VitalStream(R) Holdings, Inc. (OTC Bulletin Board: VSTH), the parent company of VitalStream, Inc., a global provider of integrated content delivery and streaming media services, today reported results for the fourth quarter and fiscal year ended December 31, 2004.

Revenues for the fourth quarter ended December 31, 2004 were $2,988,000, a 69 percent increase over revenues of $1,771,000 in the same period a year ago, and an 11 percent sequential increase over revenues of $2,691,000 in the third quarter of 2004.  Revenues for the full year 2004 were $9,972,000, a 42 percent increase over revenues of $7,001,000 in 2003.  The company ended 2004 with $10.3 million in cash versus $773,000 at the end of 2003.

For the fourth quarter of 2004, VitalStream reported a net loss of $462,000, or ($0.01) per share, compared with a net loss of $456,000, or ($0.01) per share in the same period a year ago.  For the full year 2004, the company reported a net loss of $1,546,000, or ($0.03) per share, versus a net loss of $1,055,000, or ($0.04) per share in 2003.

Included in the net loss for the fourth quarter and full year of 2004 was an additional compensation expense of approximately $188,000 related to a severance agreement with the former president and chief executive officer of the Company.  In addition, during the second quarter of 2004, the Company recorded a $303,000 non-cash compensation expense related to a severance agreement as well as $231,000 of interest expense comprised of interest and conversion costs related to the conversion of the notes payable to common stock during that quarter. VitalStream's weighted average shares outstanding increased by approximately 59 percent during fiscal year 2004 compared to fiscal year 2003 as a result of financing and conversion transactions that occurred during June of 2004.

 "Our solid revenue growth both quarter over quarter and on an annual basis reflects VitalStream's success in growing our customer base and expanding existing customer relationships," said Philip N. Kaplan, president and chief operating officer.  "In particular, we have added large enterprise customers in the media, advertising and retail sectors and now count more than 500 significant customers, based on our ability to provide the industry's leading solutions for the broadcast of digital media and communications on the internet," he added.

"During the fourth quarter, we were especially delighted to achieve two company revenue milestones as both monthly net revenues exceeded $1 million and monthly recurring revenues exceeded $1 million for the first time in the company's history," he continued.

New customers added during the fourth quarter included The New York Times, Viacom's Spike TV Network, Saleen, Milwaukee Tools, Intermix (MySpace.com) and Rokenbok.

"Our financial results reflect several factors, including the continued investments we are making in technology, and our network and administrative infrastructure, to support the growth of our customers and offer them innovative products and services," he added.

 "We are realizing key milestones in the implementation of our growth strategy," Kaplan noted.  "Leveraging our strong cash position, we are enhancing the Company's product portfolio and expanding our market development programs, including in international markets.  In addition, we will continue to explore opportunities through strategic partnerships and acquisitions that have the potential to expand our customer base and grow revenues."