[0] musicmaker.com Announces Quarterly Results For The Quarter-ended June 30, 2000.Business Editors RESTON Reston, uninc. city (1990 pop. 48,556), Fairfax co., N Va., a planned community established in 1961. A suburb of Washington, D.C., Reston is organized in a series of residential villages and commercial areas. , Va.--(BUSINESS WIRE)--July 25, 2000 musicmaker.com (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on NMS See NetWare Management System. : HITS) a leader in custom music CDs on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the and a leading provider of digital downloadable music, today announced financial results for the second quarter ended June 30, 2000. Total net revenues for the second quarter of 2000 were $1,219,000. This consisted of revenues for the Direct to Consumer business segment of $1,121,000 and $98,000 for the Special Market / Premium business segment. The Direct to Consumer business segment in the second quarter represents over a 40% increase in sales over the previous quarter sales of $777,000. The number of CDs shipped increased over 66.0%, from 63,000 in the first quarter of 2000 to over 105,000 in the second quarter of 2000. For the second quarter of 2000, the Special Market / Premium business segment accounted for $98,000 in revenue compared to the first quarter of 2000, where sales from promotion that involved Pizza Hut and CDNow accounted for more than $1,935,000 in revenue. Additionally in the first quarter, musicmaker.com completed a Digital Download  The perspective and/or examples in this article do not represent a world-wide view. Please [ edit] this page to improve its geographical balance. conversion
deal with Microsoft in which Microsoft paid musicmaker.com $250,000 to
digitize To convert an image or signal into digital code by scanning, tracing on a graphics tablet or using an analog to digital conversion device. 3D objects can be digitized by a device with a mechanical arm that is moved onto all the corners. musicmaker.com's songs in its library into the Microsoft
Audio Format.The net loss before depreciation and amortization and other non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. was $8,244,000, for the second quarter of 2000 compared to $6,102,000 for the first quarter of 2000. Net of a $1,472,000 one time charge associated with the canceling of a marketing agreement, the net loss before depreciation and amortization and other non-cash charges increased 11% from the first quarter of 2000 to second quarter of 2000. The net loss applicable to common stockholders was $14,649,000 or $(0.44) per share, $11,071,000 or $(0.34) per share and $3,634,000 or $(0.34) per share, for the second quarter 2000, the first quarter 2000, and the second quarter 1999, respectively. The net loss applicable to common stockholders includes NON-CASH charges related to the amortization of license fees of $5,527,000 and loss on investments of $1,200,000 for the second quarter of 2000. The net loss applicable to common stockholders includes NON-CASH charges related to the amortization of license fees and accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the for preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. warrants of $5,522,000 and $1,562,000 for the first quarter 2000, and the second quarter 1999, respectively. Cash and cash equivalents and trade accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying at June 30, 2000 were $37,247,000 compared to $48,826,000 at March 31, 2000. The net cash used during the second quarter of 2000 consisted primarily of cash outlays Outlays Payments on obligations in the form of cash, checks, the issuance of bonds or notes, or the maturing of interest coupons. for music acquisitions, sponsorship of the recent Jimmy Page and Black Crowes/Who Tour and equipment purchases. Additionally, net cash was used for marketing and advertising activities of approximately $1,834,000 and normal operating activities for the quarter ended June 30, 2000 of approximately $5,817,000.. In July 2000, musicmaker.com initiated the first leg of its Direct-to-Consumer multi-tiered national print and direct response marketing program planned for the second half of the year 2000. On July 24, 2000, musicmaker.com announced the launch of its new musicmaker.com web site including editorial content by the music industry's foremost journalists and dynamic new search-by-genre design. "This is the time that all of us have been waiting for" said Raju Puthukarai, musicmaker.com's Chief Executive Officer and President. "With the launch of our new web site, the first flight of our print campaign out in the market in over 30 million copies of leading upscale magazines, and our increased focus on getting value for each dollar spent, we expect to see continued improvements in our core Direct to Consumer business segment for custom CDs and digital downloading of music on the Internet" About musicmaker.com Musicmaker.com, with offices in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. and Reston, Virginia Reston is an internationally known planned community whose goal was to revolutionize post-World War II concepts of land use and residential/corporate development in American suburbia. , is a leading custom compilation Compiling a program. See compiler. and secure music download A music download refers to the transferring of a music file from an Internet-facing computer or website to a user's local computer. This term encompasses both legal downloads and downloads of copyright material without permission or payment if required. retailer on the Internet. Musicmaker.com offers music lovers the opportunity to build their own CDs by selecting and organizing songs from a library of tracks from over 165 labels, including EMI (ElectroMagnetic Interference) An electrical disturbance in a system due to natural phenomena, low-frequency waves from electromechanical devices or high-frequency waves (RFI) from chips and other electronic devices. Allowable limits are governed by the FCC. Recorded Music recorded music n → música grabada and Zomba Music Group. The musicmaker.com site also