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RMG Networks Reports Fourth Quarter and Year End 2014 Results

Reports Fourth Quarter Adjusted Revenue(1) Growth of 32% With Stable Adjusted Gross Margins and Improved Adjusted EBITDA Compared to Prior Quarter

DALLAS, TX -- (Marketwired) -- 03/31/15 -- RMG Networks Holding Corporation (NASDAQ: RMGN)

Fourth Quarter Highlights

  • Total adjusted revenue(1) of $18.6 million increased 32% from the third quarter 2014
  • Adjusted EBITDA loss(1) of $1.3 million represented a $0.9 million improvement from the third quarter 2014
  • Brought to market the first product of 'Six New Products in Six Months' initiative
  • Subsequent to year-end and as previously disclosed, issued $25 million in convertible preferred stock; offering was comprised of $15 million to convert entire senior debt facility and $10 million of new gross cash proceeds
  • Subsequent to year-end and as previously disclosed, entered into a non-binding letter of intent to sell Airline Media Networks business

RMG Networks Holding Corporation (NASDAQ: RMGN), or RMG Networks, a leading provider of technology-driven visual communications solutions, today announced its financial results for the fourth quarter and full year ended December 31, 2014.

RMG Networks helps brands and organizations communicate more effectively using location-based video networks. The company builds enterprise video networks that empower organizations to visualize critical data to better run their business. The company also connects brands with target audiences using video advertising networks.

Robert Michelson, Chief Executive Officer, commented, "We executed well in the fourth quarter and are encouraged by our progress, as adjusted revenues grew significantly and adjusted EBITDA improved compared to the prior quarter. During the fourth quarter, we advanced a number of focused initiatives to drive new product innovation, strengthen our sales organization and enhance operational efficiency, while redirecting investments to areas of our business where we have a highly differentiated offering driving competitive advantage."

"In December, we began executing on an aggressive six month innovation plan to introduce one new solution a month into the market, in order to strengthen our portfolio of products," Mr. Michelson continued. "Our efforts remain on track and our sales pipeline(2) is stronger today than it was one year ago as a result. We have also made strides with our sales organization to streamline and align sales goals across the organization."

"The recently completed financing transaction and the announcement of the proposed sale of our Airline Media Network business are two additional important steps that significantly strengthen our balance sheet, enabling us to continue funding our growth initiatives. The sale of the Airline Media network will allow us to focus our attention on our Enterprise business. In addition, we believe the capital we just raised, along with the other strategic and operational initiatives we are pursuing, will allow us to achieve our ultimate goal of sustainable profitability."

Mr. Michelson further added, "While it will still take some time for the effect of these organizational changes to impact our financial results, we are encouraged to be adding larger, more substantial deals to our pipeline(2) from existing customers as well as a number of potential opportunities tied to new customers. As an organization, we are making progress to rejuvenate growth and are on a path to achieve our ultimate goal of long-term sustainable profitability."

Fourth Quarter Financial Review

RMG Networks completed the business combinations of Reach Media Group Holdings, Inc. and Symon Holdings Corporation, or Symon, on April 8 and April 19, 2013, respectively. Symon was determined to be the Predecessor Company for accounting purposes and accordingly Symon's historical financials are included for comparison in RMG Networks' "as-reported" financials. Because Symon recorded results of operations on a January 31 fiscal year and because the results of Reach Media Group Holdings, Inc. are included in Predecessor Company financials only as of the date of combination, full year 2014 results as-reported are not comparable with the Predecessor Company's results for the full year 2013. In addition, "as-reported" results include certain items and the effects of purchase accounting which RMG Networks does not believe reflect the underlying performance of its business. Therefore, for ease of comparison, the following provides adjusted results for the full year 2014 and pro forma combined results for the full year 2013 as if the companies had existed as a combined entity for the relevant periods and adjusting for the items described above.

Adjusted Results(3,4)
Fourth Quarter Revenue. Total adjusted revenues in the fourth quarter of 2014 were $18.6 million, a sequential increase of 32.0% from $14.1 million in the third quarter of 2014.

