K2 DESIGN, INC. REPORTS SECOND
QUARTER/SIX MONTHS RESULTS
Business Wire
August 12, 1999, 6:56 a.m. PT
Business Editors
NEW YORK--(BUSINESS WIRE)--Aug. 12, 1999--K2 Design, Inc.
(NASDAQ: KTWO, KTWOW) (www.k2design.com) a leading provider of
e-communications and marketing services to Fortune 500 and other
online innovators, today reported results for the period ended June
30, 1999.
Revenue was $822,000 compared with $1,895,000 for the second
quarter of 1998. The company had a $1,523,000 gain from the sale of
50,000 shares of its 24/7 Media, Inc. (NASDAQ: TFSM) common stock,
which contributed to net income for the quarter of $788,000, or 23
cents per basic share and 21 cents per diluted share. The company
still owns more than 146,000 shares of TFSM common stock. During the
same quarter a year ago, the company reported net income of $3,005,000
or 84 cents per basic and diluted share, which was due primarily to a
$3,102,000 gain from the sale of its CLIQNOW! Division to 24/7 Media,
Inc.
For the first six months of 1999, gross revenues declined to
$2,266,000 from $4,036,000 in the first half of 1998. Net income for
the six months was $106,000, or 3 cents per basic and diluted share,
compared with net income of $3,042,000, or 84 cents per basic share
and 80 cents per diluted share for the comparable period a year ago,
due to the net gain from sale of the company's CLIQNOW! Division
during the 1998 period.
"We are, of course, not satisfied with these results, but based
the volume of new business secured in the second quarter we expect
revenue to increase in the third quarter,*" said Matthew de Ganon,
executive chairman of K2 Design, Inc. "We had a very busy second
quarter, acquiring great clients, adding strong new staff, refining
our business process and adding to our management, directors and
advisory team."
"As of the second quarter these accomplishments have not
translated into the dynamic financial performance that we believe is
attainable, but we have been able to aggressively pursue new business,
while maintaining and growing strong relationships with existing
accounts, including NCR, Standard & Poor's and Varsitybooks.com.
"These new accounts are significant wins, which we hope to
announce later in the year. They are in line with our stated focus on
four specific industries: travel, telecommunications, healthcare and
financial. As noted in the past, we are not permitted to immediately
announce new accounts due to competitive considerations of our
clients. They consider the initiatives we plan and build for them
strategic assets, and as such are highly proprietary."
de Ganon continued, "Additionally, we have significantly rebuilt
our board composition, bringing in P. Scott Munro and David Sklaver,
both tremendous assets from an M&A and management perspective. We were
also very pleased to announce the appointment of Anthony Dwyer as an
advisor."
Dwyer, age 34, is a managing director and chief market strategist
at Ladenburg Thalmann & Co., Inc., one of the nation's oldest
investment banks. Dwyer will offer K2 his extensive business and
equity market experience and advise the company on the most effective
ways to enhance shareholder value. At Ladenburg Thalmann, Dwyer
advises institutional and high net worth individuals on the direction
of the market and its underlying sectors and manages the research
department. He is also a widely followed analyst in the financial
press and is interviewed regularly by major business television
programs and financial journals.
"We have continued to expand our client base in our targeted
categories, attract substantial new talent to the company and develop
our visionary W3 Organizational Modeling(TM) as a guide for global and
multi-divisional corporations looking to communicate and do business
on the Internet. We believe that continuing on this course will
ultimately yield results which reflect K2's position as a leading
e-communications strategist and service provider,(a)" de Ganon
concluded.
K2 Design, Inc., is a leading provider of e-communications,
consulting and marketing services specializing in online strategies
and media campaigns for e-businesses. Among K2's clients are:
Lexis-Nexis; Arthur Andersen; NCR Corporation; the Puerto Rico
Convention Bureau; Smith Kline Beecham; Sony Online Entertainment;
Standard & Poor's; and Varsitybooks.com. K2 provides clients with a
broad range of complementary information technology and interactive
business solutions. K2 proprietary techniques include W3
Organizational Modeling(TM), and Insight Marketing Surveys(TM) which
provide solutions for businesses participating in the emerging digital
economy. Additional information about K2 Design is available on the
web at www.k2design.com.
