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MediaBay Posts Declining Sales For Second Quarter

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September 7 – September 14, 2006 Edition

MediaBay Posts

Declining Sales

For Second Quarter

CEDAR KNOLLS, NJ/8/18/06—MediaBay, Inc., a digital media and publishing company specializing in the marketing of spoken audio entertainment, on August 18 announced declining financial results for the second quarter ended June 30, 2006. The company said in its SEC filing that without selling or receiving new finances it might face bankruptcy before the end of the year.

The company has apparently been hurt by switching from selling physical editions of spokenword audios to digital-only editions—with dreary results.

The Company reported net sales of $1.1 million for the second quarter of 2006, down from $2.3 million in the second quarter of 2005. Net loss applicable to common stockholders for the three months ended June 30, 2006 was $13.1 million, or $1.24 per diluted common share, compared to a net loss of $3.0 million, or $0.49 per diluted common share for the three months ended June 30, 2005.

The three months ended June 30, 2006 results included $11.8 million in non-cash charges related to the accretion of discount on mandatory redeemable preferred stock and an impairment charge for goodwill. Net sales were $2.6 million for the six months ended June 30, 2006, down from $5.6 million for the six months ended June 30, 2005. Net loss applicable to common stockholders for the six months ended June 30, 2006 was $15.7 million, or $1.49 per diluted common share, compared to a net loss of $22.2 million, or $4.36 per diluted common share for the six months ended June 30, 2005. The six months ended June 30, 2006 results included $11.8 million in non-cash charges related to the accretion of discount on mandatory redeemable preferred stock and an impairment charge for goodwill. The six months ended June 30, 2005 reflected $18.0 million in non-cash charges related to the Company’s March 2005 financing, including a deemed dividend on preferred stock for the beneficial conversion feature and a loss on early extinguishment of debt.

Adding to its woes, MediaBay received notice in August from The NASDAQ Stock Market that, based on the Company’s Form 10-Q for the quarter ended June 30, 2006, the Company does not comply with the $10,000,000 stockholders’ equity requirement for continued listing on the NASDAQ Global Market.

MediaBay Inc. maintains a library of more than 75,000 hours of content, including audio books from best-selling authors and the history of American Radio. Some of MediaBay’s digital content partners include BBC, Blackstone, CBS Radio, Harper Collins, Hay House, Oasis, Penguin Audio, Random House, Simon & Schuster, Sound Room, and Zondervan. In addition to its popular Audio Book Club, MediaBay distributes its content through proprietary web sites including audiobookclub.com, radiospirits.com and Soundsgood.com as well as through partner channels including MusicNet, Real, MSN Music, Sirius Satellite Radio and XM Satellite Radio. For more information on MediaBay, please visit http://www.soundsgood.com/, http://www.mediabay.com/, http://www.radiospirits.com/ and http://www.radioclassics.com/.