  • Adjusted Enterprise revenue of $13.1 million increased 24.4% from $10.6 million in the third quarter of 2014, driven by an increase in product sales and professional services delivered. Adjusted gross margin increased to 53.7% from 52.7% in the third quarter of 2014.
  • Media revenue of $5.5 million increased 54.4% from $3.6 million in the third quarter of 2014, primarily due to better sales execution and seasonal advertising trends. Gross margin improved to 23.3% from 21.9% in the third quarter of 2014.

On a year over year basis, total adjusted revenues in the fourth quarter of 2014 represented a decrease of 17.2% from $22.5 million of adjusted revenues in the fourth quarter of 2013.

  • Adjusted Enterprise revenue decreased 18.6% from $16.1 million in the fourth quarter of 2013. Adjusted Enterprise gross margin was 53.7% compared to 50.9% in the fourth quarter of 2013.
  • Media revenue decreased 13.8% from $6.4 million in the fourth quarter of 2013. Media gross margin was 23.3% compared to 36.1% in the fourth quarter of 2013.

Fourth Quarter Adjusted EBITDA(3). Adjusted EBITDA loss was $1.3 million, improving from a loss of $2.2 million in the third quarter of 2014, due primarily to the reasons described above.

On a year over year basis, adjusted EBITDA decreased in the fourth quarter from an adjusted EBITDA loss of $0.5 million in the fourth quarter of 2013, due to the reasons described above.

During the fourth quarter of 2014, the company recorded the following non-recurring, non-cash items:

  • A $1.0 million write-off of obsolete inventory.
  • An additional $1.4 million accrual on a previously recognized loss accrual on a long-term contract, initially recorded in the second quarter of 2014. Based on revised estimates for the performance of the contract over its term, the loss is now expected to be greater than previously estimated.
  • Impairment charges of $20.8 million and $5.9 million related to goodwill and intangible assets, respectively, of the Enterprise Unit. The impairments are a result of a more conservative near-term forecast versus previous forecasts based off the strategies pursued by the company's new leadership. It does not reflect management's view of the long-term value of the company's Enterprise business unit.

Full Year. Total 2014 adjusted revenues(5) were $61.8 million, a decrease of 15.2% from total pro forma combined revenues of $72.9 million in 2013. 2014 adjusted EBITDA loss was $11.6 million compared to a pro forma combined adjusted EBITDA loss of $1.9 million in 2013.

Reported Results
Fourth Quarter. Total reported revenue for the quarter ended December 31, 2014 was $18.4 million compared to total reported revenue of $19.6 million for the same quarter last year.

Operating loss for the quarter ended December 31, 2014 was $32.5 million compared to an operating loss of $6.7 million for the same quarter last year.

Full Year. Total reported revenue for the year ended December 31, 2014 was $57.5 million compared to total revenue for the successor company for the period from April 20, 2013 through December 31, 2013 of $50.3.

Operating loss for the year ended December 31, 2014 was $79.2 million compared to an operating loss for the successor company for the period from April 20, 2013 through December 31, 2013 of $14.6 million.

Non-Binding LOI to Sell the Airline Media Network Business

RMG Networks announced on March 19, 2015, that it has entered into discussions with certain unaffiliated third parties regarding the proposed sale of its Media business, also known as the RMG Airline Media Network. The contemplated sale does not include the RMG Office Media Network.

As a result of these discussions, RMG Networks has signed a non-binding letter of intent to sell its RMG Airline Media Network business for $5.5 million, plus the assumption of certain liabilities to an unaffiliated third party. The parties are in the process of negotiating a definitive agreement.

Issuance of Series A Convertible Preferred Stock

RMG Networks announced on March 25, 2015, the sale of $25 million in Series A Convertible Preferred Stock (the "Preferred Stock") to institutional and accredited investors (the "Financing"). The Financing closed on March 27, 2015. The Financing was comprised of $15 million from the full conversion of the company's existing senior debt facility and approximately $10 million in new capital, prior to the payment of fees and other transaction expenses. With the conversion of its senior credit facility, the company is debt free, with the exception of capital leases.

