Rare Medium Group Reports Revenue Increase of 644% in Third Quarter
Revenue Increases 120% Quarter-to-Quarter;
Company Invests $19.3 Million in Internet Ventures;
Incubator Companies at 21 Million Quarterly User Sessions
NEW YORK, Nov. 2 /PRNewswire/ -- Rare Medium Group Inc. (Nasdaq: RRRR), a
leading Internet enabler, providing consulting, Internet development, "ASP"
services, and venture capital to next-generation Internet companies, today
announced record revenue growth for the third quarter ended September 30,
1999. Revenues for the third quarter rose to $11.3 million, a 644% increase
over the third quarter of 1998, and a 120% sequential increase over the
previous quarter. The Company reported a loss before depreciation,
amortization and other non-cash charges associated with the Company's
convertible preferred securities for the third quarter of $(0.10), which
improved from $(0.13) for the same period last year. This also represents a
sequential quarter-to-quarter improvement compared to the equivalent second
quarter loss of $(0.16). The Company reported a net loss exclusive of non-
cash charges of $3.5 million or $(.09) per share related to the Company's
preferred securities of $10.8 million or $(0.28) per share for the third
quarter of 1999, compared to a net loss of $7.6 million or $(0.28) per share
for the same period of the previous year.
Internet Solutions
The Internet solutions and e-commerce development arm of Rare Medium Group
Inc., reported that the bulk of the sequential quarterly revenue increase of
120% was generated from offices that have been in operation since last year.
Proforma revenue, including full quarter revenue from acquisitions and revenue
from services provided to consolidated subsidiaries, reached $12.3 million
during the third quarter.
"The rapid revenue growth achieved in the third quarter, especially the
organic growth, which was supported with the addition of 130 new colleagues
and very low annualized turnover of 6%, demonstrates the merits and acceptance
of Rare Medium's dynamic and innovative offering in an explosive growth
industry," commented Glenn S. Meyers, Rare Medium Group Inc.'s Chairman,
President and CEO. "The combination of our Internet development, venture
capital, and incubator company investments should produce unique and effective
results for our clients, employees and shareholders. As we continue to grow
our market and product offering, we expect to realize superior operating
ratios."
Selected comparative operational metrics:
3Q99 2Q99
Billable Headcount 327 197
Billing Rate $200 $160
Annual Revenue per Billable Prof. (000's) $188 $168
Utilization 70% 75%
Gross Margin 51% 54%
Annual Voluntary Turnover 6% 4%
The small reduction in utilization and gross margin reflects the
66 percent ramp-up of billable professionals during the quarter.
During the third quarter, the top ten major contract wins averaged
$1.4 million compared to $1.0 million for the previous quarter. New clients
include Intel, Ritz Carlton, Forbes, Lehman Brothers, Paine Webber,
Wishclick.com, Macromedia and ZDTV.
Venture Investment
Rare Medium Group establishes strategic equity positions in dynamic,
growing Internet companies whose vision and new business models can inspire
positive change in the way people use the Internet today. The Venture
investment focus is on Business-to-Business E-commerce, enabling tools,
broadband, and next generation communications. The Company launched two new
incubator companies and made venture investments in seven companies during the
third quarter.
The Company staffs and operates its incubator businesses with the
objective of building, leading companies within chosen segments of the
Internet industry, for either private or public offering. The Company
currently holds equity positions in the following concerns:
Effective
Company Description % Ownership*
Changemusic.com A digital music company providing 96%
(Incubator business) music news, information and content.
(Over 3 million user sessions per month)
iFace.com
(Incubator business) Voice-enabling the Internet with 80%
computer telephony solutions
LiveUniverse.com
(Incubator business) Resource for building, hosting, 100%
and developing web-based communities
(Over 1 million user sessions per month
and 500,000 registered users)
Regards.com
(Incubator business) Electronic greeting cards 90%
(Over 3 million user sessions per month)
AtomicPop.com All-digital record label and pop 33%
music lifestyle portal
Edmunds.com Automotive editorial and pricing content 4%
L90.com** Solutions for advertising, sponsorship, 6%
and brand development
iParty.com Resource for party planning, supplies 2%
and related services
SmartOnline.com Business information for small 1%
businesses and entrepreneurs
StreamSearch.com Directory and database of 21%
streaming media content
Speakout.com Online forum for exchange of ideas 7%
and information among the public,
the media and government officials
MoneyHunt.com Provides advice to America's leading 16%
entrepreneurs
goShip.com Expanding delivery options for 5%
e-commerce sites
Compacc.com Direct marketer of motorcycles, 25%
parts and accessories
* Includes issued options and warrants.
** L90.com has recently filed with the SEC to conduct an initial public
offering.
"Our venture investments provide opportunities to participate in cutting-
edge Internet developments", added Glenn S. Meyers. "We further support these
ventures by providing them the strategic, creative and technical expertise of
our award winning Internet solutions company." On several of these ventures,
Rare Medium Group co-invests with firms such as Robertson Stephens & Co.,
Compaq, General Electric, Omnicom, Brentwood Ventures, Schroeders, Zone
Ventures, Sun America, and Constellation Partners.
