GenesisIntermedia, Inc. Announces Second Quarter 2001 Results; Revenues Up 69%, Operating Loss Decreases by 32%
LOS ANGELES--Aug. 14, 2001--GenesisIntermedia, Inc. (Frankfurt:GIA) today reported its results for the second quarter 2001 and six months ended June 30.The Company reported revenues for the three months ended June 30, 2001 of $12,395,635, an increase of 69% over revenues of $7,315,341 for the three months ended June 30, 2000. For the six months ended June 30, 2001, the Company reported revenues of $24,931,089, an increase of 68% over revenues of $14,788,010 for the six months ended June 30, 2000. The Company's management attributes the increase in revenues, in part, to higher sales of proprietary products and increases in commissions and royalties earned by the Company in conjunction with the products sold from the Company's expanding Utah telemarketing facilities. During the second quarter 2001, commissions and royalties amounted to $4,878,000, or 407% higher than commissions and royalties of $962,000 from the second quarter 2000. Car rental revenue during the second quarter 2001 increased by 130%, to $2,436,000, over second quarter 2000 car rental revenue of $1,376,000, demonstrating the growth of Car Rental Direct's operations and the increase in that subsidiary's brand equity.
"During the quarter, we worked further to secure market share for the Car Rental Direct brand. We also achieved a complete network-wide functionality upgrade of Centerlinq in all retail properties. This upgrade will benefit retailers and mall managers with the ability to accommodate higher traffic and advertising feeds. Centerlinq's unique visits were up 74%, and ad views were up 30%, from the prior quarter," stated Ramy El-Batrawi, Chairman and Chief Executive Officer of GenesisIntermedia, Inc. "We believe that positive results will emerge from being pro-active in fulfilling the organizational, technical and market building needs of these companies."
Signaling a trend toward GenesisIntermedia's profitability objective, the Company reported that its loss from operations during the second quarter 2001 of $4,828,456 decreased by 32% from the loss from operations during the second quarter 2000 of $6,381,057 and sequentially, by 28% from its loss from operations during the first quarter 2001 of $6,218,726.
El-Batrawi continued, "We are also pleased that sales of our proprietary products continue to grow and that our thriving Utah operations continue to yield higher commissions for us. We are looking at continued product growth, both in the types of products offered and in our ability to utilize our core competencies in marketing and promotion to augment sales. The trend indicated by our decrease in operating loss can be attributed to a more precise allocation of our marketing-related assets that help us identify new target audiences for our products, and the most effective ways to reach them. We've brought an increased focus on direct marketing and customer relationship management, as well as a more efficient use of technology to our Utah-based sales and marketing, and customer service operations."
During the second quarter 2001, the Company's gross profit of $8,650,538, compared to $4,526,792 for the second quarter 2000, is attributable to an increase in sales of products with higher profit margins, and the growth in commissions earned from telemarketing.
Factors that affected the second quarter reported net loss included $1,452,709 in one-time, non-recurring financing costs associated with the issuance of warrants to Elliott Associates LP and other financing sources, as well as costs related to the opening of five new Car Rental Direct car rental locations and the diversification of the Car Rental Direct brand into auto sales and the opening of its first sales facility in Glendale, California. In addition, certain operating expenses during the quarter were tied to the retrofitting and upgrade of the Centerlinq network in all 33 shopping mall locations to system 4.0 in order to maximize functionality and speed, and enhance value and revenue generation capacity of the network. Aforementioned investment and financing costs contributed to a net loss of $7,730,184 for the second quarter 2001, or $(0.36) per share, compared to a net loss of $7,340,185, or $(0.43) per share, for the quarter ended June 30, 2000. For the six months ended June 30, 2001, the Company reported a net loss of $15,673,049, or $(0.73) per share, compared to a net loss of $12,473,330, or $(0.75) per share, for the six months ended June 30, 2000.
El-Batrawi added, "We are moving forward with continued measures to improve the Company's financial position and move us closer to profitability. We're currently working to convert some of our long-term debt to equity in order to reduce interest payments in future quarters. We expect to continue growing both internally and through acquisitions. At present, we're evaluating the integration of additional businesses that are marketing and media related. Our strengths have been, and will continue to be, in the marketing and media space, and in the sales of a variety of consumer goods and services by utilizing our core competencies in marketing. Any opportunities upon which we capitalize will strengthen our marketing core, and deliver increased value to shareholders."
About GenesisIntermedia, Inc.
GenesisIntermedia, Inc., a Russell 2000(R) company, is involved in several business lines revolving around the marketing and advertising of consumer goods and services. The Company's main business lines are (a) direct sales and marketing of consumer products, (b) interactive advertising and data mining in retail malls under the Centerlinq brand, and (c) car rentals for the replacement market under the Car Rental Direct brand. The Company strives to create a portfolio of complementary business activities that build on the Company's traditional strengths in marketing consumer goods and services. GenesisIntermedia.com markets through several channels including television, print, telemarketing, retail outlets and interactive/Internet media.
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Certain information included in this press release (as well as information included in oral statements or other written statements made or to be made by GenesisIntermedia, Inc.) contains statements and other matters that are forward-looking. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, actual results may differ materially from those expressed in any forward-looking statements made by GenesisIntermedia, Inc. For a description of additional risks and uncertainties, please refer to the GenesisIntermedia, Inc. filings with the Securities and Exchange Commission, including GenesisIntermedia, Inc.'s Form 10-k.
