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Executives

Randy Selman - President and Chief Executive Officer

Robert Tomlinson - Chief Financial Officer

Don Weinberger - Wolfe Axelrod Weinberger, IR

Analysts

Fred Milligan - Sanders Morris Harris

Onstream Media Corporation (OTCPK:ONSM) F3Q 2013 Earnings Conference Call August 20, 2013 4:30 PM ET

Operator

Good afternoon and welcome to the Onstream Media Corporation Conference Call to discuss the Company’s fiscal 2013 third quarter results. All participants have been placed on a listen-only mode and the floor will be opened for your questions and comments following the presentation. At this time, I would like to turn the floor over to your host, Don Weinberger of Wolfe Axelrod Weinberger. Sir, you may begin.

Don Weinberger

Thank you, Patrick. Good afternoon and welcome to the Onstream Media Conference Call. I would like to point out that during the course of the conference call there may be statements made related to future results of the company that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Actual results, performance or achievements could differ materially from those anticipated in such forward-looking statements as a result of certain factors including those set forth in the company’s filings with the Securities and Exchange Commission.

It should also be noted that the webcast of today's conference call may be found on the internet by visiting Onstream Media’s corporate website at www.onstreammedia.com, and then selecting Company at the top of the webpage and then clicking on Investor Relations and then selecting the 2013 Press Releases option. At that webpage you will find a link to the news release for the Company’s third quarter fiscal year 2013 financial results and the webcast.

An archived version of today's webcast will be accessible from the Press Releases page shortly following the end of the call and will be available for at least the next 12 months pursuant to SEC guidelines. For those interested in reviewing Onstream’s Form 10-Q filed on Friday, August 16, 2013, which contains detailed financial information related to today's discussion, you may visit Onstream's corporate website at www.onstreammedia.com, and then select Company followed by Investor Relations and then click on SEC filings. You may also access the file directly from the SEC EDGAR database by visiting www.sec.gov and then input Onstream Media under search for company filings.

It is now my pleasure to introduce Randy Selman, President and Chief Executive Officer of Onstream Media to begin today's discussion of results. Randy?

Randy Selman

Good afternoon and thank you for joining us. Today we will review our results for the three and nine months ended June 30, 2013. We will focus on the highlights of the third quarter as well as discuss the outlook for the remainder of fiscal 2013 and the beginning of fiscal 2014. Joining me today's is Onstream's Chief Financial Officer, Robert Tomlinson.

Hopefully, you have all had the opportunity to review our financial results which were contained in our 10-Q filed on Friday, August 16 after the close of the market, and summarized in the press release and 8-K filed yesterday. Let me start with a summary of our financial results for the third quarter fiscal 201, which Robert will go into in more detail later in the call.

Onstream Media had total revenues of approximately $4.5 million for the three-months ended June 30, 2013. A decrease of approximately $337,000 or 7% from the corresponding period of the prior fiscal year due to decreased revenues of the Digital Media Services Group. Digital Media Services Group revenues were approximately $1.6 million for the three months ended June 30, 2013, a decrease of approximately $584,000 or 27.2% from the corresponding period of the prior fiscal year, primarily due to a decrease in webcasting division revenues as well as a decrease in DMSP and hosting division revenues.

However, as we stated in last quarter, we expected the trend to reverse and this quarter Digital Media Services Group revenues were approximately $112,000 more than the prior quarter ended March 31, 2013. DMSP and hosting division revenues decreased by approximately $276,000, 53.3% for the three months ended June 30, 2013 as compared to the corresponding period of the prior fiscal year. This decline was primarily related to the July 2012 loss of a single customer that we were providing streaming services to at very little margin as part of a larger business relationship that is still in place. Therefore the loss of this customer and the related revenues did not have a material impact on our net operating results.

Webcasting division revenues also decreased by approximately $332,000, 20.8% for the three-months ended June 30, 2013, as compared to the corresponding period of prior fiscal year. However, webcasting revenues for the third quarter fiscal 2013 represented an increase over the immediately previous quarter, so it was apparent the industry-wide dip maybe over and we could expect an upward trend over the next quarters. Audio and web conferencing services group revenues were $2.9 million for the three months ended June 30, 2013, an increase of approximately $247,000, 9.3% from the corresponding period of the prior fiscal year. This increase was a result of revenues from the operations of our OCC division which acquired Intella2, a San Diego based communications company on November 30, 2012.

