Exhibit 99.1
BAM! Entertainment Announces Fiscal Second Quarter Results
SAN JOSE, Calif.—February 18, 2004 – BAM! Entertainment® BFUN, a developer and publisher of interactive entertainment software, today reported results for its fiscal second quarter ended December 31, 2003.
The company reported net revenues for the fiscal second quarter of $5.9 million, a decrease of 73% from net revenues of $22.0 million for the same quarter of the prior fiscal year. The operating loss for the quarter was $4.8 million and net loss for the quarter was $5.1 million, equivalent to 31 cents per share. In the same quarter of the prior year, the company sustained an operating loss of $13.3 million and a net loss of $13.4 million, equivalent to 92 cents per share.
During the quarter ended December 31, 2003, the company released Wallace & Gromit in Project Zoo on three platforms and The Powerpuff Girls — Relish Rampage Pickled Edition on one platform in North America. In the same quarter of the prior fiscal year the company released eleven new products across five platforms in both the US and Europe.
The company completed the sale of 5.37 million shares of its common stock and warrants to purchase another 4.07 million shares of its common stock, resulting in gross proceeds of $5.06 million in private offerings to institutional and accredited investors in October 2003 and January 2004. In addition, in December 2003, the company also closed the funding of a $1.5 million, 7 percent convertible term note, due December 2004.
Key titles currently slated for release during the spring of calendar year 2004 include the first release of Carmen Sandiego for next generation consoles and Bujingai: The Forsaken City, a third person action adventure title.
The company also announced today that it had agreed terms to acquire VIS entertainment plc (“VIS”), a Scottish developer of interactive entertainment software products, and SOE Development Limited, a company set up to fund the development of State of Emergency 2, one of VIS’ key properties. The terms of the proposed acquisition, which has been approved by the companies’ respective boards of directors, would create an expanded business which would embrace the expertise of both BAM! and VIS worldwide. The combined company will be led by executives from both BAM! and VIS. Their first joint project will be the development and publishing of the VIS property State of Emergency 2, the sequel to the hit product which topped the US and UK charts simultaneously, and which sold in excess of 1 million units worldwide.
Raymond C. Musci, Chief Executive Officer of BAM!, commented: “This is an exciting combination of two dynamic businesses whose activities and experience span the globe. We believe this deal will position our combined businesses strongly in a highly-competitive market, and achieve significant synergies in our operations. We are bringing together some of the most talented and knowledgeable people in our industry. There is little or no overlap between the businesses and we intend that the new combined company will operate in an efficient and rigorous manner, involving both development and publishing of games.”
About BAM! Entertainment, Inc.
Founded in 1999 and based in San Jose, California, BAM! Entertainment, Inc. is a developer, publisher and marketer of interactive entertainment software worldwide. The company develops, obtains, or licenses properties from a wide variety of sources, including global entertainment and media companies, and publishes software for video game systems, wireless devices, and personal computers. The company’s common stock is publicly traded on NASDAQ under the symbol BFUN. More information about BAM! and its products can be found at the company’s web site located at www.bam4fun.com.
This release contains statements that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current estimates and projections about BAM! Entertainment’s business, which are derived in part on assumptions of its management, and are not guarantees of BAM! Entertainment’s future performance, as such performance is difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors. Such factors include, but are not limited to, those described in BAM! Entertainment’s Annual Report on Form 10-K for the year ended June 30, 2003, and its Quarterly Report on Form 10-Q for the three-month period ended September 30, 2003, which are filed with the U.S. Securities and Exchange Commission. Readers of this release are referred to those filings. BAM! Entertainment does not intend to update any of these forward-looking statements after the date of this release.
NOTE: BAM! Entertainment, BAM! and BAM!4 are trademarks of BAM! Entertainment, Inc. PlayStation is a registered trademark of Sony Computer Entertainment Inc. Nintendo GameCube is a trademark of Nintendo of America, Inc. Nintendo and Game Boy Advance are trademarks of Nintendo. Xbox is a trademark of Microsoft Corporation. All other trademarks are the property of their respective owners.
