POMPANO BEACH, Fla., Aug. 15, 2011 /PRNewswire/ -- Onstream Media Corporation (NASDAQ: ONSM), a leading online service provider of live and on-demand corporate audio and web communications, virtual event technology and social media marketing, reported today its financial results for the third fiscal quarter ended June 30, 2011.

Financial Highlights


    --  Revenues for the three months ended June 30, 2011 were a record $4.6
        million, representing a 4.4% increase from the third quarter of fiscal
        2010 and a 3.0% increase sequentially (from the second quarter of fiscal
        2011). Revenues for the first nine months of fiscal 2011 were a record
        $13.4 million, up 5.7% compared to $12.6 million in the first nine
        months of fiscal 2010.
    --  Cash flow from operating activities (before changes in current assets
        and liabilities) for the three months ended June 30, 2011 was a record
        $328,000, compared to approximately $82,000 in the immediately preceding
        second quarter. This also represents a quarterly and nine-month record.
    --  Gross margin of $3.2 million for the three months ended June 30, 2011,
        representing 69.0% of total revenues, was an increase of 3.3% as
        compared to the year-ago quarter.
    --  Operating expenses of $3.5 million for the three months ended June 30,
        2011 represented a decrease of approximately $249,000, or 6.6%, as
        compared to the third quarter of fiscal 2010.
    --  Onstream's net loss for the three months ended June 30, 2011 was
        approximately $486,000, a 54.8% decrease as compared to a net loss of
        approximately $1.1 million for the third quarter of fiscal 2010.

Financial Discussion

The approximately $194,000, or 4.4%, increase in consolidated revenues for the three months ended June 30, 2011 was primarily due to higher sales from the Company's Audio and Web Conferencing Services Group, which were approximately $2.4 million for the three months ended June 30, 2011. This represented an increase of approximately $103,000, or 4.4%, from the corresponding period of the prior fiscal year, primarily a result of increased audio conferencing revenues in the Infinite division.

Digital Media Services Group revenues were approximately $2.2 million for the three months ended June 30, 2011, an increase of approximately $91,000, or 4.4%, from the corresponding period of the prior fiscal year, primarily due to an increase in Webcasting division revenues. Webcasting revenue growth was primarily from a 75.5% growth in revenues from webcasting services provided to the following governmental entities: the State of California, the California State Department of Technology Services, the California State Board of Equalization, the United States Nuclear Regulatory Commission and the Internal Revenue Service.

The approximately $102,000, or 3.3%, increase in consolidated gross margin for the three months ended June 30, 2011 was primarily due to approximately $70,000 additional gross margin from the Webcasting division, corresponding to an approximately $110,000 increase in Webcasting division revenues.

Operating expenses were approximately $3.5 million for the three months ended June 30, 2011, a decrease of approximately $249,000, or 6.6%, from the corresponding period of the prior fiscal year, primarily due to decreased professional fee expense.

Onstream's net loss for the three months ended June 30, 2011 was approximately $486,000, or $(0.05) per share, based on 10.3 million weighted average shares outstanding, as compared to a net loss of approximately $1.1 million, or $(0.14) per share in the year-ago quarter, based on 7.9 million weighted average shares outstanding. Onstream's third quarter fiscal 2011 $486,000 net loss represented a 54.8% decrease from the year-ago third quarter's net loss, and included approximately $1.1 million of non-cash expenses, as well as approximately $283,000 non-cash income from adjustment of derivative liability to fair value. The primary non-cash expenses included in the third quarter fiscal 2011 net loss were depreciation and amortization, employee compensation paid with options and other equity, and professional fees paid with equity.

Onstream recognized a record $328,000 positive cash flow from operating activities (before changes in current assets and liabilities) for the three months ended June 30, 2011, compared to approximately $82,000 in the immediately preceding second quarter and approximately $188,000 for the corresponding quarter of the previous fiscal year. Onstream's $284,000 positive cash flow from operating activities (before changes in current assets and liabilities) for the nine months ended June 30, 2011 represents an improvement of approximately $539,000 from the corresponding nine month period of the previous year.

Management Commentary

Randy Selman, President and Chief Executive Officer of Onstream Media, commented, "Revenues in the third quarter of fiscal 2011 represented our second consecutive quarter of record revenues, surpassing the record we set last quarter, which in turn exceeded the previous record revenues going back to the third fiscal quarter of 2008. We are also pleased to report our second consecutive quarter of positive cash flow from operating activities (before changes in current assets and liabilities). Besides being a quarterly and nine-month record, this marks the first time that cash flow from operating activities (before changes in current assets and liabilities) for the first nine months of our fiscal year has been positive."

Selman continued, "In addition to these results generated by our legacy businesses, we now have nine active MarketPlace365® ("MP365") promoter sites, another 29 signed MP365 promoter agreements (for a total of 38) and our network of MP365 sales agents is also expanding. The launch of our MP365 web portal in the third quarter of fiscal 2011 also provides us with an integrated, searchable, and SEO-enhanced (Search Engine Optimization) online directory to market our active and forthcoming MP365 marketplaces."

