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 2005
REDWOOD SHORES, Calif. – October 20, 2005 – 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, 2005.
Revenue for the three months ended September 30, 2005 was $2.9 million, compared to revenue of $2.4 million for the three months ended June 30, 2005 and $1.5 million for the three months ended September 30, 2004. For the three months ended September 30, 2005, gross margin was 60% compared to 65% for the three months ended June 30, 2005 and 42% for the three months ended September 30, 2004.
Avistar reported a net loss of $1.4 million, or $0.04 per basic and diluted share, for the three months ended September 30, 2005. Avistar reported a net loss of $1.3 million, or $0.04 per basic and diluted share, for the three months ended June 30, 2005 and $2.3 million, or $0.07 per basic and diluted share, for the three months ended September 30, 2004.
Revenue for the nine months ended September 30, 2005 was $8.3 million, as compared to $4.6 million for the nine months ended September 30, 2004. Avistar reported a net loss of $3.1 million, or $.09 per basic and diluted share, for the nine months ended September 30, 2005. For the nine months ended September 30, 2004, Avistar reported a net loss of $6.6 million, or $0.20 per basic and diluted share.
As of September 30, 2005, Avistar had cash, cash equivalents and short and long-term marketable securities totaling $15.6 million, and no debt.
“Our third quarter revenue result represents a sequential improvement, with a loss at about the same level as we experienced in the second quarter,” stated Gerald J. Burnett, chairman and chief executive officer of Avistar. “We continue to build our organizational capabilities and proceed with our partnering efforts, and believe that
we are making a great deal of progress in our mission of bringing video collaboration to the enterprise.”
“Our year-to-date revenue result reflects diversification, with software licensing, hardware sales, professional services, customer-funded development and intellectual property licensing all contributing to the total,” said Robert J. Habig, chief financial officer of Avistar. “We continue to recruit talented staff, preparing for anticipated growth. At the same time, we continue to engage in licensing discussions around our intellectual property while defending our rights when necessary, as we are doing with our infringement claim against Tandberg ASA and Tandberg Inc. This case is progressing through the U.S. District Court for the Northern District of California, with the “Markman” hearing, a key procedural milestone in the litigation process, scheduled for April 4, 2006.”
About Avistar Communications Corporation
Avistar Communications Corporation develops, markets, and supports a video collaboration platform 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 origination and distribution, and document sharing. Avistar video-enables business processes by integrating visual communications into the daily workflow and connecting communities of users within and across enterprises. Founded in 1993, Avistar 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. (CPI), a wholly owned subsidiary of Avistar, holds a current portfolio of 68 patents for inventions in the primary areas of video and network technology. CPI pursues patents for presence-based interactions, desktop video, recorded and live media at the desktop, multimedia documents, data sharing, and a rich-service network video architecture to support Avistar’s product suite and customers. CPI offers licenses to its patent portfolio and Avistar’s video-enabling technologies to companies in the video conferencing, rich-media services, public networking, and related industries.
For more information, visit www.avistar.com.
Forward Looking Statements
Statements made in this news release that are not purely historical 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 the potential for additional technology licensing revenue, the costs and potential benefits of our intellectual property litigation with Tandberg, and the success of our intellectual property licensing and defense strategy in general, as well as the market acceptance of our products and technology. As a result of these and other factors, Avistar expects to experience significant fluctuations in revenue and operating results, and there can
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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 © 2005 Avistar Communications Corporation. All rights reserved. Avistar, AvistarVOS, and the Avistar logo are trademarks or registered trademarks of Avistar Communications Corporation.
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AVISTAR COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
for the three and nine months ended September 30, 2005 and 2004
(in thousands, except per share data)
| | Three Months Ended | | Nine Months Ended | |
| | September 30, | | September 30, | | September 30, | | September 30, | |
| | 2005 | | 2004 | | 2005 | | 2004 | |
| | (unaudited) | | (unaudited) | |
Revenue: | | | | | | | | | |
Product | | $ | 842 | | $ | 713 | | $ | 2,504 | | $ | 2,189 | |
Licensing | | 1,057 | | — | | 3,171 | | — | |
Services, maintenance and support | | 992 | | 799 | | 2,598 | | 2,403 | |
Total revenue | | 2,891 | | 1,512 | | 8,273 | | 4,592 | |
Cost of revenue: | | | | | | | | | |
Product | | 531 | | 344 | | 1,299 | | 1,000 | |
