SANTA MONICA, Calif., April 20, 2006 (PRIMEZONE) -- iMedia International, Inc. (OTCBB:IMNL) (www.imedia-intl.com) released its results of operations for the year ended December 31, 2005. The Company saw a dramatic increase in net sales to $5.93 Million, an increase of $3.64 million or 159% over the comparable 2004 period.
In addition, the Company showed a significant improvement in gross profitability with an increase from a negative gross loss of $252,000 to $900,000 in gross profit. This represents an increase of $1.12 million over the comparable 2004 period. The improvement was a direct result of their increased sales to a larger and developing client base. According to the Company, they continue to contract custom interactive media projects with both new and repeat customers. Most importantly, gross margin rates on these projects are now more typical of their targeted, future anticipated margins.
"We considered 2004 and 2005 as an important start-up period where we concentrated mainly on developing our customer acquisition programs and refining our pilot programs," said Kevin Plate, EVP of Sales and Business Development. "We realized that in order to attract new customers to our new media, we often had to price our initial pilot programs below actual costs. Since we now have several years of success, we have been able to adjust our pricing accordingly."
"We are thrilled to see the continuing escalation in our sales and gross profitability," said David MacEachern, CEO of iMedia International. "It is important to understand that this growth reflects only the expansion of our custom solution business which we concentrated on during 2004 and 2005. When we factor in the launch of our newspaper syndication program which is beginning later this month, and our plans for a national newspaper rollout during 2006 and 2007, I am very confident that this aggressive growth will be sustained."
Total operating expenses increased $5.25 million to $8.97 million for the year ended December 31, 2005 a 141% increase over the comparable 2004 period. The increase is primarily attributable to an increase in selling expenses of $1.7 million or 152%, and an increase in general and Administrative expenses of $3.6 million or 166%. This compares to $6.2 million in the comparable 2004 period.
The Company attributes the increase in selling expenses directly to the increase from three to eight full-time sales executives, and their related travel and entertainment costs. Also, the Company was required to continue underwriting revenue shortfalls for its Hollywood Previews Entertainment iMagazine while they prepared to launch their national newspaper syndication rollout. This national rollout is scheduled to begin on April 30, 2006 at which time subsidizes should decrease as the program begins to generate new revenues.
Increases in the Company's General and Administrative expenses were primarily due to an increase in professional fees associated with its various financings during 2005. These included approximately $3.2 million in non-cash expenses, as opposed to approximately $44,000 for the comparable period in 2004. The majority of these non-cash expenses were related to non-recurring costs associated with the issuance of common stock and warrants to prior investors, investment bankers, to advisors and consultants, and for promotion of its ongoing financing activities.
"We are very pleased to see the increased acceptance of our convergent media in the marketplace and look forward to continued top-line growth during the second half of 2006 as our newspaper syndication program comes on line," said Anthony Fidaleo, CFO. "Despite these milestones however, we are disappointed in the impact that the costs of financing has had on our financial statements as well as our operations. We look forward to the national adoption of our newspaper syndication business, and we believe that our revenue growth will begin to offset our cash burn over the next several quarters."
During the period, the Company recorded a $12.2 million net loss, which includes $4.1 million in non-cash other expense items. These non-cash items were primarily related to the costs associated with the issuances of preferred stock and the write-down of certain investments during the year ended December 31, 2005. The increase in non-cash other expenses totaled $3.23 million for a 345% increase over the comparable 2004 period.
On September 28, 2005, the Company filed a registration statement on Form SB-2, which has not yet been declared effective. The Company is still responding to comments from the Securities and Exchange Commission and is required to amend its registration statement to include its financial statements for the period ending December 31, 2005. The Company anticipates that it will have its registration statement amended and respond to the SEC's comments around May 1, 2006.
About iMedia International, Inc.
iMedia International, Inc. (IMNL) is a publicly held digital media solutions company producing DVD's, and CD-ROM's for digital multimedia marketing and promotional campaigns. iMedia publishes proprietary and custom digital iMagazines and offers expert digital media solutions services including: strategic planning, content aggregation and production, disc audio/video design, authoring, editing and compression, disc packaging manufacturing and distribution. A key feature of iMedia's technology is its iReporting(tm) real-time, online tracking system which provides quantitative data on disc viewer usage patterns and effectiveness of iMedia marketing and promotional campaigns.
