Exhibit 99.1
RELATIONSERVE MEDIA, INC. REPORTS
THIRD QUARTER RESULTS
SENDTEC, INC. TRANSFORMATIVE ACQUISITION PROGRESSING
FORT LAUDERDALE, FLA. - NOVEMBER 18, 2005 - RELATIONSERVE MEDIA, INC. (OTCBB:
RSVM) reported unaudited consolidated net revenues of $10,382,598 for the nine
months ended September 30, 2005 compared to $7,527,601 for the same period last
year, a 38 percent increase. The company also reported unaudited consolidated
net income of $380,987 for the nine months ended September 30, 2005, as compared
to net income of $1,310,145 for the nine months ended September 30, 2004. This
translated into net income per common share of $0.03 for the first nine months
of 2005 as compared to $0.11 for the first nine months of 2004, based upon
21,628,567, and 12,001,000 fully-diluted weighted average common shares
outstanding for the respective periods.
During the fourth quarter, RelationServe and a group of investors completed the
first step of a planned two-step acquisition of SendTec, Inc. from theglobe.com
valued at approximately $49 million. The investors provided nearly $35 million
in the form of a convertible debenture and RelationServe provided an additional
$10 million of financing through the sale of new RelationServe Series A
convertible preferred stock.
The entities, which may be combined later this year or early 2006, will operate
under the SendTec name, and are expected to generate $70 million in combined pro
forma revenue in 2005 if subsequently consolidated upon satisfaction of certain
conditions, including completion of a third-quarter audit.
"RelationServe showed real strength in executing its business plan for the nine
months ending September 30, 2005, and we expect the combined
RelationServe-SendTec brand to become one of the premier Internet marketing
names" said Michael H. Brauser, Chairman of the Board.
"We were able to attract a high quality investor group including Lehman Brothers
and other institutional funds," explained Mr. Brauser. "Even after incurring
significant expenses in the quarter, we still reported positive net income for
the first nine months of 2005."
Mr. Brauser said, "Based upon our unaudited results, and present expectations,
we are confident that RelationServe will exceed the financial requirements set
under the covenants for the transaction in order for the SendTec consolidation
to be able to take place which, if satisfied, could occur during December after
which SendTec could be our wholly-owned subsidiary."
QUESTIONS & ANSWERS
THE TRANSACTION
RelationServe Media, Inc. (OTC BB:RSVM), a leading provider of permission-based
e-marketing solutions, in August 2005 announced its intention to acquire the
assets of SendTec, Inc., one of the nation's foremost direct marketing agencies
specializing in interactive advertising from theglobe.com (OTCBB:TGLO) in a
single-step transaction. Subsequently, on October 31, 2005 the company completed
the first step of a revised planned two-step acquisition. Upon satisfaction of
certain conditions to closing, including confirmation of satisfaction of certain
financial measures following an audit of the company's third quarter financial
statements, the two businesses could be combined. The combined entities will
operate under the SendTec name, and in 2005 are expected to generate $70 million
in combined pro-forma revenue. The acquisition is valued at approximately $49
million. Institutional investors provided nearly $35 million in the form of a
convertible debenture and RelationServe provided an additional $10 million of
financing through the sale of new RelationServe Series A convertible preferred
stock.
MARKET VALUE
SendTec's physical assets and management team would position RelationServe Media
as a major player in the electronic marketing space. Adding SendTec's digital
advertising, direct response TV advertising and its other services to
RelationServe's suite of e-commerce products creates synergy for new
opportunities.
LEAD INVESTORS
Lehman Brothers $10 million
Alexandra Global Master Fund 5 million
Mellon HBV Master US Event Driven Fund LP/
Mellon HBV Master Global Event Driven Fund LP $ 6 million
SDS Capital Group SPC, Ltd. 4 million
POST-CONSOLIDATION MANAGEMENT TEAM
Michael Brauser
Chairman of the Board
former President/CEO, Marlin Capital Partners
Paul Soltoff
Chief Executive Officer
former Founder and CEO, SendTec, Inc.
Eric Obeck
President
former President, SendTec, Inc.
Donald Gould Jr.
Chief Financial Officer
former CFO, SendTec Inc.
WHAT IS RELATIONSERVE'S MISSION?
RelationServe is a leading provider of permission-based e-mail marketing
solutions. Its mission is to become one of the largest and most profitable
Internet marketing organizations by supplying customers with the best return on
their media investment.
WHAT ARE RELATIONSERVE'S PROGRAMS?
RelationServe offers advertisers integrated online and offline marketing
programs including permission-based email advertising, email database append
services, online registrations/ co-registration, online surveys, database
management and other marketing, customer retention and loyalty programs for cell
phone, website and collateral marketing.
WHAT IS RELATIONSERVE'S VALUE PROPOSITION?
RelationServe owns and manages one of the largest security-compliant email
databases with...
o over 80 million security-compliant email addresses
o a total postal database of 167 million records
o a database for appending and enhancing customer records with information on over 120 million Opt-in consumers, and
o over 60 web-mining properties which generate over 10 million online
registration page views per month
WHAT IS SENDTEC'S MISSION?
