Artisoft Announces Preliminary Financial Results for Third Quarter of Fiscal 2003; Continues to Achieve Strong Growth in TeleVantage Sales.Business Editors/High-Tech Writers CAMBRIDGE Cambridge, city, Canada Cambridge (kām`brĭj), city (1991 pop. 92,772), S Ont., Canada, on the Grand River, NW of Hamilton. It was formed in 1973 with the amalgamation of Galt, Hespeler, and Preston, all founded in the early 19th cent. , Mass.--(BUSINESS WIRE)--May 8, 2003 Artisoft, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : ASFTD), developer of the first software-based phone system, today reported its preliminary financial results for the third quarter of fiscal 2003, ended March 31, 2003. Revenue increased 23% compared to the previous quarter, as the company continued to see a strong increase in demand for its TeleVantage 5.0 products. A particular highlight of the third quarter was a 97% increase in TeleVantage sales to end-users over the third quarter of fiscal 2002. The company also announced that it would be restating financial statements for certain periods to reflect a change in the treatment of a non-cash equity transaction relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc its OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and relationship with Toshiba Toshiba Corporation (株式会社東芝 Kabushiki-gaisha Tōshiba as well as the recording of Toshiba revenue prior to April 2001 on a sell through basis consistent with its treatment since that time. These accounting changes have no impact on the company's cash position, will not change the overall net income reported over the period of the restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. , and will have no impact on future results. Artisoft will present the one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charge related to the equity transaction with Toshiba in January of 2000 as a reduction in revenue amortized during the term of the original OEM Reseller An organization that sells hardware and software to the general public. Resellers purchase products from software publishers and hardware manufacturers. agreement. The charge had previously been presented as a one-time expense in the quarter ended March 31, 2000. All financial information contained herein is preliminary; the company anticipates filing final numbers with the SEC next week. Artisoft reported net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight of $1.8 million and a net loss of $1.7 million. These results compare to net sales of $1.4 million and a net loss of $1.3 million for the second quarter of fiscal 2003. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. were $3.3 million in the third quarter compared with $2.7 million in the second quarter. Third quarter expenses included a charge of approximately $300,000 for restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). costs. Second quarter expenses included a reduction of approximately $200,000 from the capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. of product development expenses directly related to the completion of TeleVantage 5.0 in December 2002. The gross profit for the third quarter of fiscal 2003 was 95% compared with 96% in the second quarter. The loss per common share in the third quarter of fiscal 2003 was $.09 compared to $.08 in the second quarter of fiscal 2003. "Although the third quarter 2003 was an extremely challenging one for the PBX (Private Branch eXchange) An inhouse telephone switching system that interconnects telephone extensions to each other as well as to the outside telephone network (PSTN). industry, Artisoft continued to buck the trend Buck the Trend When a security goes against the prevailing trend of the overall market. Notes: A stock that goes up during a bear market is said to be "bucking the trend." See also: Bear Market, Contrarian and achieve solid growth in revenue," said Steve Manson Man·son , Sir Patrick 1844-1922. Scottish parasitologist. One of the founders (1899) of the London School of Tropical Medicine, he introduced (1877) the hypothesis that the mosquito is host to the malaria parasite. , Artisoft's president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "With TeleVantage end-user sales through our reseller channel increasing at a rate of 97% from a year ago, Artisoft is clearly gaining momentum." "By restating all of the Toshiba revenues to a sell-through basis and eliminating the large one-time transactions relating to the Toshiba partnership, the growth in TeleVantage sales we have achieved becomes more apparent," said Duncan Perry, Artisoft's CFO See Chief Financial Officer. . "This change in presentation will give investors a clearer view into the fundamentals of Artisoft's business." During the quarter, Artisoft continued to expand its Open Communications Alliance Program, an alliance of over 30 leading technology vendors who are collaborating with Artisoft to develop standards-based solutions with TeleVantage as the focal point focal point n. See focus. . The company forged forge 1 n. 1. A furnace or hearth where metals are heated or wrought; a smithy. 2. A workshop where pig iron is transformed into wrought iron. v. relationships with Excendia, Homisco, Interstar Technologies and Multi-Tech Systems to deliver best-of-breed solutions that combine unified messaging Having access to e-mail, voice mail and faxes via a common computer application or by telephone. For example, unified messaging may send faxes and digitized voice mail to a mail server that turns them into e-mail attachments. , call accounting, and enhanced Voice-over-IP features with the advanced capabilities of TeleVantage. TeleVantage also continued to be honored hon·or n. 1. High respect, as that shown for special merit; esteem: the honor shown to a Nobel laureate. 