We recognized total revenues of approximately $306,000 including approximately $61,000 of free conferencing business revenues from those operations included in our results for the three-months ended June 30, 2013. We expect the Intella2 revenues for the seeable future to be at the same or higher levels. In addition, as we further integrate the acquisition into our mainstream business, we expect bottom line cash flow to increase accordingly. In addition, consolidated gross margin percentage was 72.1% for the three-months ended June 30 versus 66.6% for the corresponding period of the prior fiscal year, which was due to cost reductions in our Infinite conferencing and webcasting division and the impact of the acquired Intella2 operations, as well as the discontinuance of the low margin DMSP and hosting customer.

In addition to the gross margin improvements, adjusted EBITDA for the quarter ended June 30, 2013 was approximately $257,000. Although this amount was approximately $100,000 lower than the third quarter of fiscal 2012, it represents approximately $367,000 increase over the second quarter of fiscal 2013. And cash provided from operations before changes in working capital was approximately $110,000 for the June ending quarter as well.

I will now turn the call over to Robert who will provide more details for the three and nine month period ended June 30, 2013. Robert?

Robert Tomlinson

Thank you, Randy. Good afternoon. This slide presents the components of our revenues for the three-months ended June 30, 2013. As Randy indicated earlier, our consolidated revenues of approximately $4.5 million for the three-months ended June 30, 2013 represented a decrease of approximately $337,000 versus our revenues for the three-months ended June 30, 2012. Digital Media Services Group revenues were approximately $1.6 million for the three-months ended June 30, 2013, a decrease of approximately $584,000 or 27.2% from the corresponding period in the prior fiscal year.

This was in turn due to decreases in webcasting revenues and DMSP and hosting revenues. As Randy mentioned before, the DMSP and hosting decline as compared to the prior year was primarily related to the July 2012 loss of a single customer that we were providing streaming services to at very little margins and thus the related revenues did not have a material impact on our net operating results. Also as Randy stated, this quarter Digital Media Services Group revenues were approximately $112,000 more than the prior quarter ended March 31, 2013, and webcasting revenues for the third quarter of fiscal 2013 were approximately $53,000 more than the prior quarter ended March 31, 2013.

Further, audio and web conferencing services group revenues were approximately $2.9 million for the three-months ended June 30, 2013, an increase of approximately $247,000 or 9.3% versus the corresponding quarter of the prior fiscal year. You can see that the current quarter included approximately $306,000 of revenues related to the second quarter full quarter of the Intella2 operations. Those operations are in the new subsidiary we established just for this purpose, Onstream Conferencing Corporation or OCC. Also for information purposes, we present Infinite and OCC revenue separately in this slide. We consider them to be a single, combined line of business and on a combined basis revenues from that line of business grew by more than 11% during this quarter as compared to the same period of the previous fiscal year.

This slide presents the components of our revenues for the nine-months ended June 30, 2013. Our consolidated revenues of approximately $13.1 million for the nine months ended June 30, 2013 represented a decrease of approximately $833,000 versus our revenues for the nine-months ended June 30, 2012. However, I will point out that although there are increases and decreases in the various divisions, if not for the decline in our DMSP and hosting revenues primarily from the loss of a single customer with no material impact on our gross margin, our consolidated revenues for the three and nine months period of the current fiscal year, would have been materially the same as the corresponding consolidated revenues for the corresponding periods of the previous fiscal year.

This next slide shows a summary of our third quarter fiscal 2013 operating results compared to the same period of the prior fiscal year. Gross margin of approximately $3.2 million for the three months ended June 30, 2013 represented an increase of approximately $18,000 or 0.6% as compared to the year ago quarter. Our gross margin percentage of 72.1% for the three months ended June 30, 2013 was a significant improvement from the gross percentage of 66.6% for the corresponding period of the prior fiscal year. This improvement was due to reductions in Infinite and webcasting cost of sales and the impact of the acquired Intella2 operations, as well as the discontinuance of a single low margin DMSP and hosting customer noted above.