The Financing included 250,000 shares of Preferred Stock that are mandatorily convertible into 25,000,000 shares of RMG Networks common stock, reflecting an effective transaction price of $1.00 per common share. The Preferred Stock is mandatorily convertible upon an affirmative shareholder vote approving the conversion. The company expects to file a proxy statement with the Securities and Exchange Commission ("SEC") for such purpose in the coming days and has received support agreements committing to vote in favor of approving the conversion from investors representing approximately 45% of common shares outstanding.

The Preferred Stock does not pay dividends unless the company fails to hold a meeting of its stockholders to approve the conversion of the preferred stock within 60 days of closing the Financing (or within 75 days of closing the Financing in the case of SEC review of the proxy statement for such meeting) at which point dividends begin accruing at a rate of 1% per month or portion thereof. The company is required to file a registration statement with the SEC for the common shares underlying the Preferred Stock within 30 days of closing the Financing. The Financing also carries other terms and conditions representative of a transaction of this type, the full description of which can be reviewed in documents attached to the company's filing with the SEC on Form 8-K.

The Preferred Stock was offered and sold in a private placement pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"), and Regulation D promulgated thereunder. The securities sold in the Financing have not been registered under the Securities Act, or state securities laws and may not be offered or sold in the United States absent registration with the SEC or an applicable exemption from such registration requirements.

Roth Capital Partners served as the sole placement agent for the Financing.

Business Outlook

"In the first quarter, we expect typical seasonal patterns to impact our business," continued Mr. Michelson. "However, with our focused sales strategy and innovative new products gaining traction in the market, we are confident our growing pipeline will drive long-term growth, and that in time, we will return to delivering the financial and operational performance our shareholders expect. We have in front of us numerous, specific opportunities to deliver accelerated growth in the second half of 2015 and are committed to executing on them. With many of these initiatives in early stages, the visibility into the exact timing of their impact is still not clear. As such, we believe it would be premature to provide specific, near-term guidance at this time. As we execute on our planned product development and sales enhancement programs, we remain optimistic about our prospects for revenue growth and developing material operating leverage to produce significant adjusted EBITDA over the intermediate- and long-term to become self-sustaining."

Conference Call

Management will host a conference call to discuss these results today, Tuesday, March 31, 2015 at 9 a.m. ET. To access the call, please dial (866) 953-6856 (toll free) or (617) 399-3480 and passcode #81394350. The conference call will also be broadcast live over the Internet with an accompanying slide presentation, which can be accessed via the Investor Relations section of RMG Networks' web site at http://ir.rmgnetworks.com/phoenix.zhtml?c=251935&p=irol-calendar. All participants should call or access the website approximately 10 minutes before the conference begins. The webcast and slide presentation will be available for replay for 90 days.

A telephonic replay of this conference call will also be available by dialing (888) 286-8010 (toll free) or (617) 801-6888 (passcode: 58029439) from 1 p.m. ET on Tuesday, March 31, 2015 until midnight ET on April 7, 2015.

About RMG Networks

RMG Networks (NASDAQ: RMGN) helps brands and organizations communicate more effectively using location-based video networks. The company builds enterprise video networks that empower organizations to visualize critical data to better run their business. The company also connects brands with target audiences using video advertising networks. RMG Networks works with over 70% of the Fortune 100. The company is headquartered in Dallas, Texas, with offices in the United States, United Kingdom, Singapore and the UAE. For more information, visit http://www.rmgnetworks.com.

About Non-GAAP Financial Measures

This release includes certain non-GAAP financial measures as defined under SEC regulations, including Adjusted Revenue, Adjusted Gross Margin and Adjusted EBITDA. In evaluating its business, RMG Networks considers and uses Adjusted Revenue, Adjusted Gross Margin and Adjusted EBITDA as supplemental measures of its operating performance, and believes that many of the company's investors use these non-GAAP measures to monitor the company's performance. These measures should not be considered as a substitute for the most directly comparable GAAP measures and should not be used in isolation, but in conjunction with these GAAP measures. Definitions and reconciliations between non-GAAP measures and relevant GAAP measures are set forth in the tables at the end of this press release.

