DSET Reports Second-Quarter Financial Results.Business Editors SHREWSBURY Shrewsbury, city, England Shrewsbury (shr  z`bərē), city (1991 pop. 57,731), county seat of Shropshire, W England, on the Severn River. , N.J.--(BUSINESS WIRE)--Aug. 12, 2002(Nasdaq: DSET DSET Desert Sunshine Exposure Testing Inc. ) - DSET Corporation today reported second quarter 2002 financial results. For the quarter ended June June: see month. 30, 2002, DSET reported total revenues of $1.2 million, as compared with $1.5 million in the first quarter of 2002, and as compared with $2.6 million in the second quarter of 2001. Gross margins on revenues for the second quarter of 2002 were 15.6 percent versus 20.2 percent for the same quarter in 2001. The difference is primarily attributable to approximately $200,000 of amortization of acquired technology in the merger with ISPsoft Inc. Gross margins for the current quarter, with this amortization expense excluded, were 32.3 percent. The net loss for the quarter was $14.8 million, or a loss of $2.91 per share on a basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis, as compared with a net loss of $13.2 million, or $4.53 per share on a basic and diluted basis, for the quarter ended June 30, 2001. The weighted average number of basic and diluted common shares outstanding for the second quarter of 2002 was 5.1 million and the number of basic and diluted common shares for the second quarter of 2001 was 2.9 million. The primary difference in the number of shares between the second quarters of 2002 and 2001 is due to the 2.3 million shares issued as part of the merger with ISPsoft on January January: see month. 31, 2002. All share and per-share amounts have been restated for the Company's one-for-four reverse stock split in August 2001. During the quarter, the Company recorded a charge for the impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of goodwill of $11.4 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc DSET's merger with ISPsoft, Inc. in January 2002. The amount of impairment reflects both the further decline in the Company's stock price and resulting market valuation in recent months and a reassessment Reassessment The process of re-determining the value of property or land for tax purposes. Notes: Property is usually reassessed on an annual basis. You may request a "reassessment" if you disagree with your assessment. of the market outlook for capital equipment and software purchases in the telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. industry. Under FAS 142, "Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. ", goodwill impairment is deemed to exist if the net book value of a reporting unit exceeds its estimated fair value. The fair value was determined based on the common stock price and resultant This article is about the resultant of polynomials. For the result of adding two or more vectors, see Parallelogram rule. For the technique in organ building, see Resultant (organ). In mathematics, the resultant of two monic polynomials market value of the Company. This charge is non-recurring and does not affect the Company's cash position. This compares to a charge of $420,000 for the impairment of goodwill related to DSET's electronic bonding gateway business in the second quarter of 2001. The net loss for the quarter also included 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). and other charges of $1.8 million, related to certain severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when expenses and expenses related to the abandonment of leasehold improvements Leasehold Improvement Improvements on a leased asset that increase the value of the asset. Notes: A leasehold improvement is classified as an asset that must be depreciated over time. , excess computer and office equipment and excess furniture related to the reduction of staff and the closing of additional office space. This compares to $6.4 million of restructuring and other charges in the second quarter of 2001. The current quarter also includes a credit of $307,000 to bad debt expense, due to the collection of some previously reserved accounts and an improved outlook for collection of other accounts. In the second quarter of 2001, the Company recognized a charge to bad debt expense of $545,000. Revenues for the six months ended June 30, 2002 were $2.7 million as compared to $6.0 million for the same period of 2001. The net loss for the current period was $16.6 million, or a loss of $3.53 per share, on a basic and diluted basis as compared to a net loss of $24.1 million, or a loss of $8.28 per share, for the same period of 2001. Restructuring and other charges for the six months ended June 30, 2002 were $2.3 million, or $0.48 per share, as compared with $9.8 million, or $3.37 per share, in the same period in 2001. Restructuring and other charges were related to severance expenses, the costs of closing office space, and the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → abandoned due to the reductions in workforce. The net loss for the six months ended June 30, 2002 also included the charge noted above for the impairment of goodwill of $11.4 million related to the merger with ISPsoft, Inc. This compares to a charge of $420,000 for the impairment of goodwill related to DSET's electronic bonding gateway business in the first half of 2001. The weighted average number of basic and diluted common shares outstanding for the first six months of 2002 and 2001 was 4.7 million and 2.9 million, respectively. The company ended the second quarter with $3.9 million in cash and cash equivalents. This compares to $13.0 million in cash and cash equivalents as of December December: see month. 