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Thursday April 29, 7:00 am Eastern Time
Company Press Release
Digital Lava Reports First-Quarter 1999 Results
LOS ANGELES--(BUSINESS WIRE)--April 29, 1999--Digital Lava Inc. (AMEX:DGV -
news), a leader in streaming media applications and video publishing technology, Thursday announced first-quarter results for fiscal 1999.
During the quarter, the company successfully began achieving its strategic growth goals and produced revenue growth in the
process.
Joshua Sharfman, Digital Lava's president and chief executive officer, said: ''For 1999, we committed ourselves to three
essential growth goals -- to penetrate the business and training software markets; expand our customer base; and strengthen
our sales and marketing effort. As a result, we experienced a significant growth in revenue over the first quarter of 1998 driven
by our ability to successfully execute this strategy and penetrate our target markets.''
Results
For the first quarter ended March 31, 1999, revenues increased 52 percent to $176,879 vs. $116,227 in the first quarter of last year. The company reported a net loss for the quarter of $4,909,191, or $2.92 per basic and diluted share, vs. a net loss of $1,272,463, or $8.60 per basic and diluted share, for the same quarter last year.
The net loss for the quarter included an extraordinary loss of $3,672,656 on extinguishment of debt. Excluding the extraordinary loss, net loss for the quarter would have been $1,236,535, or $1.00 per basic and diluted share, vs. $1,272,463, or $8.60 per basic and diluted share, for the same quarter last year.
Danny Gampe, Digital Lava's chief financial officer, said: ''The growth in revenue for the quarter from the prior year reflected a
product mix of approximately 52 percent of revenue generated from higher-margin vPrism(tm) and VideoVisor(tm) software and approximately 48 percent of revenue from our consulting, publishing and other services.
''Total gross margin was 77 percent and, going forward, we expect software sales to increase as a percentage of revenue, which generally obtains a higher margin than consulting and other services.''
First-Quarter 1999 Performance
During the quarter, Digital Lava focused on implementing a nationwide sales presence through the addition of five senior salespeople in five regions, including Chicago, New York, Texas, Washington, D.C. and Atlanta.
With its augmented sales capabilities, Digital Lava is positioning itself to actively penetrate the $50 billion business and training
software market, where it can leverage the growing demand for business, video training, communications and distance learning
applications with its video publishing technology.
To complement its marketing efforts, the company is also participating in StorNet's Web-based Video Communications Seminar series, which seeks to educate prospective customers on the solutions Digital Lava's video software provides.
Sharfman said: ''An integral factor in achieving our goal of significant growth this year is further expanding our sales and
marketing effort and creating brand awareness for our video publishing applications. By strengthening our reach in the U.S., we
will be better able to rapidly build our customer base by targeting Fortune 1000 companies and other middle-market-sized
companies.''
Another important factor during the quarter was prevalence of repeat customers, which accounted for more than 59 percent of
revenues. Digital Lava continued relationships and completed multiple projects with such users as the Los Angeles Unified
School District, Diedrich Coffee, University of California Los Angeles, Cisco Systems and Lotus Corp.
Financial Position
On April 5, 1999, Dirks & Company Inc., the underwriter of the Digital Lava IPO, exercised its over-allotment option to purchase an additional 226,624 shares of common stock and 113,312 redeemable common stock purchase warrants. Gross proceeds from the exercise of the over-allotment option raised $1.7 million, bringing the total amount raised by the company's initial public offering to $19.8 million.
At March 31, 1999, Digital Lava maintained a positive cash position with $5,151,113 in cash and cash equivalents as compared with $30,893 at Dec. 31, 1998. Additionally, the company maintains short-term investments of $5,368,446 to further facilitate the growth expected this fiscal year.
Outlook
Sharfman said: ''For the upcoming quarters, our focus will remain on significantly growing revenue through penetrating target
markets, expanding our client base and providing leading-edge product innovation.
''To support these initiatives, we will continue to augment our sales force and we are participating in several tradeshows in the
coming months including The RealNetworks conference, the American Society for Training Development conference and The
Streaming Media East conference.
''Additionally, we will be continuing our seminars in conjunction with StorNet's 'Web-based Video Communications' series. The seminars will enable us to highlight our technology, its applications and further educate potential customers on the benefit of our products, which will play an important role in our growth going forward,'' Sharfman added.
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