Cautionary Note Regarding Forward Looking Statements

This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding the proposed sale of the Media business, guidance relating to future financial performance and expected operating results, such as revenue growth, our ability to achieve profitability, our position within the markets that we serve, efforts to grow our business and the impact of litigation.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: the company's ability to raise additional capital on satisfactory terms, or at all; success in retaining or recruiting, or changes required in, its management and other key personnel; the limited liquidity and trading volume of the company's securities; Reach Media Group's ("RMG") history of incurring significant net losses and limited operating history; the competitive environment in the advertising markets in which the company operates; the risk that the anticipated benefits of the combination of RMG or Symon Holdings Corporation, or of other acquisitions that the company may complete, may not be fully realized; the risk that any projections, including earnings, revenues, margins or any other financial items are not realized; changing legislation and regulatory environments; business development activities, including the company's ability to contract with, and retain, customers on attractive terms; the general volatility of the market price of the company's common stock; risks and costs associated with regulation of corporate governance and disclosure standards (including pursuant to Section 404 of the Sarbanes-Oxley Act); and general economic conditions.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

(Financial tables appear below)

                      RMG Networks Holding Corporation
                         Consolidated Balance Sheets

                                                  December 31,  December 31,
                                                      2014          2013
                                                  ------------  ------------
Assets
Current assets:
  Cash and cash equivalents                       $  3,076,708  $  8,235,566
  Accounts receivable, net                          15,748,394    22,731,678
  Inventory, net                                     1,460,876     4,633,213
  Deferred tax assets                                    6,671        63,617
  Other current assets                               1,297,893     2,224,547
                                                  ------------  ------------
Total current assets                                21,590,542    37,888,621
Property and equipment, net                          5,685,797     3,548,985
Intangible assets, net                              11,518,997    38,782,000
Goodwill                                                     -    28,642,398
Loan origination fees                                  743,082       971,726
Other assets                                           250,363       496,879
                                                  ------------  ------------
Total assets                                      $ 39,788,781  $110,330,609
                                                  ============  ============
Liabilities and Stockholders' equity (deficit)
Current liabilities:
  Accounts payable                                $  4,697,464  $  6,606,200
  Revenue share liabilities                          3,861,967     3,998,794
  Accrued liabilities                                4,306,255     4,510,848
  Loss on long-term contract                         2,648,644             -
  Deferred revenue                                   9,358,510    10,074,420
                                                  ------------  ------------
Total current liabilities                           24,872,841    25,190,262
Notes payable - non current                         14,000,000     8,000,000
Warrant liability                                    1,447,308     4,573,123
Deferred revenue - non current                       1,478,041       990,989
Deferred tax liabilities                                     -     6,430,853
Loss on long-term contract - non-current             1,035,804             -
Capital leases and other                               843,030       392,558
                                                  ------------  ------------
Total liabilities                                   43,677,024    45,577,785
                                                  ------------  ------------
Commitment and Contingencies
Stockholders' equity (deficit):
  Common stock, $.0001 par value, (250,000,000
   shares authorized; 12,467,756 and 11,920,583
   shares issued, 12,167,756 and 11,920,583
   shares outstanding, at December 31, 2014 and
   December 31, 2013, respectively.)                     1,247         1,192
  Additional paid-in capital                        82,089,504    77,452,317
  Accumulated comprehensive income (loss)                6,211       299,618
  Retained earnings (accumulated deficit)          (85,505,205)  (13,000,303
                                                  ------------  ------------
  Treasury Stock (300,000 shares)                     (480,000)            -
                                                  ------------  ------------
Total stockholders' equity (deficit)                (3,888,243)   64,752,824
                                                  ------------  ------------
Total liabilities and stockholders' equity
 (deficit)                                        $ 39,788,781  $110,330,609
                                                  ============  ============