31, 2001. The cash utilized in the first six months included approximately $3.6 million of payments made in conjunction with the ISPsoft merger. In addition, the Company collected $1.4 million for the U.S. income tax refund Tax refund Money back from the government when too much tax has been paid or withheld from a salary. due to the new tax carry-back The name given to the method provided under federal tax law that allows a taxpayer to apply net operating losses incurred during one year to the recomputation of Income Tax owed to the government for three preceding taxable years. provisions of the Job Creation and Worker Assistance Act (JCWAA JCWAA Job Creation and Worker Assistance Act ) signed into law on March 9, 2002. The company also recorded a current receivable in the second quarter for additional U.S. income tax refund claims of $449,000 related to those noted above. Second Quarter Activities In late May, we implemented another reduction in force to further reduce costs. Our current headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. is now less than 50 employees. In addition, we consolidated our two New Jersey offices and relocated re·lo·cate v. re·lo·cat·ed, re·lo·cat·ing, re·lo·cates v.tr. To move to or establish in a new place: relocated the business. v.intr. our corporate offices to our Shrewsbury, New Jersey
Shrewsbury is a Borough in Monmouth County, New Jersey, United States. As of the United States 2000 Census, the borough population was 3,590. facility in order to further reduce expenses. These actions were taken to reduce our breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations point and lower our cash burn rate. We recently announced the general availability of IPSource(TM) 2.2, Release 1. IPSource 2.2.1 is the latest release of the company's innovative and high performance IP provisioning, activation activation /ac·ti·va·tion/ (ak?ti-va´shun) 1. the act or process of rendering active. 2. the transformation of a proenzyme into an active enzyme by the action of a kinase or another enzyme. 3. , configuration and management platform that empowers service providers to roll-out new services to customers quickly, reliably and profitably. This release has already generated strong interest from major Tier I communications providers who have either started trials of the new release or indicated their desire to start trials in the near future. The general availability of Release 2 of IPSource 2.2, which includes further enhancements to our current support of IPSec and other exciting new features, is expected by the end of the year. We have recently signed a strategic partnership agreement with FDM (1) (Fused Deposition Modeling) See 3D printing. (2) (Frequency Division Multiplexing) Transmitting multiple data signals simultaneously over a single wire by using multiple carriers, each having a unique center frequency. Group, based in the U.K., to provide systems integration and support for IPSource and help promote the product to a broader customer base. FDM is an international provider of IT and e-business (Electronic-BUSINESS) Doing business online. The term is often used synonymously with e-commerce, but e-business is more of an umbrella term for having a presence on the Web. solutions to blue chip clients throughout the U.K., Europe and the U.S. Our electronic bonding gateway business continues to make positive contributions to the Company. We still see strong interest from surviving competitive service providers and new entrants to the industry for the value provided by automating this key element of provisioning new telecommunications services In telecommunication, the term telecommunications service has the following meanings: 1. Any service provided by a telecommunication provider. 