April 7, 2006 News Release: MediaBay, Inc. Announces 2005 Financial Results Company Outlines Milestones for 2005 CEDAR KNOLLS, N.J., April 7 /PRNewswire-FirstCall/ -- MediaBay, Inc. (Nasdaq: MBAY), a digital media and publishing company specializing in the marketing of spoken audio entertainment, announced financial results for the fourth quarter and full year 2005.
For the fourth quarter ended December 31, 2005, the Company reported net sales of $1.9 million, as compared to $4.5 million in the fourth quarter of 2004. Net loss applicable to common shares for the fourth quarter of 2005 was $5.9 million or $0.56 per diluted common share, compared to a net loss applicable to common shares of $18.6 million or $4.98 per diluted common share in the fourth quarter of 2004. Included in the 2005 fourth quarter loss was a non-cash charge for the impairment of goodwill of $3.5 million.
For the year ended December 31, 2005, MediaBay reported net sales of $9.0 million as compared to $18.8 million for the year ended December 31, 2004. Net loss applicable to common shares for the year ended December 31, 2005 was $30.3 million or $4.08 per diluted common share, compared to a net loss applicable to common shares of $30.7 million or $10.24 per diluted common share for the year ended December 31 2004. Included in the 2005 net loss were non-cash charges totaling $20.9 million, consisting of $17.4 million relating to a deemed dividend on the beneficial conversion of Series D preferred stock in the March 2005 financing and a charge for the impairment of goodwill of $3.5 million. The Company's independent registered public accounting firm included a going concern explanatory paragraph in its report on the Company's consolidated financial statements for the year ended December 31, 2005. The qualification was included as a result of the Company's recurring losses. For information regarding management's plans in regard to these matters, please see the MediaBay, Inc. Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2006.
"In 2005 we continued the planned transition of our business to digital distribution with the launch of our new audio download service, www.Soundsgood.com, and the launch of our first private label storefront with MSN Music at http://msn.soundsgood.com. We also plan to implement our announced distribution relationship with Real Networks. Earlier this year, we signed a distribution agreement with MusicNet, which will potentially make our content available on Yahoo, AOL, and CDIGIX, and the growing list of partner companies in the MusicNet family. These distribution deals will place our audiobook and classic radio content in most of the top music services in the United States," stated Jeff Dittus, CEO of MediaBay.
"Additionally, we recently announced that we are exploring our options and setting a strategy to bring our content to the wireless marketplace. We are excited about this market opportunity due to the enormous number of wireless devises in the market place and the rapid convergence of these devices to include support for audio entertainment playback," added Mr. Dittus.
"The decline in our revenues has been expected, as we have not marketed to attract new members to our mail order audio book club, as we have determined to focus on our digital distribution strategy. With a solid foundation of great people and partners in place, we are looking forward to participating in the explosive growth that many other digital media companies are experiencing. While it has taken longer than expected to implement many of our distribution agreements, we are optimistic that MediaBay will soon execute on its strategy."
About MediaBay, Inc.
MediaBay Inc. (Nasdaq: MBAY) is a leading digital media and publishing company specializing in spoken word and premium audio entertainment. The company maintains a library consisting of over 75,000 hours of content, including audio books from best-selling authors and the history of American Radio. Some of MediaBay's digital content partners include BBC, Blackstone, CBS Radio, Harper Collins, Hay House, Oasis, Penguin Audio, Random House, Simon & Schuster, Sound Room, and Zondervan. In addition to its popular Audio Book Club, MediaBay distributes its content through proprietary web sites including audiobookclub.com, radiospirits.com and Soundsgood.com as well as through partner channels including MusicNet, Real, MSN Music, Sirius Satellite Radio and XM Satellite Radio. For more information on MediaBay, please visit www.soundsgood.com, www.mediabay.com, www.audiobookclub.com, www.radiospirits.com and www.radioclassics.com.
Certain statements in this press release constitute "forward-looking" statements that involve a number of known and unknown risks, uncertainties and other factors which may cause MediaBay's actual results, performance or achievements to be materially different from any results, performances or achievements express or implied by such forward-looking statements. All statements other than statements of historical facts included in this press release including, without limitation, statements regarding our future financial position, business strategy, budgets, projected costs and plans and objectives of our management for future operations are forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe," or "continue" or the negative thereof or variations thereon or similar terminology. Important factors that could cause actual results to differ materially from our expectations, include, without limitation, our history of losses; the success of our new digital media distribution strategy, our ability to anticipate and respond to changing customer preferences, license and produce desirable content, protect our databases and other intellectual property from unauthorized access, collect receivables; dependence on third-party providers, suppliers and distribution channels; competition; the costs and success of our marketing strategies; product returns; member attrition and other risks detailed in our Annual Report on Form 10-K for the year ended December 31, 2005. Undue reference should not be placed on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to update any forward-looking statements.
