Base Ten Systems announces third quarter results.TRENTON, N.J.--(BUSINESS WIRE)--Sept. 16, 1996--Base Ten Systems, Inc. (NASDAQ/NMS:BASEA BASEA Boston Area Solar Energy Association ) announced that for the third quarter ended July 31, 1996, the company had an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $1.93 million on revenues of $3.03 million. Third quarter revenues in 1995 of $5.0 million included recognition of $1.05 million of royalties from the sale of PRENVAL(TM) to Johnson & Johnson Clinical Diagnostics (1) Software routines that test hardware components (memory, keyboard, disks, etc.). Diagnostics are often stored in ROM chips and activated on startup. (2) Error messages in a programmer's source code that refer to statements or syntax that the compiler or assembler Laboratories. The write-off of $569,000 of costs associated with a registration statement, subsequently withdrawn in August 1996, increased the net loss to $2.50 million. The company also announced an increase in PHARMASYST(R) backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. to $4.5 million as a result of approximately $2.6 million of new orders received over the last several months including its first order from Japan. Several PHARMASYST systems are scheduled for validation See validate. validation - The stage in the software life-cycle at the end of the development process where software is evaluated to ensure that it complies with the requirements. over the next several months and successful validation should provide a strong marketing tool enabling an expansion of the Company's Manufacturing Execution Systems' business. Third quarter financial results reflect a delay in receiving funding for the Maintenance Data Recorder A data recorder is a piece of equipment which records data, and may also be called a data logger. Examples of data recorders are:
n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. and expenses. At the beginning of the third quarter, we began to recognize revenue for PHARM PHARM Pharmacy 2 on delivery rather than on the percent completion method thereby deferring revenue until the fourth and subsequent quarters. Coupled with reduced Government Technology output because of a period of low bookings last winter, we incurred an operating loss of $1.93 million. In June we filed a Registration Statement covering the sale of two million shares of Class A Common Stock. In August, we withdrew the Registration Statement and satisfied our short-term financing needs with the sale of a $10 million 9.01% Convertible Debenture Convertible Debenture Any type of debenture that can be converted into some other security. Notes: For example, a convertible bond can be converted into stock. , due Aug. 31, 2003, enabling us to continue to pursue our goals and objectives. The write-off of the registration statement costs of $569,000 contributed to the net third quarter loss of $2.5 million or $0.33 per share. -0-
Nine Months Ended July 31, Three Months Ended July 31,
1996 1995 1996 1995
Revenues $ 10,502,000 $ 13,135,000 $ 3,032,000 $ 5,001,000 Net earnings (loss) $ (7,936,000) $ (898,000) $(2,505,000) $ 75,000 Net earnings (loss) per share $ (1.04) $ (0.13) $ (0.33) $ 0.01 Fully Diluted Common shares outstanding 7,660,300 6,684,017 7,565,040 7,511,023 Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995: Except for the historical information contained herein, the matters discussed in this press release are 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. that involve risks and uncertainties, including but not limited to economic, competitive, governmental and technological factors affecting the company's operations, markets, products and prices, and other factors discussed in the company's various filings with the Securities and Exchange Commission. Base Ten Systems, Inc. is a diversified diversified (di·verˑ·s technology company concentrating on safety critical products in Manufacturing Execution Systems – Manufacturing execution system (MES) describes a set of integrated functions within a packaged software system or it can also describe the accumulated functionality within the production management infrastructure of a manufacturing or production company. , medical imaging software, and weapons control systems. -0- TO OUR SHAREHOLDERS: The third quarter of fiscal 1996 continued our successful program of developing new business. I'm happy to report significant achievements in both the Manufacturing Execution Systems (MES (Manufacturing Execution Software) Software that provides real time access to plant activities that include equipment, labor, orders and inventory. An MES integrates the data with enterprise resource planning (ERP) systems so that management has complete control of ) market with our industry leading software system, PHARMASYST(R), and in winning two important military contracts with the potential for additional long term production contracts. This success resulted from our substantial investment in marketing and continued development of PHARMASYST and to intense engineering effort to secure new military