Selman added, "It is also noteworthy that we strengthened our balance sheet in the third quarter of 2011. Including transactions closed after the June quarter, we have reduced the liability for certain convertible debentures from $1.2 million as of March 31, 2011 to $510,000, via cash payments as well as the issuance of common shares."

Teleconference

Management will hold a conference call on Tuesday, August 16, 2011 at 4:30 p.m. ET to discuss its financial results for the three and nine months ended June 30, 2011. Management discussion will be followed by an open Q&A session. Interested parties may listen to the presentation live online at http://www.visualwebcaster.com/event.asp?id=81388 or by calling 1-888-645-4404 or 201-604-0169. It is recommended to dial in approximately 10 to 15 minutes prior to the scheduled start time. An audio rebroadcast of the conference call will be archived for one year online at http://www.visualwebcaster.com/event.asp?id=81388.

About Onstream Media

Onstream Media Corporation (NASDAQ:ONSM) is a leading online service provider of live and on-demand corporate audio and web communications, virtual event technology and social media marketing. Onstream Media's innovative Digital Media Services Platform (DMSP) provides customers with cost effective tools for encoding, managing, indexing, and publishing content via the Internet. The company's MarketPlace365® solution enables publishers, associations, tradeshow promoters and entrepreneurs to rapidly and cost effectively self deploy their own online virtual marketplaces. In addition, Onstream Media provides live and on-demand webcasting, webinars, web and audio conferencing services. To date, almost half of the Fortune 1000 companies and 78% of the Fortune 100 CEOs and CFOs have used Onstream Media's services. Select Onstream Media customers include: AAA, Dell, Disney, Georgetown University, National Press Club, PR Newswire, Shareholder.com (NASDAQ), Sony Pictures and the U.S. Government. Onstream Media's strategic relationships include Akamai, BT Conferencing, Qwest and Trade Show News Network (TSNN). For more information, visit Onstream Media at http://www.onstreammedia.com or call 954-917-6655.

Cautionary Note Regarding Forward Looking Statements

Certain statements in this document and elsewhere by Onstream Media are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such information includes, without limitation, the business outlook, assessment of market conditions, anticipated financial and operating results, strategies, future plans, contingencies and contemplated transactions of the company. Such forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors which may cause or contribute to actual results of company operations, or the performance or achievements of the company or industry results, to differ materially from those expressed, or implied by the forward-looking statements. In addition to any such risks, uncertainties and other factors discussed elsewhere herein, risks, uncertainties and other factors that could cause or contribute to actual results differing materially from those expressed or implied for the forward- looking statements include, but are not limited to fluctuations in demand; changes to economic growth in the U.S. economy; government policies and regulations, including, but not limited to those affecting the Internet. Onstream Media undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Actual results, performance or achievements could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including those set forth in Onstream Media Corporation's filings with the Securities and Exchange Commission.



    Media Relations:                          Investor Relations:
    Chris Faust                               Jeff Ramson
    FastLane Communications                   ProActive Newsroom
    973-582-3498                              212-792-4321
    cfaust@fast-lane.net                      jramson@proactivecrg.com

Financial Tables Follow


                       ONSTREAM MEDIA CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF OPERATIONS
                                       (unaudited)



                                             Nine months Ended
                                                  June 30,
                                                  --------
                                                2011          2010
                                                ----          ----
    REVENUE:
        Audio and web conferencing        $5,598,118    $5,038,769
        Webcasting                         4,694,866     4,450,214
        DMSP and hosting                   1,532,467     1,568,112
        Network usage                      1,442,542     1,415,935
        Other                                 83,789       160,535
                                              ------       -------
    Total revenue                         13,351,782    12,633,565
                                          ----------    ----------

    COSTS OF REVENUE:
        Audio and web conferencing         1,743,590     1,456,388
        Webcasting                         1,206,779     1,165,288
        DMSP and hosting                     727,251       713,668
        Network usage                        645,050       597,066
        Other                                 71,367       271,650
                                              ------       -------
    Total costs of revenue                 4,394,037     4,204,060
                                           ---------     ---------

    GROSS MARGIN                           8,957,745     8,429,505
                                           ---------     ---------

    OPERATING EXPENSES:
      General and administrative:
             Compensation                  6,558,735     6,368,200
             Professional fees             1,434,726     1,532,406
           Other                           1,629,460     1,731,718
        Impairment loss on goodwill
         and                                       -     3,100,000
             other intangible assets
        Depreciation and amortization      1,117,425     1,537,729
                                           ---------     ---------
    Total operating expenses              10,740,346    14,270,053
                                          ----------    ----------

    Loss from operations                  (1,782,601)   (5,840,548)
                                          ----------    ----------

    OTHER EXPENSE, NET:
        Interest expense                  (1,024,117)     (962,644)
        Gain from adjustment of
         derivative                           81,138             -
            liability to fair value
        Other income, net                     51,627      128, 101
                                              ------      --------

    Total other expense, net                (891,352)     (834,543)
                                            --------      --------

    Net loss                             $(2,673,953)  $(6,675,091)
                                         ===========   ===========

