EXHIBIT 99.1
Contact:
Lea-Anne Matsuoka
877-723-2878
investorrelations@raesystems.com
RAE SYSTEMS REPORTS RECORD FIRST QUARTER RESULTS
Company Posts Third Consecutive Profitable Quarter with 61% Growth
SUNNYVALE, Calif. – April 30, 2003 – RAE Systems, (OTC BB: RAEE.OB) a leading provider of hazardous environment detection solutions for homeland defense, today announced its financial results for the first quarter ended March 31, 2003.
For the quarter, RAE Systems reported total revenues of $7.3 million compared to revenues of $4.5 million in the first quarter of 2002, an increase of 61%. Worldwide consolidated net profit was $775,000 or two cents per share, compared to a net loss of $179,000 for the same quarter in 2002. The growth in revenue was due to a significant increase in government sales, particularly for homeland security. RAE also experienced a substantial gain in Europe and Asia for the monitoring of toxic gases in confined space entry.
“We are pleased with our performance this quarter, and we continue to execute to plan as we support the growing demand for homeland security technologies that provide pervasive sensing,” said Robert I. Chen, president and CEO of RAE Systems. “Our growth is being driven by a variety of markets and applications, from cargo ports and first responders to military, government agencies and private industry. In each case, the need for hazardous environment detection, whether chemical or radiological, is paramount in protecting lives and assets.”
Highlights of the first quarter include:
– | New York State purchase of 150 RAE Systems monitors. State and county task force teams for homeland security response will use MultiRAE monitors as part of their 75 standardized incident response trailers. Should a terrorist attack or hazardous materials event occur, the trailers can be easily moved to the location. The MultiRAE Plus is a handheld, five-gas monitor that provides the most complete first responder protection in hazardous environments. It simultaneously reads and displays |
carbon monoxide (CO), volatile organic compounds (VOCs), combustible gas levels, oxygen and toxic gases, which saves money on multiple monitors, training and maintenance costs. |
– | RAE Systems expanded its product line by launching personal radiation detectors. Designed as front line security devices, the GammaRAE and NeutronRAE provide real time detection of radiation sources. Unlike dosimeters, which provide weighted averages over a period of time, the GammaRAE and NeutronRAE deliver instantaneous feedback to front line homeland defense personnel such as border guards, coastal defense forces and cargo port screeners. |
– | RAE Systems received its 17th patent for “Non-Dispersive Infrared Gas Sensor Technology.” The technology is deployed in the MultiRAE IR gas detector, a handheld, five-gas monitor with the capability to simultaneously read and display carbon dioxide (CO2), volatile organic compounds (VOCs), combustible gas levels, oxygen and toxic gases, as well as in the AreaRAE-IAQ, a wireless gas monitor incorporating both NDIR and PID technologies for indoor air quality (IAQ) measurement. It combines VOC measurement with traditional IAQ parameters like temperature, humidity, CO2 and carbon monoxide (CO) in a single package. |
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About RAE Systems
RAE Systems Inc. is the leader in rapidly deployable sensing networks for homeland defense and a leading manufacturer of portable, wireless and fixed atmospheric monitors, photo-ionization detectors, radiation detectors, gas detection tubes, sampling pumps and security monitoring devices. Our customers use our products to monitor gas and other volatile organic compounds in confined spaces, to establish a perimeter security around hazardous material sites and to detect the illicit traffic of radio active materials. RAE Systems’ customers operate in such industries as safety and security, oil and gas, pharmaceuticals, utilities, food, chemical, airlines, military and hazardous material storage and disposal, and its monitors are used in civilian and government atmospheric monitoring programs in over 50 countries. For more information about RAE Systems, please visit www.RAESystems.com.
Safe Harbor Statement
This press release contains “forward-looking” statements, as that term is used in Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are denoted by such words as “continue to execute to plan”, “growing demand”, and “will use”. These types of statements address matters that are subject to risks and uncertainties, which could cause actual results to differ materially. Factors that could cause or contribute to such differences include, but are not limited to, the general economic and industry factors and receptiveness of the market to RAE and its products. In addition, our forward-looking statements should be considered in the context of other risk factors discussed in our filings with the Securities and Exchange Commission, including but not limited to our annual report on Form 10-K and 10-Q filings, available online at http://www.sec.gov. All forward-looking statements are based on information available to the company on the date hereof, and the company assumes no obligation to update such statements.