During the third quarter of fiscal 2012, we renegotiated a supplier contract which reduced our Infinite division cost of sales by approximately $36,000 for the three months ended June 30, 2013. During the third quarter of fiscal 2013, we renegotiated a supplier contract representing approximately $132,000 in annual savings, which we expect will reduce our cost of sales by approximately $122,000 for the final quarter of fiscal 2013 plus the first three quarters of fiscal 2014, as compared to the corresponding periods of fiscal 2012 and 2013.

During fiscal 2013, we also renegotiated various supplier contracts representing approximately $203,000 of annualized savings, which we expect will cumulatively reduce our cost of sales and other general and administrative expenses by approximately $193,000 for the final quarter of fiscal 2013 plus the first three quarters of fiscal 2014, as compared to the corresponding periods of fiscal 2012 and 2013.

Net Cash provided by operating activities before changes in current assets and liabilities other than cash, for the three months ended June 30, 2013 was approximately $110,000, compared to net cash provided by operating activities of approximately $372,000 for the three months ended June 30, 2012. Cash provided in the current quarter for operating activities was adversely affected by an increase in interest expense arising from the debt financing used to acquire Intella2 and for general working capital. Although the current quarter number represents a decrease as compared to the comparable quarter of the prior year, compared to the second quarter of fiscal 2013, it represents an approximately $325,000 increase from cash used in operating activities before changes in current assets and liabilities other than cash of approximately $215,000.

Onstream’s third quarter fiscal 2013 net loss of approximately $520,000, or $0.03 loss per share, was based on approximately 20.7 million weighted average shares outstanding, as compared to a third quarter fiscal 2012 net loss of approximately $244,000, or $0.02 loss per share, which was based on approximately 12.7 million weighted average shares outstanding. The increased net loss was primarily due to an approximately $160,000, or 88.4%, increase in interest expense as compared to the corresponding period of the prior fiscal year.

Onstream’s EBITDA, as adjusted, for the three months ended June 30, 2013 was approximately $257,000 as compared to EBITDA, as adjusted, of approximately $361,000 for the third quarter of fiscal 2012. Although this represents a decrease as compared to the comparable quarter of the prior year, compared to the second quarter of fiscal 2013, it represents an approximately $367,000 increase from EBITDA, as adjusted, of approximately negative $110,000.

This next slide shows a summary of our nine months year-to-date fiscal 2013 operating results compared to the same period of the prior fiscal year. Onstream's year-to-date net loss for the third quarter of fiscal 2013 or approximately $3.4 million or $0.20 per share was based on approximately 17.4 million weighted average shares outstanding, as compared to a net loss of approximately $1.6 million or $0.13 per share which is based on approximately 12.4 million weighted average shares outstanding. The approximately $1.8 million increase in the year-to-date loss is primarily explained by two non-cash expenses primarily arising during the first two quarters of the fiscal year and approximately $1.1 million increase in non-cash compensation expense paid with equity plus a non-cash debt extinguishment loss of approximately $143,000.

In addition, a significant portion of the approximately $410,000 year-to-date increase of interest expense versus the comparable prior year period, was non-cash. I will also note that year-to-date EBITDA, as adjusted, was approximately $246,000.

This next slide details the approximately $630,000 of non-cash expenses included in Onstream's net loss for the three months ended June 30, 2013. The removal of these non-cash expenses from the net loss of approximately $520,000 results in cash provided by operating activity before changes in current asset and liabilities other than cash for that period of approximately $110,000. The primary non-cash expenses included in our net loss were depreciation and amortization and certain items, employee compensation, professional fees and interest paid with equity.

Although cash provided by operating activities before changes in current assets and liabilities other than cash in the current quarter, represents a decrease as compared to the comparable quarter of the prior year. Compared to the second quarter of fiscal 2013, it represents an approximately $325,000 increase from cash used in operating activities before changes in current assets and liabilities other than cash of approximately $215,000.

