New Motion, Inc., doing business as Atrinsic (NASDAQ: NWMO), a
premier online and mobile marketing services company, announced
today that revenues for the second quarter of 2008 were $31.5
million compared with $6.9 million in the second quarter of 2007,
an increase of 356%. Revenues for the six months ended June 30,
2008 and 2007 were $60.2 million and $12.5 million, an increase of
380%. The increase in revenues is primarily attributable to the
Company�s merger with Traffix, Inc., which was consummated on
February 4, 2008, that added $21.5 and $37.1 million in revenues
for the three and six month periods ended June 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 second quarter of 2008, on a
comparable basis, the Company experienced a 45% 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 six months
ended June 30, 2008, revenues derived from mobile and online
service offerings increased 84% and 100%, respectively. Operating
expenses for the second quarter of 2008 were $11.3 million compared
with operating expenses of $7.4 million in the second quarter of
2007, an increase of approximately $4 million, primarily
attributable to the acquisition of Traffix. 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 income for
the second quarter of 2008 was $1.1 million ($0.05 per basic and
diluted earnings per share) compared with a net loss of $0.9
million for the second quarter of 2007 ($0.08 per basic and diluted
loss per share). Net income for the six months ended June 30, 2008
was $0.8 million ($0.04 per basic and diluted earnings per share)
compared with a net loss of $1.3 million for the six months ended
June 30, 2007 ($0.12 per basic and diluted loss per share). As of
June 30, 2008, the Company had cash and cash equivalents of $17.2
million, marketable securities of approximately $8.05 million
coupled with significant working capital to support future growth,
business development initiatives, and capital activities. To date
the Company has repurchased 469,800 shares of its Common stock at a
cost of approximately $2.0 million pursuant to its stock repurchase
program previously announced on April 9, 2008. Non-GAAP1 Adjusted
EBITDA for the second quarter was $2.9 million compared with $(1.4)
million for the second quarter of 2007. On a non-GAAP per diluted
share basis, Adjusted EBITDA per share for the second quarter of
2008 was $0.12 as compared to $(0.12) for the second quarter of
2007. Company Goals During 2008, the Company has 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�s goal is to
continue to identify, and execute, additional transformative type
activities which, coupled with its expectations for an improved
operating environment, are expected to establish a Company with
Estimated 2008 Revenues2 to be in the range from $145 million to
$160 million, resulting in Estimated 2008 Adjusted EBITDA to be in
the range from $15 million to $20 million. In addition, the Company
expects to finish 2008 with sufficient capital resources enabling
continued development and growth into the future. 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. 2 Estimated 2008 Revenues and Estimated 2008
Adjusted EBITDA include the actual reported amounts prepared in
accordance with GAAP, the items necessary to reconcile from GAAP to
the associated non-GAAP EBITDA, the related contributed amounts
from the Traffix and Ringtone.com transactions as if those
transactions occurred at the beginning of the periods presented,
and other transactions should such opportunities become available.
