Wednesday July 15, 4:30 pm Eastern Time
Company Press Release
SOURCE: CONNECT, Inc.
CONNECT, Inc. Announces Second Quarter Earnings
MOUNTAIN VIEW, Calif., July 15 /PRNewswire/ -- CONNECT, Inc. (Nasdaq: CNKT - news), a leading provider of business-to-business electronic-commerce software, today announced results for its second quarter ended June 30, 1998. Second quarter license revenues were $460,000, a decrease of 69% from $1,479,000 recorded in the second quarter of the prior year. Second quarter total revenues were $1,688,000 compared to total revenue of $3,180,000 for the second quarter of 1997, a decrease of 47%. Net loss for the second quarter of 1998 was $1,928,000, a $1.2 million improvement from the net loss of $3,163,000 for the second quarter of 1997.
For the six months ended June 30, 1998, revenues were $3,940,000 compared to revenues of $5,067,000 for the six months ended June 30, 1997, a decrease of 22%. Net loss for the six months ended June 30, 1998 was $4,878,000 compared to a net loss of $8,361,000 for the comparable period in 1997, a decrease of 42%.
Craig Norris, CONNECT's president and CEO, commented, ''My first priority upon taking the helm at CONNECT was to aggressively address cost issues to more closely align our expenses with current revenues. As stated in our July 6th release and now confirmed, this has achieved the desired result in the current quarter. We are now focusing attention on two key priorities: 1) forming a strategic relationship with a company having capabilities synergistic to ours and possessing greater financial resources, and 2) generating a more predictable and growing revenue stream. In the former case, we have engaged Alliant Partners to assist the Company in developing a strategic relationship which may include the acquisition of CONNECT. In the second case, we are reviewing every aspect of our marketing and sales approach to improve our positioning and execution.''
Commenting further on the quarter's results, Mr. Norris said, ''One of the more frustrating aspects of our sales pipeline is that potential customers are extending their decision processes. Often this is due to limitations on MIS resources that are committed to Year 2000 projects or their derivative, the implementation of major ERP systems.''
''We remain confident in the quality of our software and implementation services. This is attested to by our significant customer base, including AT&T Wireless, Moore Business Forms, Maintenance Warehouse, Chemdex, Snap-on Tools and our newly announced customer, Artville. Our proven track record for project implementation and innovation continues to be one of the jewels in our crown in terms of predictability and time-to-market. Of course, our implementation services track record is only possible because our software is built upon a proven technology platform.''
About CONNECT, Inc.
CONNECT provides comprehensive application software to enable Internet-based electronic commerce. CONNECT's award-winning OrderStream(TM), MarketStream(TM), and PurchaseStream(TM) applications allow global companies to manage the secure sales and purchasing of goods and services via the Internet, including sales-to-order capture, management of multi-supplier/multi-buyer communities, and the automation of MRO procurement processes. For more information, telephone 800-262-2638 or access the CONNECT Web site at www.connectinc.com.
Except for the historical information contained herein, the matters discussed in this news release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. Potential risks and uncertainties include, without limitation, those mentioned in the Company's Annual Report on Form 10-K for the year ended December 31, 1997 and the Company's ability to implement its products, acceptance by the marketplace of the Company's products and services and the Company's ability to develop new products and services.
NOTE: OrderStream, MarketStream and PurchaseStream are trademarks of CONNECT, Inc. CONNECT is a registered service mark of CONNECT, Inc. All other trademarks are property of their respective holders.
Condensed Statement of Operations
(in thousands, except per share data)
Three months ended Six months ended
June 30, June 30,
1998 1997 1998 1997
Unaudited
Revenue:
License $460 $1,479 $1,485 $1,882
Service 1,228 1,701 2,455 3,185
Total revenue 1,688 3,180 3,940 5,067
Cost of Revenue:
License 116 218 294 394
Service 1,063 2,113 2,465 4,796
Total cost of revenue 1,179 2,331 2,759 5,190
Operating Expenses:
Research & development 865 1,214 2,176 2,622
Sales & marketing 868 2,136 2,308 4,354
General & administrative 738 691 1,474 1,342
Total operating expenses 2,471 4,041 5,958 8,318
Loss from operations (1,962) (3,192) (4,777) (8,441)
Other income (expense), net 34 29 (101) 80
Loss before income taxes (1,928) (3,163) (4,878) (8,361)
Benefit for income taxes -- -- -- --
Net Loss ($1,928) ($3,163) ($4,878) ($8,361)
Basic and Diluted
net loss per share $(0.15) $(0.84) $(0.58) $(2.23)
Weighted common shares outstanding 12,849 3,772 8,418 3,751
Condensed Balance Sheets
(in thousands)
June 30, December 31,
1998 1997
Unaudited
Current assets:
Cash and cash equivalents $5,491 $9,644
Accounts receivable, net 1,200 2,298
Prepaid and other current assets 467 895
Total current assets 7,158 12,837
Property and equipment, net 1,812 2,442
Other assets 75 85
Total Assets $9,045 $15,364
Current Liabilities:
Accounts payable & accrued expenses $2,674 $3,476
Current portion of long-term obligations 1,143 1,246
Deferred revenue 455 681
Total current liabilities 4,272 5,403
Long-term obligations 681 10,593
Stockholders' Equity (Deficit) 4,092 (632)
Total liabilities and
stockholders' equity $9,045 $15,364
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