This next slide details the approximately $3.3 million of non-cash expenses net of non-cash gains included in Onstream's net loss for the nine months ended June 30, 2013. The removal of these non-cash expenses from the net loss of approximately $3.4 million results in cash used in operating activity before changes in current assets and liabilities other than cash, for that period of only approximately $116,000. The primary non-cash expenses included in our net loss or depreciation and amortization and certain items, employee compensation, professional fees and interest paid with equity.

For the current year nine month period, the most significant of these non-cash expenses is compensation paid with equity, which was primarily related to issuances of shares under an incentive compensation plan adopted by our board of directors in February 2013. Such shares have been and will be issued in accordance with the terms of the 2007 equity incentive plan which our board and a majority of our shareholders adopted on September 18, 2007 and amended on March 25, 2010 and June 13, 2011. In addition, although we expect to continue compensating our executives as well as our employees, directors and consultants with equity from time to time, we do not expect future issuances to result in this level of expense in a single year.

I will now turn the call back over to Randy.

Randy Selman

Thank you, Robert, for the detailed review of our financials for the three and nine-months ended June 30, 2013.

As we discussed in our last conference call, we have begun marketing our new updated Visual Webcaster 4 service and we are receiving excellent feedback on the new service from both existing and new clients. Our resellers such as BT Conferencing and ACT, are beginning to gain traction with the new service and as a result we expect significant increases in revenue beginning in the month of September and through the new year. We continue to add an even more robust features from the client requirements and as a result we are not only building a very competitive service, but we are closing new business as a result.

Recently we built certain security features into our platform to help Dell with its internal communications and we added a live slide option for clients of ACT. Our trend of steady growth in our audio and web conferencing business by our combined Infinite and OCC divisions continued into the third quarter of 2013 with a better than 11% growth rate year-over-year for the third fiscal quarter. Our Infinite subsidiary, now assisted by OCC division, provides feature-rich conferencing solutions that range from on-demand audio and web conferencing to full scale online event management.

Our MarketPlace365 platform has been refined into a comprehensive competitive set of virtual event services that can meet almost any client requirement and we continue to develop new features and capabilities as new requirements arise. Our new Virtual Conference Center, which is an offshoot of the MarketPlace365 platform, is poised for release which will enable our clients to hold multi-event, webcasting based conferences in an HTML5 environment compatible with almost all devices and browsers. This is the next generation of Marketplace365.

From a marketing standpoint, we completely redesigned our websites with a new look and feel and we launched and continue to maintain a substantial social marketing campaign with continuous presence on all the major social networks. We have hired five new sales people bringing our total sales force to 14, and as a result we have the largest pipeline of prospects, pending proposals and RFPs we have had since I can remember. During the remainder of fiscal 2013 and through fiscal 2014, we will continue to make investments in our product technology, marketing initiatives and to improve administrative efficiencies wherever possible.

As I stated earlier, the trend of steady growth in our audio and web conferencing business in all segments continued into the third quarter of 2013. Our Infinite subsidiary now assisted by our OCC division provides feature-rich conferencing solutions that range from on-demand audio and web conferencing to full scale online event management. As previously mentioned, audio and web conferencing services group revenues were approximately $2.9 million for the three months ended June 30, an increase of approximately $247,000 or 9.3% from the corresponding period of the prior fiscal year.

During the third quarter of 2013, Infinite added 722 new accounts, which represents an increase of approximately 40% compared to 514 new accounts added in the same quarter of the previous year. Some notable wins for this quarter, American College of Chest Physicians, The University of Baltimore, Rentech Incorporated, Lukoil Pan Americas, Illinois Insurance Association and the Northwestern Medical Facility Foundation.

Back in November, we announced the acquisition of certain assets and operations of Intella2 Incorporated, a San Diego based communications company. This acquisition brought on stream a list of customers as well as software licenses, equipment, network infrastructure and a recurring revenue stream that was estimated to be over $1 million. The services acquired from Intella2 include a host of complimentary offerings including audio conferencing, web conferencing, text messaging and voice mail services.

I can once again report that during the third quarter, our second full quarter results from Intella2, we generated $245,000 in revenue from the core Intella2 operation and another $61,000 in revenue from the free conferencing business. As mentioned last quarter, the core Intella2 revenue is still being adversely affected to some extent by certain equipment, software and network issues that we are in the process of consolidating and resolving.