                      RMG Networks Holding Corporation
           Consolidated Statements of Comprehensive Income (Loss)

                                  Successor      Successor     Predecessor
                                   Company        Company        Company
                                   Twelve        April 20,     February 1,
                                    Months          2013           2013
                                    Ending        Through        Through
                                 December 31,   December 31,    April 19,
                                     2014           2013           2013
                                -------------  -------------  -------------
Revenue:
  Advertising                   $  16,507,209  $  15,963,107  $           -
  Products                         16,686,243     18,488,304      2,239,236
  Maintenance and content
   services                        16,095,033      7,537,024      3,594,520
  Professional services             8,204,328      8,289,212      1,323,559
                                -------------  -------------  -------------
Total Revenue                      57,492,813     50,277,647      7,157,315
Cost of Revenue:
  Advertising                      12,814,119     10,718,458              -
  Products                         12,334,834     11,974,491      1,498,135
  Maintenance and content
   services                         2,892,245      1,759,866        611,692
  Professional services             5,896,578      5,232,781        861,640
  Loss on long-term contract        2,732,050              -
                                -------------  -------------  -------------
Total Cost of Revenue              36,669,826     29,685,596      2,971,467
                                -------------  -------------  -------------
Gross Profit                       20,822,987     20,592,051      4,185,848
                                -------------  -------------  -------------
Operating expenses:
  Sales and marketing              18,837,363     12,681,559      1,729,871
  General and administrative       18,880,668     12,871,283      1,739,348
  Research and development          3,974,362      2,623,791        512,985
  Acquisition expenses                378,193      2,095,250      3,143,251
  Depreciation and amortization     6,805,087      4,956,622        140,293
  Impairment of goodwill and
   intangible assets               51,108,782              -              -
                                -------------  -------------  -------------
Total operating expenses           99,984,456     35,228,505      7,265,748
                                -------------  -------------  -------------
Operating income (loss)           (79,161,469)   (14,636,454)    (3,079,900)
Other Income (Expense):
  Warrant liability income
   charge                             665,324      1,960,211              -
  Interest expense and other -
   net                             (1,719,821)    (3,327,148)       (14,553)
                                -------------  -------------  -------------
Income (loss) before income
 taxes                            (80,215,966)   (16,003,391)    (3,094,453)
Income tax expense (benefit)       (7,711,064)    (3,003,088)      (540,897)
                                -------------  -------------  -------------
Net income (loss)                 (72,504,902)   (13,000,303)    (2,553,556)
Other comprehensive income -
  Foreign currency translation
   adjustments                       (293,407)       299,618       (121,144)
                                -------------  -------------  -------------
Total comprehensive income
 (loss)                         $ (72,798,309) $ (12,700,685) $  (2,674,700)
                                =============  =============  =============
    Net income (loss) per
     share:
Basic and diluted net income
 (loss) per share of Common
 Stock                                  (5.96) $       (1.40)             -
                                =============  =============  =============
Basic and diluted net income
 (loss) per share of Class L
 Common Stock                                                 $       (2.55)
                                =============  =============  =============
  Weighted average shares used
   in computing basic and
   diluted net income (loss)
   per share of Common Stock       12,155,694      9,270,466              -
                                =============  =============  =============
  Weighted average shares used
   in computing basic and
   diluted net income (loss)
   per share of Class L Common
   Stock                                                   -      1,000,000
                                =============  =============  =============
  Weighted average shares used
   in computing basic and
   diluted net income (loss)
   per share of Class A Non-
   Voting Common Stock                                     -         68,889
                                =============  =============  =============


                      RMG Networks Holding Corporation
                    Consolidated Statements of Cash Flows


                                  Successor      Successor     Predecessor
                                   Company        Company        Company
                                   Twelve        April 20,     February 1,
                                    Months          2013           2013
                                    Ending        Through        Through
                                 December 31,   December 31,    April 19,
                                     2014           2013           2013
                                -------------  -------------  -------------