(a) This statement is a forward-looking statement reflecting current
expectations. There can be no assurance that the Company's actual
future performance will meet the Company's current expectations. See
"Factors Affecting Operating results and Market Price of Stock"
continued in the Company's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1998 for a discussion of the risks and
uncertainties which may affect this statement.
-0-
*T
K2 DESIGN, INC. and Subsidiary
Consolidated Summary Results of Operations (Unaudited)
For the Three Months Ended
6/30/99 6/30/98
Revenues $ 822,143 $ 1,895,232
Direct salaries and costs $ 718,456 $ 1,202,492
Selling, general and
administrative expenses 719,197 $ 686,894
Depreciation $ 103,795 $ 88,271
--------------- ---------------
Loss from continuing
operations before
interest & other
income net,
income taxes
and discontinued
operations $ (719,305) $ (82,425)
Interest and
other income, net $ 1,554,856(a) $ 21,378
Provision for
income taxes $ 47,876 $ --
--------------- ---------------
Income (loss) from
continuing operations $ 787,675 $ (61,047)
Loss from
discontinued operations $ -- $ (36,504)
Gain from sale of
discontinued operations $ -- $ 3,102,123(b)
--------------- ---------------
Net income $ 787,675 $ 3,004,572
=============== ===============
Income (loss) per
share from continuing
operations -
Basic $ 0.23 $ (0.02)
--------------- ---------------
Diluted $ 0.21 $ (0.02)
--------------- ---------------
Loss per share
from discontinued
operations -
Basic $ -- $ (0.01)
-------------- ---------------
Diluted $ -- $ (0.01)
-------------- ---------------
Gain from sale
of discontinued
operations -
Basic $ -- $ 0.87
-------------- ---------------
Diluted $ -- $ 0.87
-------------- ---------------
Net Income per share -
Basic $ 0.23 $ 0.84
============== ===============
Diluted $ 0.21 $ 0.84
============== ===============
Weighted average
basic common
shares outstanding 3,483,620 3,585,671
========= ==========
Weighted average
diluted common
shares outstanding 3,766,210 3,585,671
========= ==========
For the Six Months Ended
6/30/99 6/30/98
Revenues $ 2,266,206 $ 4,035,614
Direct salaries and costs $ 2,131,347 $ 2,668,093
Selling, general and
administrative expenses $ 1,351,741 $ 1,221,114
Depreciation $ 199,805 $ 177,279
--------- ---------------
Loss from continuing
operations before
interest & other
income net,
income taxes
and discontinued
operations $ (1,416,687) $ (30,872)
Interest and
other income, net 1,580,082 (a) $ 58,984
Provision for
income taxes $ 57,201 $ 2,437
------------------ ---------------
Income (loss) from
continuing operations $ 106,194 $ 25,675
Loss from
discontinued operations $ -- $ (85,309)
Gain from sale of
discontinued operations $ -- $ 3,102,123(b)
------------------ ------------
Net income $ 106,194 $3,042,489
================== ===========
Income (loss) per
share from continuing
operations -
Basic $ 0.03 $ 0.01
----------------- ---------------
Diluted $ 0.03 $ 0.01
----------------- ---------------
Loss per share
from discontinued
operations -
Basic $ -- $ (0.02)
------------------ ---------------
Diluted $ -- $ (0.02)
------------------ ---------------
Gain from sale
of discontinued
operations -
Basic $ -- $ 0.85
------------------ --------------
Diluted $ -- $ 0.81
------------------ --------------
Net Income per share -
Basic $ 0.03 $ 0.84
================= ===============
Diluted $ 0.03 $ 0.80
================= ===============
Weighted average
basic common
shares outstanding 3,471,480 3,633,171
========= ==========
Weighted average
diluted common
shares outstanding 3,762,918 3,783,141
========= ==========
*T
(a) On May 3, 1999 the company sold 50,000 shares of its stake in
24/7 Media, Inc. common stock, resulting in a $1,522,500 gain.
(b) On June 1, 1998, the company sold its CLIQNOW! Division to 24/7
Media, Inc. As a result of this sale, the consolidated statements
of operations for the three and six months ended June 30, 1998
have been restated to reflect the CLIQNOW! Division as a
discontinued operations and to show a loss from discontinued
operations separately. |
