EX-99.1 2 youbet_8kex99-1.htm Gary Sproule, CFO

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Gary Sproule, CFO
Chief Financial Officer
818 668 2100

YOUBET.COM PROFITABLE IN RECORD FIRST QUARTER,
ENTERS EXPANSION PHASE

Woodland Hills, CA, April 27, 2004 - Youbet.com, Inc. (Nasdaq: UBET), a leading online wagering company and the largest provider of horse racing content in the United States, today capped an intensive two-year financial turnaround by announcing net income of $15,111, or $0.00 per share, for the first quarter of 2004.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 136 percent to $1.1 million in the first quarter of 2004, compared to $465 thousand in the same quarter in 2003.

Youbet also reported its ninth consecutive quarter of net revenue growth, as well as, year-over-year increases in gross handle and yield on total handle for the first quarter of 2004.

Gross handle increased 18 percent to $72 million in the first quarter of 2004, compared to $61 million in the same period in 2003.

Net revenue grew to $5.4 million for the first quarter of 2004, a 43 percent increase compared to net revenues of $3.8 million in the comparable quarter of 2003.

"For the first time in Youbet's history, we have crossed the line into profitability," said Charles F. Champion, Chairman and Chief Executive Officer of Youbet. "Although we are exuberant at reaching that long-sought goal, we are equally enthused that Youbet is now ideally positioned for independent expansion and growth."

As previously announced, during the first quarter of 2004 Youbet settled a dispute with TVG. As a result of the settlement, TVG surrendered its warrant in Youbet, and Youbet has agreed not to seek stockholder approval of certain charter and bylaw amendments.

"Three clear shareholder benefits emerge from the completion of our financial turnaround and our settlement with TVG," Champion said. "First, we believe that we will now gradually attract a wider and more diverse audience from within the investment community. Second, our international strategic and tactical expansion can proceed at a more deliberate and confident pace. "And third, Champion said, we will be scheduling Youbet's annual shareholder meeting, and we will announce that date in the upcoming weeks."

 

Other Operating Expenses for the first quarter were $4.3 million, compared to $3.3 million in the same quarter of 2003. First quarter, 2004 other operating expenses increased due to increases in legal, sales and marketing and network operations expenses and employee and executive performance-based bonuses. Other operating expenses as a percent of handle in the first quarter of 2004 were 6 percent, remaining even compared to 2003 first quarter.

2004 FIRST QUARTER OPERATING HIGHLIGHTS

  • Youbet generated an 18 percent increase in total handle in the first quarter of 2004 as compared to the same period of 2003.
  • Yield on total handle increased 21 percent year-over-year.
  • Total revenue increased 32 percent in the first quarter of 2004 compared to the prior year's first quarter.
  • Net revenue rose 43 percent in the first quarter of 2004 compared to the 2003 first quarter.
  • EBITDA increased 136 percent in the first quarter of 2004 compared to the same quarter in 2003.
  • Net income increased to $15,111 in the first quarter of 2004 compared to a net loss of ($1,247,679) for the same quarter in 2003.

Youbet.com is the largest Internet provider of thoroughbred, quarter horse and harness horse racing content in the United States. Members have the ability to watch and, in most states, the ability to wager on virtually 100% of all major domestic horse racing content via Youbet.com's exclusive closed-loop network. Youbet.com members enjoy features that include commingled track pools, live audio/video, up-to-the-minute track information, real-time wagering information, phone wagering and value-added handicapping products.

Youbet.com is an official online wagering platform of Churchill Downs Incorporated and the Kentucky Derby. Youbet.com operates Youbet.com TotalAccessTM, an Oregon-based hub for the acceptance and placement of wagers. More information on Youbet.com can be found at www.Youbet.com.

Forward-Looking Statements

This press release contains certain forward-looking statements. Statements containing expressions such as "may," "will," "project," "might," "expect," "believe," "anticipate," "intend," "could," "would," "estimate," potential," "continue" or "pursue," or the negative or other variations thereof or comparable terminology used in Youbet's press releases and in its reports filed with the Securities and Exchange Commission are intended to identify forward-looking statements. These forward-looking statements, which are included in accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, may involve known and unknown risks, uncertainties and other factors that may cause Youbet's actual results and performance in future periods to be materially different from any future results or performance suggested by the forward-looking statements in this press release. Although Youbet believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that actual results will not differ materially from these expectations. From time to time, these risks, uncertainties and other factors are discussed in the Company's filings with the Securities and Exchange Commission. Such factors include, without limitation, the following: the timely development and market acceptance of new products and technologies; our ability to secure financing on terms acceptable to us; our ability to control operating expenses; increased competition in the advance deposit wagering business; a decline in the public acceptance of wagering; wagering ceasing to be approved in jurisdictions where Youbet currently operates; the limitation, conditioning or suspension of any of Youbet's licenses; increases in or new taxes imposed on wagering revenues; loss or retirement of key executives; and a decline in the general economy. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this press release. Youbet does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements

