Onstream Media Corporation Announces Fiscal 2013 and Fourth Quarter Financial Results

Onstream Media Corporation Announces Fiscal 2013 and Fourth Quarter Financial                                    Results  PR Newswire  POMPANO BEACH, Fla., Feb. 20, 2014  POMPANO BEACH, Fla., Feb. 20, 2014 /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, has reported its financial results for the fiscal year and fourth quarter ended September 30, 2013.  Highlights    oRevenues for fiscal 2013 were approximately $17.2 million as compared to     approximately $18.2 million for fiscal 2012. Revenues for the fourth     quarter of fiscal 2013 were approximately $4.1 million as compared to     approximately $4.2 million for the comparable quarter of fiscal 2012.     These decreases were the result of an unexpected reduction in webcasting     revenues from both government and commercial clients, and in the case of     the full year comparison, also resulted from the loss of a single customer     that we were providing streaming services to at very little margin.    oAudio and Web Conferencing Services Group revenues were approximately     $11.2 million for the year ended September 30, 2013, an increase of     approximately $760,000 (7.3%) from the prior fiscal year. Audio and Web     Conferencing Services Group revenues were approximately $2.7 million for     the three months ended September 30, 2013, an increase of approximately     $208,000 (8.3%) from the fourth quarter of fiscal 2012. These increases     were the result of revenues from the operations of Intella2, a San     Diego-based communications company, which Onstream acquired on November     30, 2012.   oConsolidated gross margin percentage was 70.8% for the year ended     September 30, 2013, versus 66.4% for fiscal 2012. Consolidated gross     margin percentage was 71.9% for the three months ended September 30, 2013,     versus 67.8% for the fourth quarter of fiscal 2012. These improvements     were due to reductions in webcasting cost of sales (proportionally greater     than the reduction in revenues) and the impact of the acquired Intella2     operations, and in the case of the full year comparison, the     discontinuance of a single low margin streaming customer, as discussed     above.   oEBITDA, as adjusted, for the year ended September 30, 2013 was     approximately $472,000, a decrease of approximately $102,000 (17.9%), as     compared to EBITDA, as adjusted, of approximately $574,000 for fiscal     2012. EBITDA, as adjusted, for the three months ended September 30, 2013     was approximately $226,000, an increase of approximately $45,000 (25.1%),     as compared to EBITDA, as adjusted, of approximately $180,000 for the     fourth quarter of fiscal 2012.  Management Commentary  Randy Selman, President and Chief Executive Officer of Onstream Media, stated, "Although we did experience an overall revenue decline in the fourth quarter, as compared to the same quarter of the prior fiscal year, as the result of an unexpected reduction in webcasting revenues, our EBITDA, as adjusted, for the quarter was greater than the EBITDA as adjusted for the same quarter of the previous year."  Mr. Selman continued, "We believe that our webcasting division revenues will be favorably impacted during fiscal 2014 by the comprehensive update to our webcasting platform (VW4) which we released in January 2013 and which we will be updating with a second release in June 2014. Although the first release of VW4 included several new features, the second release will include new features, such as additional billing and reporting capabilities, enhanced CPE functionality, a live phone option and the ability to connect to third party encoders, that we believe could significantly accelerate the rate of adoption of VW4 from what we have experienced thus far. We also expect to see increased webcasting sales as a result of our new Virtual Conference Center which is a multiple event conference solution with integrated webcasting."  Mr. Selman added, "We believe we are on track to show improvement in our revenues, EBITDA and our operating cash flow during fiscal 2014. During the period from June 2013 through January 2014 we made certain headcount reductions representing approximately $962,000 in annualized savings, which we expect will reduce our compensation and professional fee expenditures by approximately $822,000 in aggregate for fiscal 2014 as compared to 2013. In addition during that same period we renegotiated various supplier contracts representing approximately $331,000 in annualized savings, which we expect will cumulatively reduce our cost of sales and other general and administrative expenditures by approximately $242,000 for fiscal 2014 as compared to fiscal 2013."  Mr. Selman concluded, "Although our preliminary first quarter fiscal 2014 results, for the three months ended December 31, 2013, indicate that our revenues will be approximately $50,000 less than our first quarter fiscal 2013 revenues, as a result of the above cost reductions we expect that cash provided by operating activities (before changes in current assets and liabilities other than cash), as well as EBITDA as adjusted, for the first quarter of fiscal 2014 will exceed the corresponding amounts for any of the fiscal 2013 quarters."  