SendTec is a full service direct marketing company specializing in Internet
customer acquisition and DRTV advertising. The company has a full suite of
Internet and DR tracking systems, as well as extensive multi-disciplinary skills
in-house to help clients acquire, retain and build profitable relationships
with their customers.
WHAT IS FRIENDSAND.COM?
Friendsand.com is one of the fastest growing divisions of RelationServe,
although presently generating nominal revenue. Launched earlier this year,
Friendsand.com is a social networking site with a rapidly growing subscriber
base. Designed to become an invaluable tool for both social and business
interaction, Friendsand.com enables people around the globe to leverage the
power and accessibility of modern computing.
WHAT IS THE MARKET POTENTIAL FOR A RELATIONSERVE MEDIA AND SENDTEC COMBINATION?
There is a natural synergy between two of the hottest Internet properties in an
era of customized online products and services. Their resources underscore the
belief that all marketing roads now lead to the Web.
The two are constantly breaking new ground in content, communication, commerce
and e-commerce for the online advertising and marketing enterprise.
HOW BIG IS THE ONLINE MARKETPLACE?
Online advertising and e-commerce marketing will reach $14.4 billion this year,
according to Forrester Research, a 23% increase over 2004. It breaks down to:
o Email marketing $ 1.4 billion
o Online classifieds 2.6
o Search engine marketing 5.6
o Display advertising 4.8
o TOTAL $14.4 billion
WHAT IS THE POTENTIAL FOR FURTHER GROWTH?
The $14.4 billion represents only six percent of all advertising and marketing
spending and continues to grow in an era of customized products and services
while media fragmentation is atomizing audiences.
THE TIP OF THE ICEBERG?
The average web surfer spends about 41 percent of his or her time checking
e-mail and instant messages, 37 percent viewing news and entertainment sites and
17 percent shopping. And, the average surfer spends less than 5 percent of his
time using a search engine. That means, for example, that Google earns almost $3
billion a year from people who devote 95 percent of their time on the Internet
to doing something else. So the potential is great!
HOW EFFECTIVE IS ONLINE COMMERCE?
Almost 114 million people search for product information on the Web, and almost
100 million people actually make purchases online, according to Forrester
Research. Their research confirms that 60 percent of adults use the Internet
regularly and most use the web to shop.
SO HOW DO COMPANIES LIKE RELATIONSERVE AND SENDTEC TAKE ADVANTAGE OF THESE
TRENDS?
There has been a fundamental redistribution of marketing budgets from
traditional media channels to the Internet. More and more companies are
encouraging people to transact online, increasing their need for targeted
audiences through e-mail and ways to accurately track and allocate their online
activity.
RELATIONSERVE HAS INFORMATION ON MORE THAN 120 MILLION OPT-IN CONSUMERS. GIVEN
THIS COMPETITIVE EDGE, WHO ARE RELATIONSERVE'S COMPETITORS?
o Database Marketing services
- InfoUSA
- Acxiom
o Co-Registration/ Online Registration
- Fast Click
- Value Click
- Advertising.com
- 24/7 Real Media
o Online point solution providers
- Did-It
- Doubleclick
- iCrossing
o Social Networking Websites
- MySpace (a subsidiary of Intermix)
- Friendster
WHAT ARE RELATIONSERVE'S COMPETITIVE ADVANTAGES?
o Believe to have largest database of permission-based web-enabled
consumers (over 120 million)
o Believe to have largest collection of data mining web properties
(over 60)
o Larger databases result in higher margins and higher ROI per
customer
o Blue chip and diversified customer base
o Long term focus on client marketing ROI
WHAT ARE RELATIONSERVE'S PROGRAMS AND REVENUE SOURCES?
o E-Mail Append & Data Services
(e-mail append addresses and all other data generation work (i.e.,
postal lists)
$ 3,663,000 35%
o E-Mail Campaigns
$ 3,049,000 29%
o Online Registration
(online register of targeted prospects and all other lead
generation work)
$ 3,671,000 36%
o $10,383,000 100% TOTAL
ABOUT RELATIONSERVE
Headquartered in Fort Lauderdale, Florida, RelationServe Media develops and
executes client-tailored online and offline marketing programs. As part of its
full suite of marketing solutions, RelationServe Media owns and manages one of
the industry's largest security-compliant email databases with over 80 million
security-compliant email addresses and a total postal database of 160 million
records for its client's direct marketing initiatives. RelationServe Media
believes that it has the industry's largest and most accurate database for
appending and enhancing customer database records with information on more than
85 million opt-in consumers. In addition, RelationServe Media owns a collection
of over 60 web-mining properties that generate over 10 million online
registration page views per month for client lead generation initiatives. For
more information, visit http://www.relationserve.com.
SendTec is a full-service direct marketing company specializing in Internet
customer and lead acquisition and DRTV advertising. The company's strategy is to
generate ROI-centric, scalable results for its clients through performance-based
Internet media DRTV media buying. The company has a full suite of Internet and
DR desktop media tracking systems including the only patent-pending
DRTV-to-Internet tracking system. Additionally, SendTec offers proprietary SEM
technology-based services that are unique in the industry. For more information,
visit HTTP://WWW.SENDTEC.COM .
