Earnings:
DATA RACE ANNOUNCES FIRST QUARTER RESULTS
SAN ANTONIO, TEXAS - (November 13, 1997) - DATA RACE, Inc. (Nasdaq National Market: RACE) reported a loss of $2,724,000 for its first quarter ended September 30, 1997 on $1,154,000 in revenue. Revenue decreased from the quarter ended June 30, 1997, primarily due to the completion during the prior quarter of substantially all shipments of existing custom modem contracts. The loss was primarily due to the expenditures for the Company's new Be There!O personal multiplexer product line and manufacturing variances attributable to reduced production volumes.
According to Dr. W. B. Barker, president and chief executive officer of DATA RACE, "We believe that the indirect sales channels are critically important to reaching our ambitious revenue objectives. As a result, the Company has focused a large amount of its resources in establishing relationships with a variety of distribution partnership, especially the billion-dollar class partners. While the time to record revenue from indirect sales partners is somewhat longer than direct sales, due to the need for joint generation of a marketing plan and training of salespeople at multiple locations, we believe that this strategy is in the shareholders' best interest. We are very pleased with our progress in establishing these important indirect sales partnerships. During recent months, we have signed national agreements with Inacom Communications and Data General, strengthened our service and support offerings, and signed a number of agreements with regional resellers."
The Company has recorded revenue from shipments to about one dozen customers and distribution partners to date. While Be There! sales have increased, they are not yet a significant part of the Company's revenue. In addition, the Company currently has numerous trials, ranging from recent installations to a number of trials on which the Company hopes to receive purchase decisions shortly. These trials are installed at companies from the financial services, telecommunications, food, chemical, and retail sales industries, and vary in size from small companies to among the nation's largest.
Dr. Barker continued "During the last few months, a third of Data General's U.S. sales offices and over 50 salespeople have been trained to sell Be There! systems. In addition, the Company has completed its first jointly-sponsored Data General customer seminar and has presented the Be There! product at two internal Data General U.S. and international annual sales events. While the Inacom Communications national distribution agreement was only recently signed, DATA RACE has already trained three sales offices, representing over 25 salespeople. Inacom also recently selected DATA RACE as its first external vendor for its interactive video service designed to update, educate and communicate interactively with Inacom employees across the country. We are pleased with this opportunity for quick and widespread exposure of Be There! throughout Inacom's dispersed sales force."
The Company has just completed an $8 million dollar private placement of which $5 million has been received and $3 million is committed for purchase by January 29, 1998, subject to certain conditions.
RISKS REGARDING FORWARD LOOKING STATEMENTS
Except for the historical information, this press release contains various "forward-looking statements" which represent the Company's expectations or beliefs concerning future events, including the timing and levels of revenues from the Company's teleworker products, the timing of purchase decisions, the Company's success in developing distribution partnerships, customer acceptance of the teleworker products. The Company cautions that these forward-looking statements involve a number of risks and uncertainties and are qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements. Such factors include lack of adequate capital; changing market trends and market needs; uncertainty regarding the breadth of market acceptance of the teleworker products' performance; uncertainty regarding the length of the sales process; rapid or unexpected technological changes; new or increased competition from companies with greater resources than the Company; inability to resolve technical issues or overcome other development obstacles; and certain other factors set forth in the Company's SEC filings, including the Form 10-K for fiscal 1997. The Company's failure to succeed in its efforts, including its sales efforts with respect to the teleworker products, could have a material adverse effect on the Company's financial condition and operations.
ABOUT DATA RACE, INC.
DATA RACE, Inc. designs, manufactures, and markets a line of communications products for remote access to the corporate environment. Its unique client/server product, Be There! personal multiplexer system, gives teleworkers access to all elements of corporate communications networks. Through Be There!, teleworkers reach the corporate intranet, LAN and the Internet while sending and receiving e-mail, faxes and phone calls simultaneously over a single phone line. DATA RACE also designs and manufactures advanced communications subsystems for makers of notebook computers and network multiplexers that carry data, LAN, voice and fax traffic among a company's multiple offices. The DATA RACE Website is located at datarace.com.
DATA RACE and the DATA RACE logo are trademarks of DATA RACE, Inc. registered in the
U.S. Patent and Trademark Office. Be There! is a trademark of DATA RACE, Inc. .
DATA RACE, Inc.
STATEMENTS OF INCOME Three Months Ended September 30,
(in thousands, except per share data) 1997 1996
Total Revenue $ 1,154 $ 7,943
Cost of Revenue 1,005 6,516
Gross Profit 149 1,427
Engineering & Product Development 1,073 1,215
Sales & Marketing 1,087 934
General & Administrative 760 703
Total Operating Expenses 2,920 2,852
Operating Loss (2,771) (1,425)
Other Income/(Expense) 47 44
Income (Loss) Before Income Taxes (2,724) (1,381)
Income Tax (Expense)/Benefit - -
Net Loss $ (2,724) $ (1,381)
Per Share Data
Net Loss $ (2,724) $ (1,381)
Effect of Beneficial Conversion Feature of Convertible Preferred Stock (143) -
Net Loss Applicable to Common Stock $ (2,867) $ (1,381)
Net Loss Per Common Share $ (.54) $ (0.29)
Weighted Average Shares Outstanding 5,264 4,754
BALANCE SHEETS: Sept. 30, 1997 June 30, 1997
(in thousands)
Cash and Short-term Investments $ 2,510 $ 4,536
Accounts Receivable, Net 903 1,879
Inventory, Net 1,038 1,057
Other Current Assets 23 23
Total Current Assets 4,474 7,495
Property and Equipment, Net 1,802 1,932
Other Assets, Net 43 43
Total Assets $ 6,319 $ 9,470
Current Liabilities $ 2,094 $ 2,607
Other Long-Term Liabilities - -
Shareholders' Equity:
Preferred Stock 748 3,079
Additional Paid-In Capital 1,882 1,882
Common Stock 29,241 26,681
Retained Earnings (Deficit) (27,646) (24,779)
Total Shareholders' Equity 4,225 6,863
Total Liabilities & Shareholders' Equity $ 6,319 $ 9,470 |
