Socket Communications, Inc. Reports First Quarter 1997 Operating Results
NEWARK, Calif. — May 7, 1997 — Socket Communications, Inc. (OTC Bulletin Board: SCKT and SCKTW; PSE: SOK) today reported revenue for the quarter ended March 31, 1997 of $1,070,748, a decrease of 17 percent compared to revenue of $1,293,843 for the same period a year ago. The net loss for the quarter was $852,427 ($0.22 per share), compared to a net loss of $684,807 ($0.23 per share) for the first quarter of 1996.
The Company attributed the lower quarterly revenue in comparison to the same period a year ago to lower sales of its Ethernet PC Card because of a large one-time sale included in Q1 1996 revenues, to lower sales volume of its serial PC card to OEM customers in Q1 1997 compared to Q1 1996 resulting from completion of a major OEM contract in 1996, and to the discontinuation during the second half of 1996 of sales of its GPS PC card and related royalties from the sale of this card by a third party. During the 1997 quarter the Company reported higher sales of standard serial cards through distribution channels, higher sales of new serial PC card products introduced in the fourth quarter of 1996 and increased revenues from higher volumes of PageCard sales. Gross margins increased from 44.5 percent in the first quarter of 1996 to 49.6 percent in the first quarter of 1997 due to a favorable product mix and reductions in product unit costs.
Operating expenses for the quarter ended March 31, 1997 were $1,357,942, an increase of seven percent over the same period a year ago. Research and development expenses of $271,787 were flat for the two periods. Selling and marketing expenses of $756,800 increased 20 percent in 1997 compared to 1996 because of expenses associated with new product introductions and increased staffing. The Company's general and administrative expenses of $329,355 declined 10 percent over the previous year due to the lower occupancy costs of moving into smaller facilities in November 1996.
The Company's cash balances at March 31, 1997 were $646,216. The Company today announced its intent to merge with Cetronic AB. Under the proposed terms of the merger, Cetronic and Socket investors will provide bridge financing of up to $750,000 to Socket upon the signing of a definitive merger agreement in the form of convertible subordinated notes. The definitive merger agreement is expected to be completed around the end of May and the merger is expected to be submitted for shareholder approval in August. Cetronic also announced today the completion of a common stock financing in Sweden of $3.8 million. The net assets of Cetronic including the proceeds from this financing will help strengthen the Company's balance sheet effective with the closing of the merger. The cash raised by Cetronic in its financing is expected to fund the combined companies at least through the end of 1997.
Charlie Bass, Chairman of Socket Communications said, "Socket has focused its resources on introducing solutions for the emerging wireless data communications marketplace. These have included page-enabling the new Windows CE handheld computers and supporting development of data paging applications in several key vertical markets, including home health care. We are also working closely with Cetronic to jointly develop advanced data broadcasting communications products and plan to begin distribution of Cetronic's broadcasting products into the U.S. marketplace in the second half of 1997. The merger of Socket and Cetronic is expected to accelerate product development activities of the two companies and strengthen Socket's balance sheet as a result of Cetronic's most recent financing," Bass said.
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.
Forward Looking Statements
Certain statements in this release are forward-looking statements reflecting current expectations including statements regarding completion of the merger and the availability of financing and other potential benefits associated with the merger. Actual results may differ and such differences may be material. These statements are subject to a number of risks including completion of the negotiations of the merger agreements, satisfaction of closing conditions and the ability of the combined companies to achieve the anticipated benefits, and the general business 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.
For more information about Socket Communications, Inc., dial 800-PRO-INFO,
code SCKT.
Socket Communications, Inc.
Condensed Summary Statements of Operations
(Amounts in Thousands except per share)
(Unaudited)
Three months ended March 31,
1997 1996
Revenues $ 1,071 $ 1,294
Cost of revenues 540 718
Gross Margin 531 576
GM Percentage 49.6% 44.5%
R & D 272 271
Sales & marketing 757 631
General/administrative 329 367
Interest (income) expense, net 25 (8)
Net loss $ (852) $ (685)
Net loss per share $ (0.22) $ (0.23)
Weighted Avg. Shs Outstanding 3,854 2,997
Condensed Summary Balance Sheets
(Amounts in Thousands)
(Unaudited)
March 31, 1997 December 31, 1996
Cash $ 646 $ 618
Receivables 928 833
Inventories 844 739
Other current assets 125 21
Property and equipment, net 431 413
Other assets 56 48
Total assets $ 3,030 $ 2,672
Accounts payable and accrued
liabilities $ 1,670 $ 1,526
Bank line of credit 487 323
Convertible subordinated notes 1,000 —
Deferred revenue 202 239
Capital leases – current portion 91 109
Capital leases – long-term portion 87 103
Convertible preferred stock 1,001 1,794
Common stock 12,214 11,417
Accumulated deficit (13,722) (12,839)
Total Liabilities and Equity $ 3,030 $ 2,672
SOURCE: Socket Communications Inc.
CONTACT:
David Dunlap, Chief Financial Officer of Socket Communications, Inc., 510-744-2735;
or investors,
Nancy Hansen, or general info., Lisa Horn Chainey, of Financial Relations Board, 415-986-1591, for Socket Communications, Inc.