December 31,
2008
2007
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
21,888
$
987
Marketable securities
3,950
9,463
Accounts receivable, net of allowance for doubtful accounts of
$1,786 at September 30, 2008 and $565 at December 31, 2007
20,321
8,389
Prepaid income taxes
2,680
780
Other current assets
3,149
1,498
TOTAL CURRENT ASSETS
51,988
21,117
PROPERTY AND EQUIPMENT, NET
4,286
860
MARKETABLE SECURITIES - NON CURRENT
4,000
-
GOODWILL
100,852
-
IDENTIFIED INTANGIBLES, NET
44,044
599
OTHER ASSETS
-
1,387
TOTAL ASSETS
$
205,170
$
23,963
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable
$
7,993
$
3,257
Accrued expenses
12,725
3,720
Notes Payable
1,794
-
Deferred taxes payable
1,340
-
Other current liabilities
1,866
99
TOTAL CURRENT LIABILITIES
25,718
7,076
Deferred income taxes
14,918
-
Notes payable
-
22
TOTAL LIABILITIES
40,636
7,098
MINORITY INTEREST
191
283
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock - par value $.01, 100,000,000 authorized, 22,372,570
and 12,021,184 issued and outstanding, respectively
230
120
Additional paid-in capital
168,984
19,583
Accumulated other comprehensive loss
-
(38
)
Common stock, held in treasury, at cost, 619,372 shares
(2,581
)
Accumulated deficit
(2,290
)
(3,083
)
TOTAL STOCKHOLDERS' EQUITY
164,343
16,582
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
205,170
$
23,963
NEW MOTION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except share and per share amounts)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2008
2007
2008
2007
NET REVENUES
$
30,819
$
10,495
$
91,008
$
23,031
COST OF REVENUES
21,217
1,406
54,082
3,626
GROSS PROFIT
9,602
9,089
36,926
19,405
OPERATING EXPENSES
Selling and marketing
2,075
7,878
11,229
15,325
General and administrative (includes non-cash equity compensation of
(($71), $278, $1,009, and $472, respectively)
6,433
2,916
22,200
7,500
Depreciation and amortization
1,339
415
2,619
929
9,847
11,209
36,048
23,754
INCOME (LOSS) FROM OPERATIONS
(245
)
(2,120
)
878
(4,349
)
OTHER (INCOME) EXPENSE
Interest income and dividends
(192
)
(123
)
(567
)
(362
)
Interest expense
67
2
82
20
Other expense
(22
)
-
145
21
(147
)
(121
)
(340
)
(321
)
INCOME (LOSS) BEFORE INCOME TAXES
(98
)
(1,999
)
1,218
(4,028
)
INCOME TAXES
(77
)
(206
)
517
(1,111
)
INCOME (LOSS) BEFORE MINORITY INTEREST
(21
)
(1,793
)
701
(2,917
)
MINORITY INTEREST
(15
)
156
(92
)
291
NET INCOME (LOSS)
$
(6
)
$
(1,949
)
$
793
$
(3,208
)
EARNINGS (LOSS) PER SHARE:
Basic
$
0.00
$
(0.16
)
$
0.04
$
(0.29
)
Diluted
$
0.00
$
(0.16
)
$
0.04
$
(0.29
)
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic
22,545,451
12,000,167
21,208,980
11,108,117
Diluted
22,545,451
12,000,167
22,006,232
11,108,117
NEW MOTION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
Nine Months Ended
September 30
2008
2007
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)
$
793
$
(3,208
)
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Allowance for doubtful accounts
1,221
(440
)
Depreciation and amortization
3,097
929
Stock-based compensation expense
1,009
884
Net losses on sale of marketable securities
238
-
Deferred income taxes
(1,248
)
(1,802
)
Minority interest in net loss of consolidated joint venture
(92
)
291
Changes in operating assets and liabilities of business, net of
acquisitions:
Accounts receivable
2,872
(2,301
)
Prepaid income tax
(2,478
)
336
Prepaid expenses and other current assets
2,116
(593
)
Accounts payable
(3,412
)
2,547
Other, principally accrued expenses
1,215
233
Net cash provided by (used in) operating activities
5,331
(3,124
)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities
(6,332
)
-
Proceeds from sales of securities
20,758
-
Cash received in business combinations
12,271
-
Cash paid in business combinations
(7,041
)
(1,736
)
Capital expenditures
(1,737
)
(166
)
Net cash provided by (used in) investing activities
17,919
(1,902
)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of notes payable
(111
)
(575
)
Expenditures for equity financing
-
(470
)
Issuance of warrants
-
57
Issuance of stock
-
18,434
Purchase of common stock held in treasury
(2,581
)
-
Proceeds from exercise of stock options
343
27
Net cash (used in) provided by financing activities
(2,349
)
17,473
NET INCREASE IN CASH AND CASH EQUIVALENTS
20,901
12,447
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
987
544
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
21,888
$
12,991