During both the second and third quarters we experienced a decline in webcasting revenues as compared to the prior year. Due in part to a reduction of both government and corporate usage, which we believe is temporary. Third quarter revenues in the webcasting division decreased by approximately $332,000 or 20.8% for the three months ended June 30, 2013 as compared to the corresponding period of the prior fiscal year. Although the approximately 1,300 webcasts we produced during the three months ended June 30, 2013 was approximately 100 less than the corresponding period of the prior fiscal year, there were approximately 200 more webcasts during this quarter then during the immediately preceding quarter ended March 31, 2013. And as Robert noted, this resulted in increased revenues of approximately $53,000 in Q3 versus Q2 fiscal year 2013.

We believe that our webcasting division revenues will be favorably impacted during the remaining quarter of fiscal 2013 and into 2014 as a result of the favorable acceptance of our new webcasting platform and the increased efforts by our biggest resellers. Further, our expectation of increased webcasting sales will also be augmented as a result of the additional sales personnel, expanded marketing program, and our new Virtual Conference Center which I explained previously is multiple event conference solution with integrated webcasting that is an offshoot of the MarketPlace365 service.

Some of our new webcasting wins during the June ending quarter are Global Finance, Southern Sun Asset Management, AJ Media, Chevron, Novella Clinical, KP Events, Turner Construction, Institutional Investor Journals, Sonoma Orthopedic Products, Matrix Medical Communications, Aristotle Capital, Unilever and UBB. One more thing to mention, is this conference call webcast is on the new Visual Webcaster 4 platform.

As we have been discussing, our MarketPlace365 platform has been refined into a comprehensive, completive set of virtual event services that can meet almost any client requirement and we will continue to develop new features and capabilities as new requirements arise. We have been winning both event and annual contracts and with the roll out of our new embedded auditorium feature, now called the Virtual Conference Center, within the next few weeks we expect to see even greater sales for the MarketPlace365 service. The Virtual Conference Center is a MarketPlace offshoot that enables our client to host their own conference room or conference center on their website with complete registration functionality and the ability to present any form of online communication such as webcast, webinar, web conferencing or even just an audio conference with social interaction.

Also currently in development is our next MarketPlace365 enhancement which will make the product fully compatible with HTML5 and which we believe will increase marketability as well as broaden use on various mobile devices. Currently we have mobile apps for Android and Apple, but HTML5 will further broaden the platform suite. We have completed the integration of MarketPlace365 into our webcasting division and as a result have realized some cost reductions. At the same time we now have several events scheduled where MarketPlace365 is being used as the event venue and the average multi-day event exceeds $20,000 in combined webcasting and MarketPlace revenues.

As mentioned last quarter, Onstream Media continues to update its website and marketing collateral to appeal to targeted audiences including associations, accounting and finance, investor relations, education, legal, health sciences, technology, media and entertainment, government and publishing. Our website has been reconfigured to showcase key products and optimized with new landing pages and call to action. We have also implemented a new healthcare microsite to support this rapidly growing vertical market. Additionally, we have implemented a new RFP strategy to identify and win Fortune 1000 RFPs, targeting conferencing, webcasting and video hosting opportunities. We continue to refine successful programs including pay-per-click advertising, search engine optimization, retargeting, product reviews, direct voicemail, trade shows, channel relationships, and most of all thought leadership through articles, speaking engagements, white papers and case studies.

Upcoming trade shows include TRSA Global, Government Video and ASAE Tech. As part of our content market strategy, we recently published an article to Streaming Media Magazine's Field Guide, targeting video production companies and titled, 'choosing a webcasting vendor'. Additionally, we launched Virtual B2B, a proprietary content portal which includes articles relating to conferencing, webinars, web casting and virtual events.

Our 12-part webinar series which we are sponsoring in conjunction with Akamai for key level executive decision makers responsible for communications, marketing, training and online video publishing in their organization, has been very successful and the lead generation from the event should contribute to our revenues in the upcoming months. Recent webinars have included Social Media and the SEC, IPO Boot Camp, Citibank's Women & Co., and the Wall Street Journal with Mr. Magazine. As a result of the success of the Akamai webinar program, we are extending our webinar outreach with a new webinar series conducted by Ken Molay of Webinar Success, etouches, Streaming Learning Center, and ComProBiz.