HARBOR STATEMENT
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995: Forward-looking statements often are proceeded by words such as
"believes," "expects," "may," "anticipates," "plans," "intends," "assumes,"
"will" or similar expressions. Forward-looking statements reflect management's
current expectations, as of the date of this press release, and involve certain
risks and uncertainties. RelationServe's actual results could differ materially
from those anticipated in these forward-looking statements as a result of
various factors. The statements which are not historical facts contained in this
press release are "forward-looking statements" that involve certain risks and
uncertainties including, but not limited to risks associated with the
uncertainty of future financial results, additional financing requirements,
development of new products, the effectiveness, profitability and marketability
of such products, the ability to protect proprietary information, the impact of
current, pending or future legislation and regulation on the electronic
marketing industry, the impact of competitive products or pricing, technological
changes, the effect of general economic and business conditions and other risks
and uncertainties detailed in the Company's filings with the Securities and
Exchange Commission, which may cause actual results, performance and
achievements of the Company to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements.
FOR FURTHER INFORMATION:
INVESTOR CONTACT
JOHN NESBETT
MEDIA CONTACT
JEFFREY HODES
THE INVESTOR RELATIONS GROUP
212.825.3210
RELATIONSERVE MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2005
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash $ 1,221,651
Accounts receivable, less allowance for doubtful accounts of $1,076,701 3,039,055
Prepaid expenses and other current assets 512,831
-----------
Total current assets 4,773,537
-----------
Property and equipment, net 788,554
Intangibles, net 1,852,360
Other assets 69,154
-----------
Total Assets $ 7,483,605
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,012,657
Accrued expenses 495,279
Accrued commissions 453,431
Income taxes payable 233,508
Deferred rent 174,513
Customer deposits 176,367
-----------
Total current liabilities 2,545,755
Long-term note payable 200,000
-----------
Total liabilities 2,745,755
-----------
SHAREHOLDERS' EQUITY:
Preferred stock ($.001 Par value; 10,000,000 share authorized;
No shares issued and outstanding) --
Common stock ($.001 Par value; 90,000,000 share authorized;
19,016,015 shares issued and outstanding) 19,016
Common stock issuable (755,000 shares) 755
Additional Paid-in capital 7,078,903
Accumulated deficit (713,533)
Less: Deferred compensation (1,647,291)
-----------
Total shareholders' equity 4,737,850
-----------
Total liabilities and shareholders' equity $ 7,483,605
===========
RELATIONSERVE MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
--------------------------------------------------------------------------
2005 2004 2005 2004
----------------- ---------------- --------------- ------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues, net $ 3,704,575 $ 3,685,408 $ 10,382,598 $ 7,527,601
Cost of revenues 645,333 521,616 1,378,585 1,366,547
------------ ------------ ------------ ------------
Gross profit 3,059,242 3,163,792 9,004,013 6,161,054
------------ ------------ ------------ ------------
Selling expenses:
Salaries and commissions 386,757 1,117,285 1,932,243 2,338,588
Advertising and trade shows 151,969 75,488 454,247 296,660
------------ ------------ ------------ ------------
538,726 1,192,773 2,386,490 2,635,248
------------ ------------ ------------ ------------
General and administrative
expenses:
Bad debt 1,606,417 616,441 2,183,619 616,441
Salaries 348,630 3,458 692,953 338,889
Depreciation and amortization 228,500 217,524 577,047 413,313
Professional fees 382,284 152,006 638,637 258,948
Stock-based consulting expense 369,643 -- 497,275 --
Stock-based compensation
expense 31,667 -- 35,834 --
Other general and
administrative 631,477 318,976 1,368,929 744,057
------------ ------------ ------------ ------------
3,598,618 1,308,405 5,994,294 2,371,648
------------ ------------ ------------ ------------
Income (loss) from operations (1,078,102) 662,614 623,229 1,154,158
------------ ------------ ------------ ------------
Other income (expense):
Gain on extinguishment of debt -- 162,705 -- 162,705
Interest income 3,049 -- 3,049 --
Interest expense (5,334) -- (11,783) (6,718)
------------ ------------ ------------ ------------
Total other income
(expense) (2,285) 162,705 (8,734) 155,987
------------ ------------ ------------ ------------
Income (loss) before income taxes (1,080,387) 825,319 614,495 1,310,145
Benefit from (provision for)
income taxes 410,547 -- (233,508) --
------------ ------------ ------------ ------------
Net income (loss) $ (669,840) $ 825,319 $ 380,987 $ 1,310,145
============ ============ ============ ============
Net income (loss) per common
share:
Net income (loss) per common
share - basic $ (0.03) $ 0.07 $ 0.03 $ 0.11
============ ============ ============ ============
Net income (loss) per common
share - diluted $ (0.03) $ 0.07 $ 0.02 $ 0.11
============ ============ ============ ============
Weighted average common
shares outstanding - basic 19,771,015 12,001,000 15,112,925 12,001,000
============ ============ ============ ============
Weighted average common
shares outstanding - diluted 19,771,015 12,001,000 21,628,567 12,001,000
============ ============ ============ ============