Financial Discussion  Three Months Results  Consolidated operating revenue was approximately $4.1 million for the three months ended September 30, 2013, a decrease of approximately $109,000 (2.6%) 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 $2.7 million for the three months ended September 30, 2013, which was an increase of approximately $208,000 (8.3%) 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 $341,000, including free conferencing business revenues of approximately $69,000.  Digital Media Services Group revenues were approximately $1.4 million for the three months ended September 30, 2013, a decrease of approximately $316,000 (18.9%) 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 $309,000 (22.1%) for the three months ended September 30, 2013 as compared to the corresponding period of the prior fiscal year. The approximately 1,000 webcasts we produced during the three months ended September 30, 2013 was approximately 200 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 September 30, 2013 had a higher proportion of lower priced audio-only events, versus higher priced video events, as compared to the three months ended September 30, 2012.  Consolidated gross margin was approximately $2.9 million for the three months ended September 30, 2013, an increase of approximately $92,000 (3.3%) from the corresponding period of the prior fiscal year. Our consolidated gross margin percentage was 71.9% for the three months ended September 30, 2013, versus 67.8% for the corresponding period of the prior fiscal year. This improvement was due to reductions in webcasting cost of sales (proportionally greater than the reduction in revenues) and the impact of the acquired Intella2 operations.  Consolidated operating expenses were approximately $6.3 million for the three months ended September 30, 2013, an increase of approximately $2.6 million (68.7%) from the corresponding period of the prior fiscal year. The increase was due to a $1,650,000 increase in non-cash impairment loss on goodwill, as compared to the fourth quarter of the prior fiscal year, and an approximately $1.0 million non-cash impairment loss on property and equipment recorded in the fourth quarter of fiscal 2013, for which there was no corresponding expense in the fourth quarter 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 September 30, 2013 was approximately $70,000, compared to approximately $125,000 for the three months ended September 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.  Onstream's fourth quarter fiscal 2013 net loss of approximately $3.8 million, or $(0.17) loss per share, was based on approximately 21.6 million weighted average shares outstanding, as compared to a fourth quarter fiscal 2012 net loss of approximately $1.0 million, or $(0.08) loss per share, which was based on approximately 12.6 million weighted average shares outstanding. The increased net loss was primarily due to the increased operating expenses, and more particularly the non-cash impairment losses on goodwill and property and equipment, as discussed above.  Onstream's EBITDA, as adjusted, for the three months ended September 30, 2013 was approximately $225,000, an increase of approximately $45,000 (25.1%), as compared to EBITDA, as adjusted, of approximately $180,000 for the fourth quarter of fiscal 2012.  Twelve Months Results  Consolidated operating revenue was approximately $17.2 million for the year ended September 30, 2013, a decrease of approximately $941,000 (5.2%) from the prior fiscal year, due to decreased revenues of the Digital Media Services Group. However, Audio and Web Conferencing Services Group revenues were approximately $11.2 million for the year ended September 30, 2013, which was an increase of approximately $760,000 (7.3%) from the prior fiscal year. This increase was a result of the Intella2 operations, which had revenues of approximately $1.1 million, including free conferencing business revenues of approximately $225,000.  Digital Media Services Group revenues were approximately $6.0 million for the year ended September 30, 2013, a decrease of approximately $1.7 million (22.0%) from 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 $985,000 (16.6%) for the year ended September 30, 2013 as compared to the prior fiscal year. The approximately 4,800 webcasts we produced during the year ended September 30, 2013 was approximately 200 less than the number of webcasts we produced during the prior fiscal year. In addition, the webcasts for the year ended September 30, 2013 had a higher proportion of lower priced audio-only events, versus higher priced video events, as compared to the prior fiscal year.  Consolidated gross margin was approximately $12.1 million for the year ended September 30, 2013, an increase of approximately $133,000 (1.1%) from the prior fiscal year. Our consolidated gross margin percentage was 70.8% for the year ended September 30, 2013, versus 66.4% for the prior fiscal year. This improvement was due to reductions in webcasting cost of sales (proportionally greater than the reduction in revenues) and the impact of the acquired Intella2 operations, as well as the discontinuance of a single low margin streaming customer.  Consolidated operating expenses were approximately $17.8 million for the year ended September 30, 2013, an increase of approximately $3.7 million (178.5%) from the prior fiscal year. The increase was primarily due to a $1,650,000, or 300.0%, increase in non-cash impairment loss on goodwill and an approximately $1.0 million, or 173.6%, increase in compensation paid with common shares and other equity, both as compared to the prior fiscal year, and an approximately $1.0 million non-cash impairment loss on property and equipment during fiscal 2013, for which there was no corresponding expense in the prior fiscal year.  