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MediaNet Group Technologies Announces Results for the Second Quarter of 2012

May 11 2012 12:00AM

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BOCA RATON, FL -- (Marketwire) -- 05/11/12 -- MediaNet Group Technologies, Inc. (OTCQB: MEDG) (PINKSHEETS: MEDG), a global marketing company that provides consumers around the world with a variety of innovative, online shopping and entertainment opportunities, today announced financial results for the fiscal second quarter and six months ended March 31, 2012.

Michael Hansen, President and Chief Executive Officer of MediaNet Group stated "We further improved upon our first quarter surge in revenue growth by 46% during the second quarter as a result of the continued enthusiasm for our auctions. We continue to increase traffic and build our DubLi brand with unprecedented growth. The sales growth that began in the third and fourth quarters of 2011 has now grown to $29.4 million in the second quarter of 2012 and $49.5 million for the first half of fiscal year 2012. We are particularly pleased with our growth during this quarter, given that it is typically the weakest quarter of the year in all shopping segments. We expect our growth to continue to increase even more rapidly in the third quarter of 2012 due to the success of the new Xpress auction format, the growth of our network marketing associates and increased marketing efforts that include our new infomercial now airing in select markets in the U.S. Our strategy, to build sales volume and increase web traffic, is beginning to attract greater opportunities with business partners such as Publimedia, a division of Grupo Gestevision Telecinco, S.A., the top-rated television station in Spain. We are continuing to expand our investment in marketing, especially discounts and bonuses to consumers which are very effective in rapidly increasing our sales volume. Our investment in building our infrastructure is continuous and designed to support our future growth and development. We believe that our marketing efforts during 2012 will drive conversion to higher margin products and increased profitability."

For the second quarter ended March 31, 2012, revenues increased 600% to $29.4 million compared to $4.1 million for the second quarter ended March 31, 2011. This is in line with the company's marketing strategy to attract traffic and business to our websites in order to drive incremental revenue from advertising and partner programs. Gross profit for the quarter was $0.2 million, or 1.0% of revenue, down 89% compared to $2.1 million, or 51% of revenue, in the same period of 2011. as a direct result of changing the format of the Xpress auction from low volume high margin goods, to high volume, low margin electronic gift cards. Net loss for second quarter was $2.9 million resulting in a loss per basic and fully diluted share of $0.01, as compared to a net loss of $0.8 million, or a loss per basic and fully diluted share of $0.00 in the second quarter of 2011. For the second quarter 2012, the weighted average number of basic and fully diluted shares outstanding was 361,481,056 and 374,563,284, respectively as compared to the same period of 2011, when the weighted average number of basic and fully diluted shares outstanding was 247,129,155 and 249,696,480, respectively. Net loss per share for both basic and fully diluted is computed on the weighted average number of basic shares outstanding because derivatives are considered anti-dilutive to net loss.

For the six months ended March 31, 2012, revenues increased 717% to $49.5 million compared to $6.1 million for the six months ended March 31, 2011. Gross profit for the half year was $0.6 million, or 1% of revenue, compared to $3.6 million, or 61% of revenue, in the same period of 2011. Net loss for the first half of fiscal 2012 was $5.9 million resulting in a loss per basic and fully diluted share of $0.02, as compared to a net loss of $2.1 million, or a loss per basic and fully diluted share of $0.01 in the first half of 2011. For the first six months of fiscal 2012, the weighted average number of basic and fully diluted shares outstanding was 360,694,346 and 370,691,443, respectively as compared to the same period of 2011, when the weighted average number of basic and fully diluted shares outstanding was 246,148,800 and 248,645,221, respectively. Net loss per share for both basic and fully diluted is computed on the weighted average number of basic shares outstanding because derivatives are considered anti-dilutive to net loss.

MediaNet reports net income or loss on a GAAP and non-GAAP basis. Non-GAAP net income or loss excludes non-cash expenses for depreciation, amortization and for stock-based compensation ("SBC"). In the second fiscal quarter 2012, the charge related to SBC was $1.5 million, compared to $0.3 in the second quarter of 2011 Depreciation and amortization was $0.02 million in the second quarter of 2012, compared to $0.2 million in 2011. The result is that Non-GAAP net loss for the second quarter ended March 31, 2012 was $1.4 million compared to Non-GAAP net loss of $0.3 million for the same period in 2011 or 4.6% and 7.3% of revenues, respectively. The non-GAAP measure is reconciled to the corresponding GAAP measures in the accompanying financial tables.