Cash flows from operating
 activities
  Net income (loss)             $ (72,504,902) $ (13,000,303) $  (2,553,556)
Adjustments to reconcile net
 income (loss) to net cash
 provided by (used in)
 operating activities:
Depreciation and amortization       6,805,087      4,956,622        140,293
Change in warrant liability          (665,324)    (1,960,211)             -
Impairment of intangible assets
 and goodwill                      51,108,782              -              -
Stock-based compensation            2,060,287      1,876,122              -
Non-cash treasury stock              (480,000)             -              -
Loan origination fees                 228,644        829,324              -
Non-cash consulting expense           504,750        175,250              -
Non-cash directors' fees              116,464              -              -
Interest capitalized as debt                -        135,000              -
Deferred tax (benefit)             (6,990,895)    (3,059,732)       (12,294)
Changes in operating assets and
 liabilities:
  Accounts receivable               7,649,904    (11,226,354)     2,846,332
  Inventory                         3,172,337     (1,155,725)      (488,722)
  Other current assets              1,070,132       (650,241)      (154,529
  Other assets, net                  (258,234)        94,802         12,572
  Accounts payable                 (1,863,429)     4,618,337     (2,978,808)
  Accrued liabilities                (281,719)       184,623       (767,991)
  Deferred revenue                   (949,871)     5,165,359       (372,579)
  Loss on contract                  3,347,624
  Other non-current liabilities      (799,728)
                                -------------  -------------  -------------
Net cash provided by (used in)
 operating activities              (8,730,091)   (13,017,127)    (4,329,282)
                                -------------  -------------  -------------

Cash flows from investing
 activities
Acquisition of Symon Holdings
 Corporation                                -       (209,079)             -
Purchases of property and
 equipment                         (2,293,436)    (2,643,574)       (86,470)
                                -------------  -------------  -------------
Net cash provided by (used in)
 investing activities              (2,293,436)    (2,852,653)       (86,470)
                                -------------  -------------  -------------

Cash flows from financing
 activities
Proceeds from debt                  6,000,000      3,647,863              -
Repayments of debt                          -    (29,782,863)             -
Proceeds from sale of stock                 -     39,390,600              -
Expenses related to sale of
 stock                                      -       (274,815)             -
                                -------------  -------------  -------------
Net cash provided by (used in)
 financing activities               6,000,000     12,980,785              -
                                -------------  -------------  -------------

Effect of exchange rate changes
 on cash                             (135,331)       299,618       (121,144)
Net increase (decrease) in cash
 and cash equivalents              (5,158,858)    (2,589,377)    (4,536,896)
Cash and cash equivalents,
 beginning of period                8,235,566     10,824,943     10,203,169
                                -------------  -------------  -------------
Cash and cash equivalents, end
 of period                      $   3,076,708  $   8,235,566  $   5,666,273
                                =============  =============  =============

Supplemental disclosures of
 cash flow information:
    Cash paid during the period
     for interest               $   1,578,576  $   2,081,529  $       2,053
    Cash paid during the period
     for income taxes           $     186,509  $           -  $     150,000
    Leasehold improvements
     acquired through landlord
     allowance                  $   1,250,200  $           -  $           -


                      RMG Networks Holding Corporation
                       Reconciliation of Gross Profit
                For the Three Months Ended December 31, 2014


                 Successor
                  Company
                   Three
                   Months
                   Ended     Purchase
                  December     Price                  Loss on
                  31, 2014  Accounting  Inventory    Long-Term     Adjusted
                   (GAAP)   Adjustment  Write-Off     Contract    (Non-GAAP)
                ----------- ---------- -----------  -----------  -----------
                (Unaudited)
Revenue:
 Advertising    $ 5,517,315 $        - $         -  $         -  $ 5,517,315
 Product sales    6,709,523          -           -            -    6,709,523
 Maintenance
  and content
  services        4,050,539    209,913           -            -    4,260,452
 Professional
  services        2,150,505          -           -            -    2,150,505
                ----------- ---------- -----------  -----------  -----------
Total Revenue    18,427,882    209,913           -            -   18,637,795

