VitalStream Holdings Reports Record Quarterly and Annual Revenues
Fourth Quarter 2004 Sales Increase 69 Percent IRVINE, Calif., Feb.
10 /PRNewswire-FirstCall/ -- VitalStream(R) Holdings, Inc.
(OTC:VSTH) (BULLETIN BOARD: VSTH) , the parent company of
VitalStream, Inc., a global provider of integrated content delivery
and streaming media services, today reported results for the fourth
quarter and fiscal year ended December 31, 2004. Revenues for the
fourth quarter ended December 31, 2004 were $2,988,000, a 69
percent increase over revenues of $1,771,000 in the same period a
year ago, and an 11 percent sequential increase over revenues of
$2,691,000 in the third quarter of 2004. Revenues for the full year
2004 were $9,972,000, a 42 percent increase over revenues of
$7,001,000 in 2003. The company ended 2004 with $10.3 million in
cash versus $773,000 at the end of 2003. For the fourth quarter of
2004, VitalStream reported a net loss of $462,000, or ($0.01) per
share, compared with a net loss of $456,000, or ($0.01) per share
in the same period a year ago. For the full year 2004, the company
reported a net loss of $1,546,000, or ($0.03) per share, versus a
net loss of $1,055,000, or ($0.04) per share in 2003. Included in
the net loss for the fourth quarter and full year of 2004 was an
additional compensation expense of approximately $188,000 related
to a severance agreement with the former president and chief
executive officer of the Company. In addition, during the second
quarter of 2004, the Company recorded a $303,000 non-cash
compensation expense related to a severance agreement as well as
$231,000 of interest expense comprised of interest and conversion
costs related to the conversion of the notes payable to common
stock during that quarter. VitalStream's weighted average shares
outstanding increased by approximately 59 percent during fiscal
year 2004 compared to fiscal year 2003 as a result of financing and
conversion transactions that occurred during June of 2004. "Our
solid revenue growth both quarter over quarter and on an annual
basis reflects VitalStream's success in growing our customer base
and expanding existing customer relationships," said Philip N.
Kaplan, president and chief operating officer. "In particular, we
have added large enterprise customers in the media, advertising and
retail sectors and now count more than 500 significant customers,
based on our ability to provide the industry's leading solutions
for the broadcast of digital media and communications on the
internet," he added. "During the fourth quarter, we were especially
delighted to achieve two company revenue milestones as both monthly
net revenues exceeded $1 million and monthly recurring revenues
exceeded $1 million for the first time in the company's history,"
he continued. New customers added during the fourth quarter
included The New York Times, Viacom's Spike TV Network, Saleen,
Milwaukee Tools, Intermix (MySpace.com) and Rokenbok. "Our
financial results reflect several factors, including the continued
investments we are making in technology, and our network and
administrative infrastructure, to support the growth of our
customers and offer them innovative products and services," he
added. "We are realizing key milestones in the implementation of
our growth strategy," Kaplan noted. "Leveraging our strong cash
position, we are enhancing the Company's product portfolio and
expanding our market development programs, including in
international markets. In addition, we will continue to explore
opportunities through strategic partnerships and acquisitions that
have the potential to expand our customer base and grow revenues."
FINANCIAL SUMMARY (Unaudited) (all numbers in 000's, except per
share data) Statement of Operations Three months ended Twelve
months ended December 31, December 31, 2004 2003 2004 2003 Revenues
$2,988 $1,771 $9,972 $7,001 Cost of revenue* 1,504 954 4,600 3,390
Gross Profit 1,484 817 5,372 3,611 Research & development* 126
86 476 369 Sales & marketing* 803 574 2,860 2,037 General &
administrative* 946 566 2,771 2,159 Stock based compensation -- --
303 -- Operating loss (391) (409) (1,038) (954) Other Income
(Expense) Interest expense, net (60) (36) (462) (150) Other income
(expense) including taxes (11) (11) (46) 49 Net loss ($462) ($456)
($1,546) ($1,055) Loss per share (less preferred dividends) ($0.01)
($0.01) ($0.03) ($0.04) Weighted average shares outstanding 60,029
31,378 47,366 29,708 * In 2004, we reviewed expenses in each of
these categories for proper classification and made certain
modifications. All prior period amounts have been reclassified to
conform with current year presentation. These modifications had no
impact on loss from operations or net loss. Salaries and benefits
of employees who operate our network were reclassified from
Research and development, Sales & marketing, and General &
administrative to Cost of revenue. Certain costs not related to the
operation of our network were reclassified from Cost of revenue to
General & administrative. Balance Sheet Highlights December 31,
December 31, 2004 2003 Cash $10,276 $773 All other assets 5,953
3,882 Total Assets $16,229 $4,655 Total Liabilities $4,908 $3,182
Total Shareholders' Equity 11,321 1,473 Total Liabilities and
Shareholders' Equity $16,229 $4,655 Adjusted EBITDA Adjusted EBITDA
for the quarter ended December 31, 2004, was a negative $17,000,
compared to a negative $166,000 during the comparable period last
