We ARE shipping the news products now and the rate of shipments is expected to
increase...maybe CISCO will buy PFNT (GGG) or somebody else will...not out of the question:
(COMTEX) B: PNI Reports First Quarter Results; Significant Improvemen
B: PNI Reports First Quarter Results; Significant Improvement In Operating Loss
and Initial Revenues Posted From Networking Products
ATLANTA, May 5, 2000 /PRNewswire via COMTEX/ -- Preferred Networks, Inc. (OTC
Bulletin Board: PFNT) (PNI), a leading provider of network services to the
wireless industry and a developer and supplier of advanced communications
networking products, today reported its financial results for the three months
ended March 31, 2000.
PNI posted an important milestone in the first quarter, shipping its first
commercial networking products to customers. In the first quarter, PNI began to
ship iTerminal(TM) desktop messaging terminals and also accepted orders for its
Platform1(TM) modular switch product, which it expects to begin shipping in the
second quarter. In addition, earlier this week, PNI announced that it has
introduced and started shipments of its iLink TNPP Internet router product.
Revenues associated with the initial shipments of networking products for the
first quarter were $69,000, which PNI expects to increase significantly in the
second quarter. Total revenues for the first quarter were $3.9 million compared
to $4.9 million for the prior year period. As PNI reported in its year-end
results, the decrease in total revenues resulted primarily from lower pager
sales to network services customers, due to lower inventory levels at the end of
1999. This resulted from PNI's limited working capital resources prior to its
financial restructuring that was completed in December of 1999.
Cost of networking products for the first quarter was $97,000. The majority of
this expense represents an allocation of existing S,G&A expenses that had
previously been included in research and development costs and are now
associated with the delivery of commercial products. Due to the limited revenues
associated with PNI's initial shipments of networking products, this relatively
fixed expense allocation exceeded the networking product revenues for the
period. However, PNI expects that its future increases in networking product
shipments and associated revenue will result in positive gross profit after
these allocated expenses. Total operating expenses decreased by $1.8 million to
$5.7 million for the first quarter compared to $7.5 million for the prior year
period. The decrease in total expenses is due to lower pager sales and lower
selling, general and administrative expenses resulting from continued efforts by
PNI to gain greater operating efficiencies.
PNI posted continued improvements in net loss from continuing operations (before
the adoption of SOP 98-5 and write-off of market start-up expenses), reducing
its loss by $1.0 million to $2.0 million for the first quarter compared to $3.0
million for the prior year period. The improvement is the result of an overall
decrease in operating expenses and decreased net interest expense resulting from
the reduced outstanding debt balance.
The net loss attributable to Common Stock decreased by $2.8 million to $2.9
million for the first quarter compared to $5.7 million for the prior year
period.
Mark Dunaway, CEO of PNI, said, "This was a very exciting quarter for PNI. We
continued to post significant improvements in our bottom line performance and we
achieved our first commercial shipments of networking products. We are receiving
a very positive response from the marketplace and we are building a backlog of
customer orders for our iTerminal(TM) product, our Platform1(TM) product, and
our recently introduced iLink router. We expect to make deliveries of all of
these products to customers during the second quarter, which we expect to result
in a meaningful increase in total networking product revenues for the next
reporting period."
PNI is a developer and supplier of advanced networking hardware and software
products for companies that operate in the wireless, fixed network and Internet
marketplaces. These products provide companies with greater processing
efficiencies, cost savings, and an open platform to bring them closer to their
customers through unified service offerings. PNI also owns and operates one-way
wireless messaging networks in the Eastern United States and provides unbranded,
wholesale network services to companies. PNI's address on the World Wide Web is:
pniaccess.com .
