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January 27, 2004 16:10:00 (ET)


NEW YORK, Jan 27, 2004 /PRNewswire-FirstCall via COMTEX/ -- On2 Technologies, Inc. today announced that its revenue for the fourth quarter of 2003 was approximately $326,000, a drop of 60% from the fourth quarter of 2002. The company said that the primary reasons for the lower revenue were later than expected unit deployments by Asia-based customers who have agreed to pay On2 a per-unit royalty and a delay in completion of the VP6 chip port under the license agreements with Beijing E-world.

The company said that the combined balance of cash and accounts receivable at December 31, 2003 was $3,789,000, the highest year-end balance since 1999.

On2 also stated that it currently has approximately $1.9 million of software license fees and minimum royalty payments under contract for 2004. This $1.9 million figure does not include the remaining $750,000 from E-world that is contingent upon completion of the chip port.

The company does not currently expect expenses for 2004 to exceed 2003 expenses, net of amortization of purchased technology for 2003.

"While we are very disappointed that deployments in Japan and China are happening more slowly than we had anticipated and that the chip port for VP6 for Beijing E-world was not accomplished in 2003, we are happy with the overall progress we have made and the potential it brings us for revenue," said Douglas A. McIntyre, On2's Chairman, President and Chief Executive Officer. "In the past year we have formed or solidified relationships with companies like E-world, AOL, Sony, Allied Telesis, Power-Linx and TVZ," he added. "These types of arrangements are where the future of the company lies," he concluded.