offers over 60,000 songs for download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. in MP3 and Microsoft Windows See Windows. (operating system) Microsoft Windows - Microsoft's proprietary window system and user interface software released in 1985 to run on top of MS-DOS. Widely criticised for being too slow (hence "Windoze", "Microsloth Windows") on the machines available then. Media formats. Musicmaker.com's base business activities included marquee bands like Jimmy Page and The Black Crowes BLACK CROW Lockheed Spurious Emission Detector , the Beastie Boys Beastie Boys is a hip hop musical group from New York City consisting of Michael "Mike D" Diamond, Adam "MCA" Yauch, Adam "Ad-Rock" Horovitz and the official DJ for the group Michael "Mix Master Mike" Schwartz. and The Who. In addition to the Custom CDs musicmaker.com produced, they released the single "What Is and What Should Never Be" from their Internet-only release of Jimmy Page and The Black Crowes Live at the Greek. The track entered the top 10 in Radio & Records rock chart, an industry monitor for radio success, in just four weeks. In addition, FMQB's Mainstream Rock Chart listed the single at #6 and it rose from #21 to #15 on Billboard's Rock Track Chart with the "Airpower air·pow·er or air power n. 1. The organized, integrated use of aircraft and missiles for purposes of foreign policy, strategy, operations, and tactics. 2. The tactical and strategic strength of a country's air force. " distinction, as well as rising from #18 to #14 with a bullet in Album Network. This makes musicmaker.com not only a leader in the e-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. music revolution but also one of the online music e-tailer to generate a hit single on radio. Certain of Musicmaker's statements are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , including its statements concerning its planned marketing campaign and its statement that it expects to see continued improvements in its core Direct to Consumer business segment for custom CDs and digital downloading of music on the Internet. There are a number of uncertainties, risks and other factors, which may cause the actual results, performance, or achievements expressed or implied by such forward-looking statements to materially differ. Factors that could cause actual events or results to differ materially include, among others, musicmaker.com's ability to predict trends and preferences in the changing music industry, the amount and effectiveness of marketing and strategic relationships, musicmaker.com's ability to obtain music rights and to obtain such rights to music that is in demand by music consumers, particularly that class of music consumers who use the internet, the Internet, the, international computer network linking together thousands of individual networks at military and government agencies, educational institutions, nonprofit organizations, industrial and financial corporations of all sizes, and commercial enterprises fact that our competitors, current and future, including some of the record labels themselves, may launch competing internet services, the ability of our equipment, facilities and staff in the future to produce CDs in a timely, cost effective fashion, as well as the risks set forth in the Company's Registration Statement filed on Form S-1 dated as of July 7, 1999 as filed with the Securities and Exchange Commission ("Filings") and risk factors listed from time to time in subsequent Filings.
musicmaker.com, Inc
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three months ended Six months ended
June 30, June 30,
2000 1999 2000 1999
Net sales $ 1,219,209 $ 47,671 $ 4,305,289 $ 67,831
Cost of sales -
product 446,164 11,838 1,728,842 16,302
Cost of sales -
content 1,127,467 155,029 2,104,666 613,848
Gross profit (354,422) (119,196) 471,781 (562,319)
Operating expenses:
Sales and marketing 5,293,544 875,679 8,854,923 1,135,529
Operating and
development 563,930 398,384 1,305,153 651,639
General and
administrative 2,031,927 591,628 4,657,678 1,258,489
Amortization 5,836,645 1,581,259 11,528,171 1,739,028
Loss on investment 1,200,000 -- 1,200,000 --
14,926,046 3,446,950 27,545,925 4,784,685
Loss from operations (15,280,468) (3,566,146) (27,074,144) (5,347,004)
Other income
(expense):
Interest income 631,628 11,385 1,354,028 27,924
Interest expense (51) (38,514) (234) (78,920)
631,577 (27,129) 1,353,794 (50,996)
Net loss (14,648,891) (3,593,275) (25,720,350) (5,398,000)
Accretion for Series A
Preferred stock warrants -- (41,106) -- (82,212)
Net loss available to
common
Stockholders $(14,648,891) $ (3,634,381) $(25,720,350) $ (5,480,212)
Basic and diluted,
net loss per
Common share $ (0.44) $ (0.34) $ (0.78) $ (0.63)
Weighted average
shares Outstanding 33,140,421 10,605,305 33,093,705 8,695,412
musicmaker.com, Inc
BALANCE SHEETS
June 30, December 31,
2000 1999
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 35,694,199 $ 58,290,808
Accounts receivable 1,553,185 528,958
Prepaid expenses and
other current assets 5,978,331 1,459,923
Total current assets 43,225,715 60,279,689
Property and equipment, net 5,165,730 2,447,728
Investments -- 750,000
Intangibles, net 87,657,134 98,363,455
Related party account receivable 84,780 81,519
Other assets 4,306,059 3,477,829
Total assets $140,439,418 $165,400,220
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 841,027 $ 1,706,778
Accrued expenses 1,575,263 2,109,385
Deferred revenues 1,910,031 125,000
Current portion of
long-term obligations 42,857 42,857
Other current
liabilities 65,727 --
Total current
liabilities 4,434,905 3,984,020
Long-term obligations 128,572 171,429
Other liabilities 64,812 --
Stockholders' equity:
Common stock, $0.01
par value, 100,000,000
shares authorized;
33,140,421 and
32,993,503 shares
issued and
outstanding 331,403 329,934
Additional paid-in
capital 194,231,167 193,945,928
Warrants 779,059 779,059
Accumulated deficit (59,530,500) (33,810,150)
Total stockholders'
equity 135,811,129 161,244,771
Total liabilities and
stockholders' equity $ 140,439,418 $ 165,400,220
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