<I've been fretting all day what to do about my 1000 shares. : )>
well I hope you sold, because based on the latest quarterly report, I think this company is on the verge of bankruptcy.. I sold out this morning and was surprised that someone would actually pay .30/share.
The best that Mr Doneaway could do for a key product was 19k$ for the quarter, what an absolute joke! My brother is in the car repair business and he does that in sales in a few days... Mr Doneaway indicated that they need more money to continue.... I think they have little or no chance of raising capital by March 1 in order to make the $2.9 million in payments to creditors...
I think it's unlikely this company will be operating in 6 months..
John
Tuesday November 14, 7:00 am Eastern Time
Press Release
SOURCE: PNI Technologies, Inc.
PNI Reports Third Quarter Financial Results
ATLANTA, Nov. 14 /PRNewswire/ -- PNI Technologies, Inc. (OTC Bulletin Board: PNLG - news; PNI), a developer and supplier of advanced communications networking products and a leading provider of network services to the wireless industry, today reported its financial results for the three and nine months ended September 30, 2000.
Total revenues were $3.5 million and $11.1 million for the three and nine months ended September 30, 2000, respectively, compared to $4.0 million and $13.2 million, for the prior year periods, respectively. The revenue decrease was due primarily to a decline in revenues from network services, which were affected by industry trends of increased competition for reseller service units and declining average revenue per unit.
PNI began commercial shipments of its first networking product, the iTerminal(TM) desktop messaging terminal, in early 2000, and has subsequently introduced additional products, including its Platform1® intelligent, high- speed, modular switch. For the first six months of 2000, PNI generated revenues of $259,000 from sales of networking products. During the third quarter of 2000, PNI's development team was primarily engaged in a Platform1® customer product installation, which is expected to be concluded during the fourth quarter. However, due to PNI's limited development personnel, dedication of these personnel to that installation inhibited its ability to complete customer orders. Accordingly, PNI generated only $19,000 of networking product revenues in the three months ended September 30, 2000, and revenues of $278,000 for the nine months ended September 30, 2000. PNI believes it will ship many of its delayed orders during the fourth quarter, although due to the early stages of commercial sales of PNI's networking products, there can be no assurance that PNI will not experience further delays.
Total costs of revenues were $2.6 million and $8.0 million for the three and nine months ended September 30, 2000, respectively, compared to $2.9 million and $9.4 million for the prior year periods, respectively. Total costs of revenues decreased due primarily to continued initiatives to reduce network operating costs, which were offset in part by the cost of networking products revenues in 2000 that did not exist in 1999. The majority of the cost of networking products for 2000 results from 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 early stages of commercial sales of PNI's networking products and its attempts to build its networking products business, this relatively fixed expense allocation exceeded the networking products revenues for the three months ended September 30, 2000.
S,G&A expenses were $1.6 million and $4.8 million for the three and nine months ended September 30, 2000, respectively, compared to $1.4 million and $6.4 million for the prior year periods, respectively. S,G&A for the three month period ended September 30, 1999 was lower due to an adjustment in certain accruals related primarily to professional fees. The decrease in S,G&A for the nine months ended September 30, 2000 was due to certain cost reduction measures during the third quarter of 1999 through employee terminations, which resulted in reduced expenses for the comparative period in 2000.
The net loss attributable to Common Stock was $3.1 million and $8.7 million for the three and nine months ended September 30, 2000, respectively, compared to $2.7 million and $11.1 million for the three and nine months ended September 30, 1999, respectively. The increase in net loss attributable to Common Stock for the three month period was due primarily to the gain on sale of PTS and a related tax benefit recognized in the 1999 three month period. The net loss attributable to Common Stock for the nine month period ending September 30, 1999 decreased due to a decrease in operating losses and the cumulative effect of adopting the new accounting principle for market entry costs in January 1999.
Mark Dunaway, CEO of PNI, said, ``While we had expected to ship more networking products during the quarter, we were engaged in a customer installation of a several unit order of Platform1®s. Due to the early stages of our networking products in the marketplace, our development engineering resources were primarily dedicated to working with this customer, which hindered us from completing other projects that we believe would have resulted in product shipments. While we expect to ship a greater volume of networking products in the fourth quarter, the early stage of this part of our business may cause revenue variation from period to period, as was the case this quarter.''
Liquidity and Capital Resources:
At September 30, 2000, PNI had $2.9 million in cash, $1.8 million in accounts receivable and $2.0 million in accounts payable. An aggregate of $5.7 million in principal plus accrued interest was outstanding under PNI's credit facilities with its lenders as of September 30, 2000. At September 30, 2000, PNI was in compliance with the financial covenants under its credit facilities and had no additional borrowing availability. PNI's net cash used in operations for the nine month period ended September 30, 2000 was $2.3 million, compared to $3.7 million in the prior year period. Total cash used for the nine month period ended September 30, 2000 was $2.6 million, compared to $3.9 million in the prior year period. The improvement in the nine month period was due primarily to reduced net losses compared to the prior year period.
PNI is continuing in its efforts to develop its networking products business, and to that end has incurred expenses in the development and promotion of this business that it would not have incurred solely as a provider of network services. PNI has not yet achieved significant sales of its networking products, and its costs attributable to this business have exceeded its revenues. PNI's principal revenue source remains its network services business, which continues its trend toward lower per-user and aggregate revenues. PNI has undertaken certain marketing initiatives to address competitive pressures in its network services business, although no assurances can be given that this will lead to increased airtime revenues in the future, and the trend toward decreasing network services revenues may continue.