Our social media strategy will continue to build upon the brand awareness, promotional and lead generation goals. Social media marketing will enable Onstream to promote webinars, webcast and other virtual offerings to drive attendance to those events, traffic to the updated website and develop leads. Continued use of the Google Plus platform will positively affect (inaudible) and thus website traffic through better Google search results. You are all aware of our recent acquisition of Intella2. In order to consolidate several legacy brands marketed by Intella2, we are going to rebrand Intella2 to Advantage Conferencing. This will enable us to establish brand consistency and optimize our lead generation efforts with a new website, marketing collateral, and email campaign.

We have also implemented an aggressive win back campaign targeting former Intella2 and Infinite conferencing clients. Finally, as I previously mentioned, we hired five new sales people bringing our corporate wide sales team to 14 and we will continue adding sales personnel as our cash flow allows. Also, we have begun to expand our sales and marketing into Latin America due to the growth and demand for our products and services there. As a South Florida headquartered company, we are uniquely positioned to support this market. We plan to develop both a direct sales organization as well as channel partnerships in the region.

Looking towards the remainder of the fiscal year and into the beginning of fiscal 2014, we believe we are on track to show improvement in our revenues, EBITDA, and our cash flow. Based on a preliminary look at July 2013 revenues, we believe that our fourth quarter revenues are on pace thus far to hopefully match revenues to the immediately preceding third quarter which will represent an improvement over the traditional seasonal revenue decline from the third to fourth quarters seen in prior year. We are also optimistic about improvement on both the top and bottom line during fiscal 2014 based on our current pipeline of prospective deals.

Now with the help of our operator, we will open up the call up for questions.

Question-and-Answer Session

Operator

(Operator Instructions) And our first question comes from Fred Milligan. Your line is now open.

Fred Milligan - Sanders Morris Harris

The breakeven in terms of profitability, not cash flow but profitability on a quarterly basis would be about how much in revenues?

Randy Selman

Well, if you extract it from the current numbers, I would say probably, maybe another $400,000 or $500,000.

Robert Tomlinson

You know we have said basically, usually about $5 million...

Randy Selman

$5 million for the break point, yeah.

Fred Milligan - Sanders Morris Harris

$5 million. So when do you expect to get to the $5 million?

Randy Selman

Good question. It looks good for what I had mentioned about the pipeline. I can't even remember how far back we have seen this many RFPs, proposals going out. Just tremendous activity. With a larger sales force now, there is a whole lot more business being generated coming in the door. And if we get our fair share of those RFPs and which I expect we will, because the Visual Webcaster 4 platform seems to be very well received out there, I think that could be obtained pretty quickly.

Fred Milligan - Sanders Morris Harris

What does that mean, this year or....?

Randy Selman

Fiscal year, obviously not, but maybe within a quarter or so. It could be sooner. I mean we have got some big accounts coming in. So if those hit -- and the whole thing with webcasting services is you can close a pretty large account but it does take lead time before they reach the levels of what they contracted for. You never know if it will take a month, a few months or even a couple of quarters before they reach those levels. But I can assure you, we are working with a number of very very large, I will even say multimillion dollar accounts, that should be able to be converted into revenue and that we will see these accounts over the next couple of quarters starting to hit.

Fred Milligan - Sanders Morris Harris

It's nice to listen to the expected improvements and see what you are doing, or hear what you are doing. But there is some concern in terms of going forward, just how long this might last. So is there any way to tell us about the proprietary nature of what you are doing and in fact the competitive advantages that you might have.

Randy Selman

Well, again, we saw the downturn in the first two -- actually the second and third quarters, part of this quarter obviously. The [second] quarter did start to show the rebound. So for those first two quarters we did see the downturn and we found out later on.....

Fred Milligan - Sanders Morris Harris

Excuse me, is there a cyclical aspect of what you are doing?