TABLES
Condensed Consolidated Balance Sheets
March 31, 2003 | December 31, 2002 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 7,382,200 |
| $ | 7,193,500 |
| ||
Accounts receivable, net of allowance for doubtful accounts of $175,700 and $175,700, respectively |
| 3,398,900 |
|
| 2,475,700 |
| ||
Inventories |
| 3,526,600 |
|
| 3,176,400 |
| ||
Prepaid expenses and other current assets |
| 461,600 |
|
| 402,000 |
| ||
Deferred income taxes |
| 528,800 |
|
| 528,800 |
| ||
Total Current Assets |
| 15,298,100 |
|
| 13,776,400 |
| ||
Property and Equipment, net |
| 1,956,200 |
|
| 2,026,800 |
| ||
Deposits and Other Assets |
| 103,700 |
|
| 81,800 |
| ||
Investment in Unconsolidated Affiliate |
| 718,800 |
|
| 784,700 |
| ||
$ | 18,076,800 |
| $ | 16,669,700 |
| |||
Liabilities and Shareholders’ Equity | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 1,476,600 |
| $ | 942,400 |
| ||
Accounts payable to affiliate |
| 744,600 |
|
| 757,900 |
| ||
Accrued expenses |
| 1,676,600 |
|
| 1,689,700 |
| ||
Income taxes payable |
| 1,767,400 |
|
| 1,726,200 |
| ||
Current portion of deferred revenue |
| 109,100 |
|
| 149,700 |
| ||
Current portion of capital lease obligations |
| 159,600 |
|
| 159,600 |
| ||
Total Current Liabilities |
| 5,933,900 |
|
| 5,425,500 |
| ||
Deferred Revenue, net of current portion |
| 31,100 |
|
| — |
| ||
Capital Leases Obligations, net of current portion |
| 54,900 |
|
| 107,300 |
| ||
Deferred Income Taxes |
| 277,200 |
|
| 277,200 |
| ||
Total Liabilities |
| 6,297,100 |
|
| 5,810,000 |
| ||
Commitments and Contingencies | ||||||||
Shareholders’ Equity: | ||||||||
Common stock, $0.001 par value; 200,000,000 shares authorized; |
| 45,800 |
|
| 45,500 |
| ||
Additional paid-in capital |
| 17,583,900 |
|
| 17,955,800 |
| ||
Deferred compensation |
| — |
|
| (516,600 | ) | ||
Accumulated deficit |
| (5,850,000 | ) |
| (6,625,000 | ) | ||
Total Shareholders’ Equity |
| 11,779,700 |
|
| 10,859,700 |
| ||
$ | 18,076,800 |
| $ | 16,669,700 |
| |||
See accompanying notes to condensed consolidated financial statements.
Condensed Consolidated Statements of Operations
Three months ended March 31, | ||||||||
2003 | 2002 | |||||||
(Unaudited) | (Unaudited) | |||||||
Net Sales | $ | 7,339,400 |
| $ | 4,545,300 |
| ||
Cost of Sales |
| 2,912,800 |
|
| 2,024,800 |
| ||
Gross Margin |
| 4,426,600 |
|
| 2,520,500 |
| ||
Operating Expenses: | ||||||||
Sales and marketing |
| 1,470,100 |
|
| 1,073,300 |
| ||
Research and development |
| 706,000 |
|
| 594,000 |
| ||
General and administrative |
| 1,187,600 |
|
| 845,200 |
| ||
Legal fees and settlement costs |
| 88,600 |
|
| 77,900 |
| ||
Total Operating Expenses |
| 3,452,300 |
|
| 2,590,400 |
| ||
Operating Income (Loss) |
| 974,300 |
|
| (69,900 | ) | ||
Other Income (Expense): | ||||||||
Interest income |
| 9,400 |
|
| 14,100 |
| ||
Interest expense |
| (8,500 | ) |
| (59,500 | ) | ||
Other, net |
| 1,100 |
|
| (2,400 | ) | ||
Equity in loss of unconsolidated affiliate |
| (65,900 | ) |
| (61,300 | ) | ||
Total Other Income (Expense) |
| (63,900 | ) |
| (109,100 | ) | ||
Income (Loss) Before Income Taxes |
| 910,400 |
|
| (179,000 | ) | ||
Income Taxes |
| (135,400 | ) |
| — |
| ||
Net Income (Loss) | $ | 775,000 |
| $ | (179,000 | ) | ||
Basic Earnings (Loss) Per Common Share | $ | 0.02 |
| $ | (0.01 | ) | ||
Diluted Earnings (Loss) Per Common Share | $ | 0.02 |
| $ | (0.01 | ) | ||
Weighted-average common shares outstanding |
| 45,637,578 |
|
| 25,544,312 |
| ||
Stock Options |
| 1,397,375 |
|
| — |
| ||
Diluted weighted-average common shares outstanding |
| 47,034,953 |
|
| 25,544,312 |
| ||
See accompanying notes to condensed consolidated financial statements.