PNI is obligated to make aggregate principal payments of $2.9 million to two of its three primary outside lenders in March 2001, and thereafter will be required to make regular principal payments to two of these lenders in the aggregate average monthly amount of $161,000 (in addition to monthly interest payments presently made to these two lenders) for the remainder of 2001. If these lender obligations are not successfully paid or restructured by the time they are due, the lenders will be able to declare the principal and all accrued interest currently due. These debts are secured by substantially all of PNI's assets. In the absence of a substantial improvement in its networking products business or its network services business (or both), PNI's cash and cash equivalents on hand, together with cash from operations, may not be sufficient to meet these debt service requirements. In such event, PNI would be required to raise funds in the form of equity, bank debt or other debt financing to execute its business plan. PNI is exploring a variety of financing and restructuring alternatives, including selling or licensing various assets and restructuring or reorganizing its outstanding debt and/or its business. There can be no assurance that if additional funds are required, such funds will be available on terms acceptable to PNI, if at all, and the failure to obtain such funds could have a material adverse effect on PNI.
About PNI:
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 resellers of wireless services. PNI's address on the World Wide Web is: www.pni.net .
Safe Harbor Statement:
The Private Securities Litigation Reform Act of 1995 provides a ``safe harbor'' for forward-looking statements. Certain information included in this press release (as well as information included in PNI's filings with the Securities and Exchange Commission and in oral statements or other written statements made or to be made by PNI) contains statements that are or will be forward-looking, such as statements relating to future sales activity and financial performance, marketing efforts and their possible results, financing and restructuring alternatives and their possible results, future capital expenditures, financing sources and availability and the effects of laws and regulations (including FCC regulations) and competition. Such forward-looking information involves important risks and uncertainties that could significantly affect 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, uncertainties affecting the wireless industries generally; risks relating to PNI's expansion and other business development activities; risks relating to the deployment and feasibility of PNI's new networking technologies and products; risks relating 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® and iTerminal(TM) products; the relatively unproven nature of PNI's networking products, which represent a new product line for PNI; possible challenges to PNI's technologies (such as challenges to the validity of patents on PNI's switching technology); risks relating to the ability of PNI to obtain additional funds in the form of debt or equity (including availability of financing terms acceptable to PNI); fluctuations in interest rates; and the existence of and changes to federal and state laws and regulations. In particular, statements relating to the competitive position and performance of PNI's current and future networking products and their expected performance in the marketplace are forward-looking statements that are subject to risks and uncertainties. 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 Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
Revenues
Network
services $2,565,700 $ 3,206,572 $8,214,372 $9,878,145
Pager sales 826,42 752,575 2,436,447 3,195,216
Networking
products 18,756 --- 277,656 ---
Other
services 43,264 56,040 147,929 158,759
Total
revenues 3,454,142 4,015,187 11,076,404 13,232,120
Costs of revenues
Network
services 1,779,427 2,164,820 5,597,848 6,309,322
Pager sales 743,906 745,515 2,127,878 3,073,318
Networking
product 110,599 --- 320,127 ---
Other
services 441 6,430 1,693 10,193
Total costs
of
revenues 2,634,373 2,916,765 8,047,546 9,392,833
Gross margin 819,769 1,098,422 3,028,858 3,839,287
Selling, general
and adminis-
trative
expenses 1,612,408 1,372,304 4,830,513 6,418,920
Depreciation
and amort-
ization 1,304,997 1,408,433 3,866,498 3,770,533
Operating
loss (2,097,636) (1,682,315) (5,668,153) (6,350,166)
Interest
expense (164,525) (447,603) (490,031) (1,421,209)
Interest
income 25,165 21,045 126,293 77,372
Gain/(loss) on
asset
disposal 91,543 12,314 91,543 (62,206)
Loss from continuing
operations before
income taxes and
cumulative effect
of change in acc-
ounting principle
(2,145,453) (2,096,559) (5,940,348) (7,756,209)
Income tax
benefit --- 120,000 --- 400,000
Net loss from
continuing
operations
before cumulative
effect of change
in accounting
principle (2,145,453) (1,976,559) (5,940,348) (7,356,209)
Discontinued
operations(1):
Net income from
discontinued
operations, net
of income tax --- (71,748) --- (177,081)
Gain on sale of
PTS, net of
income tax --- 191,506 --- 836,428
Net income
from discontinued
operations --- 119,758 --- 659,347
Cumulative effect
of change in accoun-
ting principle(2) --- --- --- (1,832,398)
Net loss (2,145,453) (1,856,801) (5,940,348) (8,529,260)
Accretion of
Redeemable
Preferred
Stock (155,641) (155,642) (466,925) (466,919)
Redeemable
Preferred
Stock dividend
requirements (823,627) (724,968) (2,268,344) (2,115,051)
Net loss attr-
ibutable to
Common
Stock $(3,124,721) (2,737,411) (8,675,617)(11,111,230)
Net income (loss)
per share of
Common Stock
from:
Continuing
operations
before
cumulative
effect of
change in
accounting
principle (0.19) (0.18) (0.53) (0.61)
Discontinued
operations,
net of income tax --- 0.01 --- 0.04
Cumulative effect
of change in
accounting
principle --- --- --- (0.11)
Net loss per share of
Common Stock (0.19) (0.17) (0.53) (0.68)
Weighted average
number of common
shares used in
calculating net
loss per share
of Common
Stock 16,544,417 16,369,302 16,496,925 16,337,940
June 30, 2000 December 31, 1999 Cash $ 2,918,729 $5,489,898 Total assets 32,624,292 39,142,754 Total debt 5,657,156 6,068,587 Redeemable
Preferred Stock 30,165,856 27,430,576
Stockholders'
equity (6,234,193) 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,
Inc., 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 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: PNI Technologies, Inc.
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