2. . One of our main competitors, Quintessant Communications, recently went out of business, and we believe this and further consolidation in the market should help our future prospects. In keeping with our commitment to support the latest industry standards in our products, we recently released ezAccess 3.4. This new electronic bonding gateway product supports both ASOG ASOG Access Service Ordering Guidelines ASOG Access Service Ordering Guidelines (telecommunications) ASOG Air Support Operations Group (Access Service Ordering Guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. ) 24 and ASOG 25 and is compliant with MetaSolv's TBS TBS Tablespoon TBS Tokyo Broadcasting System, Inc. TBS Treasury Board Secretariat (Canada) TBS Tris-Buffered Saline TBS Tris Buffered Saline TBS Turn Based Strategy (games) 5.1.2. As we previously announced, we transferred our stock listing to the Nasdaq SmallCap market effective May 29, 2002 in order to continue to provide investors with a robust and liquid market for trading our stock. However, in July 2002 DSET received notice from Nasdaq that we had not maintained the minimum required market value for our publicly held shares of common stock of $1 million for a thirty-day period. As a consequence, we will be provided 90 calendar days, or until October 15, 2002, to regain compliance. In order to regain compliance, the market value of publicly held shares of our common stock must be greater than $1 million for a minimum of 10 consecutive trading days In Business, the trading day is the time span that a particular stock exchange is open. For example, the New York Stock Exchange is, as of 2006, open from 09:30AM to 4:00PM. Trading days never take place on weekends. . In order to comply with this rule, we believe we must maintain a minimum closing bid price of at least $0.31. If we do not qualify for continued listing by October 15, 2002 we will have the opportunity to appeal any delisting Delisting When the stock of a company is removed from a stock exchange. Notes: Reasons for delisting include violating regulations and/or failure to meet financial specifications set out by the stock exchange. notification to Nasdaq's Listing Qualifications Panel. In the event that we are not able to maintain our listing on the Nasdaq SmallCap market, trading may continue on the Over-the-Counter (OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). ) Bulletin Board or other electronic quotation services Electronic Quotation Service An Internet-based quotation service operated by Pink Sheets LLC for brokers and market makers of over-the-counter equities and bonds. . Looking Forward We continue to pursue additional financing to meet future funding needs of our operations until we again can generate a positive cash flow. We are exploring multiple options to raise additional funds while we try aggressively to sell our way into stability with our new IP solutions. If cash flows are insufficient or we are unable to raise funds on acceptable terms, there would be a material adverse effect on our financial position and operations. Investors are encouraged to review our risks and uncertainties as outlined in greater detail in our 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. filed with the SEC, along with the possible actions the Company may take to mitigate mit·i·gate v. To moderate in force or intensity. mit  i·ga tion n. them.We continue to believe that our unique IP solutions are competitive and we are working hard to win our first few customers in this market, which could open the door to raising additional cash. About DSET DSET Corporation (www.dset.com) is one of the leading providers of innovative OSS Oss (ôs), city (1994 pop. 62,141), North Brabant prov., S Netherlands; chartered 1399. It is a significant industrial center. Manufactures include meat products, chemicals, pharmaceuticals, electrical equipment, and metalware. software solutions designed to minimize operational costs and maximize the value of service offerings for telecommunications providers around the world. Since 1989, DSET's field-proven products have been used to build critical global network applications that generate immediate return on investment. DSET's portfolio of industry-leading products include: IPSource, an advanced IP provisioning, activation and configuration platform enabling providers to deploy, modify and manage services quickly, reliably and profitably; and electronic-bonding gateways that allow competitive service providers to exchange information electronically with other telecommunications providers which significantly reduce the time required to provision services and resolve service outages for their customers. Statements regarding financial matters contained in this press release, other than historical facts, are forward-looking. Since all statements about DSET's plans, estimates, and expectations are based on current projections that involve risks and uncertainties, and are subject to change at any time, the company's actual results may differ materially from expected results. Investors should consider these risks and uncertainties, which are discussed in documents filed by DSET with the Securities and Exchange Commission. These documents identify important factors that could cause the actual results to differ materially from those contained in the projections or 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. . DSET expressly disclaims any obligation to update any forward-looking statements. DSET and the DSET logo are registered trademarks of DSET Corporation. IPSource is a trademark of DSET Corporation. All other trademarks are the property of their respective owners.