Cost of
 Revenues:
 Advertising      4,232,418          -           -            -    4,232,418
 Product sales    4,923,141          -  (1,028,829)           -    3,894,312
 Maintenance
  and content
  services          681,872          -           -            -      681,872
 Professional
  services        1,502,612          -           -            -    1,502,612
 Loss on long-
  term contract   1,358,679          -           -   (1,358,679)           -
                ----------- ---------- -----------  -----------  -----------
Total Cost of
 Revenue         12,698,722          -  (1,028,829)  (1,358,679)  10,311,214
                ----------- ---------- -----------  -----------  -----------

Gross Profit    $ 5,729,160 $  209,913 $ 1,028,829  $ 1,358,679  $ 8,326,581
                =========== ========== ===========  ===========  ===========


                      RMG Networks Holding Corporation
                       Reconciliation of Gross Profit
                For the Three Months Ended December 31, 2013


                                     Successor
                                   Company Three
                                    Months Ended    Purchase
                                    December 31,     Price
                                        2013       Accounting     Adjusted
                                       (GAAP)      Adjustment    (Non-GAAP)
                                   ------------- ------------- -------------
                                    (Unaudited)
Revenue:
  Advertising                      $   6,397,833 $           - $   6,397,833
  Product sales                        7,958,396             -     7,958,396
  Maintenance and content services     1,732,003     2,561,729     4,293,732
  Professional services                3,556,565       300,000     3,856,565
                                   ------------- ------------- -------------
Total Revenue                         19,644,797     2,861,729    22,506,526
                                   ------------- ------------- -------------

Cost of Revenues:
  Advertising                          4,010,559             -     4,010,559
  Product sales                        4,983,711             -     4,983,711
  Maintenance and content services       314,093             -       314,093
  Professional services                2,690,640             -     2,690,640
  Loss on long-term contract                   -             -             -
                                   ------------- ------------- -------------
Total Cost of Revenue                 11,999,003             -    11,999,003
                                   ------------- ------------- -------------

Gross Profit                       $   7,645,794 $   2,861,729 $  10,507,523
                                   ============= ============= =============


                      RMG Networks Holding Corporation
                       Reconciliation of Gross Profit
                    For The Year Ended December 31, 2014

                                   Successor
                                    Company
                                      Year
                                     Ended
                                    December      Purchase
                                      31,          Price
                                      2014       Accounting    Inventory
                                     (GAAP)      Adjustment    Write-Off
                                 ------------- ------------- -------------

Revenue:
 Advertising                     $  16,507,209 $           - $           -
 Product sales                      16,686,243             -             -
 Maintenance and content
  services                          16,095,033       839,652             -
 Professional services               8,204,328             -             -
                                 ------------- ------------- -------------
Total Revenue                       57,492,813       839,652             -

Cost of Revenues:
 Advertising                        12,814,119             -             -
 Product sales                      12,334,834             -    (1,028,829)
 Maintenance and content
  services                           2,892,245             -             -
 Professional services               5,896,578             -             -
 Loss on long-term contract          2,732,050             -             -
                                 ------------- ------------- -------------
Total Cost of Revenue               36,669,826             -    (1,028,829)
                                 ------------- ------------- -------------

Gross Profit                     $  20,822,987 $     839,652 $   1,028,829
                                 ============= ============= =============








                                      Cost          Loss on
                                       of            Long-        Adjusted
                                     Revenue         Term           (Non-
                                Reclassification   Contract        GAAP)
                                ---------------- ------------  -------------

Revenue:
 Advertising                    $              - $          -  $  16,507,209
 Product sales                         1,381,459      987,542     19,055,244
 Maintenance and content
  services                                     -      394,565     17,329,250
 Professional services                         -      687,789      8,892,117
                                ---------------- ------------  -------------
Total Revenue                          1,381,459    2,069,896     61,783,820

