On2 Technologies Reports 70% Increase in Revenue in Q1 2002; Achieves Double Digit Sequential Growth for Third Quarter in a Row.Business Editors NEW YORK--(BUSINESS WIRE)--April 22, 2002 On2 Technologies On2 Technologies ((AMEX:ONT)), formerly known as The Duck Corporation, is a small publicly-traded company (on the American Stock Exchange) that designs proprietary and standards-based video codec technology. Inc., The Duck Corporation (AMEX AMEX See: American Stock Exchange : ONT ONT Ontario (old acronym - ON is now frequently used) ONT Optimizing Converged Cisco Networks (cisco CCNP exam) ONT Optical Network Terminal ONT Ontario Northland Railway ), the industry leader in compression technology, today announced financial results for the first quarter ended March 31, 2002. Revenues for the quarter ended March 31, 2002 were $1,202,000, an increase of 70% over $706,000 in revenues for the same quarter last year and an increase of 31% over $919,000 in revenues for the fourth quarter of 2001. Net loss attributable to common stockholders for the first quarter of 2002 was $1,394,000, or $0.03 per share, compared to $5,426,000, or $0.19 per share, in the same quarter last year and $4,326,000, or $0.12 per share, for the fourth quarter of 2001. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become loss, which excludes, interest, taxes, depreciation of fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → and amoritzation of purchased technology, was $979,000, or $0.02 per share for the quarter ended March 31, 2002. "Clearly, the operations of the company are moving in the right direction. Over the last three quarters, we have consistently increased revenue while decreasing our operating costs operating costs npl → gastos mpl operacionales ," said Douglas A. McIntyre, President and Chief Executive Officer of On2 Technologies. "And while the demand and integration work surrounding VP4 continues to be strong, our engineers also remained focused on improving our product offerings. VP5 is the fruit of those labors. VP5 should provide us a distinct competitive advantage in the marketplace." Mark Meagher, On2's Chief Financial Officer, noted, "In the wake of heightened accounting concerns and the ambiguity surrounding pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma financial information, our earnings releases will contain only those financial statements that adhere to adhere to verb 1. follow, keep, maintain, respect, observe, be true, fulfil, obey, heed, keep to, abide by, be loyal, mind, be constant, be faithful 2. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting and will no longer contain additional pro forma financial statements Pro forma financial statements A firm's financial statements as adjusted to reflect a projected or planned transaction. "What-if" analysis. . We will provide sufficient supplemental information that will allow the readers of our financial statements to determine both our operating results and our EBITDA results." Q1 Review - On2 achieved the majority of its revenue for the quarter from the licensing and engineering fees associated with the Company's VP4 video compression Encoding digital video to take up less storage space and transmission bandwidth. See video codec and data compression. video compression - Compression of sequences of images. technology and TrueCast Server software. The Company also strengthened its foothold in Asia by appointing Media Cruise Solutions to be its exclusive reseller of encoding and server software in Japan. On2 announced several technological breakthroughs during the quarter. On2 became the first video compression company to develop low bit rate codecs The following is a list of codecs. Audio codecs Non-compression formats
TVZ Tsafsman-Vladut-Zink Bound (information theory) , an information website targeting broadcasters around the world. In February, On2 released a preview version of its latest video compression breakthrough, VP5. VP5 is the first codec (1) (enCOder/DECoder) A hardware circuit that performs analog-to-digital conversion (ADC) and digital-to-analog (DAC) conversion. When analog signals are entered into a computer, cellphone or other device via a microphone or video source such as VHS tape or analog TV, on the market to offer true broadcast-quality, real-time compression of difficult live material such as sports and action footage at sub-megabit data rates. On2 believes that VP5 is the world's most powerful video codec (1) A hardware circuit that converts analog video (NTSC, PAL, SECAM) into digital code and vice versa. The term may refer to only the A/D and D/A conversion, or it may include the compression technique for further reducing the signal (definition #2 below). See codec. and represents up to a 50% improvement in perceptual quality over VP4. "VP5 is a significant advancement in the field of video compression. We have seen no other low bit rate codec properly handle interlaced Refers to a display system or image that uses interlacing and does not render contiguous lines one after the other. See interlace and interlaced GIF. content, nor deliver such high video quality at lower data rates," stated Dan Miller, Founder and CTO (Chief Technical Officer) The executive responsible for the technical direction of an organization. See CIO and salary survey. . "The NAB show in Las Vegas Las Vegas (läs vā`gəs), city (1990 pop. 258,295), seat of Clark co., S Nev.; inc. 1911. It is the largest city in Nevada and the center of one of the fastest-growing urban areas in the United States. was a great place to unveil many of the attributes of VP5, and the product lived up to its promises. Our VP line