LONDON and NEW YORK, Oct. 16 /PRNewswire-FirstCall/ --
Narrowstep(TM) Inc (OTC:NRWS) (BULLETIN BOARD: NRWS) , the TV on
the Internet Company, announced its financial results for the
second quarter of fiscal 2007 ended August 31, 2006. Revenues
increased 118 percent to $1,568,367, from $717,985 for the
comparable period of fiscal 2006. For the six months ended August
31, 2006, revenue increased 144 percent to $2,712,890, from
$1,110,236 for the six months ended August 31, 2005. Sequential
revenues increased 50 percent in the second quarter from the
$1,144,523 reported in the first quarter of fiscal 2007. Results
for the second quarter were driven primarily by a 308 percent
increase in narrowcasting and related activities to $1,041,980,
compared with $255,304 in the second quarter of fiscal 2006.
Revenues for the three and six months ended August 31, 2006, do not
include any contribution from the Company's previously announced
agreement with Terra Networks, which will be recognized in the
third quarter. Gross profit for the second quarter increased 322
percent to $949,461, compared to $225,220 for the same period last
year. The gross profit margin for the quarter was 61 percent, an
increase of nearly 100 percent, compared to 31 percent for the
second quarter of fiscal 2006. The increase in gross margins
reflected the higher margins of the fast-growing narrowcasting
segment of the Company's business. For the six months ended August
31, 2006, gross profit increased 610 percent to $1,716,450, versus
$241,619 for the same period last year. The gross profit margin for
the six months ended August 31, 2006, was 63 percent, an increase
of 186 percent, compared to 22 percent for the six months ended
August 31, 2005. Net loss for the second quarter of fiscal 2007 was
$1,285,587, or $0.03 per share, versus a net loss of $741,243, or
$0.02 per share, for the quarter ended August 31, 2006; while the
net loss for the first six months of fiscal 2007 was $2,455,392, or
$0.05 per share, compared to $1,977,312, or $0.06 per share, for
the same period last year. Commenting on today's announcement,
Steve Beaumont, Narrowstep President and CEO said, "Revenues from
our narrowcasting and related activities, which represent recurring
revenue streams, have increased dramatically compared to our
results from the prior year. We believe that narrowcasting revenues
will continue to increase, primarily driven by the addition of new
customers and the resulting increase in licensing, bandwidth usage
and storage fees. The increase in narrowcasting revenues, which
have significantly higher margins, drove our strong increase in
gross profits and gross profit margin for the quarter, which we
believe demonstrates the scalability of our business model." "The
Company is showing strong growth in key markets," continued
Beaumont. "The US, Central and South America show continuing
opportunity for channel development and sales. As I've emphasized
previously, we continue to view the United States market as
essential and are committed to increasing US-based sales. So I'm
pleased to say that for the three months ended August 31, 2006,
sales in the US increased 104 percent over the same period last
year. We also continue to reinvest in the Company, having hired
additional sales and marketing staff in the US, and in the UK." The
Company garnered a significant number of new customers during the
quarter, including ROMEreports TV, the Country Channel,
MACExperience, HorseTV Access, Terra Networks, MSN UK and JWTwo,
the entertainment division of JWT, the United States' largest
advertising agency. Results Conference Call At 11:00 AM EDT today
(4:00 PM BST and 8:00 AM PDT) management will host its quarterly
conference call to discuss its financial results. This call will be
broadcast live over the Internet. Those interested in listening to
the live webcast may do so by going to the Company's website at
http://www.narrowstep.com/ or http://www.vcall.com/. Web
participants are encouraged to go to either website at least 15
minutes prior to the start of the call to register, download, and
install any necessary audio software. The online archive will be
available shortly after the conclusion of the call and continue for
seven days. About Narrowstep(TM) Inc Narrowstep(TM) Inc (OTC:NRWS)
(BULLETIN BOARD: NRWS) , the TV on the Internet Company, is a
leading global provider of broadband television services.