Cash used in operating activities (before changes in current assets and liabilities other than cash) for the year ended September 30, 2013 was approximately $46,000, compared to approximately $677,000 cash provided by operating activities for the year ended September 30, 2012. Cash used in the current year for operating activities, as compared to the previous year, was adversely affected by an increase in interest expense arising from the debt financing used to acquire Intella2 and for general working capital.  Onstream's fiscal 2013 net loss of approximately $7.2 million, or $(0.39) loss per share, was based on approximately 18.5 million weighted average shares outstanding, as compared to a fiscal 2012 net loss of approximately $2.6 million, or $(0.22) loss per share, which was based on approximately 12.2 million weighted average shares outstanding. The increased net loss was primarily due to the increased operating expenses, including the non-cash impairment losses on goodwill and property and equipment, as discussed above.  Onstream's EBITDA, as adjusted, for the year ended September 30, 2013 was approximately $472,000, a decrease of approximately $102,000 (17.9%), as compared to EBITDA, as adjusted, of approximately $574,000 for fiscal 2012.  Teleconference  Because of the timing of the release of these results and the filing of the related 10-K, Onstream's leadership team will combine its conference call discussing the financial results for the period ended September 30, 2013 with a discussion of the financial results for the first quarter of fiscal 2014, the three month period ended December 31, 2013. The time and date of that combined conference call will be announced by us shortly before the first quarter fiscal 2014 10-Q is filed.  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.      ONSTREAM MEDIA CORPORATION AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF OPERATIONS                       Year Ended                   Three Months Ended                                                    September 30,                       September 30,                       2013          2012           2013          2012                                                    (unaudited)   (unaudited) REVENUE:  Audio and web     $         $  8,363,030 $          $    conferencing          9,121,228                   2,271,550    1,969,275  Webcasting        4,953,184     5,937,701      1,089,517     1,398,365  DMSP and hosting  960,187       1,697,421      241,580       257,984  Network usage     1,950,252     1,964,176      421,201       491,871  Other             233,147       197,007        48,709        63,664 Total revenue         17,217,998    18,159,335     4,072,557     4,181,159 COSTS OF REVENUE:  Audio and web     2,516,451     2,452,499      603,209       545,661 conferencing  Webcasting        1,369,189     1,851,679      295,001       499,948  DMSP and hosting  141,264       794,783        38,193        35,818  Network usage     939,250       924,899        195,219       227,211  Other             63,223        79,515         13,558        37,545 Total costs of        5,029,377     6,103,375      1,145,180     1,346,183 revenue                       12,188,621 GROSS MARGIN                        12,055,960     2,927,377     2,834,976                        OPERATING EXPENSES:  General and administrative:  Compensation 7,945,565     7,292,350      1,914,911     1,684,033 (excluding equity)  Compensation paid with common                                                                      1,639,994  shares and               586,969        88,856        149,217 other equity  Professional 1,194,587     1,958,533      139,959       390,193 fees   Other        2,552,367     2,283,888      652,889       591,307  Impairment loss on 2,200,000     550,000        2,200,000     550,000 goodwill  Impairment loss on                                            property and        1,000,000                    1,000,000                                     -                            -  equipment  Depreciation and   1,274,168     1,401,433      265,975       346,712 amortization Total operating       17,806,681    14,073,173     6,262,590     3,711,462 expenses                       (5,618,060)                  (3,335,213) Loss from operations                (2,017,213)                  (876,486)                                                    OTHER EXPENSE, NET:  Interest expense  (1,411,289)   (775,462)      (435,493)     (209,667)  Debt              (143,251)     -              -             - extinguishment loss  Gain from adjustment of                                                    derivative         27,480                       -                                     106,837                      60,019  liability to fair value  Other (expense)   (24,382)      53,162         6,036         10,952 income, net Total other expense,  (1,551,442)   (615,463)      (429,457)     (138,696) net Net loss              $         $ (2,632,676) $           $                         (7,169,502)                 (3,764,670)  (1,015,182) Loss per share – basic and diluted: Net loss per share    $       $         $       $                               (0.39)   (0.22)          (0.17)       (0.08) Weighted average                                               