About MediaNet Group Technologies, Inc.:

MediaNet Group Technologies, Inc. (OTCQB: MEDG), through its wholly-owned subsidiaries under the DubLi brand addresses consumer needs both online and offline through innovative engagement models, as well as virtual shopping experiences. Through its DubLi.com website, the company also creates tremendous opportunities by helping entrepreneurs both large and small create micro-distributor organizations by joining Dublinetwork.com. MediaNet Group Technologies main focus is to provide consumers around the world with the highest online value for their shopping and entertainment opportunities. The foundation of MediaNet Group was built upon an innovative business concept, a global presence and a consumer-centric business model that seeks to capitalize on global economic trends and changing consumer behaviors. The central hub of the MediaNet Group universe is DubLi.com, a comprehensive online shopping and entertainment community. DubLi Network is the sales and marketing engine for DubLi.com that is driven by a marketing network of Business Associates who use word-of-mouth advertising, the most effective form of direct selling, to sell a variety of memberships and packages that generate traffic to DubLi.com. DubLi Partner offers a white-label version of its DubLi.com platform giving participating organizations a professional, reliable web presence while providing access to DubLi's global online shopping and entertainment community. BSP Rewards, also known as DubLi Shopping, is responsible for the management and operations of DubLi's Shopping Mall platforms around the world. MediaNet Group is emerging as a leading provider of innovative shopping and entertainment solutions to consumers in over 100 countries.

Additional information about the Company is available in its filing with the Securities and Exchange Commission at www.sec.gov.

Except for historical matters contained herein, statements made in this press release are forward-looking. Without limiting the generality of the foregoing, words such as "may," "will," "to," "plan," "expect," "believe," "anticipate," "intend," "could," "would," "estimate," or "continue" or the negative other variations thereof or comparable terminology are intended to identify forward-looking statements.

Investors and others are cautioned that a variety of factors, including certain risks, may affect our business and cause actual results to differ materially from those set forth in the forward-looking statements. These risk factors include, without limitation, the risk of (i) an inability to establish and/or maintain a large, growing base of productive business associates; (ii) an inability to develop and/or maintain brand awareness for our online auctions; (iii) a failure to maintain the competitive bidding environment for our online auctions; (iv) a failure to adapt to technological change; (v) a failure to comply with governmental laws and regulations applicable to our business; and (vi) a failure to maintain our internal controls. The Company is also subject to the risks and uncertainties described in its filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended September 30, 2011.

Presented below is selected financial information. Readers are encouraged to read the Company's Quarterly Report on Form 10-Q for the three and six months ended March 31, 2012 filed with the Securities and Exchange Commission.