DSET Corporation
Consolidated Balance Sheets
(In $000)
June 30, 2002 Dec. 31, 2001
Assets (unaudited)
Current assets:
Cash and cash equivalents $ 3,893 $ 12,958
Accounts receivable, net 774 824
Income taxes receivable 462 8
Prepaid licenses 916 935
Prepaid expenses and other
current assets, net 396 330
---------- ---------
Total current assets 6,441 15,055
Acquired technology, net 3,667 -
Fixed assets, net 1,643 2,173
Goodwill, net - 19
Loans to ISPsoft Inc - 3,850
Merger and acquisition costs - 1,043
Other assets, net 308 418
---------- ---------
Total assets $ 12,059 $ 22,558
========== =========
Liabilities and
Shareholders' Equity
Current liabilities:
Accounts payable and accrued
expenses $ 1,669 $ 2,460
Deferred revenues 1,782 2,293
Accrued restructuring expenses 2,182 1,177
Current portion of notes payable 849 494
Current portion of capital
lease obligation 159 138
---------- ---------
Total current liabilities 6,641 6,562
Long term accrued restructuring
expenses 612 1,021
Deferred rent 106 550
Capital lease obligation 187 283
Other liabilities 22 21
---------- ---------
Total liabilities 7,568 8,437
---------- ---------
Commitments
Shareholders' equity:
Common stock 56,946 50,138
Accumulated deficit (52,388) (35,837)
Accumulated other
comprehensive loss (23) (22)
Treasury stock, at cost (44) (158)
---------- ---------
---------- ---------
Total shareholders' equity 4,491 14,121
---------- ---------
Total liabilities and
shareholders' equity $ 12,059 $ 22,558
============= ===========
DSET Corporation
Consolidated Statements of Net Loss
(In $000 except per share data)
Quarter Ended Six Months Ended
June 30, June 30,
2002 2001(a) 2002 2001(a)
Unaudited Unaudited Unaudited Unaudited
Revenues: ----------- ---------- ---------- ----------
License revenues $ 123 $ 586 $ 377 $ 2,107
Service revenues 1,078 2,030 2,326 3,925
-------- -------- -------- --------
Total revenues 1,201 2,616 2,703 6,032
-------- -------- -------- --------
Cost of revenues:
License revenues 133 524 336 1,026
Service revenues 881 1,565 1,915 3,556
-------- -------- -------- --------
Total cost of revenues 1,014 2,089 2,251 4,582
-------- -------- -------- --------
Gross profit 187 527 452 1,450
-------- -------- -------- --------
Operating expenses:
Sales and marketing 495 2,120 1,231 4,649
Research and product
development 1,091 2,994 2,078 6,903
General and administrative 913 1,417 2,131 3,269
Bad debt expense and
other charges (307) 545 (307) 985
Amortization of goodwill
and other intangibles 0 103 0 204
Restructuring and
other charges 1,786 6,360 2,250 9,789
Impairment of goodwill 11,444 420 11,444 420
-------- -------- -------- --------
Total operating
expenses 15,422 13,959 18,827 26,219
-------- -------- -------- --------
Operating loss (15,235) (13,432) (18,375) (24,769)
Interest expense and
other income (expense) (13) (30) (77) (77)
Interest income 20 404 66 894
-------- -------- -------- --------
Loss before taxes (15,228) (13,058) (18,386) (23,952)
Provision (benefit) for
income taxes (449) 98 (1,835) 127
-------- -------- -------- --------
Net loss $ (14,779) $ (13,156) $ (16,551) $ (24,079)
======== ======== ======== ========
Net loss per common
share-basic and diluted $ (2.91) $ (4.53) $ (3.53) $ (8.28)
======== ======== ======== ========
Weighted average number
of common shares
outstanding and
common equivalent
shares outstanding(b) 5,082 2,907 4,692 2,907
======== ======== ======== ========
(a) Certain amounts have been reclassified for comparative purposes
(b) After giving retroactive application to the company's one-for-four
reverse stock split in August 2001
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