Randy Selman

The only cyclical aspect we were seeing was the seasonal fourth quarter. This year maybe a little confusing because we saw the downturn in those first two quarters. But some of that came from some of the government issues that were going on at that time, including the sequestering and of course we saw just a general corporate decline. But we also found out that that was industry wide. We have spoken to several conferencing and webcasting companies, who also saw a dip in revenues during that point and the public ones reflected it and somebody who could look at the results from those companies can see that there were downturns there as well.

So it was an industry wide dip there. It started to come back in the June quarter. We saw a little increase in the revenues. In the webcasting we certainly saw an improvement in their web conferencing and audio conferencing business. So going forward now, if things continue to improve, and as I said, we are going to get our fair share of RFPs and proposals that we are sending out right now. So I anticipate that there will be improved revenue production. And with the cost cutting measures that we are doing, we are going to have some better bottom line results as a result. So it's probably going to be very apparent by the end of the year that that a, we have made some major cost cuts that affect our cash flow, and that we are seeing improvements in revenues as a result of all these larger deals that we have been concluding.

And a lot of that is coming from our resellers. Our resellers have certainly stepped up. We are very happy to finally see some real activity. They have had some pretty big wins....

Fred Milligan - Sanders Morris Harris

Excuse me, why do you think they have stepped up?

Randy Selman

Because of the new product platform, they are really gaining ground introducing VW4 to their clients and as a result we are winning business with them.

Fred Milligan - Sanders Morris Harris

Is there a proprietary aspect to what you are doing?

Randy Selman

Well, the main thing about VW4, to give you kind of the edge. Onstream has always done business with our clients in a client centric way. We have always provided exceptional white glove service, exceptional customer support. Our product was old and so they were hanging on because of the quality of our service and we really have to give props to our operations group for that. But in effect what's happened now is our debt team has produced a really great product that we are now introducing. So the combination of having a state of the art webcasting product along with quality customer service is now giving us an edge on competition. And I can't tell you how many times we hear how bad our competitors treat their clients and that they wished we had a quality platform, and now that we do, people are switching back to us or to us. And I feel very very confident that Visual Webcaster 4 will have a major impact on operating results going forward.

Fred Milligan - Sanders Morris Harris

So a year from now the company is going to be able to -- say a lot different than what it has been?

Randy Selman

That’s what I am expecting and that’s what I am hoping.

Fred Milligan - Sanders Morris Harris

Okay. You guys are going to buy stock in the--?

Randy Selman

We bought a bunch of it recently. We may be trying to soon, we will see.

Fred Milligan - Sanders Morris Harris

(Inaudible) is a good buy?

Randy Selman

It certainly is.

Fred Milligan - Sanders Morris Harris

Is the cash adequate?

Randy Selman

It's adequate. It's tight but it's adequate. You know it always gets a little tighter in the summer months but we anticipate a big September, October and November. So as things go well we really pick up at that point.

Operator

Thank you. (Operator Instructions)

Randy Selman

I do have a couple of online questions. One asked by [John Switner]. Over the past months we have talked and -- you have mentioned you had 14, do you have 14 total or just the five you are saying you have now? No, there were five additional to the nine that we had prior. There are now 14 salespeople selling our webcasting and our web and audio conferencing services. And of course MarketPlace365 services as well. So there are now 14 sales people. The highest level the company has had since we started business.

Second question, he is asking about resellers, who are we talking about and do you have an estimate of revenues? Obviously, we can't really estimate their revenues until we actually have some track record. But the primary resellers that are stepping up is BT and ACT. And we expect a couple of the others that are coming on board, that have signed agreements with us, will be in that mix very soon. You know revenue estimates for hundreds of million dollar companies could be anywhere, so I can't really give a specific number. But they are working with Fortune 1000 companies and those companies do order a lot of webcasting and conferencing services. So my expectation is that we will see some pretty good revenue production by those resellers in the coming quarters.

And that’s all I have on the Q&A now. Patrick, any other on the audio side?

Operator

There are no further phone questions.

Randy Selman

Okay. With that, thank you all for joining us today. We look forward to updating you on our year-end fiscal 2013 results in about five months today - four months from today. All right, thank you again and good bye.

Operator

Thank you. And ladies and gentlemen, this concludes today's webcast. We thank you for your participation. You may now disconnect your lines and have a great day.

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