EXHIBIT 99
Contact Information
James B. Mariner
CHATCOM, INC.
800-456-1333
email: jmariner@jlchatcom.com
CHATCOM, INC. REPORTS PRELIMINARY FOURTH QUARTER RESULTS
CHATSWORTH, CA - June 30, 1997 - ChatCom, Inc. (NASDAQ: CHAT), today reported
preliminary results for its fourth fiscal quarter, which ended March 31, 1997.
These results, which are subject to adjustment on completion of its year-end
audit, reflected revenues of approximately $1,460,000 for the fourth quarter and
approximately $9,100,000 for the fiscal year ended March 31, 1997, as compared
to $2,383,000 for the fourth quarter and $14,790,000 for the fiscal year ended
March 31, 1996. The Company reported a net loss of approximately $2,290,000 (or
$0.23 per share on average shares outstanding of 9,826,892) for the fourth
quarter and a net loss of approximately $4,600,000 (or $0.51 per share on
average shares outstanding of 8,965,743) for the fiscal year ended March 31,
1997, as compared to a net loss of $1,349,000 (or $0.18 per share on average
shares outstanding of 7,536,629) for the fourth quarter and a net loss of
$1,968,000 (or $0.26 per share on average shares outstanding of 7,536,492) for
the fiscal year ended March 31, 1996.
The net loss for the March 31, 1997 quarter was due primarily to a decrease in
revenues, attributable in part to a contraint on the number of Pentium Pro chips
allocated by Intel (which problem is now corrected), a large volume of orders
received late in the quarter, which could not be manufactured in time to ship
during the quarter, and delays in Canadian government orders held back during
Canada's unscheduled election process, an increase in operating expenses
primarily in the sales, marketing, and engineering areas, and a significant
increase in the Company's reserve for inventory obsolescence as the Company
continued to refocus its products toward new markets and position itself to
develop and serve a new customer base.
Since the end of the March 31, 1997 quarter, the Company has experienced an
increase in the demand for its products, primarily in server consolidation,
network emulation and telephone company web services. The Company anticipates
that its revenues for the June 30, 1997 quarter will be in the range of
approximately $4,250,000 to $4,400,000. Although the Company is
encouraged by customer reaction to its new product offerings, the Company
expects to record a loss for this quarter due to lower than anticipated gross
margins and continued high operating costs. The Company is continuing its
efforts to refocus its products and change its customer base, and to increase
gross profit margins, and has begun to implement measures to reduce its
operating expenses. The Company has received preliminary indications that these
Canadian government orders are now being released at their anticipated levels.
The Company must provide additional liquidity to support its current level of
operations or any significant future increase in revenues and is actively
seeking additional financing to meet its immediate needs as well as its
anticipated requirements for the balance of the current fiscal year. The
Company, which currently does not have any bank debt, has received a conditional
commitment for a credit line and is in the process of finalizing the
implementation of the credit line and is negotiating an equity investment from
one of several strategic partners. The Company has not received a firm
commitment for any of the foregoing debt or equity financing, and there can be
no assurance that it will be able to obtain these commitments for a sufficient
amount of financing. If the Company does not raise sufficient financing to meet
its short term needs, it intends, within the next few weeks, to implement a
contingency plan, pursuant to which it will reduce its future product
development efforts, significantly reduce its current advertising and marketing
activities, and make significant reductions in its sales, engineering, customer
service and manufacturing work force. Although the Company believes that it
should be able to maintain operations at a reduced level under the contingency
plan for the foreseeable future, it may be required to raise capital to continue
operations at this reduced level and it would be necessary to raise additional
capital to restore operations to their prior level.
Founded in 1982, ChatCom, Inc. is a leading supplier of award-winning managed,
consolidated, application and communication server systems to Fortune 1000
companies worldwide. Located in Chatsworth, CA, ChatCom, Inc. is publicly held
and traded on NASDAQ under the symbol CHAT. ChatCom can be reached at
800-456-1333 or on the web at http://www.jlchatcom.com
Safe Harbor Statement under the Private Securities Litigation Reform Act of
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1995. Except for the historical information contain herein, the matters
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discussed in the Press Release are forward-looking statements, which involve
risks and uncertainties, including but not limited to economic, competitive,
governmental, and technological factors affecting the revenues, operations,
markets, products, prices, and other factors discussed in the Company's various
filings with the Securities and Exchange Commission.