FastComm Announces Results For First Quarter Ended July 31, 1999
Business Wire - September 13, 1999 09:23
DULLES, Va.--(BUSINESS WIRE)--Sept. 13, 1999--FastComm Communications Corporation (OTC BB: FSCX) today announced results for its fiscal year 2000 first quarter ended July 31, 1999.
The company said that the combination of a 55% increase in revenue (from $1.1 million to $1.7 million), an increase in the gross profit margin from 46% to 55%, and a 17% decrease in operating expenses compared to the same quarter last year, resulted in a significant reduction in the company's net loss for the period. In the first quarter of last year, the company reported a net loss of $2.0 million, compared to a net loss $777,000 in the first quarter of this year. On a per share basis, and accounting for an additional 4,352,461 weighted average shares outstanding compared to the same quarter last year (a 35% increase), the loss was reduced from ($0.16) to ($0.05). The company also noted that this is its first full quarter operating outside of Chapter 11 Bankruptcy protection, and that its cash position has improved significantly.
REVENUES:
Revenues for the quarter increased a total of $618,000, or 55%, from $1,130,000 in the first quarter of last year to $1,747,000 in the first quarter of the current fiscal year. Revenues increased $1,131,000, or 185%, when compared with that of the previous quarter. The increase was attributed to growth of sales of frame relay access devices and, to a lesser degree, sales of the company's Quick product line, which enables companies to integrate legacy and LAN protocols into a single network. The company said that strength in these two areas, which amounted to a $765,000 revenue increase between years, was offset by a $115,000 decrease in sales of the company's data compression products. The revenue growth came from more profitable products and was the reason for the improvement in gross profit margins.
"Our revenues are moving in the right direction, and according to plan," said President and CEO Peter Madsen. "We feel optimistic about the quarter we're now in and the quarters ahead of us," he said.
EXPENSES:
The company improved its gross margins and reduced operating expenses in all areas.
--Gross margins increased from 46% to 55%. As noted above, the improvement was the consequence of a shift in mix of revenues coming from higher profit margin products.
--Selling, general and administrative (SG&A) expenses decreased significantly both as a percent of revenues and in absolute terms. SG&A expenses fell by $590,000, or 38%, from $1,570,000 to $980,000 Approximately one-third of the reduction in SG&A was attributed to a decline in personnel, and another third of the reduction was attributed to expired or renegotiated leases. The balance of the reduction was attributed to less legal and other professional fees plus reduced travel costs. The company said that advertising expenses increased modestly during the quarter.
--Research and Development (R&D) costs decreased from $702,000 in the first quarter of last year to $582,000 in the current quarter. Last years costs included a one time $150,000 licensing agreement fee.
BALANCE SHEET:
The company said that its balance sheet has been strengthened as a result of $1 million raised through a private placement offering of securities to a group of accredited investors. The offering included the issuance of warrants which, if exercised, will generate a maximum of $2.6 million in additional capital to the company. Other unexercised warrants associated with subordinated debentures and those issued in connection with the company's Bankruptcy reorganization will, if exercised, generate an additional $4.8 million. The company said it also expects to seek additional funding to meet future operating requirements, expansion, and new R&D expenses.
Primarily as a result of the $1 million in new capital raised by the private placement, offset by the loss during the period, quarter end shareholders' equity increased $638,000 to $1,624,417 from $1,036,031 at the end of the 1999 fiscal year three months ago.
Also at the end of the quarter, the company had a cash position of $991,000, and a current ratio of 2.2 to one. Working capital increased from $1.9 million at April 30, 1999 to $2.5 in the current fiscal quarter.
OPERATING PERFORMANCE & MANAGEMENT'S PERSPECTIVE:
"We are extremely pleased at the first quarter results, and our position as we enter the second quarter," Madsen said. "We began the second quarter by shipping a $500,000 order, and we are obtaining a good flow of orders for our new voice products. These orders are coming from customers in South America and Asia in addition to the U.S.
"We now have several goals that are on the top of our agenda. We would like to build relationships with more South American distributors because we find substantial interest for our products in markets there. Similarly, we would like to put in place new distributors for our voice data products in Korea, and we would like to build a presence in China, especially for our ChanlComm products," he said.
Madsen said, "We have emerged through the Chapter 11 process as a truly reorganized company. The process was horrendous when measured by the time we had to devote to it, the distraction from operations, the costs for lawyers and consultants who prospered while our sales suffered, and the erosion of shareholder value. Now, we are focused on improving our results and restoring shareholder value. Along those lines, we plan to commence conference calls announcing the results of our second fiscal quarter ended October 30, 1999.
"Our costs have been slashed, and we have put non-operational issues largely behind us," he said. "We have good reason to be optimistic about our ChanlComm product family, a replacement for the front end processor in IBM mainframe computer networks. We began shipping certain of these products in the fourth quarter of last year, and we are now excited about introducing a new product that will expand port capacity from 16 to 256. We are very excited about this introduction and the prospects for revenue growth associated with it."
NEW INVESTOR RELATIONS FIRM:
The company also announced that it has retained The Poretz Group, an investor relations firm, to assist in the communication of the company's story to the investment community. Based in the technology center of Northern Virginia, The Poretz Group works with technology companies ranging from pre-public venture-backed companies to micro-caps and to companies with market caps approaching $2 billion. "We have known Pete Madsen and FastComm for several years, and have witnessed the progress made as the company went through its restructuring," said Doug Poretz, founder and President. "The company has changed significantly. It is no longer a FRAD company; it is no longer a distressed company. Clearly, it has a clear vision and a need to return to profitability and to return to Nasdaq listing. In the meantime, it has a legitimate story to tell, and we look forward to helping the company tell it. We'll do so deliberately, with candor and credibility, and in a way consistent with Pete's strong desire to restore and then build new value for the company's investors," Poretz said.
FastComm designs, develops, and manufactures advanced WAN/LAN/Global network routing and switching equipment, controllers and processors (both mainframe and Unisys environments), Internet access products, and related networking devices. It is a total system solution provider specializing in voice/fax/video/data over IP and Frame Relay. FastComm is a leader in the effort to provide optimal migration paths for legacy networks that are upgrading to newer routing technologies. The corporate goal is to provide customers with leading-edge networking technology and a cost-effective means of incorporating these technologies into new or existing networks. FastComm prides itself in its ability to customize networks to meet the specific needs of their customers. These customers include state governments, federal agencies, and multi-national corporations.
For more information, or to request a data sheet of any FastComm product, please contact us via phone (703) 318-7750; fax (703) 787-4625; email info@fastcomm.com; or visit FastComm on the World Wide Web at http:\\www.fastcomm.com .
FastComm products include the WEB Router(TM), GlobalView(TM), EtherFRAD(TM), RingFRAD(TM), MetroLan(TM), QUICK II(TM), ChanlComm(R) and GlobalStack(TM). These products provide routed and switched Voice / Data and Video access solutions for bandwidths ranging from 9.6kbps to full T1/E1 over Leased Line, Frame Relay, X.25 and digital and analog networks.
Forward-looking statements are made in this release pursuant to the safe harbor provisions of the Private Securities Litigation reform Act of 1995. Investors are cautioned that all forward looking statements are subject to risk and uncertainties, including, without limitation, the timing of new announcements or introductions by the company and its competitors, the hiring and retention of key employees, competitive pricing pressure, dependence on third parties for components and products, and general economic conditions in the United States and international markets, and the risk factors detailed from time to time in the Company's periodic reports and registration statements filed with the Securities and Exchange Commission.
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