    Loss per share - basic and
     diluted:
    Net loss per share                        $(0.28)       $(0.87)
                                              ======        ======
    Weighted average shares of
     common stock outstanding -
     basic and diluted                     9,514,683     7,635,390
                                           =========     =========




                                            Three months Ended
                                                 June 30,
                                                 --------
                                               2011          2010
                                               ----          ----
    REVENUE:
        Audio and web conferencing       $1,947,602    $1,796,247
        Webcasting                        1,686,296     1,576,672
        DMSP and hosting                    474,314       500,739
        Network usage                       495,432       521,298
        Other                                21,556        35,802
                                             ------        ------
    Total revenue                         4,625,200     4,430,758
                                          ---------     ---------

    COSTS OF REVENUE:
        Audio and web conferencing          576,290       461,573
        Webcasting                          412,806       373,372
        DMSP and hosting                    210,651       225,890
        Network usage                       216,565       214,752
        Other                                17,430        65,569
                                             ------        ------
    Total costs of revenue                1,433,742     1,341,156
                                          ---------     ---------

    GROSS MARGIN                          3,191,458     3,089,602
                                          ---------     ---------

    OPERATING EXPENSES:
      General and administrative:
             Compensation                 2,162,279     2,115,488
             Professional fees              424,863       614,293
           Other                            571,877       620,514
        Impairment loss on goodwill
         and                                      -             -
             other intangible assets
        Depreciation and amortization       363,987       421,568
                                            -------       -------
    Total operating expenses              3,523,006     3,771,863
                                          ---------     ---------

    Loss from operations                   (331,548)     (682,261)
                                           --------      --------

    OTHER EXPENSE, NET:
        Interest expense                   (480,265)     (424,715)
        Gain from adjustment of
         derivative                         283,144             -
            liability to fair value
        Other income, net                    42,958        33,090
                                             ------        ------

    Total other expense, net               (154,163)     (391,625)
                                           --------      --------

    Net loss                              $(485,711)  $(1,073,886)
                                          =========   ===========

    Loss per share - basic and
     diluted:
    Net loss per share                       $(0.05)       $(0.14)
                                             ======        ======
    Weighted average shares of
     common stock outstanding -
     basic and diluted                   10,307,645     7,880,691
                                         ==========     =========



                 ONSTREAM MEDIA CORPORATION AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS



                                                       June 30,     September
                                                         2011          30,
                                                    (unaudited)           2010
                                                    -----------           ----
                        ASSETS
                        ------
    CURRENT ASSETS:
      Cash and cash equivalents                         $370,769      $825,408
      Accounts receivable, net of allowance for        2,657,489     2,805,420
       doubtful accounts of $299,914 and $363,973,
        respectively
      Prepaid expenses                                   464,133       316,591
      Inventories and other current assets               126,154       125,000
                                                         -------       -------
    Total current assets                               3,618,545     4,072,419
    PROPERTY AND EQUIPMENT, net                        2,676,601     2,854,263
    INTANGIBLE ASSETS, net                               914,210     1,284,524
    GOODWILL, net                                     12,396,948    12,396,948
    OTHER NON-CURRENT ASSETS                             104,263       104,263
                                                         -------       -------
    Total assets                                     $19,710,567   $20,712,417
                                                     ===========   ===========




                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------
    CURRENT LIABILITIES:
      Accounts payable                             $1,748,245      $2,553,366
        Accrued liabilities                         1,340,466       1,066,960
        Amounts due to directors and officers         514,993         374,124
      Deferred revenue                                102,538         141,788
      Notes and leases payable -  current
       portion, net of discount                     2,068,526       1,904,214
        Convertible debentures, net of
         discount                                     559,992       1,626,796
                                                      -------       ---------
    Total current liabilities                       6,334,760       7,667,248
    Notes and leases payable, net of
     current portion and discount                      60,129         120,100
    Convertible debentures, net of
     discount                                         758,567         815,629
    Detachable warrants, associated with
     sale of common shares                            305,266         386,404
        and Series A-14 Preferred                     -------         -------
    Total liabilities                               7,458,722       8,989,381
                                                    ---------       ---------

    COMMITMENTS AND CONTINGENCIES

    STOCKHOLDERS' EQUITY:
    Series A-13 Convertible Preferred
     stock, par value $.0001 per share,                     3               3
       authorized 170,000 shares, 35,000
        issued and outstanding
    Series A-14 Convertible Preferred
     stock, par value $.0001 per share,                    42              42
       authorized 420,000 shares, 420,000
        issued and outstanding
    Common stock, par value $.0001 per
     share; authorized 75,000,000 shares,
     10,534,163 and 8,384,570 issued and
     outstanding, respectively                          1,053             838
    Additional paid-in capital                    138,681,995     135,453,812
    Unamortized discount                             (183,747)       (297,422)
    Accumulated deficit                          (126,247,501)   (123,434,237)
                                                 ------------    ------------
    Total stockholders' equity                     12,251,845      11,723,036
                                                   ----------      ----------
    Total liabilities and stockholders'
     equity                                       $19,710,567     $20,712,417
                                                  ===========     ===========

SOURCE Onstream Media Corporation