Published: August 14, 2006
DigitalFX International, Inc. Reports Record Quarterly Revenue of $5.9 Million
Q2 Revenue up 645% Year-on-Year
DigitalFX
International, Inc. ("DigitalFX" or the "Company") (OTCBB: DFXN), a
social networking and digital communications company, has announced record
operating results for the quarter ended June 30, 2006.
DigitalFX
reported record revenue of approximately $5.9 million for the quarter ended
June 30, 2006, as compared to approximately $787,000 in Q2 2005 -- a 645%
increase. This increase was due to increased sales in all product groups,
as well as the January 2006 initiation of sales to Australia and New
Zealand.
Gross profit for the three months ended June 30, 2006 was approximately
$4.7 million, as compared to gross profit of approximately $537,000 in Q2
2005 -- a 771% increase. Gross profit margins were 80% in Q2 2006, up from
68% in Q2 2005 as a result of an enhanced product mix and economies of
scale in services provided for recurring products.
DigitalFX
also reported an operating loss of approximately $35,000 for the three
months ended June 30, 2006, as compared to an operating loss of
approximately $380,000 in Q2 2005 -- a 91% improvement.
DigitalFX
reported a net loss of approximately $46,000 for the three months ended
June 30, 2006, as compared to a net loss of approximately $380,000 in Q2
2005 -- an 88% improvement. The Q2 2006 loss included $635,000 in one-time
charges related to an exchange transaction; these consisted of investment
banking, auditing and legal fees. Excluding these one-time charges, net
income for Q2 2006 would have been approximately $589,000 on an as adjusted
basis.
Based on approximately 22.1 million shares outstanding, DigitalFX
achieved break-even results for the three months ending June 31, 2006,
improved from a loss of 0.02 cents per share in Q2 2005. Again excluding
the one-time charges related to the exchange transaction, the Company would
have earned a profit of 0.03 cents per share on an as adjusted basis.
Six-Month Operating Results
DigitalFX
reported record revenue of approximately $9.1 million for the six months
ended June 30, 2006, as compared to approximately $1.4 million for the six
months ended June 30, 2005 -- a 573% increase. This increase was due to
increased sales in all product groups and the increase in sales to
international markets.
Gross profit for the six months ended June 30, 2006 was approximately $7.2
million, as compared to gross profit of approximately $986,000 six months
ended June 30, 2005 -- a 635% increase. Gross profit margins were 79% for
the six months ended June 30, 2006, up from 73% six months ended June 30,
2005 as a result of an enhanced product mix and economies of scale in
services provided for recurring products.
DigitalFX also reported operating income of approximately $17,000 for the
six months ended June 30, 2006, as compared to an operating loss of
approximately $771,000 for the six months ended June 30, 2005 -- a 102%
increase.
DigitalFX reported a net loss of approximately $5,000 for the six months
ended June 30, 2006, as compared to a net loss of approximately $771,000
for the six months ended June 30, 2005 -- a 99% improvement. The loss
incurred in the six months ended June 30, 2006 included $635,000 in
one-time charges related to an exchange transaction; these consisted of
investment banking, auditing and legal fees. Excluding these one-time
charges, net income for Q2 2006 would have been approximately $630,000 on
an as adjusted basis.
Based on approximately 22.1 million shares outstanding, DigitalFX achieved
break-even results for the six months ended June 30, 2006, improved from a
loss of 0.04 cents per share for the six months ended June 30, 2005. Again
excluding the one-time charges related to the exchange transaction, the
Company would have earned a profit of 0.03 cents per share on an as
adjusted basis.
Earnings Conference Call
DigitalFX will host a conference call on Monday, August 14, 2006 to review
first quarter earnings results. The conference call is scheduled for 4:30
p.m., Eastern Daylight Saving Time (EDT). To participate in the call,
please dial:
U.S. and Canada: 1 (800) 374-0113
International: 1 (706) 758-9607
A replay of the call will be available two hours after completion. You will
be able to access it at any time through the DigitalFX Website at
www.DigitalFX.com, or by phone until September 14, 2006. To access the
replay by phone, please dial:
U.S. and Canada: 1 (800) 642-1687
International: 1 (706) 645-9291
Conference ID: 4471330
About DigitalFX International, Inc.
