Socket Communications, Inc. Reports Second Quarter Operating Results
NEWARK, Calif. — August 4, 1997 — Socket Communications, Inc. (OTC Bulletin Board: SCKT and SCKTW; Pacific Stock Exchange: SOK) today reported revenue for the quarter ended June 30, 1997 of $1,122,692, an increase of 16 percent compared to revenue of $968,397 for the same period a year ago. Net loss for the quarter ended June 30, 1997 was $1,064,886 ($0.22 per share) compared to a net loss of $955,354 ($0.32 per share) for the same period a year ago.
Revenue for the six months ended June 30, 1997 was $2,193,440, a decrease of three percent compared to revenue of $2,262,240 for the same period a year ago. Net loss for the six months ended June 30, 1997 was $1,917,313 ($0.44 per share), compared to a net loss of $1,640,161 ($0.55 per share) for the same period in 1996.
The increase in revenue for the quarter ended June 30, 1997 compared to the same quarter in the previous year resulted primarily from three areas: first, higher sales volumes for new serial PC card products introduced at the end of 1996; second, higher demand for the low power, battery friendly features of the serial PC card from users of handheld computer (H/PC) platforms such as Windows CE; and finally, the company received a large order for Ethernet PC cards from a major customer. Revenue for the six months ended June 30, 1997 were comparatively flat compared to the prior year because of higher serial PC card and Ethernet PC card sales in the first quarter of 1996 compared to the first quarter of 1997. Sales of the Company's PageCard PC cards were equivalent in the three month and six month periods in both years.
The higher net loss in the quarter and six months ended June 30, 1997 compared to the same period in 1996 resulted primarily from higher sales and marketing expenses, one-time financing costs and costs related to the company's pending combination with Cetronic AB. These increased costs, however, were partially offset by improving gross margins in 1997.
"We believe Socket is the leading supplier of serial PC cards and that the demand for extremely low power consumption PC cards such as Socket's is being accelerated by the growth in H/PC computer sales and the development of applications using these devices. The Company has been expanding its serial PC card product line in response to this growing demand," said Socket's Chairman Charlie Bass.
Recent product introductions included an expanded family of serial PC card products in the fourth quarter of 1996 including a ruggedized serial PC card for physically demanding applications, a dual port serial PC card for applications needing additional serial ports, and a combination Ethernet and serial PC card for plugging into a network connection and adding peripheral devices using the same PC card slot. The Company began shipping an infrared serial PC card early in the 1997 third quarter.
Socket also announced today, in a separate release, that in cooperation with Welch Allyn, a leading supplier of bar code wands and bar code scanning products, it has developed a bar code wand PC card which is designed to allow powerful H/PC computers to serve as data collection terminals for bar code scanning applications. The wand is powered from the computer through the PC card slot. Bar code scanning is used in a number of applications including inventory and production management, and H/PCs are ideal low cost devices for portable data capture as they provide storage capacity, programmability and connectivity to desktop systems. The company expects to begin shipping the product in volume in late third quarter 1997.
Bass continued, "Socket continues to maintain its focus on the development of wireless messaging solutions to transmit data over the paging networks directly to applications on mobile computers, including the new generation of H/PCs. The Company is developing point-to-point vertical applications and point-to-multipoint group broadcasting applications which integrate Cetronic products, such as its personal digital information server, into Socket's wireless messaging solutions."
About Socket Communications
Socket Communications, Inc. develops and sells connection solutions for mobile computers, including PC Card hardware and software for wireless messaging, a family of Serial PC Cards and Ethernet PC Cards. Socket's PageCard(R) is a PC Card alphanumeric pager that downloads wireless data to a mobile computer. The PageSoft(R) library includes development tools and middleware, send and receive applications, plus rules-based e-mail forwarding agents. Socket's connection solutions are based on its HIS chip technology featuring extremely low power consumption, making them ideal for battery-operated mobile computers and handheld devices. In June 1997, Socket signed a definitive combination agreement with Cetronic AB, a Sweden-based privately held and venture capital-backed company that develops and markets software and hardware for wireless data broadcast markets. The combination is expected to be completed in the fourth quarter of 1997. Details about Socket and its products may be found on Socket's web site at http://www.socketcom.com.
Forward Looking Statement
This press release contains forward looking statements that involve a number of risks and uncertainties. Among the factors that could cause actual results to differ materially are the following: business conditions and growth in the wireless data communications market, the mobile computer market and the general economy; the rate of market acceptance of the Company's wireless technology; competitive factors such as price pressures and availability of third party product components at reasonable prices; changes in product mix; the success of the Company's efforts to raise additional capital including the availability of additional capital on terms and conditions acceptable to the Company; the success of new business relationships and new products; and the risk factors listed from time to time in the Company's SEC reports, including but not limited to the report on Form 10-KSB for the year ended December 31, 1996 and on Form 10-QSB for the quarter ended March 31, 1997.
SOCKET COMMUNICATIONS, INC.
Condensed Summary Statement of Operations (Unaudited)
(Amounts in thousands except per share)
Six Months Ended Three Months Ended
June 30, June 30,
1997 1996 1997 1996
Revenue $ 2,193 $ 2,262 $ 1,123 $ 968
Cost of revenue 1,085 1,288 546 569
Gross margin 1,108 974 577 399
GM percent 51% 43% 51% 41%
Research and development 545 515 273 244
Sales and marketing 1,553 1,328 796 697
General and administrative 866 775 537 408
Interest (inc) expense, net 61 (4) 36 5
Net loss [1,917) [1,640) [1,065) $ (955)
Net loss per share $ (0.44) $ (0.55) $ (0.22) $ (0.32)
Weighted Avg. Shares Outstanding 4,405 3,007 4,956 3,017
Condensed Summary Balance Sheets
(Amount in Thousands)
June 30, 1997 December 31, 1996
(Unaudited) (Audited)
Cash $ 253 $ 618
Receivables 652 833
Inventories 936 739
Other current assets 10 21
Property and equipment, net 391 413
Other assets 64 48
Total Assets $2,306 $2,672
Accounts payable and accrued liabilities $1,789 $1,527
Convertible subordinated notes 1,600 —
Bank line of credit 221 323
Deferred revenue 133 239
Capital leases – current portion 74 109
Capital leases- long term portion 70 103
Convertible preferred stock 403 1,251
Common stock 12,811 11,417
Accumulated deficit (14,795) (12,297)
Total Liabilities and Equity $2,306 $2,672
SOURCE: Socket Communications, Inc.
CONTACT:
David Dunlap, Chief Financial Officer of Socket Communications, 510-744-2735;
or
Nancy Hansen (investors) or Lisa Horn Chainey (general info.) of Financial Relations Board, 415-986-1591, for Socket Communications