Live Microsystems Inc (LMSC)

[wolfdeluxe]

Livewire Mobile Announces Financial Results for the Quarter Ended
March 31, 2011

http://www.otcmarkets.com/otciq/ajax/showFinancialReportById.pdf?id=54902

Closes $1.65 Million in New Funding

LITTLETON, Mass., June 29, 2011 – Livewire Mobile, Inc. (otcmarkets: LVWR), a Mobile
Internet leader with one of the most comprehensive one-stop digital content solutions for
carriers, handset/tablet manufacturers, and media companies today announced financial
results for the first quarter ended March 31, 2011. The Company also announced today that
in June 2011, it closed $1.65 million in new debt funding.

Quarter Ended March 31, 2011 Results
The Company’s results of operations for the quarter ended March 31, 2011 include the
results of operations of Fonestarz Media Group, Ltd., acquired on December 17, 2010.
Total revenues for the first quarter of 2011 were $2.6 million, compared to $3.1 million for
the fourth quarter of 2010 and $3.0 million for the first quarter of 2010. Recurring managed
service revenues decreased 8% to $2.2 million, from $2.4 million, for the same period in
2010. The decrease in managed service revenues and total revenues from the same period
last year was primarily due to a $1.0 million decrease due to commercial changes with a
large customer effective January 1, 2011, offset by the addition of $0.9 million of managed
service revenues resulting from the Company’s acquisition of Fonestarz, as well as a $0.1
million decrease in the cap-ex portion of our ringback tone (RBT) business, and an expected
decrease of $0.1 million in non-core handset royalty revenues. The cap-ex portion of the
Company’s business can result in considerable variability in quarterly revenues due to the
timing of completion of cap-ex deployments.

Gross margin was 50% during the quarter ended March 31, 2011, down from the 64%
during the fourth quarter of 2010, and down from 60% during the first quarter of 2010,
primarily due to the decrease in managed services revenue due to commercial changes with
a large customer effective January 1, 2011.

The Company had a loss from continuing operations of $(1.5) million for the first quarter of
2011, or $(0.33) per share, which included $(0.2) million, or $(0.05) per share, of
restructuring expense and $0.2 million, or $0.04 per share, of rent expense reduction
resulting from an office lease amendment, compared to $(0.3) million, or $(0.06) per share
for the fourth quarter of 2010, and compared to $(0.3) million, or $(0.07) per share, for the
first quarter of 2010.

The Company had a net loss of $(1.6) million for the first quarter of 2011, or $(0.34) per
share, which included $(0.2) million, or $(0.05) per share, of restructuring expense, and
$0.2 million, or $0.04 per share, of rent expense reduction resulting from an office lease
amendment, compared to a net loss of $(0.2) million, or $(0.05) per share for the fourth
quarter of 2010, and net loss of $(0.4) million, or $(0.10) per share, for the first quarter of
2010.

Adjusted EBITDA from continuing operations (a non-GAAP financial measure) was $(1.0)
million, or $(0.22) per share, for the first quarter of 2011, compared to $0.3 million, or
$0.07 per share, for the fourth quarter of 2010, and $(46,000), or $(0.01) per share, in the
first quarter of 2010. A complete reconciliation between adjusted EBITDA from continuing
operations and operating income/(loss) on a GAAP basis is provided in the financial tables at
the end of this release.

Cash totaled $3.0 million at March 31, 2011, compared to $4.8 million at December 31,
2010. The decrease in total cash from December 31, 2010 was primarily due to the
Company’s first quarter net loss, resulting primarily from a commercial change with a large
customer effective January 1, 2011, and changes in its working capital. In June 2011, the
Company closed $1.65 million in new debt funding.

Three UK Extends New Facebook and Twitter-Friendly Music Store to More
Customers
In January 2011, Three UK extended a new Facebook and Twitter-friendly music store to
more of its mobile phone customers, following the success of the service on Android-based
handsets. The Three music store, powered by Fonestarz, a subsidiary of Livewire Mobile,
allows customers to download tracks direct to their handsets and has the option to
automatically update a customer’s status on Twitter and Facebook with the latest music
they have purchased. The browser-based store features music from all major and leading
independent record labels including Sony, Universal, Warner, EMI and Vidzone. It also
comes with My Music Club, a section that provides special offers and promotions. The new
music store makes it easier for customers on Three’s award-winning mobile Internet
network to access the latest tracks on their handsets. Customers can access the store
through Three’s mobile phone portal and clicking on the Three music store.
Company Enters Worldwide System Distribution and License Agreement with a
Major Worldwide Telecom Equipment and Services Provider

As separately announced, the Company renewed under a global System Distribution and
License Agreement its relationship with a major worldwide telecom equipment and services
provider during the first quarter of 2011 that allows this partner to license and distribute
worldwide the Company’s new, multi-media ringback tone platform, MyCaller® 4.0.
Q2 2011 Launch of New Multi-Media RBT Managed Service
The Company launched a new, multi-media ringback tone managed service at an existing
North American customer in April 2011.

