On2.com Reports Net Loss of Over $7 Million in Second Quarter

Broadband company On2.com (http://www.on2.com) said it reported a net loss of over $7 million for the second quarter 2000.

On2.com also announced the acquisition of San Francisco-based Eight Cylinder Studios (http://www.8cs.com), a maker and designer of broadband environments.

"We are excited aboutthe integration of Eight Cylinder's technology solutions with On2's technologyproducts and services. This will allow us to provide a full broadbandsolution to our customers" said Douglas A. McIntyre, On2.com President and CEO.

According to Eight Cylinder CEO Jon Middleton the company "blends 2D, 3D, text, audio and more in one environment. We're going after the look and feel of broadcast." Currently, the company has 30 employees and says they'll remain in San Francisco rather than move to On2.com's New York headquarters.

On2.com announced revenues of $225,000--which is good news considering last year's 2Q revenues were a paltry $9,000. The overall net loss for 2Q 2000 was $7,155,000, or $0.28 per share.

"Our second quarter was characterized by significant momentum indeveloping and marketing our business-to-business broadband technology andsolutions," said McIntyre. "To datethis year, On2 has attracted new customers including USA Networks, Showtime,BigWig.com, Celebstreet.com, and J&R Electronics. We remain confident in ourability to continue to execute our business plan and to grow revenues as aleading broadband technology provider."

Concerning the company's recent change of focus from content to technology: "The refocus of our business strategy to provide leading broadbandtechnology solutions enables us to significantly reduce our operating costs, atrend which we believe will become evident beginning in the third quarter of2000" said Mark Meagher, Executive Vice President and Chief Financial Officer.