Full Press Release Details
FOR IMMEDIATE RELEASE CONTACT: Dean Oakey -- Financial Inquiries
May 16, 2007 213-253-2282
Karen Strickholm - Press Inquiries
NEW MOTION, INC. REPORTS
FIRST QUARTER 2007 RESULTS
83% YEAR OVER YEAR INCREASE IN QUARTERLY NET SALES TO $5,642,000
SUCCESSFULLY COMPLETED REVERSE MERGER
FINALIZED COMPANY'S FIRST EQUITY FINANCING GROSSING $20MM
IRVINE, CA -- NEW MOTION INC. (OTCBB: NWMO), a leading digital entertainment
company providing a broad range of digital and mobile products and services to
consumers, today announced financial results for the first quarter ended March
31, 2007. The company reported net sales for the quarter of 2007 of $5,642,000,
an increase of 83% over the prior year period, and a net loss for the same
period of $372,000, or $0.04 per share including $388,000 in non-cash expenses.
The substantial sales growth reflects New Motion's accomplishments over the past
12 months -- establishing a larger consumer base, increasing the average revenue
generated per user, and developing a more diversified selection of products and
services. Expanded service and product offerings now include RINGTONECHANNEL, a
"white label" mobile storefront provider for well known brands, BID4PRIZES, a
low-bid mobile auction game, and GATORARCADE, a premium online and mobile gaming
site. The company continues to generate substantial revenue from the company's
initial product offering -- MOBILESIDEWALK(TM), a mobile entertainment portal
selling ringtones, wall papers and other basic mobile entertainment products.
"We had strong revenue growth in the quarter, and expect to capitalize on the
successful launch of BID4PRIZES and several other exciting new product
initiatives in the pipeline. We are also pleased with the outcome of various
corporate transactions during the first quarter, which included a reverse
merger, a 300-to-1 reverse stock split, a corporate name change from MPLC, Inc.
to New Motion, Inc., and a private placement investment in which we received
gross proceeds of $20 million," said BURTON KATZ, Chief Executive Officer.
Over the past year, New Motion, Inc. also acquired mobile messaging assets of
Mobliss, Inc., which will create improved operating scalability and billing
efficiency. In a related transaction, the company has also established a joint
venture with Japan-headquartered Index Holdings (JASDAQ: 4835), one of the
word's largest interactive media corporations, to form a joint venture for an
Asian-themed off-deck mobile entertainment portal in North America.
FIRST QUARTER RESULTS
First quarter net sales of $5,642,000 increased 83% from the $3,078,000 in net
sales reported in the first quarter of 2006. First quarter gross margin was 87%,
a decrease from the gross margin of 98% reported in the first quarter of 2006.
The decrease in gross margin is primarily attributable to the inclusion of
RingtoneChannel sales in the first quarter, which require revenue share payments
to third party clients. Although these fees impact initial cost of sales and
initial gross profit margin, over time the company incurs substantially less
selling and marketing expense, and thus anticipates a more favorable impact or
net income for this service offering.
Operating expense in the first quarter of 2007 was $5,187,000, compared to
$1,394,000 in the first quarter of the prior year. The year to year increase in
operating expense is attributable to absolute increases in marketing
expenditures and expanded staff and administrative costs to support current and
expected growth. Also included in the first quarter was approximately $381,000
of non-cash amortization and stock compensation expense, which did not exist in
The company reported a net loss of $372,000, or $0.04 per share, for the first
quarter of 2007. Gross proceeds of $20 million in the quarter were raised and
$1,380,000 was invested in the acquisition of assets and in building out the
technology infrastructure. As of March 31, 2007, New Motion, Inc. had
approximately $18 million of cash.
For further information related to the Company's operations and financial
results for the first quarter ended March 31, 2007, please refer to the
Company's Quarterly Report on Form 10-QSB filed with the SEC on May 15, 2007.
New Motion, Inc. continues to foresee sales growth at a fast rate over the next
several quarters, and the company expects this growth rate to exceed that of the
average growth rate in the mobile entertainment industry overall. Over the last
two quarters the company has invested heavily in expanding staff in its Irvine,
CA and Seattle, WA offices, scaling its technical infrastructure, and launching
new products, services and content. It is anticipated that these fixed cost
increases will moderate and will begin to decrease as a percentage of net sales
over the remainder of the year.
"While the company continues to grow its traditional mobile entertainment
offerings, our business strategy will continue to expand our service offerings
to include a far wider range of products and services, differentiating ourselves
in the marketplace and establishing fresh streams of revenue, said Katz. "This
strategy, coupled with the build-out of our delivery and billing platforms,
contributes to our positive prospects for 2007 overall."
ABOUT NEW MOTION, INC.
NEW MOTION, INC. (OTCBB: NWMO), headquartered in Irvine, California, is a
digital entertainment company providing a broad range of digital and mobile
products and services to consumers. New Motion, Inc. combines the power of the
Internet, the latest in mobile technology, and traditional marketing /
advertising methodologies to their brands: MOBILESIDEWALK(TM), a mobile
entertainment portal, RINGTONECHANNEL, a mobile storefront provider, Bid4Prizes,
a low-bid mobile auction game, and GATORARCADE, a premium online and mobile
gaming site. Headed by a seasoned team of Internet, new media, entertainment and
technology professionals, New Motion, Inc. was founded in 2005 and is
headquartered in Irvine, California with a branch office in Seattle. WIRED
MAGAZINE recently declared New Motion's mobile content capabilities a "rival to
those of their mainstream-media counterparts," WIRELESS BUSINESS FORECAST named
New Motion "a company to watch," and RCR WIRELESS NEWS noted that New Motion,
Inc. is "gaining traction in the direct-to-consumer ring." For more information,
please visit www.newmotioninc.com, www.mobilesidewalk.com,
FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, about NEW MOTION.
Forward-looking statements are statements that are not historical facts. Such
forward-looking statements, based upon the current beliefs and expectations of
New Motion's management, are subject to risks and uncertainties, which could
cause actual results to differ from the forward looking statements. The
following factors, among others, could cause actual results to differ from those