Narrowstep(TM) Inc. Reports 1st Quarter Results for Fiscal Year 2008

Narrowstep(TM) Inc. Reports 1st Quarter Results for Fiscal Year 2008

NEW YORK and LONDON, July 17 /PRNewswire-FirstCall/ -- Narrowstep(TM) Inc. (BULLETIN BOARD: NRWS) , the TV on the Internet Company, announced results for the first quarter of fiscal year 2008, ended May 31, 2007. Revenue for the quarter was $1.6 million with a loss of $3.3 million or $0.07 loss per share, compared to revenue for the comparable quarter of the previous year of $1.1 million with a loss of $1.2 million or $0.03 loss per share. At quarter's end the company had $4.3 million in cash.

"The future of television is largely dependent on the Internet, and television on the Internet is an area where Narrowstep has a distinct advantage," said David C. McCourt, Chairman and CEO. "We continue to see tremendous demand for Narrowstep's technology and tools for monetizing video content. During the first quarter, we launched a number of exciting channels for industry leaders such as Virgin Media, the Sci Fi Channel and award- winning film company, BreakThru Films. We also entered into exclusive partnerships with the William Morris Agency, the world's largest talent and literary agency, as well as with Telefonica, the third largest telecommunications company in the world."

Overall revenue increased by 39% year over year, the increase in narrowcasting sales was 69% year over year ($1.4 million compared to $0.8 million).

"As we discussed last quarter, Narrowstep is focused on capitalizing on the high growth, high margin narrowcasting segment of our business. As such, we have moved away from the lower margin production business in order to focus on the higher margin channel building and channel development segment which plays to the strength of our telvOS(TM) platform, and where I believe we have a real advantage both in the U.S. and abroad," added McCourt.

At this time, Narrowstep will not be conducting an investor call. For additional information please contact, Jesse Case at (609) 951-2221 or jcase@narrowstep.com.

PART 1 - FINANCIAL INFORMATION
Item 1 - Financial Statements

NARROWSTEP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
Three Months Ended
May 31, 2007 May 31, 2006
$ $
Revenue
Narrowcasting and other 1,415,160 836,513
Production services 175,633 308,010
Total revenue 1,590,793 1,144,523

Costs and Expenses

Operating 1,225,791 422,218

Selling, general and administrative 2,645,624 1,680,563

Research & development 798,750 255,057

Total operating expenses 4,670,165 2,357,838

Operating Loss (3,079,372) (1,213,315)
Interest income (expense), net (179,643) 44,099
Currency exchange income (loss) (1,903) (589)
(3,260,91
Net Loss 8) (1,169,805)

Foreign currency translation adjustment 17,472 36,764

Comprehensive Loss (3,243,446) (1,133,041)

Net Loss per Common Share - Basic and Diluted (0.07) (0.03)
Weighted-Average Number of Shares
Outstanding, Basic and Diluted 45,348,974 43,730,360

See Notes to Condensed Consolidated
Financial Statements.

NARROWSTEP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
May 31, 2007 Feb. 28, 2007
(Unaudited)
$ $
Assets `
Current assets:
Cash and cash equivalents 4,328,212 466,870
Accounts receivable, net of allowance
for doubtful accounts of
$1,522,139 and $940,534 at May 31,
2007 (unaudited) and
February 28, 2007, respectively 1,415,949 1,403,779
Prepaid expenses and other current
assets 298,942 332,192

Total current assets 6,043,103 2,202,841

Property and equipment, net 1,610,274 1,234,557
Software development costs, net 125,006 149,080

Debt issuance costs, net 157,191 -

Total Assets 7,935,574 3,586,478

Liabilities and Stockholders' Equity (Deficit)
Liabilities
Current liabilities:
Unearned revenue 461,190 384,295
Accounts payable 994,621 960,580
Net obligations under capital leases, current 90,666 88,110
Accrued expenses and other current
liabilities 979,523 977,948

Total current liabilities 2,526,000 2,410,933

Net obligations under capital leases
- long-term 113,032 135,470
Convertible notes and interest
payable, net of debt discount of
$920,034 6,402,682 -

Other long term liabilities 56,158 -
Total Liabilities 9,097,872 2,546,403

Commitments and Contingencies
Stockholder's Equity (Deficit)
Common stock, $0.000001 par value
450,000,000 shares
authorized, 45,348,974 issued and
outstanding at May 31,
2007 (unaudited) and February 28,
2007, respectively 45 45
Additional paid-in capital 21,584,762 20,543,688
Accumulated deficit (22,816,451) (19,555,533)
Accumulated other comprehensive income
(loss) 69,347 51,875

Total Stockholders' Equity (Deficit) (1,162,297) (1,040,075
Total Liabilities and Stockholders'
Equity (Deficit) 7,935,574 3,586,478

See Notes to Condensed Consolidated
Financial Statements.

About Narrowstep

Narrowstep(TM) Inc. (BULLETIN BOARD: NRWS) , the TV on the Internet company, is a leading provider of Internet TV services to 100+ companies worldwide. Narrowstep's propriety technology, the Television Operating System(TM) or telvOS(TM) delivers the most television-like and true community building Internet TV experience available. A pioneer in the IPTV spectrum, Narrowstep offers the expertise to build channels, as well as state-of-the-art technology that can send video to multiple platforms. For more information about telvOS(TM), please visit http://www.narrowstep.com/technology/internet-tv-software-platform.aspx and for more information about Narrowstep, please visit http://narrowstep.com/ or call 609-951-2221.

Forward-looking Statement:

Certain statements in this news release constitute 'forward-looking statements' within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known or unknown risks, including those detailed in the Company's filings with the Securities and Exchange Commission, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

First Call Analyst:
FCMN Contact: j.case@narrowstep.com

Source: Narrowstep Inc.

CONTACT: Jesse Case, Narrowstep(TM) Inc., Public Relations Coordinator,
+1-609-951-2221, or j.case@narrowstep.com

Web site:

http://www.narrowstep.com/

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