Exhibit 99.7
Digital Fusion Reports First Quarter Results; Closes Equity Investment
HUNTSVILLE, Ala.--(BUSINESS WIRE)--May 14, 2004--Digital Fusion,
Inc. (OTCBB:DIGF), a business and information technology (IT) services
provider, today announced financial results for the first quarter
ended March 31, 2004.
Financial Comparisons
For the quarter ended March 31, 2004, revenues were $1.5 million
versus $1.6 million for the same quarter in the previous year. The
decrease in revenues during the first quarter 2004 compared to the
same period last year was primarily due to the reduction in IT
spending by our largest customer and the completion of two long-term
projects. Net loss for the quarter ended March 31, 2004 was
$90,000 compared to a net loss of $366,000 for the same quarter in
the previous year.
Business Discussion
Consulting revenues were down approximately $100,000 in the first
quarter of 2004 compared to the fourth quarter primarily due to the
completion of two long-term projects and the delay in the start of new
projects. Consulting operating margins increased to 26.4% first
quarter 2004 compared to 24.6% in the fourth quarter of 2003.
Revenue from product sales through the company's General Services
Administration (GSA) schedule for the quarter ended March 31, 2004
increased $92,000 to $205,000 compared to the fourth quarter of 2003.
The company expects to increase product revenue through its GSA
schedule and commercially in fiscal year 2004. The company sells help
desk management software to Information Technology buyers and follows
up these sales by introducing the new clients to its consulting
services offerings.
Equity Investment
On May 11, 2004, Digital Fusion and Madison Run, LLC completed an
equity sale whereby Madison Run bought 608,108 shares of Digital
Fusion common stock at $0.74 (74 cents) per share, was issued a five
year warrant to purchase 304,054 shares of Digital Fusion common stock
at $0.89 (89 cents) per share, and was issued a five year warrant to
purchase 212,839 shares of Digital Fusion common stock at $0.94
(94 cents) per share. Mr. Gary Ryan, who was appointed as Digital
Fusion's new President on May 5th, is a member of the Madison Run
investment group and personally invested $100,000 in the offering.
Management Comments
"The completion of two major projects in the fourth quarter to
meet customer yearend requirements resulted in the early completion of
a piece of our first quarter planned backlog," said Roy Crippen, chief
executive officer. "Our pipeline for the remainder of 2004 continues
to build and we are confident that we will execute our plans to
increase revenue this year. Also, the investment by Madison Run gives
us the additional capital required to significantly enhance our sales
and marketing efforts to the federal markets. I want to thank them for
their support."
"My top priority as Digital Fusion's new president is to grow our
revenue," said Gary Ryan, president. "We are looking towards new
service offerings which will propel that growth and that will remain
our primary focus for the remainder of this fiscal year."
About Digital Fusion
Digital Fusion is a business and information technology consulting
company helping its customers make the most of technology to access
business information, enhance the performance of their human resources
and meet their business needs.
Digital Fusion provides a range of services in business process
and application strategy and development, including Application
Development and Data Management, Systems Integration and IT Support.
Based in the eastern U.S., Digital Fusion has offices in Washington
D.C., Philadelphia, Orlando, Huntsville, and New Jersey. For
additional information about Digital Fusion visit
http://www.digitalfusion.com.
Forward Looking Statements. All statements other than statements
of historical fact included in this release are forward-looking
statements. When used in this release, words such as "anticipate,"
"believe," "estimate," "expect," "intend" and similar expressions, as
they relate to the Company or its management, as well as assumptions
made by and information currently available to the Company's
management, identify forward-looking statements. Actual results could
differ materially from those contemplated by the forward-looking
statements as a result of certain factors including, but not limited
to: the effect of business and economic conditions; the impact of
competitive products and pricing; and capacity and supply constraints
or difficulties. Such statements reflect the current views of the
Company with respect to future events and are subject to these and
other risks, uncertainties and assumptions relating to the operations,
results of operations, growth strategy and liquidity of the Company.
DIGITAL FUSION, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share data)
March 31,
2004 December 31,
ASSETS unaudited 2003
---------- ------------
Current assets:
Cash and cash equivalents $ 156 $ 419
Accounts receivable (net of allowance
for doubtful accounts of $90 in
2004 and 2003) 930 737
Other current assets 50 39
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Total current assets 1,136 1,195
Property and equipment, net 24 29
Intangible assets, net 3,347 3,347
Other assets 13 13
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Total assets $ 4,520 $ 4,584
========== ============
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 673 $ 658
Current maturities of long-term debt 713 46
Deferred revenue 21 21
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Total current liabilities 1,407 725
Interest payable - long term 50 39
Long-term debt, less current maturities 602 1,269
Pension obligation 295 295
---------- ------------
Total liabilities 2,354 2,328
---------- ------------
Stockholders' equity:
Common stock, $.01 par value, authorized
16,000,000 shares, 7,167,671 shares
issued and outstanding 72 72
Additional paid in capital 39,919 39,919
Accumulated deficit (37,825) (37,735)
---------- ------------
Total stockholders' equity 2,166 2,256
---------- ------------
Total liabilities and stockholders'
equity $ 4,520 $ 4,584
========== ============
DIGITAL FUSION, INC.
Condensed Consolidated Statements of Operations
For the three and twelve months ended March 31, 2004 and 2004
(unaudited, in thousands, except per share amounts)
2004 2003
---------- ----------
Revenues
Services $ 1,281 $ 1,612
Product 205 -
---------- ----------
Total Revenues 1,486 1,612
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Cost of services and goods sold
Services 943 1,334
Product 189 -
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Total cost of services and goods sold 1,132 1,334
---------- ----------
Gross Profit 354 278
---------- ----------
Operating expenses:
Selling 97 109
General and administrative 313 483
---------- ----------
Total operating expenses 410 592
---------- ----------
Operating loss (56) (314)
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Other expense:
Interest expense, net (34) (52)
---------- ----------
Total other expense (34) (52)
---------- ----------
Loss before income taxes (90) (366)
Income tax provision - -
---------- ----------
Net loss (90) (366)
========== ==========
Loss per share:
Basic and diluted $ (0.01)$ (0.05)
========== ==========
Weighted average common stock outstanding:
Basic and diluted 7,168,000 7,168,000
========== ==========
CONTACT: Digital Fusion, Inc., Huntsville
Roy E. Crippen, 256-837-2620
rcrippen@digitalfusion.com