Condensed Consolidated Statements of Cash Flows
Three months ended March 31, | ||||||||
2003 | 2002 | |||||||
(Unaudited) | (Unaudited) | |||||||
Increase (Decrease) in Cash and Cash Equivalents | ||||||||
Cash Flows From Operating Activities: | ||||||||
Net Income (Loss) | $ | 775,000 |
| $ | (179,000 | ) | ||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||||
Depreciation and amortization |
| 186,600 |
|
| 121,400 |
| ||
Provision for doubtful accounts |
| — |
|
| (22,400 | ) | ||
Inventory reserve |
| 43,000 |
|
| — |
| ||
Compensation expense |
| 125,000 |
|
| — |
| ||
Amortization of deferred compensation |
| — |
|
| 49,200 |
| ||
Equity in loss of unconsolidated affiliate |
| 65,900 |
|
| 61,300 |
| ||
Deferred income taxes |
| — |
|
| (146,700 | ) | ||
Changes in operating assets and liabilities, net of effects of deconsolidation: | ||||||||
Accounts receivable |
| (923,200 | ) |
| 78,600 |
| ||
Inventories |
| (393,200 | ) |
| (57,800 | ) | ||
Prepaid expenses and other current assets |
| (59,600 | ) |
| (44,700 | ) | ||
Accounts payable |
| 534,200 |
|
| 705,600 |
| ||
Accounts payable to affiliate |
| (13,300 | ) |
| (2,500 | ) | ||
Accrued expenses |
| (13,100 | ) |
| 39,500 |
| ||
Income taxes payable |
| 41,200 |
|
| — |
| ||
Deferred revenue |
| (9,500 | ) |
| (42,200 | ) | ||
Net Cash Provided by Operating Activities |
| 359,000 |
|
| 560,300 |
| ||
Cash Flows From Investing Activities: | ||||||||
Cash relinquished in deconsolidation |
| — |
|
| (878,300 | ) | ||
Investment in affiliate |
| — |
|
| (500,000 | ) | ||
Acquisition of property and equipment |
| (116,000 | ) |
| (73,000 | ) | ||
Deposits and other |
| (21,900 | ) |
| (149,600 | ) | ||
Net Cash Used In Investing Activities |
| (137,900 | ) |
| (1,600,900 | ) | ||
Cash Flows From Financing Activities: | ||||||||
Proceeds from the issuance of common stock |
| 20,000 |
|
| 200 |
| ||
Payment on capital lease obligation |
| (52,400 | ) |
| (32,100 | ) | ||
Net Cash Used In Financing Activities |
| (32,400 | ) |
| (31,900 | ) | ||
Net Increase (Decrease) in Cash and Cash Equivalents |
| 188,700 |
|
| (1,072,500 | ) | ||
Cash and Cash Equivalents, beginning of period |
| 7,193,500 |
|
| 3,742,600 |
| ||
Cash and Cash Equivalents, end of period | $ | 7,382,200 |
| $ | 2,670,100 |
| ||
Supplemental Disclosure of Cash Flow Information: | ||||||||
Cash Paid: | ||||||||
Income taxes | $ | 100,000 |
| $ | 146,700 |
| ||
Interest | $ | 8,500 |
| $ | 49,500 |
| ||
Noncash Inventory and Financing Activities: | ||||||||
Capital leases entered into for equipment | $ | — |
| $ | 160,400 |
| ||
See accompanying notes to condensed consolidated financial statements.