contracts. Our corporate goal over the next eighteen months is to dominate the MES market in the pharmaceutical industry and to exploit the recent success in the military market. MES Progress Report In the last several months, the company was awarded approximately $26 million in new contracts increasing the PHARMASYST backlog to $4.5 million. In addition, we made significant enhancements in the development of PHARM2, the standard version of PHARMASYST containing dispensing dispensing provision of drugs or medicines as set out properly on a lawful prescription. A prescription can only be filled, the drugs supplied, by a registered pharmacist, veterinarian, dentist or member of the medical profession. , electronic batch record, inventory control and document management systems modules. PHARM2 has also been expanded to service industry applications involving clinical trials, an exciting new market with opportunities in biotechnology. We recently introduced PHARMASYST into Japan's large pharmaceutical market, where we believe that we have a significant competitive advantage. In August, we signed a business partner agreement with Taisei Corporation Taisei Corporation (大成建設株式会社 , a prominent $15.6 billion engineering and construction company providing turnkey See turnkey system. plant facilities to both Japanese and international pharmaceutical manufacturers. Our two Japanese business partners, Toyo Engineering Company, a member of The Mitsui Group, and Taisei are both providing us with MES opportunities and the company has already received its first Japanese contract. We have begun converting the English version of PHARMASYST into Japanese, signifying Signifyin' (slang) is an African-American rhetorical device featuring indirect communication or persuasion and the creating of new meanings for old words and signs. Signifying, in this sense, includes repetition and difference, implication and association, combining words and our commitment to this very large market. PHARMASYST has recently been installed in a pharmaceutical manufacturing plant in Canada and is scheduled for validation in October. A second system installed in a North Carolina North Carolina, state in the SE United States. It is bordered by the Atlantic Ocean (E), South Carolina and Georgia (S), Tennessee (W), and Virginia (N). Facts and Figures Area, 52,586 sq mi (136,198 sq km). Pop. facility is currently undergoing validation, and a third system recently installed at a pharmaceutical plant in California is scheduled for validation in October. Successful validation of these three systems will provide operating confirmation of PHARMASYST and should prove a powerful marketing tool for new and larger contracts. PHARM2 is an exciting product because it permits compliance with FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. cGMP (current Good Manufacturing Practice Good Manufacturing Practice or GMP (also referred to as 'cGMP' or 'current Good Manufacturing Practice') is a term that is recognized worldwide for the control and management of manufacturing and quality control testing of foods and pharmaceutical products. ) but more importantly because it substantially reduces factory labor providing a powerful cost reduction tool. The requirement to reduce costs is driven by a combination of consumer pressure, the demands of the large pharmaceutical retailers and competition from cost-effective generic drug generic drug, a drug sold or prescribed under the nonproprietary name of its active ingredients or under a generally descriptive name rather than under a brand or trade name. manufacturers. Our business partners, who have more experience in this industry than we do, tell us that the market is prime and anxious to incorporate advanced MES solutions like PHARM2. uPACS(TM) PROGRESS REPORT During the third fiscal quarter, we received FDA clearance to market uPACS in the U.S. through two 510(k) Premarket Notifications. We signed an exclusive distribution agreement with Dr. Kleef Nach. Med. GmbH, a well known medical products distributor in Germany, including a commitment to purchase uPACS systems valued at more than $350,000 over the next year. In addition, Toshiba Medical Systems Europe now includes uPACS in their approved product list as the only ultrasound ultrasound or sonography, in medicine, technique that uses sound waves to study and treat hard-to-reach body areas. In scanning with ultrasound, high-frequency sound waves are transmitted to the area of interest and the returning echoes recorded image archiving system. These initial successes encourage us to continue the development of the networked product that we need to penetrate the U.S. market. GOVERNMENT TECHNOLOGY PROGRESS REPORT In the third fiscal quarter, McDonnell Douglas McDonnell Douglas was a major American aerospace manufacturer and defense contractor, producing a number of famous commercial and military aircraft. It merged with Boeing in 1997 to form The Boeing Company. awarded the Company the contract for the design and development of the Interference Blanker Unit intended for use aboard the new F-18 E/F