The company has scheduled a conference call with the investment community
for 5 p.m. (EST.) today, November 2, 1999:
Telephone Number: 800-280-2151
Reservation Number: 13452718
A replay of the conference call will be available after 7 p.m. for
24 hours through Frontier Confertech by dialing 1-800-633-8284 and entering
the reservation number 13452718, and through Vcall on the internet at
www.vcall.com.
About Rare Medium Group Inc.
Rare Medium Group Inc., through its wholly owned subsidiary, Rare Medium
Inc., provides Internet solutions and E-commerce strategies that improve
business processes and develop branding strategies, marketing communications
and interactive content. Customers include large and medium-sized companies
in the financial, automotive, consumer service, retail, technology,
entertainment and consumer goods industries. Rare Medium Group Inc. seeks to
incubate paradigm-shifting ideas and build the next wave of blockbuster
Internet companies by investing capital and leveraging its Internet
development and solutions expertise. Rare Medium Group Inc., headquartered in
New York City with 12 additional offices throughout the United States, Canada,
and abroad, employs approximately 400 Internet professionals. More
information about Rare Medium Group Inc. and companies currently in
development is available at www.raremediumgroup.com and for Rare Medium Inc.
at www.raremedium.com.
Except for historical matters contained herein, the matters discussed in
this press release are forward-looking and are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that these forward-looking statements reflect numerous
assumptions and involve risks uncertainties that may affect Rare Medium Group
Inc., and its subsidiaries' business and prospects and cause actual results to
differ materially from these forward-looking statements. Among the factors
that could cause actual results to differ are Rare Medium's limited operating
history; competition; low barriers to entry; reliance on strategic
relationships; rapid technological changes; inability to complete transactions
on favorable terms and those risks discussed in the company's filings with the
SEC.
RARE MEDIUM GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
1999 1998 1999 1998
Revenues $11,336,636 $1,522,839 $19,080,519 $2,537,929
Expenses:
Compensation expense 9,944,680 2,129,760 18,625,508 3,554,328
Sales and marketing
expense 660,095 84,977 1,315,271 126,968
General and
administrative
expense 5,565,179 769,768 9,999,430 2,249,697
Total expenses 16,169,954 2,984,505 29,940,209 5,930,993
Loss before depreciation,
amortization, interest
and discontinued
operations (4,833,318) (1,461,666)(10,859,690) (3,393,064)
Depreciation and
amortization 6,807,273 4,165,861 16,971,398 8,414,642
Loss before interest
and discontinued
operations (11,640,591) (5,627,527)(27,831,088) (11,807,706)
Interest income/
(expense), net 795,615 (438,575)
(1,407,019) (839,456)
Net (loss) / gain from
discontinued operations --- (1,525,342) --- 19,955,058
Net loss (10,844,976) (7,591,444)(29,238,107) 7,307,896
Deemed dividend attributable
to issuance of convertible
preferred stock --- --- (29,879,155) ---
Cumulative dividends and
accretion of convertible
preferred stock to
liquidation value (3,470,733) --- (4,662,730) ---
Net income (loss)
attributable to
common stockholders $(14,315,709) $(7,591,444)(63,779,992) 7,307,896
Earnings (loss) per share:
Continuing operations $(0.28) $(0.23) $(0.83) $(0.48)
Discontinued operations $--- $(0.05) $--- $0.76
Non-cash dividends and
accretion of convertible
preferred stock $(0.09) $--- $(0.98) $---
Net (loss)/income
per share $(0.37) $(0.28) $(1.81) $0.28
Weighted average common
shares outstanding 38,723,657 26,731,817 35,320,850 26,128,504
RARE MEDIUM GROUP, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
September 30, December 31,
1999 1998
ASSETS
Current assets:
Cash and cash equivalents $59,373,542 $917,978
Accounts receivable, net 7,296,630 1,184,182
Work in process 3,125,002 251,718
Prepaid expenses and other current assets 2,621,532 443,526
Total current assets 72,416,706 2,797,404
Property, plant and equipment, net 7,839,516 1,918,273
Investments in affiliates 14,550,901 ---
Intangibles, net 57,720,459 39,899,170
Other assets 1,197,912 128,275
Total assets $153,725,494 $44,743,122
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $5,115,569 $1,634,889
Accrued liabilities 4,086,135 1,912,364
Deferred revenue 605,730 308,898
Current portion of notes payable 3,844,444 129,525
Total current liabilities 13,651,878 3,985,676
Notes payable - related parties 2,990,285 10,591,526
Other noncurrent liabilities 183,658 344,210
Total liabilities 16,825,821 14,921,412
Series A convertible preferred Stock,
.01 par value 34,553,354 ---
Stockholders' equity:
Common stock, $.01 par value, authorized
200,000,000 shares, issued 40,359,067
shares at September 30, 1999 and
30,696,828 shares at December 31, 1998 407,588 306,968
Additional paid-in capital 216,261,555 84,720,304
Note receivable from shareholder (230,467) (230,467)
Accumulated deficit (113,920,927) (54,803,665)
Treasury stock, at cost, 66,227 shares (171,430) (171,430)
Total stockholders' equity 102,346,319 29,821,710
Total liabilities and stockholders' equity $153,725,494 $44,743,122
SOURCE Rare Medium Group, Inc.
CO: Rare Medium Group, Inc.
ST: New York
IN: CPR MLM
SU: ERN
11/02/1999 16:44 EST prnewswire.com |