year. Adjusted EBITDA for the full year 2004, was a positive
$366,000, compared to a negative $214,000 for 2003. The
reconciliation of net loss to Adjusted EBITDA is as follows: Three
months ended Twelve months ended December 31, December 31, 2004
2003 2004 2003 (all numbers in 000's) Net loss ($462) ($456)
($1,546) ($1,055) Depreciation and amortization 85 254 1,145 689
Interest expense, net 60 36 461 150 Non-cash stock compensation --
-- 303 -- Income tax expense -- -- 3 2 Adjusted EBITDA ($17) ($166)
$366 ($214) Use of Non-GAAP Financial Measures VitalStream defines
Adjusted EBITDA as net income (loss) before interest, income taxes,
depreciation, amortization and stock-based compensation. Adjusted
EBITDA is not a measure used in financial statements reported in
accordance with generally accepted accounting principles, does not
represent funds available for discretionary use and is not intended
to represent cash flow from operations as measured under generally
accepted accounting principles. Adjusted EBITDA should not be
considered as an alternative to net loss or net cash used in
operating activities. VitalStream's calculation of Adjusted EBITDA
may not be comparable to the computation of similarly titled
measures of other companies. VitalStream's management uses Adjusted
EBITDA as a measure of its operating performance. In addition,
VitalStream believes that Adjusted EBITDA may be useful to existing
and potential creditors of VitalStream, and to analysts and
investors that follow VitalStream's performance, because it is one
measure of the income generated that is available to service any
outstanding debt. About VitalStream, Inc. VitalStream, Inc., a
wholly-owned subsidiary of VitalStream Holdings, Inc. (OTC:VSTH)
(BULLETIN BOARD: VSTH) , is a global provider of integrated content
delivery services that enable businesses to broadcast their digital
media and communications to worldwide audiences via the Internet.
The Company provides complete solutions, including audio and video
streaming, live event broadcasting, media asset management,
integrated web hosting and consulting services, that seamlessly
integrate with today's leading streaming media technologies. To
ensure a worldwide reach, VitalStream engineered its award-winning
content delivery network certified for quality delivery in the
United States, Europe and Asia. For more information, call
800-254-7554, or visit http://www.vitalstream.com/. Forward-Looking
Statements This news release may contain certain "forward-looking
statements" within the meaning of Section 27A of the Securities Act
of 1993 and Section 21E of the Securities Exchange Act of 1934.
These statements are based on management's current expectations and
are subject to uncertainty and changes in circumstances. Actual
results may vary materially from the expectations contained in the
forward-looking statements. Forward-looking statements may include
statements addressing future financial and operating results of the
Company. The following factors, among others, could cause actual
results to differ materially from those described in any
forward-looking statements: The risk that the Company's revenue may
decrease on a quarter over quarter basis because of a slower than
projected growth in the demand for digital broadcast and streaming
services; the risks that the Company's existing customers may cease
to use the Company's services and/or may not use the Company's
services at the projected rate; uncertainties regarding the future
demand for the Company's products and services generally despite
infrastructure investments, expansion into other markets and
product enhancements; the risk that the trend towards increasing
broadband penetration may not continue; the inability of the
Company to compete or the competitive advantage of companies that
compete or may compete in our markets; the risk that the Company
may not be able to find suitable strategic or acquisition
transactions or, upon completing such transactions, achieve the
anticipated benefits; the risk that the Company's operational
efficiency may not continue to improve; the risk that the Company
may be unable to obtain capital necessary to continue operations
and fuel growth or obtain it at favorable rates; the risk that the
Company may experience technical or security problems that injure
its business or increase its operating costs; and or uncertainties
regarding our ability to pursue our proposed business strategy.
More detailed information about these factors and others is set
forth in the Company's filings with the Securities and Exchange
Commission, including its most recent Annual Report on Form 10-K.
Such forward-looking statements speak only as of the date of this
release. The Company is under no obligation (and expressly
disclaims any obligation) to update or revise any forward-looking
statements whether as a result of new information, future events or
otherwise. VitalStream is a registered trademark of VitalStream,
Inc. All other trademarks are property of their respective holders.
For more information please contact: Investor Relations Contact:
Mark Belzowski VitalStream, Inc. 949/743-2000 Neal Rosen Kalt Rosen
& Co. LLC 415/397-2686 DATASOURCE: VitalStream Holdings, Inc.
CONTACT: Investor Relations, Mark Belzowski of VitalStream, Inc.,
+1-949-743-2000, ; or Neal Rosen of Kalt Rosen & Co. LLC,
+1-415-397-2686, , for VitalStream, Inc. Web site:
http://www.vitalstream.com/
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