There can be no assurance that such opportunities will become
available, under appropriate terms and conditions, and within the
time period described above. 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
Estimated 2008 Revenues in the range from $145 million to $160
million which will result in Estimated 2008 Adjusted EBITDA in the
range from $15 million to $20 million, as well as the Company�s
expectation to finish 2008 with 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 six month periods ended June�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
Six Months Ended June 30, 2008 June 30, 2007 June 30, 2008 June 30,
2007 � � Net Income (loss) $ 1,066 $ (887 ) $ 798 $ (1,259 ) �
Reconciliation Items: Minority interest (48 ) (20 ) (76 ) 135
Income tax expense (benefit) 768 (909 ) 594 (905 ) Other expense 37
- 167 21 Interest income and dividends, net (75 ) (142 ) (360 )
(221 ) Depreciation and amortization � 715 � � 320 � � 1,280 � �
514 � � EBITDA 2,463 (1,638 ) 2,403 (1,715 ) � Non-cash equity
based compensation � 386 � � 278 � � 1,080 � � 472 � � Adjusted
EBITDA $ 2,849 � $ (1,360 ) $ 3,483 � $ (1,243 ) � Diluted Adjusted
EBITDA per common share $ 0.12 � $ (0.12 ) $ 0.16 � $ (0.12 )
Condensed Pro Forma Summary The following table sets forth the
Company�s Condensed Proforma results for the three and six month
periods ended June�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 Six Months Ending June 30, 2008 and 2007 (In thousands) �
� � � � � Three Months Ended Six Months Ended June 30, 2008 June
30, 2007 June 30, 2008 June 30, 2007 Net revenues $ 34,797 $ 27,836
$ 74,726 $ 52,574 Cost of revenues � 20,605 � 16,476 � � 44,563 �
30,084 � Gross profit 14,192 11,360 30,163 22,489 � Operating
expense net of interest income and other expense 11,575 12,222
26,809 24,657 � Income tax expense (benefit) � 1,054 � (353 ) �
1,381 � (889 ) Net income (loss) $ 1,563 $ (509 ) $ 1,974 $ (1,279
) Basic and Diluted earnings per share $ 0.07 $ (0.02 ) $ 0.09 $
(0.06 ) 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 Six Months Ended June 30,
2008 June 30, 2007 June 30, 2008 June 30, 2007 � � Pro Forma Net
Income (loss) $ 1,563 $ (509 ) $ 1,973 $ (1,279 ) � Reconciliation
Items: Minority interest (47 ) (20 ) (76 ) 183 Income tax expense
(benefit) 1,054 (353 ) 1,381 (889 ) Other expense (203 ) 7 167 20
Interest income and dividends, net (75 ) (454 ) (360 ) (832 )
Depreciation and amortization � 749 � � 1,771 � � 1,587 � � 3,417 �
� Pro Forma EBITDA 3,040 442 4,672 620 � Non-cash equity based
compensation � 386 � � 343 � � 1,080 � � 631 � � Adjusted Pro Forma
EBITDA $ 3,426 � $ 785 � $ 5,752 � $ 1,251 � � Diluted Pro Forma
Adjusted EBITDA per common share $ 0.15 � $ 0.07 � $ 0.27 � $ 0.12
� NEW MOTION, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE
SHEETS (in thousands, except share and per share amounts) � � � � �
� � � � � June 30, December 31, 2008 2007 � (Unaudited) ASSETS
CURRENT ASSETS Cash and cash equivalents $ 17,152 $ 987 Marketable
securities - 9,463 Accounts receivable, trade, net of allowance for
doubtful accounts of $1,303 at June 30, 2008 and $565 at December
31, 2007 22,269 8,389 Other current assets � 3,947 � � 2,278 �
TOTAL CURRENT ASSETS � 43,368 � � 21,117 � � PROPERTY AND
EQUIPMENT, NET 3,815 860 MARKETABLE SECURITIES - NON CURRENT 8,050
- GOODWILL 101,373 - INDENTIFIED INTANGIBLES, NET 45,903 599 OTHER
ASSETS 560 1,387 � � TOTAL ASSETS $ 203,069 � $ 23,963 � �
LIABILITIES AND STOCKHOLDERS' EQUITY � CURRENT LIABILITIES Accounts
payable $ 4,322 $ 3,257 Accrued expenses 13,108 3,720 Other current
liabilities 375 99 � � TOTAL CURRENT LIABILITIES 17,805 7,076 �
Deferred income taxes 17,442 - Notes payable � 1,771 � � 22 � TOTAL
LIABILITIES � 37,018 � � 7,098 � � � Minority interest � 207 � �
283 � � COMMITMENTS AND CONTINGENCIES � STOCKHOLDERS' EQUITY Common