of codecs continued to gain notoriety among potential clients evaluating codecs." Business Outlook - On the basis of first quarter results, the Company affirmed its full-year guidance for revenues to rise 150% compared to 2001, with a drop in expenses of approximately 25%. On2 Technologies will host an investor call at 5 p.m. EST today. The call may be accessed live at (877).285.1152, or via live Webcast at: http://dmg.activate.com/dmgi.dll?7427&ef35 . In addition, the call will also be archived for 24 hours Adv. 1. for 24 hours - without stopping; "she worked around the clock" around the clock, round the clock after the live call. The dial-in information for the archived call is 800-642-1687, passcode: 3900609. About On2 Technologies, The Duck Corporation On2 Technologies (AMEX: ONT) is a leading technology firm at the forefront of video compression. The Company revolutionized video encoding with the creation of its advanced full-motion, full-screen, video compression and streaming technology (TrueMotion(R) VP3/VP4/VP5). On2 licenses its high quality video codecs for use in set-top boxes, consumer electronics devices and wireless applications. In addition, On2 offers a suite of products and services, including high-level video encoding, customized technical support, and consulting services. Headquartered in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. , the Company has an office in Albany, NY, and operations in London, UK, and Seoul, Korea. On2 may be reached at 145 Hudson Street Hudson Street can refer to:
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , NY 10013, telephone 917-237-0500 or info@on2.com. Investor inquiries should be sent to invest@on2.com. This release contains statements that constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements relating to future financial results (specifically, expected revenues, earnings and operating costs, and future business performance). These forward-looking statements are subject to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the aforementioned Sections and the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve potential risks and uncertainties including those described in our filings with the SEC, and that the actual results or developments may differ materially from those in the forward-looking statements as a result of various factors. Potential risks and uncertainties include, but are not limited to, general economic conditions, competition in the compression technology industry, the company's history of operating losses and the ability to obtain additional operating funds. We have based these forward-looking statements on information currently available and disclaim any intention or obligation to update or revise any forward-looking statement.
On2 Technologies, Inc.
Unaudited Condensed Consolidated Statements of Operations
Three months ended March 31,
-----------------------------
2002 2001
------------- ----------
Revenues $ 1,202,000 $ 705,643
Operating expenses (a):
Cost of revenues 471,730 1,069,690
Research and development 691,068 1,199,946
Sales and marketing 370,607 767,824
General and administrative 1,038,265 1,511,292
Restructuring charges - 293,200
Non-cash stock based compensation - 50,000
------------- -----------
Total operating expenses 2,571,670 4,891,952
------------- -----------
Loss from operations (1,369,670) (4,186,309)
Interest and other (expense) income, net (b) (10,767) (269,845)
------------ -----------
Loss before provision for income taxes (1,380,437) (4,456,154)
Provision for income taxes 13,151 11,326
------------ -----------
Net loss (1,393,588) (4,467,480)
Non-cash convertible preferred stock dividend - 958,497
------------ -----------
Net loss attributable to common
stockholders $ (1,393,588) $ (5,425,977)
============ ===========
Basic and diluted net loss per common share $ (0.03) $ (0.19)
============ ===========
Weighted average basic and diluted
common shares outstanding 42,834,868 29,016,304
============ ===========
(a) Operating expenses includes $241,143 of depreciation of fixed
assets and $156,830 of amortization of purchased technology for
the three months ended March 31, 2002. Operating expenses includes
$370,961 of depreciation of fixed assets and $477,044 of
amortization of goodwill, purchased technology and other
intangible assets for the three months ended March 31, 2001.
(b) For the three months ended March 31, 2001, interest and other
income, net includes $293,577 for the amortization of a debt
discount.
On2 Technologies, Inc.
Condensed Consolidated Balance Sheets
ASSETS March 31, 2002 December 31, 2001
-------------- -----------------
(unaudited)
Current assets:
Cash and cash equivalents $ 174,117 $ 215,726
Accounts receivable 933,050 678,920
Prepaid expenses and other current assets 287,952 222,950
-------------- -----------------
Total current assets 1,395,119 1,117,596
Property and equipment, net 1,203,050 1,406,143
Goodwill and intangible assets, net 964,012 1,120,843
Other assets 273,411 282,080
-------------- ------------------
Total assets $ 3,835,592 $ 3,926,662
============== ==================
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 799,664 $ 987,977
Deferred revenue 30,107 35,047
Current portion of capital lease obligations 3,303 -
-------------- ------------------
Total current liabilities 833,074 1,023,024
Long term portion of capital lease
obligations 8,227 -
Convertible debentures - 2,000,000
Stockholders' equity 2,994,291 903,638
-------------- ------------------
Total liabilities and stockholders'
equity $ 3,835,592 $ 3,926,662
============== ==================
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