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Oasys Mobile Announces Fourth Quarter 2006 and Fiscal 2006 Results; Engages RBC Daniels & Associates as Investment BankerRALEIGH, N.C. --(Business Wire)-- Oasys Mobile, Inc. (OTCBB: OYSM), a leading provider of premium mobile media content, products and services, today announced financial results for the fourth quarter and year ended December 31, 2006. Results for the quarter and the year include: -- Total revenue for the fourth quarter of 2006 increased by 35.4% to approximately $2.64 million, as compared to total revenue of approximately $1.95 million for the fourth quarter of 2005. This was also an increase of 24.8% in total revenue over the third quarter of 2006. -- Total revenue for the year ended December 31, 2006 increased by 11.5% to approximately $8.69 million compared to approximately $7.79 million for the fiscal year ended December 31, 2005. -- Net loss from operations for the fourth quarter of 2006 was approximately $1.55 million compared to a net loss from operations of approximately $1.82 million for the same period in 2005. This positive change was primarily due to both increased revenues and reduced costs from the restructuring of Oasys' business and a refocusing on its core competencies of developing and distributing mobile games and other mobile applications. -- For the fiscal year ended December 31, 2006, net loss from operations was approximately $9.33 million compared to approximately $4.41 million for the same period in 2005. Operating loss for 2006 includes a charge of approximately $960,000 related to the expensing of employee stock options, as required by FAS 123(R), which were not expensed in 2005. There was also a one-time charge in 2006 of approximately $1.48 million for expense related to the modification of stock purchase warrants in conjunction with the securities purchase agreement entered into in November 2005, in connection with the Company's 6% Senior Secured Convertible Debentures. Operating loss for 2006 also reflects increased costs for the development and marketing of oasysmobile.com, the company's off-deck consumer-focused portal and mobile content store, and severance costs for the former chief executive officer of the Company. -- Net loss applicable to common shareholders for the fourth quarter of 2006 was approximately $2.95 million, or $0.22 per share, compared to approximately $2.49 million, or $0.18 per share, for the same period in 2005. Net loss applicable to common shareholders for the year ended December 31, 2006 was $14.76 million, or $1.09 per share, compared to $6.11 million, or $0.46 per share, for the same period in 2005. Net loss applicable to common shareholders for 2006 includes a non-cash charge of approximately $4.96 million related to amortization of the debt discount and beneficial conversion feature related to the Company's 6% Senior Secured Convertible Debentures. -- As of December 31, 2006, Oasys Mobile's cash and accounts receivable totaled approximately $3.81 million. Oasys Mobile also announced that it has engaged RBC Daniels & Associates as its investment banker to assist in obtaining an equity investment or debt issuance to allow it to pay or refinance its senior secured debt due in June 2007 and have additional working capital for growth and expansion. Alternatively, RBC Daniels is assisting Oasys Mobile in evaluating certain strategic alternatives, including investments from strategic partners or business combinations, including the sale of the business. Doug Dyer, CEO of Oasys Mobile, stated, "Our fourth quarter was our strongest yet and marked a turning point in the Company's operations. We are now focused on three distinct lines of business that we believe have long-term sustainable growth. Our games and mobile publishing business is one of the strongest in the industry. While we have successfully streamlined our operations and reduced our headcount by approximately 33%, we grew fourth quarter 2006 revenues by 35 percent over fourth quarter 2005 revenues. Additionally, our aggregation business, which we launched in the third quarter of 2006, grew 49% over the previous quarter. In 2006, Oasys Mobile increased headcount and expended resources pursuing an off-deck direct-to-consumer portal strategy. We have now refocused our portal operations and have positioned the portal technology as a white-label business. It is important to note that our fourth quarter 2006 revenues grew approximately 25% percent over the third quarter of 2006. We will continue to introduce new titles in 2007 and focus on global expansion, and we anticipate reaching profitability in 2007." Oasys is actively negotiating multiple content licensing agreements for new mobile games and other mobile applications. These new products will be included in our 2007 and 2008 product road maps. We have also recently announced expanded relationships with key licensors and partners for the distribution of new enhanced versions of mobile games we are already distributing, as well as new games based on those entities brands. Additionally, our relationships with domestic and international carriers are stronger than ever, and we are working closely with them to expand Oasys' product availability