Annual Revenues Increase 97 Percent Over Fiscal 2005; Quarterly Revenues Grow 431 Percent From Fourth Quarter of Fiscal 2005 LONDON and NEW YORK, April 26 /PRNewswire-FirstCall/ -- Narrowstep(TM) Inc (OTC:NRWS) (BULLETIN BOARD: NRWS) , the TV on the Internet Company, today announced record results for its fiscal fourth quarter and year ended February 28, 2006. Annual revenue increased 97 percent year-over-year, to a record $2.71 million, compared to $1.38 million in fiscal 2005, while fourth quarter revenue increased 431 percent, to $820,000, from $190,000 for the fourth quarter of fiscal 2005. Annual revenue included $1.5 million from narrowcasting and related activities, compared with $520,000 for fiscal 2005, an increase of 288 percent. Revenue for fiscal 2006 also included a one-time payment of approximately $160,000. The Company's gross profit was $1.65 million for fiscal 2006, an increase of 184 percent, from $581,000 for fiscal 2005. Steve Beaumont, Narrowstep CEO, said, "With our recent cash infusion and improving financial results, we believe Narrowstep is capable of achieving the recognition and critical mass that will lead to the widespread adoption of what we expect will emerge as the standard in television transmission using Internet protocol -- our Television Operating System(TM) (telvOS(TM)). "Content providers of every sort are pushing hard to find and deploy the most dynamic and scalable software to deliver programming via niche channels to highly targeted audiences. We believe that our proprietary technology is the only viable and field-tested end-to-end solution for distributing 'real' and searchable TV programming on the Internet, rather than what most perceive to be television over IP -- streaming on-demand video. Further, telvOS can deliver these channels not only to desktops, but to any portable Windows Media-enabled device, such as mobile phones or PDAs." For the fourth quarter of fiscal 2006, the Company reported a net loss of $920,000, or $0.03 per share, compared to a loss of $1.9 million, or $0.07 per share, for the fourth quarter of fiscal 2005. For all of fiscal 2006, the Company reported a net loss of $4.29 million, or $0.13 per share, versus a net loss of $4.61 million, or $0.16 per share, for fiscal 2005. Beaumont continued, "We are already working with a variety of TV-related media and producers throughout Europe, and so our next horizon is the United States: the biggest media market in the world. We now host more than 80 content channels and believe we will host many times that number soon, which we expect to help us deliver impressive results in the US this year that will match our fast growth in the UK and Europe. Narrowstep enables cable companies, traditional broadcasters, ISPs, publishers, and other content providers, and even major industrials, to deliver programming through Internet channels using TV over IP. The Company counts among its customers a variety of organizations, such as Land Rover, ITV, Telewest, the cities of London and Glasgow, Sail TV, the International Paralympic Committee, Cyprus ITV Ltd, MotorSport Television and BlueYonder TV. Beaumont also said, "We believe the overall mobile device market will only continue to rise, as will the popularity of video-playout on those devices. As the market continues to move forward, so too will Narrowstep, taking advantage of as many opportunities as possible to tell our story across industries." Representatives from Narrowstep were at the recent National Cable & Telecommunications Association trade show in Atlanta, as well as the New York Auto Show, where Land Rover launched its telvOS-based Internet television channel, the first to be launched by an automobile manufacturer. The Company is currently at the National Association of Broadcasters trade show in Las Vegas. About Narrowstep(TM) Inc Narrowstep(TM) Inc (OTC:NRWS) (BULLETIN BOARD: NRWS) is a leading provider of Internet-based video content delivery (TV on IP). Narrowstep's product and service offerings enable customers to distribute channels of video-based content and provide related services over the Internet. The Narrowstep system, TelVOS(TM), enables comprehensive delivery of video content and television-like programming to mobile, wireless, Internet, broadband and broadcast services to clients throughout the world. The Narrowstep system enables owners and users of video content to reach audiences by "narrowcasting" -- targeting delivery of specific content to interested groups. To learn more, visit http://www.narrowstep.com/. Forward-looking Statement Certain statements in this news release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known or unknown risks, including those detailed in the Company's filings with the Securities and Exchange Commission, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. For further information please contact: Steve Crowther, CFO Narrowstep(TM) Inc Tel: + 1 609 951 2221 Email: or Jesse Deal (investors) Allen & Caron Tel: + 1 212 691 8087 Email: NARROWSTEP INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Unaudited) February 28, 2006 $ ASSETS Current assets: Cash and cash equivalents 2,232,854 Short-term investments 2,500,000 Accounts receivable, net of allowance for doubtful accounts of $201,715 418,394 Prepaid expenses and other current assets 135,542 Total current assets 5,286,790 Property and equipment, net of accumulated depreciation 289,148 Software development costs, net of accumulated amortization 146,166 Goodwill 1,157,581 Intangible assets, net of accumulated amortization 113,173 Total assets 6,992,858 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Current liabilities: Accounts payable 504,919 Net obligations under capital leases, current 58,113 Accrued expenses and other liabilities 600,732 Total current liabilities 1,163,764 Net obligations under capital leases - long-term 43,997 Total liabilities 1,207,761 COMMITMENTS STOCKHOLDERS' EQUITY: Common stock, $0.000001 par value, 450,000,000 shares authorized, 45,136,474 issued and outstanding 45 Additional paid-in capital 16,443,374 Deferred stock compensation 3,267,997 Stock subscription receivable (1,410,000) Accumulated deficit (12,494,059) Accumulated other comprehensive loss (22,260) Total stockholders' equity 5,785,097 Total liabilities and stockholders' equity 6,992,858 NARROWSTEP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Year ended Year ended February 28, 2006 February 28, 2005 $ $ Revenue: Narrowcasting and other (including related party transactions of $0 for the year ended February 28, 2006, and $262,373 for the year ended February 28, 2005) 1,499,633 517,061 Production services 1,206,629 858,552 Total revenue 2,706,262 1,375,613 Cost of revenue: Direct costs 925,911 697,925 Software amortization 129,850 96,758 Total costs of revenue 1,055,761 794,683 Gross profit 1,650,501 580,930 Operating expenses: Selling, general and administrative (including non-cash stock compensation expense of $1,344,915 for the year ended February 28, 2006 and $786,616 for the year ended February 28, 2005) 5,936,659 5,177,277 Total operating expenses 5,936,659 5,177,277 Loss from operations (4,286,158) (4,596,347) Other income 2,530 1,798 Currency exchange losses (6,149) (10,507) Net loss (4,289,777) (4,605,056) Net loss per common share - basic and diluted $(0.13) $(0.16) Weighted-average number of outstanding, basic and diluted shares 32,190,594 28,124,781 DATASOURCE: Narrowstep Inc CONTACT: Steve Crowther, CFO of Narrowstep Inc, +1-609-951-2221, ; or Investors, Jesse Deal of Allen & Caron, +1-212-691-8087, , for Narrowstep Inc Web site: http://www.narrowstep.com/

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