2. a. Good name; reputation. b. for technical excellence by receiving the "2002 Product of the Year" Award from Communications Solutions Magazine. Since its introduction in 1998, TeleVantage has been distinguished with 32 industry awards. Artisoft will hold a conference call at 4:45 p.m. ET today to discuss the third quarter fiscal year 2003 financial results. The conference call will be broadcast live via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at http://www.artisoft.com/corpcalls.html. About Artisoft Artisoft Inc. is a leading developer of open, standards-based telephone systems that bring together voice and date for more powerful and productive communications. Artisoft's TeleVantage delivers greater functionality, flexibility, and value than proprietary PBXs to a variety of customers, from small offices to large enterprise organizations with sophisticated call centers. The company's innovative products have consistently garnered industry recognition for technical excellence, winning more than 30 awards. The company distributes its products and services worldwide through a dedicated and growing channel of authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: resellers. For more information, please call 800-914-9985 or visit our website at http://www.artisoft.com. Artisoft and TeleVantage are registered trademarks of Artisoft, Inc. All other company and product names mentioned may be trademarks or registered trademarks of the respective companies with which they are associated. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. : This release contains forward-looking statements based on current expectations or beliefs, as well as a number of assumptions about future events, and these statements are subject to important facts and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The forward-looking statements in this release address a variety of subjects. The following factors, among others, could cause actual results to differ materially from those described in these forward- looking statements: the final review of the Company's financial results and preparation of the Company's financial statements for the fiscal quarter ended March 31, 2003 and the effects of the financial restatements and related issues identified in this press release, The availability of additional financing on terms acceptable to the Company or at all, risks associated with the Company's strategic alliances, the impact of competitive products and pricing, product demand and market acceptance risks, the presence of competitors with greater financial resources, product development and commercialization risks, costs associated with integration and administration of acquired operations, capacity and supply constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. or difficulties and other factors detailed in the Company's filings with the Securities and Exchange Commission including its most recent filings on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and Form 10-Q Form 10-Q See 10-Q. .
Artisoft, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(Unaudited)
All numbers are estimates. We anticipate filing final results for all
periods with the SEC in amended financial statements next week.
Three Months Ended Nine Months Ended
March 31, March 31,
2003 2002 2003 2002
Net revenue:
Product $ 1,751 $ 1,329 $ 4,495 $ 4,149
Services - - - 20
Total net revenue 1,751 1,329 4,495 4,169
Cost of sales:
Product 92 115 182 787
Services - - - 12
Total cost of sales 92 115 182 799
Gross profit:
Product 1,659 1,214 4,313 3,362
Services - - - 8
Total gross profit 1,659 1,214 4,313 3,370
Operating expenses:
Sales and marketing 1,423 1,398 3,958 4,410
Product development 829 763 2,278 2,731
General and administrative 1,081 1,077 3,667 3,457
Total operating expenses 3,333 3,238 9,903 10,598
Loss from operations (1,674) (2,024) (5,590) (7,228)
Other income, net 12 34 53 159
Net loss (1,662) (1,990) (5,537) (7,069)
Dividend to Series B preferred
stock - - (2,006) (2,766)
Loss applicable to common stock $(1,662) $(1,990) $(7,543) $(9,835)
Net loss applicable to common
stock-Basic and Diluted $ (0.09) $ (0.13) $ (0.44) $ (0.63)
Weighted average common shares
outstanding-Basic and Diluted 17,831 15,782 17,166 15,731
Artisoft, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
All numbers are estimates. We anticipate filing final results for all
periods with the SEC in amended financial statements next week.
March 31, June 30,
2003 2002
Unaudited Unaudited
ASSETS
Current Assets:
Cash and cash equivalents $ 4,110 $ 6,020
Receivables:
Trade accounts, net of allowances of $54 and
$118 at March, 2003 and June 2002,
respectively 772 858
Other receivables - -
Inventories 24 14
Prepaid expenses 403 274
Total current assets 5,309 7,166
Property and equipment 3,699 3,480
Less accumulated depreciation and amortization (3,162) (2,682)
Net property and equipment 537 798
Other assets 305 257
$ 6,151 $ 8,221
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 408 $ 376
Accrued liabilities 1,938 1,569
Deferred revenue 1,583 1,723
Customer Deposits 908 -
Total current liabilities 4,837 3,668
Commitments and contingencies - -
Shareholders' equity:
Preferred stock, $1.00 par value.
Authorized 11,433,600 shares;
Series A Preferred Stock, $1.00 par value.
Authorized 50,000
Series A shares; no Series A shares issued at
March 31, 2003 - -
Series B Preferred Stock, $1.00 par value.
Authorized 2,800,000
Series B shares; issued 2,800,000 Series B
shares at March 31, 2003 (Aggregate
liquidation value $7 million) 2,800 2,800
Common stock, $.01 par value. Authorized
50,000,000 shares;
issued 31,146,022 shares at March 31, 2003
and 29,166,613 at June 30, 2002 311 292
Additional paid-in capital 108,222 106,460
Accumulated deficit (40,339) (34,802)
Subscriptions Receivable - (413)
Less treasury stock, at cost, 13,300,700 shares
at March 31, 2003 and 13,320,500 at
June 30, 2002 (69,680) (69,784)
Net shareholders' equity 1,314 4,553
$ 6,151 $ 8,221
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