For more information on iMedia International, Inc. please contact:
Kelly R. Konzelman, Executive Vice President 1721 21st Street, Santa Monica, CA 90404 Phone: (310) 453-4499 Fax: (310) 453-6120 kellyk@imedia-intl.com
The information in this news release includes certain forward-looking statements that are based upon assumptions that in the future may prove not to have been accurate and are subject to significant risks and uncertainties, including statements about the Company's future financial performance, and the increase in sales and top-line revenue growth. Although the Company believes that the expectations reflected in its forward-looking statements are reasonable, it can give no assurance that such expectations or any of its forward-looking statements will prove to be correct. Factors that could cause results to differ include, but are not limited to, successful performance of internal plans, product development and acceptance, the impact of competitive services and pricing, general economic risks and uncertainties, and various other information detailed from time to time in the Company's filings with the United States Securities and Exchange Commission. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date thereof. The forward-looking statements contained in this release should not be relied upon for the basis of any investment decisions. The Company faces other risks that are not contained in this disclosure. Investors should refer to the full filing of the Company's Annual Report on Form 10-KSB dated April 19, 2006 at http://www.sec.gov, before making an investment decision.
IMEDIA INTERNATIONAL, INC.
COMBINED BALANCE SHEETS
DECEMBER 31, 2005 AND DECEMBER 31, 2004
December 31, December 31,
2005 2004
(Restated)
------------- ------------
Assets
Current assets:
Cash $ 1,397,904 $ 453,304
Accounts receivable,
net of allowance
for doubtful accounts
of $25,000 and $0 1,820,483 46,444
Work in process 27,779 --
Prepaid expense 13,5621 554
----------- -----------
Total current assets 3,259,727 500,302
Property and equipment, net 140,486 78,211
Investment in available
for sale securities -- 1,066,461
----------- -----------
Total assets $ 3,400,213 $ 1,644,974
=========== ===========
Liabilities and
shareholders' deficit
Current liabilities:
Accounts payable and
accrued expenses $ 1,124,761 $ 906,779
Accrued liquidated
damages 1,209,518 --
Deferred revenue and
customer deposits 90,440 --
Due to affiliate 46,669 --
Notes payable -- 950,022
Note payable -- related party 8,483 130,000
----------- -----------
Total current liabilities 2,479,871 1,986,801
Warrant liability 5,115,305 --
----------- -----------
Total liabilities 7,595,176 --
----------- -----------
Commitments and contingencies
Mandatory redeemable
convertible preferred
stock, net of discount
of $2,187,109 852,891 --
Total shareholders'
deficit (5,047,854) (341,827)
----------- -----------
Total liabilities and
shareholders' deficit $ 3,400,213 $ 1,644,974
=========== ===========
IMEDIA INTERNATIONAL, INC.
COMBINED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
Years Ended
December 31,
2005 2004
(Restated)
------------------- -------------------
Net sales $ 5,931,626 $ 2,290,534
Cost of sales 5,061,153 2,542,579
------------ ------------
Gross profit (loss) 870,473 (252,045)
------------ ------------
Operating expenses:
Selling 2,775,346 1,100,737
General and administrative 5,609,575 2,112,412
Management and consulting
fees-related party 581,000 507,000
------------ ------------
Total operating expenses 8,965,921 3,720,149
------------ ------------
Loss from operations (8,095,448) (3,972,194)
------------ ------------
Other expenses:
Interest on fixed
conversion feature
and amortization
of discount 126,204 851,418
Warrants issued for
extension on
Convertible note payable 340,478 --
Loss on revaluation of
warrants 533,737 --
Liquidated damages on late
filing of registration
statement 1,379,757 --
Interest expense, net 61,246 86,922
Loss on investment 573,975 --
Impairment loss on
investment in available
for sale securities 1,156,269 --
------------ ------------
Total other expenses 4,171,666 938,340
------------ ------------
Loss before provision
for income taxes (12,267,114) (4,910,534)
------------ ------------
Provision for
income taxes 4,000 3,260
------------ ------------
Net loss (12,271,114) (4,913,794)
Beneficial conversion
feature on the Series B
convertible preferred
stock 3,753,485 --
Interest on fixed
conversion feature and
amortization of debt
discount on Series A
redeemable preferred
stock 852,891 --
Preferred stock dividends
Series A and B 214,907 --
Preferred stock dividends
-- iPublishing 27,000 27,000
------------ ------------
Net loss allocable to
common shareholders $(17,119,397) $ (4,940,794)
------------ ------------
Other comprehensive loss,
net of tax unrealized
holding loss on securities -- $ (1,130,451)
------------ ------------
Comprehensive loss $(17,119,397) $ (6,071,245)
============ ============
Net loss per common share
from operations
-- Basic and Diluted $ (0.24) $ (0.08)
============ ============
Weighted average common
outstanding shares,
Basic and Diluted 70,552,192 61,655,666
============ ============
THE IMEDIA INTERNATIONAL, INC.
