Atrinsic (NWMO) Acquires Ringtone.com

July 2, 2008 8:10 AM EDT

New Motion, Inc., doing business as Atrinsic (NASDAQ: NWMO), has acquired the assets of Ringtone.com, a popular mobile entertainment destination for downloadable mobile content and a highly valuable Internet domain which receives more than 1,000 signups per day.

Based on existing subscribers and historical retention rates, Ringtone.com is expected to generate a higher return on the company's marketing investments than if it had organically acquired these customers during fiscal year 2008; subsequently, the company also expects to materially reduce its annual customer acquisition budget and reconfirms its 2008 pro forma guidance of $145 million to $160 million in revenue with adjusted EBITDA of $15 million to $20 million.

In consideration for the assets acquired, Atrinsic will pay W3i $6.25 million in cash, offset by $1.5 million in working capital for a net cash outlay of $4.75 million. In addition, W3i will receive a $1.75 million convertible note, with a 10% coupon and a term of one year. This note is optionally convertible by W3i into Atrinsic common stock at a 30% share price premium based on the average market price of Atrinsic's common stock for the 10 trading days preceding the close of the transaction. (Ringtone.com was a wholly-owned subsidiary of W3i Holdings)

Burton Katz, the Company's CEO, commented, "...This accretive asset purchase enables us to re-enter the ringtone space, in what still represents an approximate $4 billion global business, with a low-cost platform that will leverage the popular ringtone.com domain and implement a new, ad-supported business model..."[SM]

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