GENESISINTERMEDIA, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
AS OF JUNE 30, 2001 AND JUNE 30, 2000
3 Months 3 Months
Ended Ended
June 30, June 30,
2001 2000
------------ ------------
(unaudited) (unaudited)
Revenue $ 12,395,635 $ 7,315,341
Cost of Revenue 3,745,097 2,788,549
------------ ------------
Gross Profit 8,650,538 4,526,792
Operating expenses
Selling, general and
administrative expenses 11,901,307 9,844,423
Depreciation and amortization 1,577,687 1,022,268
Loss from operations of DynaMedia -- 41,158
------------ ------------
Total operating expenses 13,478,994 10,907,849
------------ ------------
Loss from operations (4,828,456) (6,381,057)
Other income (expenses)
Gain on sale of assets 24,147 --
Interest expense (1,473,166) (959,128)
Financing costs (1,452,709) --
------------ ------------
Total other income (expenses) (2,901,728) (959,128)
------------ ------------
Loss before provision for income taxes (7,730,184) (7,340,185)
Provision (benefit) for income taxes -- --
------------ ------------
Net loss $ (7,730,184) $ (7,340,185)
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Basic loss per common share $ (0.36) $ (0.43)
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Diluted loss per common share $ (0.36) $ (0.43)
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Weighted-average common
shares outstanding 21,690,805 17,077,278
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GENESISINTERMEDIA, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
AS OF JUNE 30, 2001 AND JUNE 30, 2000
6 Months 6 Months
Ended Ended
June 30, June 30,
2001 2000
------------ ------------
(unaudited) (unaudited)
Revenue $ 24,931,089 $ 14,788,010
Cost of Revenue 6,349,650 4,683,830
------------ ------------
Gross Profit 18,581,439 10,104,180
Operating expenses
Selling, general and
administrative expenses 26,630,772 19,465,474
Depreciation and amortization 2,997,849 1,842,334
Income from operations of DynaMedia -- (69,361)
------------ ------------
Total operating expenses 29,628,621 21,238,447
------------ ------------
Loss from operations (11,047,182) (11,134,267)
Other income (expenses)
Gain on sale of assets 202,092 --
Interest expense (3,104,708) (1,235,938)
Financing costs (1,723,251) (103,125)
------------ ------------
Total other income (expenses) (4,625,867) (1,339,063)
------------ ------------
Loss before provision for income taxes (15,673,049) (12,473,330)
Provision (benefit) for income taxes -- --
------------ ------------
Net loss $(15,673,049) $(12,473,330)
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Basic loss per common share $ (0.73) $ (0.75)
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Diluted loss per common share $ (0.73) $ (0.75)
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Weighted-average common
shares outstanding 21,400,637 16,649,889
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GENESISINTERMEDIA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2001 AND DECEMBER 2000
June 30 December 31,
2001 2000
(unaudited) (audited)
ASSETS
Current assets
Cash and cash equivalents $ 1,775,211 $ 858,848
Marketable securities at market -- 1,926,746
Accounts receivable, net 5,254,209 3,846,453
Inventories 968,693 1,383,620
Revenue earning equipment 7,622,145 8,435,359
Prepaid advertising 628,132 2,461,928
Advances receivable 1,103,665 1,201,348
Deposits and other prepaid assets 4,577,852 2,809,428
----------- -----------
Total current assets 21,929,907 22,923,730
Property and equipment, net 27,105,204 28,133,574
Customer lists -- 955,287
Goodwill, net 4,095,456 4,479,560
Other assets 1,006,724 684,430
----------- -----------
Total assets $54,137,291 $57,176,581
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GENESISINTERMEDIA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2001 AND DECEMBER 2000
June 30, December 31,
2001 2000
(unaudited) (audited)
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Current portion of notes payable $ 121,119 $ --
Current portion of capital
lease obligations 576,062 745,973
Line of credit 8,349,587 9,225,946
Accounts payable 6,631,053 8,329,734
Accrued payroll taxes 729,163 859,833
Accrued interest - related party 2,059,695 2,053,490
Other accrued liabilities 1,837,920 1,913,863
Due to stockholder 68,567 2,693,993
Income taxes payable 65,000 65,000
------------ ------------
Total current liabilities 20,438,166 25,887,832
Notes payable, net of current portion 7,856,250 7,856,250
Note payable to related party 34,661,445 30,382,266
Capital lease obligations,
net of current portion 480,383 518,172
------------ ------------
Total liabilities 63,436,244 64,644,520
Commitments and contingencies
Stockholders' deficit
Convertible preferred stock,
$0.001 par value, 5,000,000 authorized
71,429 and 71,429 shares issued and
outstanding ($7.00 per share
liquidation preference
Dividends of $102,083 in arrears) 71 71
Common stock, $0.001 par value
75,000,000 shares authorized
22,311,881 and 20,971,560
shares issued and outstanding 22,312 20,972
Additional paid-in capital 50,581,373 35,752,544
Accumulated deficit (57,500,226) (41,827,177)
Treasury stock (2,402,483) (2,402,483)
Accumulated comprehensive income -- 988,134
------------ ------------
Total stockholders' deficit (9,298,953) (7,467,939)
------------ ------------
Total liabilities and
stockholders' deficit $ 54,137,291 $ 57,176,581
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