in the global marketplace including Europe, Asia and Latin America. About Oasys Mobile, Inc. Oasys Mobile, Inc. is a leading developer, publisher and aggregator of premium mobile games, mobile media applications and service that allow individuals to enjoy and share their mobile lifestyle. Oasys Mobile content is distributed through an extensive global carrier network as well its consumer portal, www.oasysmobile.com. Through its white-label services, Oasys Mobile also helps carriers and other content companies expand their customer base by incorporating rich mobile content into their product and brand offerings. For more information, see www.oasysmobileinc.com. This press release contains forward-looking statements that involve risks and uncertainties concerning Oasys Mobile's business, products, and financial results. Actual results may differ materially from the results predicted. More information about potential risk factors that could affect our business, products, and financial results is included in Oasys Mobile's annual report on Form 10-K for the year ended December 31, 2006, and in reports subsequently filed by Oasys Mobile with the Securities and Exchange Commission ("SEC"). All documents are available through the SEC's Electronic Data Gathering Analysis and Retrieval system (EDGAR) at www.sec.gov or from Oasys Mobile's web site at www.oasysmobileinc.com. Oasys Mobile hereby disclaims any obligation to publicly update the information provided above, including forward-looking statements, to reflect subsequent events or circumstances. All trademarks and/or registered trademarks are the property of their respective owners.
Oasys Mobile, Inc.
Balance Sheets
December 31
2006 2005
------------- -------------
Assets
Current assets:
Cash $ 1,451,498 $ 8,985,158
Accounts receivable 2,354,553 1,072,615
Prepaids and other current assets 146,702 36,172
------------- -------------
Total current assets 3,952,753 10,093,945
Equipment, software and furniture, net 152,987 125,839
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Total assets $ 4,105,740 $ 10,219,784
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December 31
2006 2005
------------- -------------
Liabilities and stockholders' equity
(deficit)
Current liabilities:
Accounts payable $ 2,699,201 $ 2,319,754
Accrued salaries and related costs 311,554 205,076
Accrued interest 574,251 151,500
Current portion of notes payable 77,500 77,500
Current portion of capital lease
obligations 14,900 -
Convertible notes payable 8,000,000 -
Discount on convertible notes payable (2,458,404) -
------------- -------------
Total current liabilities 9,219,002 2,753,830
Long-term liabilities:
Capital lease obligations 18,697 -
Convertible notes payable - 8,000,000
Discount on convertible notes payable - (7,415,960)
------------- -------------
Total liabilities 9,237,699 3,337,870
Stockholders' equity (deficit):
Series A convertible preferred stock,
$0.001 par value; 10,000 shares
designated, 2,407 shares issued and
outstanding at December 31, 2006 and 2005
(liquidation preference of $2,856,307 as
of December 31, 2006) 2,407,295 2,407,295
Common stock, $.001 par value, 185,000,000
shares authorized; 13,752,686 and
13,523,554 issued and 13,748,836 and
13,519,704 outstanding at December 31,
2006 and 2005, respectively 13,749 13,520
Additional paid-in capital 67,839,964 65,369,259
Deferred compensation - (85,578)
Accumulated deficit (75,165,348) (60,594,963)
Treasury stock, at cost (3,850 shares) (227,619) (227,619)
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Total stockholders' equity (deficit) (5,131,959) 6,881,914
------------- -------------
Total liabilities and stockholders' equity
(deficit) $ 4,105,740 $ 10,219,784
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Oasys Mobile, Inc.
Statements of Operations
Three months ended
December 31
2006 2005
------------ ------------
Revenues:
Wireless applications and contracts $ 2,643,866 $ 1,948,464
Wireless license fees - 4,000
------------ ------------
Total revenues 2,643,866 1,952,464
------------ ------------
Cost of revenues:
Wireless applications and contracts 1,651,668 1,045,225
------------ ------------
Total cost of revenues 1,651,668 1,045,225
------------ ------------
Gross profit 992,198 907,239
Operating expenses:
General and administrative 916,560 1,092,220
Research and development 1,007,631 930,646
Sales and marketing 603,600 703,412
Non-cash consulting 15,000 5,215
------------ ------------
Total operating expenses 2,542,791 2,731,493
------------ ------------
Loss from operations (1,550,593) (1,824,254)
Interest expense, net (102,016) (31,780)
Amortization of discount on debt and
beneficial conversion feature (1,249,576) (584,040)
------------ ------------
Net loss $(2,902,185) $(2,440,074)
------------ ------------
Net loss applicable to common stockholders:
Net loss $(2,902,185) $(2,440,074)
Preferred stock dividends (48,140) (48,132)
------------ ------------
Net loss applicable to common stockholders $(2,950,325) $(2,488,206)
============ ============
Per share amounts (basic and diluted) $ (0.22) $ (0.18)
============ ============
Weighted average shares of common stock
outstanding 13,670,575 13,519,567
============ ============
Oasys Mobile, Inc.