Company Closes $1.65 Million In New Funding
In June 2011, the Company closed debt funding totaling $1.65 million in senior secured
convertible notes with three longstanding and one more recent stockholder. The notes have
a term of 18 months, bear interest at 10% per annum and are convertible into common
stock at an initial conversion rate (subject to adjustment) of $2.50 per share. The notes are
secured by all of the assets of the Company and contain certain operating and financial
covenants applicable to the Company. The obligations under the notes are guaranteed by
certain significant subsidiaries (as defined) of the Company.

Business Perspective
Matthew Stecker, CEO of Livewire Mobile, said, “Our results for the quarter-ended March 31,
2011 were in line with our expectations. We expected a decrease in our managed service
revenues resulting from a commercial change that became effective January 1, 2011 with a
large customer, as previously disclosed. This decrease was largely offset by revenues
contributed from our Fonestarz subsidiary during the first quarter of 2011. We continue to
be optimistic about our long-term pipeline generation that we believe will result from our
acquisition of Fonestarz Media Group, Ltd., and our extensive mobile internet, content
management, music and other service offerings.”
“I am also pleased to announce that in June 2011 the Company closed $1.65 million in new
debt funding from four existing stockholders. This funding will help enable the Company to
continue to expand its international market presence and expand its already deep content
offerings.”

Use of Non-GAAP Financial Measures
In addition to reporting its financial results in accordance with generally accepted
accounting principles, or GAAP, the Company has also provided in this release adjusted
EBITDA from continuing operations which is a non-GAAP financial measure adjusted to
exclude certain non-cash and other specified expenses. The Company believes the use of
non-GAAP measures in addition to GAAP measures is an additional useful method of
evaluating its results of operations. Management uses these non-GAAP financial measures
when evaluating the Company's financial results, as well as for internal planning and
forecasting purposes. Specifically, the Company has excluded stock-based compensation,
depreciation, amortization of intangible assets, restructuring charges, interest income and
expense, other income/expense, and taxes from its non-GAAP financial measures. The non-
GAAP financial measures disclosed by the Company should not be considered a substitute
for, or superior to, financial measures calculated in accordance with GAAP, and the expected
results calculated in accordance with GAAP and reconciliations to those expected results
should be carefully evaluated. The non-GAAP financial measures used by the Company may
be calculated differently from, and therefore may not be comparable to, similarly titled
measures used by other companies. The Company may consider whether other significant
non-recurring items that arise in the future should also be excluded in calculating the non-
GAAP financial measures it uses. Reconciliations between the non-GAAP financial measures
on a GAAP basis and a non-GAAP basis are provided herein, as applicable.
Net Operating Losses (NOLs) Protective Provisions

During the third quarter of 2010, the Company received shareholder approval to amend its
articles of incorporation in order to protect its NOLs (the "NOL Protective Measures") and
those measures are now in effect. Under the NOL Protective Measures any person, company
or investment firm that wishes to become a "5% shareholder" of Livewire Mobile, Inc. must
first obtain a waiver from the Company's board of directors. In addition, any person,
company or investment firm that is already a "5% shareholder" of Livewire Mobile, Inc.
cannot make any additional purchases of Livewire Mobile, Inc. stock without a waiver from
the Company's board of directors.
Livewire Mobile, Inc. strongly urges that any stockholder contemplating owning more than
185,000 shares contact the Company before doing so.

About Livewire Mobile, Inc.
Livewire Mobile (otcmarkets: LVWR) is a Mobile Internet leader with one of the most
comprehensive one-stop digital content solutions for carriers, handset and tablet
manufacturers, and media companies entering the mobile content market. The Company’s
integrated suite of personalization services includes ringback tones, ringtones, DRM-free
mobile full-track music and videos, fully integrated storefronts, extensive content, and other
applications, as well as dedicated content marketing, mobile advertising solutions, and
integrated storefront management and merchandising. For more information, please visit
www.livewiremobile.com.
Livewire Mobile is a registered service mark and MyCaller is a registered trademark of
Livewire Mobile, Inc. All other trade names are the property of their respective owners.
Statements other than historical facts included or referred to in this Press Release are
“forward-looking statements”, including forward-looking statements about our optimism
about our long-term pipeline generation that we believe will result from our acquisition of
Fonestarz Media Group, Ltd, that our recent funding will help enable the Company to
continue to expand its international market presence and expand its already deep content
offerings, and our expected total annualized cost savings of approximately $0.9 million -
$1.0 million related to headcount reductions in May 2011. These statements are based on
management’s expectations as of the date of this document and are subject to uncertainties
and changes in circumstances. Actual results may differ materially from these expectations
due to risks and uncertainties including, but not limited to, our optimism about our longterm
pipeline generation that we believe will result from our acquisition of Fonestarz Media
Group, Ltd, that our recent funding will help enable the Company to continue to expand its
international market presence and expand its already deep content offerings, and our
expected total annualized cost savings of approximately $0.9 million - $1.0 million related
to headcount reductions in May 2011. In addition, while management may elect to update
forward-looking statements at some point in the future, management specifically disclaims
any obligation to do so, even if its estimates change. Any reference to our website in this
press release is not intended to incorporate the contents thereof into this press release or
any other public announcement.

Investor Relations:
Todd Donahue, CFO
Livewire Mobile, Inc.
978-742-3167
[e-mail]

Media Relations:
Erin Schweppe, VP Product Marketing
Livewire Mobile, Inc.
978-742-3155
[e-mail]