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
 
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