stock - par value $.01, 100,000,000 authorized, 22,774,327 and
12,021,184 issued and outstanding, respectively 228 120 Additional
paid-in capital 168,948 19,583 Accumulated other comprehensive
income (loss) - (38 ) Common stock, held in treasury, at cost,
232,300 shares (1,047 ) Accumulated deficit (2,285 ) (3,083 ) � � �
� TOTAL STOCKHOLDERS' EQUITY � 165,844 � � 16,582 � TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY $ 203,069 � $ 23,963 � NEW
MOTION, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED) (in thousands, except share and per share
amounts) � � � � � � � � � Three Months Ended Six Months Ended June
30, June 30, 2008 2007 2008 2007 � NET REVENUES $ 31,451 $ 6,894 $
60,189 $ 12,536 � COST OF REVENUES � 18,378 � � 1,494 � � 32,864 �
� 2,220 � � GROSS PROFIT � 13,073 � � 5,400 � � 27,325 � � 10,316 �
� OPERATING EXPENSES Selling and marketing 2,581 4,460 9,154 7,447
General and administrative (includes non-cash equity compensation
of $386, $278, $1,080, and $472, respectively) 8,029 2,578 15,768
4,584 Deprecation and amortization � 715 � � 320 � � 1,280 � � 514
� � 11,325 � � 7,358 � � 26,202 � � 12,545 � � INCOME (LOSS) FROM
OPERATIONS � 1,748 � � (1,958 ) � 1,123 � � (2,229 ) � OTHER
(INCOME) EXPENSE � Interest income and dividends, net (75 ) (142 )
(360 ) (221 ) Other expense 37 - 167 21 � � � � � � INCOME (LOSS)
BEFORE INCOME TAXES � 1,786 � � (1,816 ) � 1,316 � � (2,029 ) �
INCOME TAXES � 768 � � (909 ) � 594 � � (905 ) � INCOME (LOSS)
BEFORE MINORITY INTEREST � 1,018 � � (907 ) � 722 � � (1,124 ) � �
MINORITY INTEREST � (48 ) � (20 ) � (76 ) � 135 � � NET INCOME
(LOSS) $ 1,066 � $ (887 ) $ 798 � $ (1,259 ) � EARNINGS (LOSS) PER
SHARE: Basic $ 0.05 � $ (0.08 ) $ 0.04 � $ (0.12 ) Diluted $ 0.05 �
$ (0.08 ) $ 0.04 � $ (0.12 ) � WEIGHTED AVERAGE SHARES OUTSTANDING:
� Basic � 22,664,860 � � 11,780,923 � � 20,613,896 � � 10,650,096 �
Diluted � 23,176,573 � � 11,780,923 � � 21,209,564 � � 10,650,096 �
NEW MOTION, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS (UNAUDITED) (in thousands) � � � � � � � Six Months
Ended June 30 2008 � 2007 � CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 798 $ (1,259 ) Adjustments to reconcile net
income (loss) to net cash used in operating activities: Allowance
for doubtful accounts 738 (602 ) Depreciation and amortization
1,280 514 Stock-based compensation expense 1,080 472 Net losses on
sale of marketable securities 175 - Deferred income taxes (88 )
(1,044 ) Minority interest in net loss of consolidated joint
venture (76 ) 135 Changes in operating assets and liabilities of
business, net of acquisitions: Accounts receivable 1,407 (710 )
Other current assets (646 ) (602 ) Other assets (480 ) (10 )
Accounts payable (6,692 ) (723 ) Other, principally accrued
expenses � 936 � � 892 � Net cash used in operating activities �
(1,568 ) � (2,937 ) � CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities (6,332 ) - Proceeds from sales of
securities 20,658 - Cash received in business combinations 12,271 -
Cash paid in business combinations (7,041 ) (1,006 ) Capital
expenditures � (972 ) � (118 ) Net cash provided by (used in)
investing activities � 18,584 � � (1,124 ) � CASH FLOWS FROM
FINANCING ACTIVITIES Repayments of notes payable (1 ) (552 )
Expenditures for equity financing - (470 ) Issuance of warrants -
57 Issuance of stock - 18,471 Purchase of common stock held in
treasury (1,047 ) - Proceeds from exercise of stock options 197 - �
� Net cash (used in) provided by financing activities � (851 ) �
17,506 � � � NET INCREASE IN CASH AND CASH EQUIVALENTS 16,165
13,445 � CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD � 987 � �
544 � � CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 17,152 � $
13,989 �
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