shares of common stock outstanding –   18,496,064    12,188,002     21,603,659    12,922,797 basic and diluted    ONSTREAM MEDIA CORPORATION AND SUBSIDIARIES  RECONCILIATION OF NET LOSS TO EBITDA AND EBITDA, AS ADJUSTED  (unaudited)                              Year Ended                Three Months Ended                               September 30,             September 30,                              2013         2012         2013        2012 Net loss                     $          $           $         $                                (7,169,502) (2,632,676) (3,764,670) (1,015,182) Add: Depreciation and        1,274,168    1,401,433    265,975     346,712 amortization Add: Interest expense        1,411,289    775,462      435,494     209,667 EBITDA                       $         $         $         $                                 (4,484,045)  (455,781)   (3,063,201) (458,803) EBITDA                       $         $         $         $                                 (4,484,045)  (455,781)   (3,063,201) (458,803) Add: Compensation paid with                                                                    1,639,994  common shares and other               586,969      88,856      149,217 equity Add: Impairment loss on      2,200,000    550,000      2,200,000   550,000 goodwill Add: Impairment loss on                                           property and               1,000,000                                           -            1,000,000   -  equipment Add: Debt extinguishment     143,251      -            -           - loss Less: Gain from adjustment of                                                                 derivative liability to  (27,480)     (106,837)    -           (60,019) fair value EBITDA, as adjusted          $       $        $       $                                  471,720     574,351     225,655     180,395    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, impairment loss on goodwill, impairment loss on property and equipment, debt extinguishment loss and gain 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                                      September 30,         September 30,                                       2013                  2012 ASSETS CURRENT ASSETS:  Cash and cash equivalents        $       257,018 $                                                                  359,795  Accounts receivable, net of      2,175,505             2,357,726 allowance for doubtful accounts  Prepaid expenses                 142,307               293,294  Inventories and other current    140,585               146,159 assets Total current assets                 2,715,415             3,156,974 PROPERTY AND EQUIPMENT, net          2,047,633             2,841,115 INTANGIBLE ASSETS, net               669,543               277,579 GOODWILL, net                        8,358,604             10,146,948 OTHER NON-CURRENT ASSETS             136,215               146,215 Total assets                         $    13,927,410    $    16,568,831 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES:  Accounts payable                 $     1,927,430   $     1,634,110  Accrued liabilities              1,527,435             1,398,668  Amounts due to directors and     409,410               669,697 officers  Deferred revenue                 152,696               138,856  Notes and leases payable –      2,198,858             1,650,985 current portion, net of discount  Convertible debentures – current 587,198               407,384 portion, net of discount Total current liabilities            6,803,027             5,899,700 Accrued liabilities – non-current    354,813               - portion Notes and leases payable, net of     759,932               189,857 current portion and discount Convertible debentures, net of       548,796               801,844 current portion and discount Detachable warrants, associated with -                     81,374 sale of common/preferred shares Total liabilities                    8,466,568             6,972,775 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Series A-13 Convertible Preferred stock, par value $.0001 per share,                           authorized 170,000 shares, zero    -                     2 and 17,500 issued and outstanding, respectively Series A-14 Convertible Preferred stock, par value $.0001 per share,                           authorized 420,000 shares, zero    -                     16 and 160,000 issued and outstanding, respectively Common stock, par value $.0001 per                         share; authorized 75,000,000 shares, 19,345,744 and 12,902,217 issued and 1,933                 1,289 outstanding, respectively Common stock committed for issue –                         2,291,667 and 366,667                                      229                   37  shares, respectively Additional paid-in capital           144,385,772           141,199,589 Obligation to repurchase common      (164,000)             - shares Accumulated deficit                  (138,763,092)         (131,604,877) Total stockholders' equity           5,460,842             9,596,056 Total liabilities and stockholders'  $   13,927,410      $   16,568,831 equity  Media Relations:     Investor Relations: FastLane             Wolfe Axelrod Weinberger Associates, LLC Chris Faust          Donald C. Weinberger (973) 906-5553       (212) 370-4500; (212) 370-4505 cfaust@fast-lane.net don@wolfeaxelrod.com  SOURCE Onstream Media Corporation  Website: http://www.onstreammedia.com