MediaNet Group Technologies, Inc. and SubsidiariesCondensed Consolidated Balance Sheets - Unaudited March 31, September 30, 2012 2011 ------------- -------------Assets:Current Assets: Cash and cash equivalents $ 1,994,756 $ 1,503,234 Restricted cash 4,055,677 448,161 Accounts receivable 191,490 253,095 Inventories 138,810 168,846 Prepaid customer acquisition costs 6,628,110 6,958,894 Prepaid expenses 828,607 2,060,468 ------------- -------------Total Current Assets 13,837,450 11,392,698Property and Equipment, net 292,397 207,419Other Assets: Restricted cash, net - 1,864,293 Real estate contract, net 3,129,346 3,203,847 Other 95,477 74,651 ------------- -------------Total Other Assets 3,224,823 5,142,791 ------------- -------------Total Assets $ 17,354,670 $ 16,742,908 ============= =============Liabilities and Stockholders' Equity (Deficit):Current Liabilities: Accounts payable $ 1,800,063 $ 1,650,540 Accrued and other liabilities 190,196 229,118 Loyalty points payable 219,445 318,653 Commissions payable 1,887,287 1,128,355 Deferred revenue 17,266,828 13,830,389 Note payable - related party 23,801 - ------------- -------------Total Current Liabilities 21,387,620 17,157,055Stockholders' Equity (Deficit): Preferred stock- $0.01 par value, 50 million shares authorized, -0- and -0- outstanding, respectively - - Common stock -$.001 par value, 500 million shares authorized 366,246,522 and 359,802,057 issued and outstanding, respectively 366,246 359,802 Additional paid-in capital 14,197,357 11,953,103 Accumulated other comprehensive loss (71,195) (85,923) Accumulated deficit (18,525,358) (12,641,129) ------------- -------------Total Stockholders' Equity (Deficit) (4,032,950) (414,147) ------------- -------------Total Liabilities and Stockholders' Equity (Deficit) $ 17,354,670 $ 16,742,908 ============= =============MediaNet Group Technologies, Inc. and SubsidiariesCondensed Consolidated Statements of Operations - Unaudited For the Three Months ended For the Six Months ended March 31, March 31, -------------------------- -------------------------- 2012 2011 2012 2011 ------------ ------------ ------------ ------------Revenues $ 29,361,662 $ 4,193,181 $ 49,472,226 $ 6,054,519Direct cost of revenues 29,133,972 2,069,019 48,835,635 2,391,087 ------------ ------------ ------------ ------------Gross profit 227,690 2,124,162 636,591 3,663,432Selling, general and administrative 3,110,640 2,955,326 6,518,548 5,792,102Loss (gain) on sale of Asset - 999 - (2,467) ------------ ------------ ------------ ------------Loss from operations (2,882,950) (832,163) (5,881,957) (2,126,203)Interest expense (1,019) (1,303) (2,272) (3,801) ------------ ------------ ------------ ------------Loss from operations before income taxes (2,883,969) (833,466) (5,884,229) (2,130,004)Income taxes - benefit (expense) - - - - ------------ ------------ ------------ ------------Net loss (2,883,969) (833,466) (5,884,229) (2,130,004)Foreign currency translation adjustment (61,821) (251,635) 14,728 329,418 ------------ ------------ ------------ ------------Comprehensive loss $ (2,945,790) $ (1,085,101) $ (5,869,501) $ (1,800,586) ============ ============ ============ ============Net loss per common share Basic $ (0.01) $ (0.00) $ (0.02) $ (0.01) Diluted $ (0.01) $ (0.00) $ (0.02) $ (0.01)Weighted average shares outstanding: Basic 361,481,056 247,129,155 360,694,346 246,148,800 Diluted 374,563,284 249,696,480 370,691,443 248,645,221MediaNet Group Technologies, Inc. and SubsidiariesCondensed Consolidated Statements of Cash Flows - UnauditedFor the Six Months Ended March 31, 2012 2011 ------------ ------------Cash flows from operating activitiesNet loss $ (5,884,229) $ (2,130,004)Reconcile net loss to net cash from operating activities: Depreciation and amortization 56,735 473,689 Real estate impairment - 367,292 Recover restricted cash impairment allowance (293,438) - Option agreement written off - 250,000 Stock based compensation 2,936,767 560,876 Promotional DubLi Credits 39,351 93,740Changes in operating assets and liabilities: Restricted cash (1,500,520) (61,332) Accounts receivable 56,175 35,474 Inventories 26,402 114,818 Prepaid customer acquisition costs 180,588 (12,649,669) Prepaid expenses 35,153 94,224 Accounts payable 727,031 119,822 Accrued and other liabilities (71,658) 505,566 Loyalty points payable (99,208) (64,866) Commission payable 744,296 (536,986) Deferred revenue 3,736,764 11,605,524 ------------ ------------Net cash used in operations 690,209 (1,221,832) ------------ ------------Investing activities: Purchases of equipment and software (144,889) (8,928) Sale of equipment and software 2,056 - Payments on real estate contract (270,015) (327,724) Other assets (20,826) (26,127) Restricted cash - 256,888 ------------ ------------Net cash provided by (used in) investing activities (433,674) (105,891) ------------ ------------Financing activities Proceeds from note payable - related party - 287,819 Repayments of note payable - related party (202,312) (263,666) Proceeds from stock subscriptions 468,643 1,146,117 ------------ ------------Net cash provided by financing activities 266,331 1,170,270 ------------ ------------Effect of exchange rate changes on cash (31,344) 40,724Net increase (decrease) in cash and equivalents 491,522 (116,729)Cash at beginning of period 1,503,234 487,171 ------------ ------------Cash at end of period $ 1,994,756 $ 370,442 ============ ============Supplemental cash flow information: Cash paid for interest $ 2,272 $ 3,801 Cash paid for income taxes - -Non-cash transactions Foreign currency translation adjustment 14,668 329,418 Two step common share transfer - 63,394 Real estate loan from officer 223,000 -




The following table reconciles the non-GAAP measures to the corresponding GAAP measures:


For the Three Months For the Six Months ended ended March 31, March 31, ----------------------- ------------------------ 2012 2011 2012 2011 ----------- ---------- ----------- -----------Non-GAAP MeasuresNet income (loss) $(2,883,969) $ (833,466) $(5,884,229) $(2,130,004)Depreciation and amortization 23,094 196,066 56,735 473,689Stock based compensation 1,505,086 330,438 2,936,767 560,876 ----------- ---------- ----------- -----------Non-GAAP net income (loss) $(1,355,790) $ (306,962) $(2,890,728) $(1,095,439) =========== ========== =========== ===========





Contacts:
MediaNet Group Technologies Contact:
Stefanie Kitzes
stefanie@medianetgroup.com
561-417-1500





Source: Marketwire


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