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
2005 2004
-------------------------------------
(Restated Note 2)
Net loss $(12,271,114) $ (4,913,794)
Adjustments to reconcile
net loss to net cash
used in operating
activities:
Interest on fixed
conversion feature and
amortization of debt
discount 62,936 851,419
Depreciation 46,716 48,111
Allowance for doubtful
accounts 25,000 --
Loss on sales of
investments 599,793 --
Impairment loss on
investment for sale
securities 1,130,451 --
Issuance of additional
warrants to investors 810,563 --
Issuance of warrants
for services 481,870 434,378
Issuance of warrants for
extension of notes payable 340,478 --
Common stock issued
for services 2,050,811 151,208
Common stock issued for
liquidated damages 119,840 --
Common stock issued for
preferred stock dividends 184,690 --
Common stock issued to
employees for
signing bonus' 30,000 --
Common stock issued for
extension of related
parties notes payable 94,900 --
Net change in warrant
liability due revaluation 533,737 --
Net change in deferred
compensation 98,461 (149,246)
Changes in assets
and liabilities
Accounts receivable (1,799,039) (46,444)
Work in process (27,779) 71,056
Prepaid expenses and
other assets (13,007) 2,841
Accounts payable and
accrued expenses 205,024 612,532
Accrued liquidated damages 1,209,518 --
Deferred revenue and
customer deposits 90,440 --
------------ ------------
Net cash used in
operating activities (5,995,711) (2,937,939)
------------ ------------
Cash flows from
Investing activities
Purchase of equipment (108,993) (74,488)
Due from shareholder 15,047 (55,047)
Due to related parties -- (41,875)
Due to/from affiliates, net 46,669 --
Proceeds from sale of
investment in available
for sale securities 466,668 --
------------ ------------
Net cash provided by
(used in) investing
activities 419,391 (171,410)
------------ ------------
Cash flows from financing
activities
Common stock committed
for interest on related
party notes (94,900) 94,900
Issuance (cancellation)
of committed shares (50,000) 50,000
Payments on notes payable
-- related parties (130,000) (14,254)
Payments on notes payable (1,000,000) (251,035)
Proceeds from notes payable
-- related parties 8,483 144,349
Proceeds on notes payable -- 1,250,000
Proceeds from issuance of
redeemable Series A
preferred stock, net 2,712,953 --
Proceeds from issuance of
Series B preferred
stock, net 4,166,331 --
Proceeds from issuance of
common stock from exercise
of warrants, net 1,134,960 1,253,000
Proceeds from issuance of
common stock for cash 15,000 --
Proceeds from collection of
subscription receivable -- 370,000
Offering costs paid with
common stock -- (189,790)
Dividend on iPublishing
preferred stock (27,000) (27,000)
Dividends on Series
A and B preferred stock (214,907) --
------------ ------------
Net cash provided by
financing activities 6,520,920 2,680,170
Increase (decrease) in cash 944,600 (429,179)
Cash, beginning of year 453,304 882,483
------------ ------------
Cash, end of year $ 1,397,904 $ 453,304
============ ============