E/F Educator/Facilitator , with interesting possibilities for use on other aircraft. Our aim is to be awarded production contracts over the next ten years for this system to be installed in 1500 F-18/F/F aircraft and to get it specified for other aircraft as well. We also won the design contract for the Maintenance Data Recorder (the black box that has received such public notice because of recent aircraft tragedies) to be used aboard the Apache Apache (əpăch`ē), Native North Americans of the Southwest composed of six culturally related groups. They speak a language that has various dialects and belongs to the Athabascan branch of the Nadene linguistic stock (see Native American helicopter, with potential production quantities of up to 1,000 units. We believe that this device also has broad application for other fleets of helicopters. The Maintenance Data Recorder and the Interference Blanker Unit are intended to serve as the foundation for Government Technology revenues over the next ten years. FINANCIAL RESULTS Third quarter financial results reflect a delay in receiving funding for the Maintenance Data Recorder and the Interference Blanker Unit contracts until July, despite notification of the awards in April. This prevented the recognition of any revenue from these contracts in the third quarter although we incurred continuing overhead and administrative costs and expenses. At the beginning of the third quarter, we began to recognize revenue for PHARM2 on delivery rather than on the percent completion method, thereby deferring revenue until the fourth and subsequent quarters. Coupled with reduced Government Technology output because of a period of low bookings last winter, we incurred an operating loss of $1.93 million. In June, we filed a Registration Statement covering the sale of two million shares of Class A Common Stock. In August, we withdrew the Registration Statement and satisfied our short-term financing needs with the sale of a $10 million 9.01 percent Convertible Debenture, due Aug. 31, 2003, enabling us to continue to pursue our goals and objectives. The write-off of the registration statement costs of $560,000 contributed to the net third quarter loss of $2.5 million or $0.33 per share. SUMMARY The performance demands as well as the size of the market for Manufacturing Execution Systems continue to grow. There are exciting possibilities for profitable new business and we believe that PHARMASYST is the software system needed to reach domination domination the relationship between animals and humans in which little consideration is given to the rights of the animals. The prevailing sentiment is one of proprietary domination. in this market. We must, however, continue to strengthen our organization with experienced project and software engineers. Otherwise, we will miss all the opportunities waiting for us, not be able to handle the new business that we expect, and open the field to competition. This means increases in cost before developing the corresponding revenue. To continue our momentum we must also accelerate our marketing and selling activities and have planned an active campaign. I am pleased, but not yet satisfied, with our progress in the dynamic MES market and with our restoration to prominence prominence /prom·i·nence/ (prom´i-nins) a protrusion or projection. frontonasal prominence in the defense market. Our marketing and financial results reflect the strategy of investing heavily in the development of new products for the healthcare market for long term growth and earnings while deriving revenue and infrastructure from our government business. We have maintained a steady course and met our short term objectives. We expect to continue on that course until we reach our long term goals. -0-
CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
Nine Months Ended July 31, Three Months Ended July 31,
1996 1995 1996 1995
Revenues $ 10,502,000 $ 13,135,000 $ 3,032,000 $ 5,001,000 (Loss) earnings before taxes $ (7,936,000) $ (1,382,000) $(2,505,000) $ 111,000 Income taxes (benefit) $ --- $ (484,000) $ --- $ 36,000 Net (loss)/ earnings $ (7,936,000) $ (898,000) $(2,505,000) $ 75,000 Net (loss) earnings per common share $ (1.04) $ (0.13) $ (0.33) $ 0.01 Average common shares outstanding 7,660,300 6,684,017 7,565,040 7,511,023
CONDENSED BALANCE SHEET (UNAUDITED)
July 31, 1996 1995 Current assets $ 10,672,000 $ 18,943,000 Total assets $ 21,265,000 $ 28,223,000 Current liabilities $ 4,564,000 $ 4,202,000 Shareholders' equity $ 12,856,000 $ 19,879,000 Per share(a) $ 1.68 $ 2.97 (a) Based upon 7,660,300 and 6,684,017 weighted average shares outstanding in 1996 and 1995, respectively. Shareholders are encouraged to read the Company's 10Q for additional details concerning the company's operations and financial condition. Copies may be obtained without cost by writing to Investor Relations Department at the company's address. CONTACT: Base Ten Systems Inc. Edward J. Klinsport, 609/586-7010 or Strategic Growth International, Inc. Richard E. Cooper, 516/829-7111 |
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