Digital Fusion, Inc. (Pink Sheets: DIGF), an information technology (“IT”), research and engineering, and acquisition and business support services provider, today announced financial results for the fourth quarter ended December 28, 2007.

Fourth Quarter 2007 Highlights

• Revenue of $14.7 million, an increase of $4.9 million or 50% over same quarter in the previous year
• Earnings before interest, taxes, share-based compensation, depreciation and amortization (EBITDA) of $1.3 million, an increase of $830,000 or 191.7% over same quarter in the previous year

Financial Comparisons

On January 1, 2007, Digital Fusion, Inc. elected to change its accounting period. The election changes the financial reporting period to a 52-53-week year. For 2007, Digital Fusion will have the following quarterly reporting periods: 1) twelve weeks ending March 23, 2007; 2) fourteen weeks ending June 29, 2007; 3) twelve weeks ending September 21, 2007; and 4) fourteen weeks ending December 28, 2007. The financial reporting period ending December 28, 2007 is a 14-week period compared to the previous year’s 13-week period (three months) ending December 31, 2006.

For the fourteen weeks ended December 28, 2007, revenues increased to $14.7 million compared to $9.8 million for the fourth quarter of 2006. For the quarter, GAAP net income was $1.5 million and earnings per share was $0.11, compared to GAAP net income of $1.9 million and earnings per share of $0.15 for the fourth quarter of 2006.

For the fifty-two weeks ended December 28, 2007, revenues increased to $47.5 million compared to $34.4 million for the twelve months ended December 31, 2006. For the fifty-two weeks ended December 28, 2007, GAAP net income was $1.6 million and earnings per share was $0.12 compared to GAAP net income of $1.3 million and earnings per share of $0.09 for the twelve months ended December 31, 2006.

Business Discussion

Service revenue increased approximately $2.2 million in the fourth quarter of 2007 compared to the same quarter in the previous year. The increase in service revenues during the fourth quarter of 2007 compared to the same quarter in the previous year was primarily related to the increase in the number of billable employees, the NASA Marshall Space Flight Center contract, growth in engineering and IT services, and one additional week included in the fourth quarter of 2007 associated with the change in quarterly reporting periods. Reimbursed costs revenue increased $2.8 million in the fourth quarter of 2007 compared to the fourth quarter of 2006. The increase in reimbursed cost revenue is primarily related to an increase in sub-contract activity, purchases made for customers, and one additional week included in the fourth quarter of 2007 associated with the change in quarterly reporting periods. Product revenue decreased approximately $5,000 in the fourth quarter of 2007 compared to the same quarter of the previous year. The decrease in product revenue resulted from a reduction of software re-sales to governmental organizations. Reselling software is not something the company is focused on, and product revenue is not expected to be significant in the future.

Management Comments

“The fourth quarter results as well as the yearly results met our expectations and I remain confident that 2008 will continue to reflect our positive trends. We are well positioned for continued success and we have numerous potential new business opportunities. We set out almost three years ago with a plan to expand our business base in our core competencies and I am proud to report that we have been successful, particularly in terms of new customers and expanding scope of operations with our current customer base”, said Lt. Gen. (Ret.) Frank Libutti, Chairman of the Board and Chief Executive Officer of Digital Fusion.

About Digital Fusion

Digital Fusion, Inc., headquartered in Huntsville, Alabama, is an information technology, research and engineering, and acquisition and business support services company that helps its customers make the most of technology to meet their business needs. Digital Fusion provides state-of-the-art solutions to both government and commercial customers. Digital Fusion’s core competencies are focused in the following broad areas: Application Development, Architecture and Security; Network Security; Data Management and Business Intelligence; System Migration and Integration; Sensor Systems Development and Analysis; Aerodynamic Design, Analysis, and Support; Thermal-Structural Modeling; Test and Evaluation; Systems Engineering; Modeling and Simulation; Control System Design and Analysis; Mechanical Design and Analysis; and Program Management Support. 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 “project”, "anticipate,'' "believe,'' "estimate,'' "expect,' ”plan”, "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. Similarly, statements herein that describe the Company’s business strategy, outlook, objectives, plans, intentions or goals are also 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; capacity and supply constraints or difficulties, the Company’s dependence on continued funding of U.S. government programs; contract procurement and termination risks; competitive factors such as pricing pressures and/or competition to hire and retain employees, and material changes in laws or regulations applicable to the Company businesses. 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. These statements reflect the Company’s current beliefs and are based upon information currently available to it. Be advised that developments subsequent to this release are likely to cause these statements to become outdated with the passage of time.