MEDIABAY, INC. Consolidated Balance Sheets (Dollars in thousands)
December 31, 2005 2004
Assets Current Assets: Cash and cash equivalents $8,243 $3,122 Accounts receivable, net of allowances for sales returns and doubtful accounts of $1,533 and $2,708 at December 31, 2005 and 2004, respectively 691 1,285 Inventory 763 1,530 Prepaid expenses and other current assets 464 199 Royalty advances 523 489 Total current assets 10,684 6,625 Fixed assets, net 1,785 243 Other intangibles, net 42 50 Goodwill 6,156 9,658 $18,667 $16,576
Liabilities and Stockholders' Equity (Deficit) Current liabilities: Accounts payable and accrued expenses $4,969 $5,361 Accounts payable, related party - 315 Current portion of long-term debt - 200 Short-term debt, net of original issue discount of $52 and $54 at December 31, 2005 and 2004, respectively 32 29 Preferred dividend payable 319 - Total current liabilities 5,320 5,905 Long-term debt, net of original issue discount of $111 and $908 at December 31, 2005 and 2004, respectively 608 9,102 Related party long-term debt including accrued interest - 7,750 Total liabilities 5,928 22,757
Commitments and Contingencies - -
Preferred stock, no par value, authorized 5,000,000 shares; no shares of Series A outstanding at December 31, 2005 and 25,000 shares of Series A outstanding at December 31, 2004; 200 shares of Series B issued and outstanding at December 31, 2005 and December 31, 2004; no shares of Series C issued and outstanding at December 31, 2005 and 43,527 shares of Series C issued and outstanding at December 31, 2004; and 21,063 shares of Series D issued and outstanding at December 31, 2005 and no shares of Series D issued and outstanding at December 31, 2004 11,436 6,873 Common stock; no par value, authorized 150,000,000 shares; issued and outstanding 10,516,414 and 4,140,663 at December 31, 2005 and 2004, respectively 121,681 101,966 Contributed capital 42,637 17,682 Accumulated deficit (163,015) (132,702) Total common stockholders' equity (deficit) 12,739 (6,181) $18,667 $16,576
MEDIABAY, INC. Consolidated Statements of Operations (Dollars in thousands, except per share data)
Years ended December 31, 2005 2004 2003 Sales, net of returns, discounts and allowances of $1,825, $5,363 and $16,960 for the years ended December 31, 2005, 2004 and 2003, respectively $8,955 $18,831 $36,617 Cost of sales 5,920 12,547 17,764 Advertising and promotion expense 2,091 5,546 10,452 Bad debt expense 51 829 3,940 General and administrative 6,895 6,043 6,816 Severance and other termination costs 697 - 544 Depreciation and amortization 154 144 328 Charge for impairment of goodwill 3,502 - -
Operating (loss) income (10,355) (6,278) (3,227) Interest (expense) (767) (9,082) (1,925) Interest income 257 - - Loss on early extinguishment of debt (579) - - Loss before income tax expense (11,444) (15,360) (5,152) Income tax expense - 14,753 1,471 Net loss (11,444) (30,113) (6,623) Dividends on preferred stock 1,446 574 246 Deemed dividend on beneficial conversion of Series D Preferred Stock 17,423 - -
Net loss applicable to common shares $(30,313) $(30,687) $ (6,869)
Basic and diluted loss per share: Basic and diluted loss per share $(4.08) $(10.24) $(2.92)
MEDIABAY, INC. Consolidated Statements of Cash Flows (Dollars in thousands)
Years ended December 31, 2005 2004 2003 Cash flows from operating activities:
Net loss $(11,444) $(30,113) $(6,623) Adjustments to reconcile net loss to net cash used in operating activities: Charge for impairment of goodwill 3,502 -- -- Inventory obsolescence included in cost of goods sold -- 2,530 285 Write-off of non-recoupable royalty advances -- 1,215 -- Income tax expense -- 14,753 1,471 Non-cash beneficial conversion 4,382 - Amortization of deferred member acquisition costs 17 3,509 6,625 Loss on extinguishment of debt 579 1,532 - Non-current accrued interest 155 898 909 Amortization of deferred financing costs and original issue discount 240 1,329 561 Depreciation and amortization 154 144 328 Non-cash compensation expense 328 118 Changes in asset and liability accounts, net of acquisitions and asset write-downs: Decrease in accounts receivable, net 816 1,979 4,195 Decrease in inventory 767 103 896 (Increase) decrease in prepaid expenses and other current assets (319) (48) 300 (Increase) decrease in royalty advances (34) (1,000) 240 Increase in deferred member acquisition costs -- (356) (2,410) (Decrease) increase in accounts payable and accrued expenses (643) (5,406) (5,346) Net cash (used in) provided by operating activities (6,210) (4,221) 1,549 Cash flows from investing activities: Purchase of fixed assets (1,687) (136) (16) Additions to intangible assets -- (20) (102) Cash paid in acquisitions -- - (148) Net cash used in investing activities (1,687) (156) (266) Cash flows from financing activities: Proceeds from issuance of debt -- 13,500 1,065 Redemption of Series A and C Preferred Stock (5,789) Proceeds from sale of common stock -- 900 - Proceeds from exercise of stock options 40 563 - Proceeds from sale of preferred stock and warrants, net of costs 31,421 - 328 Repayment of long-term debt (11,763) (6,008) (1,615) Payment of dividends (891) - - Increase in deferred financing costs - (2,139) (99) Payments made in connection with litigation settlement recorded in contributed capital, net of cash received - - (676) Net cash provided by (used in) financing activities 13,018 6,816 (997) Net increase in cash and cash equivalents 5,121 2,439 286 Cash and cash equivalents at beginning of year 3,122 683 397 Cash and cash equivalents at end of year $8,243 $3,122 $683 SOURCE MediaBay, Inc. -0- 04/07/2006 /CONTACT: Tim Clemensen, Rubenstein Investor Relations, +1-212-843-9337, tclemensen@rubensteinir.com, for MediaBay, Inc./ /Web site: http://www.mediabay.com http://www.Soundsgood.com http://www.audiobookclub.com http://www.radiospirits.com http://www.radioclassics.com. / (MBAY)
CO: MediaBay, Inc. ST: New Jersey IN: ENT PUB SU: ERN
News 
Market Data 
Discover 