 

 Youbet.com, Inc.
Condensed Consolidated Balance Sheets

       

March 31,

  

December 31,

  
       

2004

  

2003

  
       

(Unaudited)

  

(Audited)

  

ASSETS:

          
 

Current Assets:

        
   

Cash and Cash Equivalents

$

8,359,904 

  

$

8,273,926 

  
   

Restricted Cash, current

3,422,470 

  

3,518,016 

  
   

Receivables

170,925 

  

140,657 

  
   

Interest and Other Receivables

1,595,010 

  

1,270,759 

  
   

Prepaid Expenses

802,427 

  

884,409 

  
 

Total Current Assets

$

14,350,735 

  

$

14,087,767 

  
 

Property and Equipment, net

2,541,093 

  

2,731,922 

  
 

Licensing Rights, net

503,602 

  

1,407,447 

  
 

Deferred Lease Costs

28,283 

  

29,331 

  
 

Deposits

95,650 

  

595,650 

  
   

TOTAL ASSETS

$

17,519,363 

  

$

18,852,117 

  
               

LIABILITIES AND STOCKHOLDER'S EQUITY

        
 

Current Liabilities:

        
   

Accounts Payable - Trade

$

555,957 

  

$

439,559 

  
   

Fees Payable to Related Party

2,237,324 

  

3,426,076 

  
   

Accounts Payable - Track Related

2,365,552 

  

2,539,534 

  
   

Accrued Expenses

849,434 

  

1,756,918 

  
   

Customer Deposits

2,500,771 

  

2,356,004 

  
   

Accrued Compensation and Related Items

464,922 

  

524,197 

  
   

Deferred Revenues

86,184 

  

79,519 

  
 

Total Current Liabilities

$

9,060,144 

  

$

11,121,807 

  
               
   

TOTAL LIABILITIES

$

9,060,144 

  

$

11,121,807 

  
               
 

Stockholders' Equity:

        
   

Preferred Stock, $0.001 par value, authorized

-- 

  

--

  
     

1,000,000 shares, none outstanding

        
   

Common Stock, $0.001 par value, authorized 100,000,000 shares

        
     

29,777,946 and 28,377,443 shares outstanding as of March 31,

        
     

2004 and December 31, 2003, respectively

$

29,778 

  

$

28,377 

  
   

Treasury Stock (623,683 shares at cost)

(1,828,709)

 

(1,828,709)

  
   

Additional Paid In Capital

102,089,635 

  

       101,377,238

 
   

Accumulated Deficit

(91,831,485)

  

(91,846,596)

  
   

TOTAL STOCKHOLDERS' EQUITY

8,459,219 

  

7,730,310 

  
   

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

17,519,363 

  

$

18,852,117 

  
               
 
 

 Youbet.com, Inc.
Condensed Consolidated Statement of Operations

       

Quarter Ended March 31,

  
       

2004

  

2003

  

Revenues

       
 

Commissions

$

14,260,036 

  

$

10,845,220 

  
 

Subscription and Transaction Fees

182,321 

  

84,874 

  
 

Race Information

84,747 

  

76,313 

  

Total Revenues

$

14,527,104 

  

$

11,006,407 

  

Operating Expenses:

        
 

Track Fees

7,133,091 

  

5,883,606 

  
 

Licensing Fees - Related Party

1,973,036 

  

1,323,835 

  
 

Network Operations

521,609 

  

378,653 

  
 

Research and Development

415,841 

  

393,286 

  
 

Sales and Marketing

669,092 

  

381,434 

  
 

General and Administrative

2,719,198 

  

2,180,593 

  
 

Depreciation and Amortization

1,125,432 

  

1,384,260 

  

Total Operating Expenses

$

14,557,299 

  

$

11,925,667 

  

Loss From Operations

$

(30,195)

  

$

(919,260)

  

Other Income (Expense):

        
 

Interest Income

46,740 

  

8,786 

  
 

Interest Expense

(1,434)

  