Statements of Operations
Year ended December 31
2006 2005
------------- ------------
Revenues:
Wireless applications and contracts $ 8,663,117 $ 7,782,241
Wireless license fees 24,750 12,700
Contracts and license fees - -
------------- ------------
Total revenues 8,687,867 7,794,941
------------- ------------
Cost of revenues:
Wireless applications and contracts 5,018,966 3,893,776
Contracts and license fees - -
------------- ------------
Total cost of revenues 5,018,966 3,893,776
------------- ------------
Gross profit 3,668,901 3,901,165
Operating expenses:
General and administrative 3,735,570 3,215,040
Research and development 3,843,254 3,168,620
Sales and marketing 3,911,284 1,846,608
Modification of warrants in conjunction
with the Securities Purchase Agreement 1,478,585 -
Non-cash consulting 35,000 20,823
Non-cash settlements - 58,750
------------- ------------
Total operating expenses 13,003,693 8,309,841
------------- ------------
Loss from operations (9,334,792) (4,408,676)
Interest expense, net (278,037) (77,262)
Amortization of discount on debt and
beneficial conversion feature (4,957,556) (1,435,372)
------------- ------------
Net loss $(14,570,385) $(5,921,310)
------------- ------------
Net loss applicable to common stockholders:
Net loss $(14,570,385) $(5,921,310)
Preferred stock dividends (192,560) (192,552)
------------- ------------
Net loss applicable to common stockholders $(14,762,945) $(6,113,862)
============= ============
Per share amounts (basic and diluted) $ (1.09) $ (0.46)
============= ============
Weighted average shares of common stock
outstanding 13,570,553 13,317,440
============= ============
Oasys Mobile, Inc.
Statements of Cash Flows
Year ended December 31
2006 2005
------------- ------------
Operating activities
Net loss $(14,570,385) $(5,921,310)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 62,231 47,356
Stock-based compensation 1,055,860 39,221
Common stock, options and warrants issued
for services 12,000 166,662
Amortization of discount on debt and
beneficial conversion feature 4,957,556 1,435,372
Amortization of restricted stock 35,000 -
Modification of warrants in conjunction
with the Securities Purchase Agreement 1,478,585 -
Allowance for doubtful accounts 10,000 5,000
Non-cash settlements - 58,750
Changes in operating assets and
liabilities:
Accounts receivable (1,291,938) (275,917)
Prepaid and other assets (110,530) 65,143
Accounts payable and other accrued
expenses 354,514 1,152,495
Accrued interest 422,751 55,432
Accrued salaries and related costs 106,478 18,047
-------------- ------------
Net cash used in operating activities (7,477,878) (3,153,749)
Investing activities
Purchases of equipment and furniture (43,040) (76,190)
-------------- ------------
Net cash used in investing activities (43,040) (76,190)
Financing activities
Proceeds from exercise of stock options and
warrants - 4,333,788
Proceeds from issuance of convertible debt - 8,215,000
Principal payments on convertible debt - (1,640,000)
Principal payments on capital lease
obligations (12,742) -
Principal payments on notes payable and
short-term borrowings - (99,479)
-------------- ------------
Net cash (used in) provided by financing
activities (12,742) 10,809,309
-------------- ------------
Net (decrease) increase in cash (7,533,660) 7,579,370
Cash at beginning of year 8,985,158 1,405,788
-------------- ------------
Cash at end of year $ 1,451,498 $ 8,985,158
============== ============
Supplemental disclosures of cash flow
information
Cash paid for interest $ 72,572 $ 47,527
============== ============
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