Safe Harbor Statement Under the Private Securities Litigation Reform Act of
1995: The statements contained in this release which are not historical facts,
are forward-looking statements that are subject to risks and uncertainties,
including those identified in PNI's 1999 Annual Report on Form 10-K, and actual
results could differ materially from those anticipated in the forwarding-looking
statements. Certain information included in this release contains statements
that are or will be forward-looking. Such forward-looking information involves
important risks and uncertainties that could significantly effect anticipated
results in the future and, accordingly, such results may differ from those
expressed in any forward-looking statements made by or on behalf of PNI. These
risks and uncertainties include, but are not limited to, risks related to
technological change in the wireless industries; risks associated with PNI's
efforts to commercialize and market successfully its networking products, such
as the Platform1(TM) and iTerminal(TM) products; the relatively unproven nature
of PNI's networking products, which represent a new product line for PNI; and
challenges to PNI's technologies (such as challenges to the validity of patents
on PNI's switching technology). PNI operates in a highly competitive marketplace
and new product developments by competitors can occur at any time, thereby
diminishing the attractiveness of PNI's products.
Summary Financial Information
Three Months Ended
March 31,
2000 1999
Revenues
Network services $2,936,601 $3,306,154
Pager sales 818,835 1,589,835
Networking products 69,491 ---
Other services 37,756 53,848
Total revenues 3,862,683 4,949,837
Costs of revenues
Network services 1,979,020 2,125,363
Pager sales 719,622 1,507,839
Networking products 97,458 ---
Other services 1,119 2,567
Total costs of revenues 2,797,219 3,635,769
Gross margin 1,065,464 1,314,068
Selling, general and administrative expenses 1,601,948 2,621,767
Depreciation and amortization 1,299,903 1,226,284
Operating loss (1,836,387) (2,533,983)
Interest expense (163,172) (483,750)
Interest income 26,017 37,161
Net loss from continuing operations before
cumulative effect of change in
accounting principle (1,973,542) (2,980,572)
Net loss from discontinued operations, net
of income tax(1) --- (59,841)
Cumulative effect of change in accounting
principle(2) --- (1,832,398)
Net loss
(1,973,542) (4,872,811)
Accretion of Redeemable Preferred Stock
(155,631)
(155,642)
Redeemable Preferred Stock dividend
requirements
(724,728) (675,000)
Net loss attributable to Common
Stock
$(2,853,904) $(5,703,453)
Net income (loss) per share of Common Stock from:
Continuing operations before cumulative
effect of change in accounting principle
$(0.17) $(0.24)
Discontinued operations, net of income tax --- (0.00)
Cumulative effect of change in accounting
principle --- (0.11)
Net loss per share of Common Stock $(0.17) $(0.35)
Weighted average number of common shares used
in calculating net loss per share of
Common Stock 16,401,418 16,265,377
Summary Balance Sheet Data
March 31, 2000 December 31,1999
Cash $4,965,648 $5,489,898
Total assets 37,429,517 39,142,754
Total debt 6,289,989 6,068,587
Redeemable Preferred Stock 28,310,946 27,430,576
Stockholders' equity (445,640) 2,100,944
Notes to Summary Financial Data
(1) On May 28, 1999, PNI sold substantially all of the assets of its
wholly-owned subsidiary, Preferred Technical Services, a provider of
wireless network equipment installation, maintenance and engineering
services. On December 10, 1999, PNI sold its wholly-owned subsidiary
EPS Wireless, Inc., a provider of paging and cellular product repair
services, sales of new, used, and refurbished paging and cellular
products and inventory management services. Operating results for
these subsidiaries for 1999 have been reclassified and reported as
discontinued operations in accordance with Accounting Principles
Board Opinion No. 30.
(2) Effective January 1, 1999, PNI adopted the Accounting Standards
Executive Committee issued Statement of Position 98-5, which required
it to write-off of any previously capitalized start-up or
organizational costs, to be reported as a cumulative effect of a
change in accounting principle. PNI wrote off the unamortized amount
of its market entry costs in the amount of $1,832,398.
SOURCE Preferred Networks, Inc.
(C) 2000 PR Newswire. All rights reserved.
prnewswire.com
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CONTACT: Kathryn Loev Putnam, Senior Vice President and Chief Financia
Officer of Preferred Networks, Inc., 770-582-3507
/Company News On-Call: prnewswire.com
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