Services, maintenance and support | | 616 | | 526 | | 1,588 | | 1,469 | |
Total cost of revenue | | 1,147 | | 870 | | 2,887 | | 2,469 | |
Gross profit | | 1,744 | | 642 | | 5,386 | | 2,123 | |
Operating Expenses: | | | | | | | | | |
Research and development | | 905 | | 552 | | 2,252 | | 1,808 | |
Sales and marketing | | 782 | | 597 | | 2,299 | | 1,874 | |
General and administrative | | 1,621 | | 1,776 | | 4,256 | | 5,075 | |
Total operating expenses | | 3,308 | | 2,925 | | 8,807 | | 8,757 | |
Loss from operations | | (1,564 | ) | (2,283 | ) | (3,421 | ) | (6,634 | ) |
Other income (expense): | | | | | | | | | |
Interest income | | 144 | | 12 | | 365 | | 41 | |
Other income (expense), net | | (5 | ) | (18 | ) | (16 | ) | (17 | ) |
Total other income (expense), net | | 139 | | (6 | ) | 349 | | 24 | |
Net loss | | $ | (1,425 | ) | $ | (2,289 | ) | $ | (3,072 | ) | $ | (6,610 | ) |
| | | | | | | | | |
Net loss per share - basic and diluted | | $ | (0.04 | ) | $ | (0.07 | ) | $ | (0.09 | ) | $ | (0.20 | ) |
Weighted average shares used in calculating basic and diluted net loss per share | | 33,687 | | 33,335 | | 33,554 | | 32,358 | |
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AVISTAR COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
as of September 30, 2005 and December 31, 2004
(in thousands, except share and per share data)
| | September 30, | | December 31, | |
| | 2005 | | 2004 | |
| | (unaudited) | |
Assets: | | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 13,273 | | $ | 21,656 | |
Marketable securities | | 1,797 | | — | |
Total cash, cash equivalents and marketable securities | | 15,070 | | 21,656 | |
Accounts receivable, net of allowance for doubtful accounts of $87 and $22 at September 30, 2005 and December 31, 2004, respectively | | 982 | | 886 | |
Inventories, including inventory shipped to customers’ sites, not yet installed of $24 and $34 at September 30, 2005 and December 31, 2004, respectively | | 735 | | 737 | |
Prepaid expenses and other current assets | | 461 | | 454 | |
Total current assets | | 17,248 | | 23,733 | |
Long-term marketable securities | | 566 | | — | |
Property and equipment, net | | 346 | | 192 | |
Other assets | | 287 | | 286 | |
Total assets | | $ | 18,447 | | $ | 24,211 | |
| | | | | |
Liabilities and Stockholders’ Equity (Deficit): | | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 612 | | $ | 1,105 | |
Deferred license revenue | | 4,264 | | 4,226 | |
Deferred services revenue and customer deposits | | 1,131 | | 748 | |
Accrued liabilities and other | | 1,392 | | 1,287 | |
Total current liabilities | | 7,399 | | 7,366 | |
Long-term liabilities: | | | | | |
Long-term deferred license revenue | | 13,161 | | 16,331 | |
Total liabilities | | 20,560 | | 23,697 | |
Stockholders’ equity (deficit): | | | | | |
Common stock, $0.001 par value; 250,000,000 shares authorized at September 30, 2005 and December 31, 2004; 34,903,917 and 34,542,334 shares issued at September 30, 2005 and December 31, 2004, respectively | | 35 | | 35 | |
Less: treasury common stock, 1,181,625 at September 30, 2005 and December 31, 2004, at cost | | (53 | ) | (53 | ) |
Additional paid-in-capital | | 90,450 | | 90,005 | |
Accumulated deficit | | (92,545 | ) | (89,473 | ) |
Total stockholders’ equity (deficit) | | (2,113 | ) | 514 | |
Total liabilities and stockholders’ equity (deficit) | | $ | 18,447 | | $ | 24,211 | |
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AVISTAR COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 2005 and 2004
(in thousands)
| | Nine Months Ended | |
| | September 30, | | September 30, | |
| | 2005 | | 2004 | |
| | (unaudited) | |
Cash Flows from Operating Activities: | | | | | |
Net loss | | $ | (3,072 | ) | $ | (6,610 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | |
Depreciation | | 139 | | 208 | |
Compensation on options issued to consultants | | 69 | | 18 | |
Provision for doubtful accounts | | 65 | | 44 | |
Changes in assets and liabilities: | | | | | |
Accounts receivable | | (161 | ) | 60 | |
Inventories | | 2 | | 255 | |
Prepaid expenses and other current assets | | (7 | ) | 175 | |
Other assets | | (1 | ) | — | |
Accounts payable | | (493 | ) | (113 | ) |
Deferred license revenue | | (3,132 | ) | — | |
Deferred services revenue and customer deposits | | 383 | | 543 | |
Accrued liabilities and other | | 105 | | 434 | |
Net cash used in operating activities | | (6,103 | ) | (4,986 | ) |
| | | | | |
Cash Flows from Investing Activities: | | | | | |
Purchase of short-term marketable securities | | (1,797 | ) | — | |
Purchase of long-term marketable securities | | (566 | ) | — | |
Purchase of property and equipment | | (293 | ) | (144 | ) |
Net cash used in investing activities | | (2,656 | ) | (144 | ) |
| | | | | |
Cash Flows from Financing Activities: | | | | | |
Proceeds from issuance of common stock | | 376 | | 3,707 | |
Proceeds from draw on line of credit | | — | | 750 | |
Repurchases of common stock | | — | | (2 | ) |
Net cash provided by financing activities | | 376 | | 4,455 | |
Net decrease in cash and cash equivalents | | (8,383 | ) | (675 | ) |
Cash and cash equivalents, beginning of year | | 21,656 | | 5,438 | |
Cash and cash equivalents, end of period | | $ | 13,273 | | $ | 4,763 | |
| | | | | |
Supplemental Cash Flow Information: | | | | | |
Cash paid for income taxes | | $ | 315 | | $ | 46 | |
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