Digital Lava Cuts Jobs, Concludes Investigation
Digital Lava (www.digitallava.com) announced that it completed a special investigation into "revenue recognition issues" revising its third quarter financial results. In addition, the company announced a 22 percent staff cutback as a result of "Digital Lava's less-than-anticipated revenue growth and uncertainty in the corporate marketplace."
Digital Lava's stock halted trading a few weeks ago when it reported irregularities in its sales and delayed reporting financial results. Peter Webb, the executive VP of sales was placed on administrative leave in February. Despite the announcement today, the company's stock hasn't resumed trading.
According to a press statement issued today, Digital Lava finished an internal investigation regarding sales of its Firestream encoding stations by a special committee of the board of directors, along with help from an independent auditing firm and outside counsel. The company said that its previously announced revenues will decrease by approximately $600,000, as a result of misreported sales.
A spokesperson for the company said that it expects that approximately $20,000 will be recognized as sales revenue in the fourth quarter of 2000.
Digital Lava said it anticipates that previously reported third-quarter revenue of $1.74 million will be revised to $1.10 million, while the revenue for the nine months ended Sept. 30, 2000, will be revised from $4.39 million to $3.74 million.
"We recognize that this has been a period of uncertainty, but I am confident that the company is fundamentally stronger as a result and am grateful for the patience of our shareholders while we resolved these issues," said Bob Greene, CEO of Digital Lava in a statement. "Above all, we continue to be committed to building long-term shareholder value through the growth of the company. We are still signing up new clients and repeat customers for our publishing services and software. We believe Digital Lava's opportunity is outstanding as we continue to capitalize on our technology and publishing services to provide fast, cost-effective rich media business communication solutions.''