Midisoft Corp. posts $0.64 Annual Loss vs. $0.79 Loss
Friday April 16, 12:12 pm Eastern Time
Company Press Release
Midisoft Corporation Reports 1998 Results
Higher Gross Margin, Decreased Operating Expenses and Lower Losses on Decreased Revenues Reported
ISSAQUAH, Wash.--(BUSINESS WIRE)--April 16, 1999--Midisoft Corporation (OTC BB: MIDI - news), the music technology pioneer and a recognized leader of innovative applications for the control and use of sound on personal computers and the Internet, today announced 1998 revenues of $1,760,000, compared to revenues of $3,000,000 in 1997. The Company also reported a gross profit of $1,090,000, or 62% of revenue, for 1998 compared to a gross profit of $1,350,000 or 44.8% of revenue the prior year. Operating expenses were reduced 26% in 1998, resulting in an operating loss of $2,590,000 versus an operating loss of $3,640,000 in 1997.
In 1998, the Company recorded interest expense of $1,570,000 primarily consisting of one-time non-cash charges related to the intrinsic value of the conversion option of debt issued in 1998. The net loss for 1998 was $4,160,000, or $.64 per share on 6,457,000 shares, compared to a net loss of $4,730,000, or $.79 per share on 6,014,000 shares one year ago, an improvement of 19% on the per share basis.
Sales to software distributors and resellers, including direct sales and sales directly off the Internet, increased to 79% of total revenues from 70% of total revenues the previous year. OEM sales made up 21% of revenues in 1998 compared to 30% of revenues in 1997. International sales accounted for 10% of revenues in 1998 compared to 13% of revenues in 1997, resulting from the Company's continued emphasis on U.S. sales in 1998.
Larry Foster, President and CEO, commented, ''in 1998 we saw a different mix of products gain momentum. We met this by focusing on specialty markets within the music segment and focusing on computer products manufacturers and Internet partnerships for strategic products. We remained fully committed to our research and development program. Expenditures for R&D continued at a substantial level, totaling 36% of sales, compared to 33% of sales in 1997. That commitment resulted in a stream of product upgrades and partnerships. Midisoft released Midisoft Studio(TM) 6.0 and Desktop Sheet Music(TM) and placed Play Piano(TM) in 298 Canadian RadioShack® locations. We broadened our distribution into musical instrument stores and command shelf space in the largest retailer in the country, Sam Ash.''
''Our Internet Products Division announced release of Internet Media Player(TM) at Microsoft's Web Tech-Ed Conference and continued to enhance the player throughout the year with support for Microsoft® NetShow 3.0 and DirectShow technology,'' Mr. Foster added. ''We formed partnerships with KNAC, NetRadio(TM), WorldLink(TM), and Cyrix® Corporation to feature branded versions of Internet Media Player on their websites. Our PC audio and music software is bundled with a total of five Diamond Multimedia audio accelerator cards, and we announced an arrangement with Packard Bell NEC to bundle Mediaworks(TM) '98, our universal media player, on all Packard Bell and NEC Ready computers.''
On April 14, 1999, the Company announced that Internet Media Player supports Microsoft's Audio 4.0 and provides enhanced content organization and management capabilities. A new licensing program for independent content providers for player branding and promotion of digital audio and video was also announced. This product incorporates the current Internet market dynamics for media players and contains an ad banner that reflects a potential additional revenue stream for the Company.
Midisoft Corporation is the music technology pioneer and a recognized leader of sound applications for use on personal computers and the Internet. The Company develops and sells music creation software for musicians to compose, edit and record music and print engraver-quality sheet music. It develops and markets sound management products for users to conveniently access Internet content, sound controls and media files directly from their desktops. Midisoft's products help make the wealth of web-based content available and accessible for the enjoyment of the increasing number of consumers who join the Internet daily. Based in Issaquah, Washington, the Company develops award-winning consumer and business products that are sold at retail and licensed to third-party manufacturers, destination websites and content portals. For further information on the Company, please visit the Midisoft web site at www.midisoft.com
All statements in this press release other than statements of historical fact are forward-looking statements that involve substantial risks and uncertainties. There can be no assurance that the Company's capital requirements will not increase in the future that the Company's operations will improve, or that revenues will increase. Reference is made to Midisoft's Annual Report on Form 10-KSB for the year ended December 31, 1998 and to the Company's other reports filed with the Securities and Exchange Commission for a discussion of such risks and uncertainties and other factors that may have a material effect on the Company's business.
Midisoft Corporation
Balance Sheet
December 31
1998 1997
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Assets
Current assets
Cash and cash equivalents $ 270,000 $ 90,000
Accounts receivable, net 183,000 574,000
Inventories 115,000 222,000
Prepaids and other 42,000 82,000
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Total current assets 610,000 968,000
Long-term receivable 195,000 195,000
Property and equipment, net 116,000 239,000
Debt issuance costs, net of accumulated
amortization of $23,000 in 1998
and $0 in 1997 56,000 50,000
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977,000 1,452,000
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Liabilities and Shareholders' Deficit
Current liabilities
Trade accounts payable $1,181,000 $ 969,000
Current portion of long-term debt 250,000 250,000
Accrued wages and payroll taxes 93,000 100,000
Other accrued expenses 273,000 391,000
Deferred revenue 6,000 30,000
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Total current liabilities 1,803,000 1,740,000
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Long-term debt, net of discount 2,258,000 740,000
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Warrant obligations 81,000 81,000
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Shareholders' deficit
Preferred stock, Series A convertible, no
par value; 2,500,000 shares authorized,
zero issued and outstanding in 1998 and 1997
Common stock, no par value; 25,000,000
shares authorized, 7,251,000 issued and
outstanding in 1998 and 6,359,000 issued
and outstanding in 1997 20,488,000 20,165,000
Additional paid-in capital 3,026,000 1,245,000
Notes receivable from shareholders (191,000) (191,000)
Accumulated deficit (26,488,000) (22,328,000)
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Total shareholders' deficit (3,165,000) (1,109,000)
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$ 977,000 $1,452,000
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Midisoft Corporation
Statement of Operations
December 31,
1998 1997
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Revenues $1,760,000 $3,004,000
Cost of revenues 672,000 1,659,000
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Gross profit 1,088,000 1,345,000
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Operating expenses
Sales and marketing 1,190,000 1,842,000
General and administrative 1,864,000 2,151,000
Research and development 626,000 988,000
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Total operating expenses 3,680,000 4,981,000
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Operating loss (2,592,000) (3,636,000)
Interest expense (1,565,000) (1,035,000)
Interest income 17,000 6,000
Other expense (20,000) (64,000)
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Net loss $(4,160,000) $(4,729,000)
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Basic and diluted net loss per share $ (0.64) $ (0.79)
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Weighted-average shares outstanding 6,457,000 6,014,000
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Contact:
Midisoft Corporation
Gary M. Cully, Chief Financial Officer
(425) 313-3440; garyc@midisoft.com
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