Cost of Revenues:
 Advertising                           1,381,459            -     14,195,578
 Product sales                                 -            -     11,306,005
 Maintenance and content
  services                                     -            -      2,892,245
 Professional services                         -            -      5,896,578
 Loss on long-term contract                    -   (2,732,050)             -
                                ---------------- ------------  -------------
Total Cost of Revenue                  1,381,459   (2,732,050)    34,290,406
                                ---------------- ------------  -------------

Gross Profit                    $              - $  4,801,946  $  27,493,414
                                ================ ============  =============


                      RMG Networks Holding Corporation
        Reconciliation of Operating Income (Loss) to Adjusted EBITDA

                                                       Fourth Quarter
                                                     2014          2013
                                                -------------  ------------

Operating income (loss) per Statements of
 Comprehensive Income                           $ (32,548,285) $ (6,725,013)

Revenues that would have been recognized in the
 period had the balance in deferred revenue at
 the acquisition date not been required to be
 adjusted to market value at the acquisition
 date in accordance with GAAP purchase
 accounting guidelines                                209,913     2,861,729

Depreciation and amortization                       1,406,109     1,985,002
Acquisition expenses                                        -       100,000
Stock-based compensation                              577,073     1,318,481
Impairment of intangible assets and goodwill       26,686,933             -
Write-off of obsolete inventory                     1,028,829             -
Loss on long-term contract                          1,358,679             -
                                                -------------  ------------

      Adjusted EBITDA                           $  (1,280,749) $   (459,801)
                                                =============  ============


                      RMG Networks Holding Corporation
        Reconciliation of Operating Income (Loss) to Adjusted EBITDA

                                                         Full Year
                                                    2014         2013(6)
                                               -------------  -------------

Operating income (loss) per Statements of
 Comprehensive Income                          $ (79,161,469) $ (19,785,414)

Revenues that would have been recognized in
 the period had the balance in deferred
 revenue at the acquisition date not been
 required to be adjusted to market value at
 the acquisition date in accordance with GAAP
 purchase accounting guidelines                      839,652      4,399,479

Depreciation and amortization                      6,805,087      5,822,067
Acquisition expenses                                 378,193      5,807,518
Stock-based compensation                           2,060,287      1,876,122
Impairment of intangible assets and goodwill      51,108,782              -
Write-off of obsolete inventory                    1,028,829              -
Loss on long-term contract                         4,801,946              -
Reorganization costs                                 579,029              -
                                               -------------  -------------

      Adjusted EBITDA                          $ (11,559,664) $  (1,880,228)
                                               =============  =============


(1) Q4 and Q3 2014 GAAP consolidated revenue was $18.4 million and $13.9 million. Q4 & Q3 2014 GAAP operating loss was $32.5 million and $18.5 million, respectively. Please see the tables at the end of this press release for a reconciliation of GAAP results to adjusted results.

(2) Pipeline does not represent contracted deals and the company makes no assurance of closing deals in the pipeline.

(3) Q4 & Q3 2014 GAAP consolidated revenue was $18.4 million and $13.9 million, respectively. Q4 & Q3 2014 GAAP Enterprise revenue was $12.9 million and $10.3 million, respectively. Q4 & Q3 2014 GAAP operating loss was $32.5 million and $18.5 million, respectively. Please see the tables at the end of this press release for a reconciliation of GAAP results to adjusted results.

(4) Enterprise revenues represent Products, Maintenance and Content Services, and Professional Services revenue line items; Media revenues represent Advertising revenue line item.

(5) 2014 GAAP consolidated revenue was $57.5 million. GAAP consolidated revenue for the period April 20, 2013, through December 31, 2013, was $50.3 million. 2014 GAAP operating loss was $32.5 million. GAAP operating loss for the period April 20, 2013, through December 31, 2013, was $14.6 million. Please see the tables at the end of this press release for a reconciliation of GAAP results to adjusted results.

(6) Represents 2013 pro forma combined results

Contact:
For RMG Networks Holding Corporation

Investor
Brett Maas / Rob Fink
646-536-7331 / 646-415-8972
Email Contact

or

Media
Julie Rasco
800-827-9666
Email Contact

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