2004-11-22 09:45:02
Dwango Reports Continued Record Revenues for Third Quarter

Business Editors

SEATTLE--(BUSINESS WIRE)--Nov. 22, 2004--

Growing Relationships with Cingular, AT&T Wireless, and Nextel
Drive Another Quarter with over 200% Increase in Revenue

Dwango(R) North America (OTCBB WGN), a leading developer and
distributor of entertainment content and applications for mobile
phones, today announced record revenue for its third quarter for the
period ended September 30, 2004.
Dwango reported quarterly revenue of $545,000, a 208% increase
versus the second quarter. For the nine months ended September 30,
2004, the Company had total revenue of $781,000. Dwango reported a
third quarter loss of $2,775,000, or $.39 per share. For the nine
months ended September 30, 2004, Dwango lost $6,430,000, or $.94 per
share.
"It is an exciting time for Dwango. Our investments in product
development, brand marketing, and infrastructure continue to pay off,"
said Rick Hennessey, Dwango's chief executive officer. "The demand for
ringtones sold through leading wireless carriers such as Cingular
Wireless, Nextel Communications and AT&T Wireless continues to grow
rapidly, as demonstrated by the nearly four-fold increase in revenue
in that area. We expect our success in ringtones to help fuel growth
in sales of our games and other feature products, where partnerships
with Rolling Stone and ESPN allow us to offer popular proprietary
content. Recently, we completed a $3 million financing with an
institutional investor, which will accelerate marketing activities,
continue to expand distribution and acquire more exclusive content. We
expect that our rapid penetration of many of the leading wireless
carriers has laid the groundwork for continued growth in the fourth
quarter and 2005."

Some of the highlights of the third quarter included:

-- Strengthened balance sheet. Dwango raised $3 million through a
private placement with Weiss, Peck & Greer Investments.

-- Enhanced first-of-its-kind functionality for mobile content.
Dwango delivered the first-of-its-kind SMS wake-up
functionality for Dwango's industry leading games, including
the recently launched ESPN Bassmaster game "Legendary
Lunkers."

-- New partners. Dwango partnered with Beliefnet, Inc., the
premier multi-faith media company and online community, to
bring customers mobile media content under the Beliefnet
Mobile brand.

-- Expanded Ringtone offerings. Dwango signed an agreement with
INgrooves, the world's largest digital record company, to
create music ringtones from INgrooves' dance, electronic,
hip-hop and R&B artists and labels.
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Dwango North America Corp.
Condensed Consolidated Balance Sheet
(In Thousands)

September
30,
2004
-----------
ASSETS (unaudited)
Current Assets:
Cash $1,823
Prepaid Royalties 659
Prepaid expenses 188
Other current assets 27
Accounts Receivable 452
-----------

Total current assets 3,149

Fixed assets, (net) 283
Deferred financing costs 865
Intangibles, net 402
Prepaid License 339
-----------

$5,038
===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $680
Current portion of lease obligation 59
-----------

Total current liabilities 739

Long-Term Liabilities:
Senior convertible notes payable, net of debt 1,479
discount and deferred financing of $4,776,000
Accrued interest - senior convertible notes 256
Long term portion of lease obligation 75
-----------
Total Liabilities 2,549
-----------

Redeemable Convertible Series A Preferred stock, 50
$.001 par value; issued and outstanding 1,250
shares; including $33,000 of accrued dividends
and net of debt discount and deferred financing
of $1,233,000

Redeemable Convertible Series B Preferred stock, 674
$.001 par value; issued and outstanding 3,000
shares; including $34,000 of accrued dividends
and net of debt discount and deferred financing
of $2,361,000

10,000,000 total shares of Preferred stock authorized

Stockholders' equity:
Common stock, $.001 par value; 50,000,000 shares 7
authorized; issued and outstanding 7,412,000
shares
Additional paid-in capital 14,315
Deficit accumulated during development stage (12,557)
-----------

Total stockholders' equity 1,765
-----------

$5,038
===========

Consolidated Income Statement
(In Thousands, except per share data)
(Unaudited)

Three-Month Nine-Month
Period Ended Period Ended
September 30, September 30,
2004 2004
2004 2003 2004 2003
-------- -------- -------- --------

Revenue $545 $4 $781 $10

Cost of Sales 381 468
-------- -------- -------- --------

Gross Profit 164 4 313 10
-------- -------- -------- --------
Expenses:
Sales and Marketing 324 31 615 31
Research and Development 677 84 1,597 84
General and administrative 1,047 1,223 2,666 2,422
-------- -------- -------- --------
Operating loss (1,884) (1,334) (4,565) (2,527)

Interest expense, including
amortization of debt issuance
cost and net of interest income 679 187 1,647 247
-------- -------- -------- --------
Net loss (2,563) (1,521) (6,212) (2,774)

Accretion of redeemable
preferred stock obligations (212) - (218) -
-------- -------- -------- --------
Net Loss attributable to
common stockholders $(2,775) $(1,521) $(6,430) $(2,774)
======== ======== ======== ========
Common share data:
Basic and diluted loss per share $(0.39) $(0.30) $(0.94) $(0.55)
======== ======== ======== ========

Weighted average number of
basic and diluted common
shares outstanding 7,116 5,074 6,869 5,052
======== ======== ======== ========
*T
About Dwango North America

Dwango North America offers a comprehensive approach for bringing
lifestyle and affiliate brands to the wireless market through
customized entertainment content, ringtones, games and applications
for mobile phones. Dwango North America holds exclusive technology and
trademark licenses from Dwango Co. Ltd. of Japan. Dwango North America
corporate information can be found at www.dwango.com.

This release contains forward-looking statements. These
forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially
from those projected. These statements are not guarantees of future
performance and are subject to certain risks, uncertainties and
assumptions that are difficult to predict. Readers are cautioned not
to place undue reliance on these forward-looking statements, which
speak only as of the date of this release. Dwango undertakes no
obligation to update publicly any forward-looking statements to
reflect new information, events or circumstances after the date of
this release or to reflect the occurrence of unanticipated results.
The risks and uncertainties to which forward-looking statements are
subject include, but are not limited to, the need to raise capital,
the business of Dwango, including the market for its products and
services, the effect of government regulation and competition, and
other material risks.