(395,150)

  
 

Other Income

-- 

  

57,945 

  

Total Other Income (Expense)

$

45,306 

  

$

(328,419)

  

Net Income (Loss)

$

15,111 

  

$

(1,247,679)

  
               

Earnings (Loss) per share -basic

$

0.00 

  

$

(0.05)

  
               

Earnings (Loss) per share - diluted

$

0.00 

  

$

(0.05)

  
               
 
 
 

Youbet.com, Inc.
Condensed Consolidated Statement of Cash Flows

               
       

Quarter Ended March 31,

  
       

2004

  

2003

  

Increase In Cash and Cash Equivalents

        
 

Cash Flows from Operating Activities:

        
   

Net Income (Loss)

$

15,111 

  

$

(1,247,679)

  
 

Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:

        
   

Depreciation and Amortization

1,125,431 

  

1,384,260 

  
   

Non-Cash Interest Expense

-- 

  

358,638 

  
   

Stock-Based Compensation

(7,006)

  

51,009 

  
   

Loss on Sale of Property and Equipment

7,891 

  

-- 

  
 

Change in Operating Assets and Liabilities:

        
   

Restricted Cash

(2,182)

  

(344,837)

  
   

Receivables

(30,268)

  

210,458 

  
   

Interest and Other Receivables

(324,251)

  

2,785 

  
   

Prepaid Expenses

81,983 

  

50,544 

  
   

Deposits

501,047 

  

1,048 

  
   

Account Payable - Trade

116,398 

  

(4,962)

  
   

Fees Payable - Related Parties

(1,188,751)

  

(934,131)

  
   

Accounts Payable - Track Related

(173,982)

  

(1,443,230)

  
   

Accrued Expenses

(491,601)

  

865,597 

  
   

Customer Deposits

144,767 

  

478,289 

  
   

Accrued Compensation and Related Items

(59,275)

  

(295,364)

  
   

Deferred Revenues

6,665 

  

37,761 

  
     

Net Cash Used In Operating Activities

$

(278,023)

  

$

(829,814)

  
 

Cash Flows From Investing Activities:

        
   

Restricted Cash

97,728 

  

63,041 

  
   

Purchases of Property and Equipment

(38,649)

  

(160,106)

  
     

Net Cash Provided by (Used) in Investing Activities

$

59,079 

  

$

(97,065)

  
 

Cash Flows from Financing Activities:

        
   

Proceeds from Exercise of Stock Options and Warrants

304,922 

  

253,164 

  
   

Proceeds from Notes Payable

-- 

  

2,000,000 

  
   

Payments of Notes Payable

-- 

  

(750,000)

  
     

Net Cash Provided By Financing Activities

$

304,922 

  

$

1,503,164 

  
 

Net Increase in Cash and Cash Equivalents

$

85,978 

  

$

576,285 

  
 

Cash and Cash Equivalents at the Beginning of the Period

8,273,926 

  

4,559,897 

  
 

Cash and Cash Equivalents at the End of the Period

$

8,359,904 

  

$

5,136,182 

  
               
 

Supplemental Disclosure of Cash Flow Information:

    

 

  
   

Cash Paid for Interest

$

2,121

  

$

80,137

  
   

Cash Paid for Income Tax

-- 

  

-- 

  
           
 

Non-Cash Investing and Financing Activities:

        
   

Issuance of Warrants for $2 million note

-- 

  

$

518,223

  
   

Stock Issuance for Surrender of September 20, 2001 TVG Warrant

3,640,000 

  

-- 

  
     Stock Issuance for TVG Legal Fees Settlement

415,758 

  

-- 

  
               
 
 
 

Reconciliation of Net Income to EBITDA

       

Quarter Ended March 31,

  
       

2004

  

2003

  

Net Income (Loss)

$

15,111 

  

$

(1,247,679)

  

Depreciation and Amortization

$

1,125,432 

  

$

1,384,261 

  

Other (income) and expense

$

(45,306)

  

$

328,419 

  

EBITDA (a)

$

1,095,237 

  

$

465,001 

  
 

(a) Represents net income (loss) before interest income and expense, tax expense or benefit, and depreciation and amortization. EBITDA is not determined in accordance with generally accepted accounting principles, is not indicative of cash provided by or used in operating activities and should not be considered in isolation, as an alternative to, or more meaningful than measures of performance determined in accordance with generally accepted accounting principles. However, our analysts believe EBITDA is an alternative measure to net income and that it is not indicative of actual results from operations.