Exhibit 99.1
For Immediate Release
Contact: Robert J. Habig
650.610.2900
ir@avistar.com
AVISTAR COMMUNICATIONS REPORTS FINANCIAL RESULTS
FOR THE THIRD QUARTER OF 2004
REDWOOD SHORES, Calif. – October 21, 2004 – Avistar Communications Corporation (NASDAQ: AVSR), a provider of enterprise video communication solutions, today announced financial results for the three and nine months ended September 30, 2004.
Revenue for the three months ended September 30, 2004 was $1.5 million, compared to revenue of $1.7 million for the three months ended June 30, 2004 and $2.0 million for the three months ended September 30, 2003. For the three months ended September 30, 2004, gross margin was 42% compared to 51 % for the three months ended June 30, 2004 and 53 % for the three months ended September 30, 2003.
Avistar reported a net loss of $2.3 million, or $0.07 per basic and diluted share, for the three months ended September 30, 2004. Avistar reported a net loss of $2.2 million, or $0.07 per basic and diluted share, for the three months ended June 30, 2004 and $1.3 million, or $0.05 per basic and diluted share, for the three months ended September 30, 2003.
Revenue for the nine months ended September 30, 2004 was $4.6 million, compared to revenue of $5.2 million for the nine months ended September 30, 2003. Avistar reported a net loss of $6.6 million, or $0.20 per basic and diluted share, for the nine months ended September 30, 2004. For the nine months ended September 30, 2003, Avistar reported a net loss of $6.5 million, or $0.26 per basic and diluted share.
As of September 30, 2004, Avistar had cash and cash equivalents of $4.8 million, with $750,000 of that balance representing an advance from our line of credit with Comerica Bank – California.
“The just-completed quarter saw a major product milestone with the introduction of our internet protocol (I.P.) desktop unit in August. This product expansion provides flexibility to our customers in tailoring their collaborative video solution to the developing capabilities of their network infrastructure,” stated Gerald J. Burnett, chairman and chief executive officer of Avistar. “An additional, upcoming milestone is the scheduled trial date of January 24, 2005 for our subsidiary’s patent infringement case against Polycom, Inc. This action has required a good deal of resource and management attention over the past two years. Although the outcome is not certain, based on developments over that period of time we continue to believe in the strength of our case.”
“Our third quarter results were largely consistent with recent performance,” said Robert J. Habig, chief financial officer of Avistar. “We continue to see increasing interest in our networked video solution and operating system functionality, constrained by continued caution in the procurement decision-
making function. The vacation months of summer provided an additional, seasonal challenge to finalizing pending deals during our third quarter.”
About Avistar Communications Corporation
Avistar develops, markets and supports video collaboration solutions for the enterprise, all powered by the AvistarVOS™ software. From the desktop, Avistar delivers TV-quality video calling, recording, publishing to web and emails, video-on-demand, broadcast, and document sharing. Avistar delivers on vBusiness - video-enabling business - by integrating visual communications into the daily workflow and connecting communities of users within and across enterprises.
Founded in 1993, Avistar Communications Corporation is headquartered in Redwood Shores, California, with sales offices in New York and London. Avistar’s technology is used in more than 35 countries. Collaboration Properties, Inc., a wholly owned subsidiary of Avistar Communications Corporation, holds a broad portfolio of patents covering the AvistarVOS platform as well as multiple software and hardware video collaboration products. For more information, visit www.avistar.com.
Forward Looking Statements
Statements made in this news release that are not purely historical, including but not limited to statements regarding the trial date, impact and outcome of CPI’s litigation with Polycom and statements regarding market interest in our products, are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act. Such statements are subject to risks and uncertainties that could cause actual results to differ materially, including such factors, among others, as unforeseen developments and judicial determinations in CPI’s litigation with Polycom, Inc., market acceptance of Avistar’s new and existing products, conditions in the financial services sector, which influences the length of Avistar’s sales cycle and its ability to successfully complete product sales, Avistar’s dependence on a few customers for a majority of its revenue, the impact of competitive products and pricing, and the adequacy of Avistar’s cash resources and continued ability to borrow and /or raise additional equity. As a result of these and other factors, Avistar expects to experience significant fluctuations in revenue and operating results, and there can be no assurance that Avistar will become or remain profitable in the future, or that its future results will meet expectations. These and other risk factors are discussed in Avistar’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission from time to time. Avistar disclaims any intent or obligation to update these forward-looking statements.
~ financial statements follow ~
Copyright © 2004 Avistar Communications Corporation. All rights reserved. Avistar, AvistarVOS, and the Avistar logo are trademarks or registered trademarks of Avistar Communications Corporation.
