Full Press Release Details
FOR IMMEDIATE RELEASE CONTACT: Karen Strickholm - Press Inquiries
--------------------- 505-988-4401
August 14, 2007 strickholmcompany@msn.com
NEW MOTION, INC. REPORTS 2007
SECOND QUARTER AND SIX MONTHS RESULTS
2ND QUARTER SALES INCREASE 77% YEAR-OVER YEAR TO $6.9 MILLION;
SIX MONTHS SALES INCREASE 80% TO $12.5 MILLION;
COMPANY COMPLETES 1-FOR 300 REVERSE STOCK SPLIT
IRVINE, CA -- NEW MOTION INC. (OTCBB: NWMO), a leading digital entertainment
company leveraging the Internet and the latest in mobile technology to provide a
broad range of mobile entertainment and Internet media services, today announced
financial results for the three and six months ended June 30, 2007.
The company reported that net sales for the second quarter, grew 77% to
$6,894,000, compared to the second quarter a year ago. For the six months ended
June 30, 2007, net sales grew 80% to $12,536,000, compared to the six months
ended June 30, 2006. The Company experienced a net loss of $1,259,000, or $0.12
per share for the six months ended June 30, 2007, which includes approximately
$986,000 of non-cash depreciation, amortization and stock compensation expense,
and a net loss of $887,000, or $0.08 per share for the quarter ended June 30,
2007, which includes approximately $531,000 of non-cash depreciation,
amortization and stock compensation expense.
The increase in New Motion's net sales in both the three and six month periods
was the result of a growing subscriber base. This reflects New Motion's success
at efficiently acquiring large numbers of new customers, combined with the
Company's successful efforts to engage and retain its subscribers with an
attractive portfolio of high quality, innovative mobile entertainment and
Internet media services focused on three strategic service lines -- digital
music, casual games and interactive contests. Each service line represents
unique growth opportunities for New Motion`s existing domestic business, through
acquisition of both product and distribution assets, and through future
international business development opportunities.
"This quarter was all about the successful execution of our plan to expand our
customer base by offering engaging mobile entertainment services," said Burton
Katz, chief executive officer. "As evidenced by our significant top line sales
growth rate, we were successful at targeting our sales and marketing expenses on
the most efficient customer acquisition opportunities, working with our online
direct marketing partners. We successfully launched several attractive mobile
entertainment services in the second quarter, highlighted by the introduction of
Bid4Prizes, part of New Motion's interactive contests, and the casual
games-centric site, GatorArcade. Both of these new properties, introduced during
fiscal year 2007, contributed to our 80% year-over-year jump in net sales. We
expect that the sales and operating momentum we experienced in the second
quarter and first half of this year will continue for the balance of 2007, and
will ultimately translate into fiscal year 2007 revenue growth in line with our
second quarter sales growth rate, and profitability for the whole of 2007."
During the second quarter, in addition to changing its ticker symbol to "NWMO,"
New Motion concluded several corporate initiatives, which included increasing
the number of shares of its common stock from 75 million to 100 million,
changing its corporate name to New Motion, Inc. (from MPLC, Inc.) and completing
a 1-for-300 reverse stock split.
ALLAN LEGATOR, secretary and chief financial officer, noted, "These significant
corporate milestones represent the transformation of New Motion into a leading
mobile entertainment company and our first full quarter as a publicly traded
company. New Motion is a vastly different company than it was a year ago. Based
on our current and anticipated sales and operating momentum, we fully expect to
be a vastly different company a year from now. In order to achieve our sales and
growth targets efficiently, we continue to add talent to our team and invest in
our operating infrastructure, including improving information technology,
expanding customer service, and building a diverse and competitively unique set
of mobile entertainment and Internet media properties. We expect these operating
initiatives to support our growing sales and increase our profitability."
SECOND QUARTER RESULTS
Second quarter net sales of $6,894,000 increased 77% from the $3,884,000 in net
sales reported in the second quarter of 2006. Second quarter gross margin was
78%, a decrease over the gross margin from the first quarter of 2006 of 96%. The
increase in sales was the result of a larger average monthly billable customer
base - which in turn was the result of higher overall levels of selling,
marketing, and customer acquisition expense.
Operating expense in the second quarter of 2007 was $7,358,000, compared to
$3,210,000 in the second quarter of the prior year. The year-to-year increase in
operating expense is primarily attributed to higher levels of selling and
marketing expense and additional costs incurred as a public company, as well as
investments made in internal systems, human resources and infrastructure to
support the Company's top-line sales growth rate. The Company recorded $531,000
of non-cash depreciation, amortization and stock compensation expense in the
quarter. The company reported a net loss of $887,000, or $0.08 per share, for
the second quarter of 2007.
RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2007
For the six months ended June 30, 2007, net sales were $12,536,000 an increase
of 80% from the $6,962,000 in net sales for the six months ended June 30, 2006.
For the six months ended June 30, 2007, gross margin was 82%, a decrease from
the 97% gross margin for the six months ended June 30, 2007. The increase in
sales was primarily the result of a larger average monthly billable customer
Operating expense for the six months ended June 30, 2007 was $12,545,000,
compared to $4,604,000 for the six months ended June 30, 3006. The
year-over-year increase in operating expense is attributed to higher levels of
selling and marketing expense and higher levels of general and administrative
expense. The Company recorded $986,000 of non-cash depreciation, amortization
and stock compensation expense in the six-month period. The company reported a
net loss of $1,259,000, or $0.12 per share, for the six months ended June 30,
For further information related to the Company's operations and financial
results for the three and six months ended June 30, 2007, please refer to the
Company's Quarterly Report on Form 10-QSB as filed with the Securities and
Exchange Commission.
New Motion expects to continue its current rate of sales growth for the balance
of 2007 by efficiently growing its subscriber base through targeted marketing
programs, and diversifying and expanding its product offerings and customer
experience through investments fitting the Company's strategic service lines --
digital music, casual games and interactive contests. New Motion expects to
support its top line growth, expanding subscriber base and growing portfolio of