Narrowstep's proprietary technologies and customer-focused services
enable TV channels to be delivered over the Internet. 90+ companies
worldwide have chosen Narrowstep because it offers the most
television-like and true community building broadband experience.
The Company's telvOS(TM) (Television Operating System(TM)) and
nBed(TM) technologies enable the most comprehensive delivery of
video to mobile, wireless, Internet, broadband, video-over-IP and
entirely new IP-delivered broadcast services. For more information,
go to http://www.narrowstep.com/ or call 212-404-1400.
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: Jesse Deal (investors) Allen & Caron Tel: + 1
212 691 8087 Email: NARROWSTEP INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEETS August 31, February 28, 2006 2006 $ $
Assets (Unaudited) Current assets: Cash and cash equivalents
1,183,482 2,232,854 Short-term investments 2,557,609 2,500,000
Accounts receivable, net of allowance for doubtful accounts of
$255,619 on August 31, 2006 and $201,715 at February 28, 2006
1,334,984 418,394 Prepaid expenses and other current assets 209,247
135,542 Total current assets 5,285,322 5,286,790 Property and
equipment, net 854,729 289,148 Software development costs, net
169,054 146,166 Goodwill 1,157,581 1,157,581 Intangible assets, net
92,015 113,173 Total Assets 7,558,701 6,992,858 Liabilities and
Stockholders' Equity Liabilities Current liabilities: Unearned
revenue 391,085 176,628 Accounts payable 868,702 504,919 Net
obligations under capital leases, current 73,814 58,113 Accrued
expenses and other current liabilities 523,629 424,104 Total
current liabilities 1,857,230 1,163,764 Net obligations under
capital leases - long-term 128,634 43,997 Total Liabilities
1,985,864 1,207,761 Stockholders' Equity Common stock, $0.000001
par value 450,000,000 shares authorized with 45,248,974 (unaudited)
issued at August 31, 2006 and 45,136,474 issued at February 28,
2006 45 45 Additional paid-in capital 16,470,026 16,443,374 Stock
compensation 4,031,494 3,267,997 Stock subscription receivable
(1,410,000) Accumulated deficit (14,949,451) (12,494,059)
Accumulated other comprehensive income (loss) 20,723 (22,260) Total
stockholders' equity 5,572,837 5,785,097 Total Liabilities and
Stockholders' Equity 7,558,701 6,992,858 NARROWSTEP INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) Three months ended Six months ended August 31, August
31, 2006 2005 2006 2005 $ $ $ $ Operating Revenue Narrowcasting and
other 1,041,980 255,304 1,878,493 483,765 Production services
526,387 462,681 834,397 626,471 Total revenue 1,568,367 717,985
2,712,890 1,110,236 Costs of Revenue: Direct costs 585,294 460,317
930,591 803,887 Software amortization 33,612 32,448 65,849 64,730
Total costs of revenue 618,906 492,765 996,440 868,617 Gross Profit
949,461 225,220 1,716,450 241,619 Operating Expenses: Selling,
general and administrative 2,277,959 967,042 4,258,263 2,196,391
Total operating expenses 2,277,959 967,042 4,258,263 2,196,391
Operating Loss (1,328,498) (741,822) (2,541,813) (1,954,772) Other
income (expense) 41,166 71 85,265 350 Currency exchange income
(loss) 1,745 508 1,156 (22,890) Net Loss (1,285,587) (741,243)
(2,455,392) (1,977,312) Net Loss per Common Share - Basic and
Diluted (0.03) (0.02) (0.05) (0.06) Weighted-average Number of
Shares Outstanding, Basic and Diluted 45,248,974 31,809,656
45,192,724 30,878,929 DATASOURCE: Narrowstep Inc CONTACT:
Investors, Jesse Deal of Allen & Caron, +1-212-691-8087, , for
Narrowstep Inc Web site: http://www.vcall.com/ Web site:
http://www.narrowstep.com/
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