AVISTAR COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
for the three and nine months ended September 30, 2004 and 2003
(in thousands, except per share data)
| | Three Months Ended | | Nine Months Ended | |
| | September 30,
2004 | | September 30,
2003 | | September 30,
2004 | | September 30,
2003 | |
| | (unaudited) | | (unaudited) | |
Revenue: | | | | | | | | | |
Product | | $ | 713 | | $ | 837 | | $ | 2,189 | | $ | 2,207 | |
Services, maintenance and support | | 799 | | 1,198 | | 2,403 | | 2,976 | |
Total revenue | | 1,512 | | 2,035 | | 4,592 | | 5,183 | |
Cost of revenue: | | | | | | | | | |
Product | | 344 | | 390 | | 1,000 | | 1,091 | |
Services, maintenance and support | | 526 | | 570 | | 1,469 | | 1,698 | |
Total cost of revenue | | 870 | | 960 | | 2,469 | | 2,789 | |
Gross margin | | 642 | | 1,075 | | 2,123 | | 2,394 | |
Operating Expenses: | | | | | | | | | |
Research and development | | 552 | | 549 | | 1,808 | | 1,860 | |
Sales and marketing | | 597 | | 939 | | 1,874 | | 2,854 | |
General and administrative | | 1,776 | | 1,397 | | 5,075 | | 4,579 | |
Amortization of deferred stock compensation * | | — | | 23 | | — | | 113 | |
Total operating expenses | | 2,925 | | 2,908 | | 8,757 | | 9,406 | |
Loss from operations | | (2,283 | ) | (1,833 | ) | (6,634 | ) | (7,012 | ) |
Other income (expense): | | | | | | | | | |
Interest income | | 12 | | 5 | | 41 | | 33 | |
Other income (expense), net | | (18 | ) | 521 | | (17 | ) | 511 | |
Total other income, net | | (6 | ) | 526 | | 24 | | 544 | |
Net loss | | $ | (2,289 | ) | $ | (1,307 | ) | $ | (6,610 | ) | $ | (6,468 | ) |
| | | | | | | | | |
Net loss per share - basic and diluted | | $ | (0.07 | ) | $ | (0.05 | ) | $ | (0.20 | ) | $ | (0.26 | ) |
Weighted average shares used in calculating basic and diluted net loss per share | | 33,335 | | 25,371 | | 32,358 | | 25,345 | |
* Amortization of deferred stock compensation excluded from the following expenses: | | | | | | | | | |
Cost of revenue | | $ | — | | $ | 3 | | $ | — | | $ | 13 | |
Research and development | | — | | 2 | | — | | 10 | |
Sales and marketing | | — | | 17 | | — | | 87 | |
General and administrative | | — | | 1 | | — | | 3 | |
| | $ | — | | $ | 23 | | $ | — | | $ | 113 | |
AVISTAR COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
as of September 30, 2004 and December 31, 2003
(in thousands, except share and per share data)
| | September 30,
2004 | | December 31,
2003 | |
| | (unaudited) | |
Assets: | | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 4,763 | | $ | 5,438 | |
Accounts receivable, net of allowance for doubtful accounts of $33 at September 30, 2004 and $44 at December 31, 2003 | | 591 | | 695 | |
Inventories, including inventory shipped to customers’ sites, not yet installed of $35 at September 30, 2004 and $41 at December 31, 2003 | | 682 | | 937 | |
Prepaid expenses and other current assets | | 340 | | 515 | |
Total current assets | | 6,376 | | 7,585 | |
Property and equipment, net | | 288 | | 352 | |
Other assets | | 291 | | 291 | |
Total assets | | $ | 6,955 | | $ | 8,228 | |
| | | | | |
Liabilities and Stockholders’ Equity: | | | | | |
Current liabilities: | | | | | |
Line of Credit | | $ | 750 | | $ | — | |
Accounts payable | | 828 | | $ | 941 | |
Deferred revenue and customer deposits | | 1,214 | | 671 | |
Accrued liabilities and other | | 1,559 | | 1,125 | |
Total current liabilities | | 4,351 | | 2,737 | |
Stockholders’ equity: | | | | | |
Common stock, $0.001 par value; 250,000,000 shares authorized at September 30, 2004 and December 31, 2003; 34,542,021 and 31,390,383 shares issued at September 30, 2004 and December 31, 2003, respectively | | 35 | | 31 | |
Less: treasury common stock, 1,181,625 and 1,179,625 shares at September 30, 2004 and December 31, 2003, respectively, at cost | | (53 | ) | (51 | ) |
Additional paid-in-capital | | 89,999 | | 86,278 | |
Accumulated deficit | | (87,377 | ) | (80,767 | ) |
Total stockholders’ equity | | 2,604 | | 5,491 | |
Total liabilities and stockholders’ equity | | $ | 6,955 | | $ | 8,228 | |
AVISTAR COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 2004 and 2003
(in thousands)
| | Nine Months Ended | |
| | September 30,
2004 | | September 30,
2003 | |
| | (unaudited) | |
| | | | | |
Cash Flows from Operating Activities: | | | | | |
Net loss | | $ | (6,610 | ) | $ | (6,468 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | |
Depreciation. | | 208 | | 155 | |
Stock-based compensation | | — | | 113 | |
Compensation on options issued to consultants | | 18 | | 32 | |
Provision for doubtful accounts | | 44 | | 75 | |
Changes in current assets and liabilities: | | | | | |
Accounts receivable | | 60 | | (300 | ) |
Inventories. | | 255 | | 293 | |
Prepaid expenses and other current assets | | 175 | | 187 | |
Other assets | | — | | (29 | ) |
Accounts payable | | (113 | ) | (12 | ) |
Deferred revenue and customer deposits | | 543 | | (514 | ) |
Accrued liabilities and other | | 434 | | 252 | |
Net cash used in operating activities | | (4,986 | ) | (6,216 | ) |
| | | | | |
Cash Flows from Investing Activities: | | | | | |
Sale of short-term investments | | — | | 2,400 | |
Purchase of property and equipment | | (144 | ) | (50 | ) |
Net cash provided by (used in) investing activities | | (144 | ) | 2,350 | |
| | | | | |
Cash Flows from Financing Activities: | | | | | |
Proceeds from issuance of common stock | | 3,707 | | 77 | |
Repurchases of common stock | | (2 | ) | — | |
Proceeds from draw on line of credit | | 750 | | 1,500 | |
Net cash provided by financing activities | | 4,455 | | 1,577 | |
Net increase (decrease) in cash and cash equivalents | | (675 | ) | (2,289 | ) |
Cash and cash equivalents, beginning of period | | 5,438 | | 4,783 | |
Cash and cash equivalents, end of period | | $ | 4,763 | | $ | 2,494 | |
| | | | | |
Supplemental Cash Flow Information: | | | | | |
Cash paid for income taxes | | $ | 46 | | $ | — | |