DigitalFX is a social networking and digital communications company. The
Company develops and markets proprietary web-based social networking
software applications, including video email, video instant messaging and
live webcasting. DigitalFX bundles its proprietary applications with other
open source applications and sells them as an integrated suite through an
Internet-based subscription model. The Company's Web 2.0 communication
tools enable users to create, transcode, send, manage and store all forms
of digital media content (i.e., photos, videos, music, documents). These
innovative social networking applications are scalable, customizable and
highly extendible.
Currently, the primary source of subscribers for these applications is the
Company's social networking website, www.helloworld.com. DigitalFX intends
to aggressively expand its subscription base by offering its suite of
communications tools to affinity groups, enterprises and other social
networks, using its unique multi-tiered marketing program. By providing
subscribers with its rich and expanding suite of collaborative
applications, DigitalFX is facilitating the rapidly accelerating trends in
streaming media, social networking, podcasting and self-generated content.
With its dynamic marketing strategy and the remarkable ease of use of its
products, the Company intends to simplify the digital lives of millions of
subscribers.
FORWARD-LOOKING STATEMENTS
The information contained herein includes forward-looking statements.
These statements relate to future events or to our future financial
performance, and involve known and unknown risks, uncertainties and other
factors that may cause our actual results, levels of activity, performance,
or achievements to be materially different from any future results, levels
of activity, performance or achievements expressed or implied by these
forward-looking statements. You should not place undue reliance on
forward-looking statements since they involve known and unknown risks,
uncertainties and other factors which are, in some cases, beyond our
control and which could, and likely will, materially affect actual results,
levels of activity, performance or achievements. Any forward-looking
statement reflects our current views with respect to future events and is
subject to these and other risks, uncertainties and assumptions relating to
our operations, results of operations, growth strategy and liquidity. We
assume no obligation to publicly update or revise these forward-looking
statements for any reason, or to update the reasons actual results could
differ materially from those anticipated in these forward-looking
statements, even if new information becomes available in the future. The
safe harbor for forward-looking statements contained in the Securities
Litigation Reform Act of 1995 protects companies from liability for their
forward-looking statements if they comply with the requirements of the Act.
DigitalFX, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
December 31, June 30,
------------ ------------
2005 2006
------------ ------------
Assets (unaudited)
Current assets:
Cash and cash equivalents $ 265 622
Accounts receivable, net 27 384
Inventories, net 154 299
Prepaid bandwith charges - 100
Prepaid expenses and other assets 25 157
------------ ------------
Total current assets 471 1,562
Property and equipment, net 238 281
Deposits, merchant processors 150 473
Other assets 25 22
------------ ------------
Total assets $ 884 2,338
============ ============
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable $ 343 506
Accrued expenses 413 538
Accrued commissions 424 1,125
Due to affiliate 54 194
Note payable 50 -
------------ ------------
Total current liabilities 1,284 2,363
------------ ------------
Commitments and Contingencies
Stockholders’ deficit:
Preferred Stock, $0.01 par value, 5,000,000
shares authorized, no shares issued and
outstanding - -
Common Stock, $0.001 par value, 100,000
shares authorized, 19,917 and 22,074
shares issued and outstanding 20 22
Additional Paid In Capital 4,440 4,764
Deferred Compensation (57) -
Other comprehensive loss (1) (4)
Accumulated deficit (4,802) (4,807)
------------ ------------
Total stockholders’ deficit (400) (25)
------------ ------------
Total liabilities and stockholders’
deficit $ 884 2,338
============ ============
DigitalFX, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
and Comprehensive Income (Loss)
(In thousands except per share data)
Six months ended Three months ended
June 30, June 30,
--------------------- ---------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
(unaudited) (unaudited)(unaudited)(unaudited)
Revenues $ 9,122 $ 1,355 $ 5,865 $ 787
Cost of revenues 1,877 369 1,186 250
--------- --------- --------- ---------
Gross profit 7,245 986 4,679 537
Commission expenses 4,380 528 2,765 308
Other operating expenses 2,213 1,229 1,314 609
Expenses relating to
exchange transaction 635 - 635 -
--------- --------- --------- ---------
Operating income (loss) 17 (771) (35) (380)
Other income (expense) (22) - (11) -
--------- --------- --------- ---------
Net loss (5) (771) (46) (380)
--------- --------- --------- ---------
Weighted average shares
outstanding 20,097,187 19,917,435 20,276,938 19,917,435
========== ========== ========== ==========
Net loss per share $ (0.00) $ (0.04) $ (0.00) $ (0.02)
========== ========== ========== ==========
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