BAM! ENTERTAINMENT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Amounts in thousands, except per share amounts)
(Unaudited)
Three months ended | Six months ended | |||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
2003 | 2002 | 2003 | 2002 | |||||||||||||||||
Net revenues | $ | 5,923 | $ | 22,005 | $ | 7,286 | $ | 30,745 | ||||||||||||
Costs and expenses: | ||||||||||||||||||||
Cost of revenues | ||||||||||||||||||||
Cost of goods sold | 3,720 | 14,315 | 4,353 | 18,752 | ||||||||||||||||
Royalties, software costs, and license costs | 3,238 | 9,430 | 3,919 | 13,626 | ||||||||||||||||
Project abandonment costs | — | 3,686 | 105 | 5,613 | ||||||||||||||||
Total cost of revenues | 6,958 | 27,431 | 8,377 | 37,991 | ||||||||||||||||
Research and development (exclusive of amortization of deferred stock compensation) | 679 | 755 | 1,217 | 2,048 | ||||||||||||||||
Sales and marketing (exclusive of amortization of deferred stock compensation) | 1,395 | 4,152 | 1,577 | 7,012 | ||||||||||||||||
General and administrative (exclusive of amortization of deferred stock compensation) | 1,550 | 2,352 | 2,810 | 4,392 | ||||||||||||||||
Amortization of deferred stock compensation* | 36 | 133 | 109 | 294 | ||||||||||||||||
Litigation settlement | — | — | (650 | ) | — | |||||||||||||||
Restructuring costs | 69 | 451 | 245 | 451 | ||||||||||||||||
Total costs and expenses | 10,687 | 35,274 | 13,685 | 52,188 | ||||||||||||||||
Loss from operations | (4,764 | ) | (13,269 | ) | (6,399 | ) | (21,443 | ) | ||||||||||||
Interest income | 1 | 79 | 2 | 143 | ||||||||||||||||
Interest expense | (321 | ) | (258 | ) | (349 | ) | (526 | ) | ||||||||||||
Other income (expense) | (37 | ) | 19 | (40 | ) | (24 | ) | |||||||||||||
Net loss | $ | (5,121 | ) | $ | (13,429 | ) | $ | (6,786 | ) | $ | (21,850 | ) | ||||||||
Net loss per share: | ||||||||||||||||||||
Basic and diluted | $ | (0.31 | ) | $ | (0.92 | ) | $ | (0.43 | ) | $ | (1.49 | ) | ||||||||
Shares used in computation: | ||||||||||||||||||||
Basic and diluted | 16,748 | 14,669 | 15,736 | 14,632 | ||||||||||||||||
*Amortization of deferred stock compensation: | ||||||||||||||||||||
Research and development | $ | 1 | $ | 11 | $ | 2 | $ | 24 | ||||||||||||
Sales and marketing | 1 | 7 | 2 | 16 | ||||||||||||||||
General and administrative | 34 | 115 | 105 | 254 | ||||||||||||||||
$ | 36 | $ | 133 | $ | 109 | $ | 294 |
BAM! ENTERTAINMENT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Amounts in thousands)
(Unaudited)
December 31, | June 30, | |||||||||
2003 | 2003 | |||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 399 | $ | 1,068 | ||||||
Accounts receivable, net of allowance of $5,247 as of December 31, 2003 and $2,722 as of June 30, 2003 | 2,116 | 539 | ||||||||
Inventories | 1,079 | 961 | ||||||||
Prepaid royalties | 1,072 | 1,067 | ||||||||
Prepaid expenses and other | 791 | 1,036 | ||||||||
Total current assets | 5,457 | 4,671 | ||||||||
Capitalized software and licensed assets, net | 2,313 | 4,138 | ||||||||
Property and equipment, net | 410 | 597 | ||||||||
Long-term receivable, net of allowance of $1,627 as of December 31, 2003 and $1,627 as of June 30, 2003 | — | — | ||||||||
Other assets | 54 | 54 | ||||||||
Total assets | $ | 8,234 | $ | 9,460 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||||
Current liabilities: | ||||||||||
Accounts payable — trade | $ | 3,612 | $ | 3,199 | ||||||
Short-term borrowings | 1,538 | — | ||||||||
Royalties payable | 713 | 1,242 | ||||||||
Loan from director | 256 | — | ||||||||
Convertible term note | 1,020 | — | ||||||||
Obligations under capital leases — short-term portion | 27 | 27 | ||||||||
Accrued compensation and related benefits | 900 | 785 | ||||||||
Accrued software costs | 85 | 128 | ||||||||
Accrued expenses — other | 1,512 | 793 | ||||||||
Total current liabilities | 9,663 | 6,174 | ||||||||
Obligations under capital leases — long-term portion | 13 | 26 | ||||||||
Funds held in escrow for a future stockholder investment | 25 | — | ||||||||
Stockholders’ equity (deficit): | ||||||||||
Common stock $0.001 par value; shares authorized; 100,000,000; shares issued and outstanding: 16,813,521 and 14,678,290 as of December 31, 2003 and June 30, 2003, respectively | 17 | 15 | ||||||||
Additional paid-in capital | 65,161 | 62,986 | ||||||||
Deferred stock compensation | (65 | ) | (245 | ) | ||||||
Accumulated deficit | (66,597 | ) | (59,811 | ) | ||||||
Accumulated other comprehensive income | 17 | 315 | ||||||||
Total stockholders’ equity (deficit) | (1,467 | ) | 3,260 | |||||||
Total liabilities and stockholders’ equity (deficit) | $ | 8,234 | $ | 9,460 |
BAM! ENTERTAINMENT, INC. AND SUBSIDIARIES
QUARTERLY FACT SHEET
NET REVENUES ANALYSIS
(Dollars in thousands)
(Unaudited)
Percentage | |||||||||||||
of net revenues | |||||||||||||
Three months ended | for the three | ||||||||||||
December 31, | months ended | ||||||||||||
December 31, | |||||||||||||
2003 | 2002 | 2003 | |||||||||||
Geographic sales mix | |||||||||||||
North America | $ | 5,405 | $ | 14,773 | 91.3 | % | |||||||
International | 518 | 7,232 | 8.7 | ||||||||||
Total net revenues | $ | 5,923 | $ | 22,005 | 100.0 | % | |||||||
Platform revenue mix | |||||||||||||
PlayStation 2 | $ | 1,804 | $ | 9,196 | 30.5 | % | |||||||
GameCube | 1,484 | 1,442 | 25.0 | ||||||||||
Xbox | 454 | 1,898 | 7.7 | ||||||||||
Gameboy Advance | 1,870 | 6,474 | 31.6 | ||||||||||
Gameboy Color | (2 | ) | 111 | (0.0 | ) | ||||||||
N64 | — | 306 | — | ||||||||||
Personal Computer | 196 | 212 | 3.3 | ||||||||||
PlayStation 1 | 117 | 2,366 | 1.9 | ||||||||||
Total net revenues | $ | 5,923 | $ | 22,005 | 100.0 | % |