EXHIBIT 99.1
[NUMEREX LOGO] INVESTOR RELATIONS CONTACT:
Alan B. Catherall 770-485-2527
PRESS RELEASE
FOR IMMEDIATE RELEASE
NUMEREX REPORTS FIRST QUARTER 2004 RESULTS
ATLANTA, MAY 11, 2004 - NUMEREX CORP. (NASDAQ: NMRX), a leader in interactive
data communications, today announced financial results for the first quarter of
2004 reporting a net loss of $0.8 million, or $(0.07) per fully diluted share as
compared a net loss of $1.1 million or $(0.10) per fully diluted share for the
first quarter of 2003. Net sales for the first quarter were $4.8 million
compared to $4.7 million for the first quarter of 2003. Please see attached
financial statements for more details.
"Total revenues in the first quarter of 2004 grew modestly compared to the same
quarter last year. However this result masks the strong growth in wireless data
products and services, stated Stratton Nicolaides, Chairman and CEO of Numerex.
"After eliminating revenues of $430 thousand associated with Data1Source LLC,
the sale of which occurred in September 2003, wireless data revenues increased
by 37% compared to the first quarter of 2003. Specifically, the first quarter of
2004 saw acceleration in growth in the Company's security business, Uplink(TM)
Security. We expect this pattern to continue throughout the year as demand
increases in both the alarm security and financial services sectors."
"An estimated $500 thousand of costs associated with the ramp-up in both
MobileGuardian(TM) and VendView(TM) negatively impacted operating results.
However, we expect these costs to substantially abate during the second half of
2004 as indirect distribution channels begin to contribute to revenues, thereby
increasing operating leverage and lessening our dependence on direct marketing
and selling. Although VendView sales were not significant during the first
quarter, we have already received a major order for shipment in the second
quarter and believe that our VendView product and associated service will gain
additional market acceptance as the year progresses. In addition, VendView is
currently in trial with several major bottling and vending operators. We believe
that these trials will yield positive results during the second half of the
year."
"Our first quarter was met with lower than expected activity in our digital
multimedia and networking business. However, we are encouraged by the increase
in second quarter activity and an improved opportunity funnel. As a result, we
anticipate revenues at a run-rate of approximately $1.5 million during second
quarter. Certain F.C.C. E-Rate awards approximating $1.8 million that were on
hold for several months have been announced. While there can be no assurances of
the timing or that these awards will even result in revenue producing contracts,
we view this as a positive occurrence. In addition, IPContact(TM), our software
based video and voice product, is currently undergoing several trials. We expect
to see an increased in order book flow from IPContact beginning in the third
quarter".
"Currently, we estimate total revenues to range between $5 million and $5.5
million for the second quarter and expect a consequent reduction in operating
losses. We remain confident in the performance of our core wireless business and
expect improved operating results over the course of the year."
"Our financing transaction in January 2004, which has been highlighted in prior
press releases, allowed us to significantly strengthen our Balance Sheet.
Specifically, cash increased from $734 thousand at December 31, 2003 to over
$1.3 million by March 31, 2004. In addition, since the primary purpose of the
financing transaction was to repay $3.5 million of short term debt, our current
liabilities declined from over $8.5 million at December 31, 2003 to less than
$5.4 million by March 31, 2004. Finally, the $4.5 million term note has delayed
repayment terms and will require maximum cash outlays of both principal and
interest of less than $750 thousand during the balance of 2004. Actual cash
outlays could be lower than this if the equity conversion feature is available
to be exercised."
-continued-
"Ultimately, our goal continues to be to generate additional cash from
operations and to further improve our liquidity by inventory reductions and
non-core asset sales."
CONFERENCE CALL AND WEBCAST INFORMATION
Numerex will conduct a conference call on May 11th, at 11:00 A.M., Eastern
Daylight Time, accessible by calling (877) 365-7581 in the U.S. and Canada, or
(706) 679-3922 international. A live Webcast of the call will also be available
via Numerex's Web site at http://www.nmrx.com, under the Investor Relations
section. A replay of the conference call will be available via Numerex's Web
site beginning two hours after the call.
ABOUT NUMEREX
Numerex (Nasdaq:NMRX) is a communications technology business comprised of
operating subsidiaries that primarily utilize existing wireless or cellular,
Internet and cable infrastructure thereby enabling network access and
information management through the deployment of proprietary software and
technology which provides an entrance to and exit from a communications network.
Such technology is referred to as a "gateway" in the communications industry.
The Company primarily markets and sells products and services in wireless data
communications through Cellemetry(R), Uplink(TM), MobileGuardian(TM),
VendView(TM), and digital multimedia through PowerPlay(TM) and IPContact(TM).
These products and services enable customers around the globe to monitor and
move information for a variety of applications from home and business security
to distance learning. In addition, the Company offers wireline alarm security
products and services, as well as telecommunications network support. For more
information on Numerex, please visit our Web site at: www.nmrx.com.
This press release contains, and other statements may contain, forward-looking
statements with respect to Numerex's future financial or business performance,
conditions or strategies and other financial and business matters, including
expectations regarding growth trends and activities in the wireless data
business. Forward-looking statements are typically identified by words or
phrases such as "believe," "expect," "anticipate," "intend," "estimate,"
"assume," "strategy," "plan," "outlook," "outcome," "continue," "remain,"
"trend," and variations of such words and similar expressions, or future or
conditional verbs such as "will," "would," "should," "could," "may," or similar
expressions. Numerex cautions that these forward-looking statements are subject
to numerous assumptions, risks and uncertainties, which change over time. These
forward-looking statements speak only as of the date of this press release, and
Numerex assumes no duty to update forward-looking statements. Actual results
could differ materially from those anticipated in these forward-looking
statements and future results could differ materially from historical
performance.
The following factors, among others, could cause actual results to differ
materially from forward-looking statements or historical performance: the
failure to realize improvements on our digital multimedia and networking
business; variations in quarterly operating results, delays in the development,
introduction and marketing of new wireless products and services; customer
acceptance of products and services; economic conditions; changes in financial
and capital markets; the inability to attain revenue and earnings growth in our
wireless data business; changes in interest rates; inflation; the introduction,
withdrawal, success and timing of business initiatives and strategies;
competitive conditions; the inability to realize revenue enhancements; and
extent and timing of technological changes. Numerex's SEC reports identify
additional factors that can affect forward-looking statements.
-continued-
NUMEREX CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FOR THE THREE MONTH
PERIOD ENDED MARCH 31,
2004 2003
(UNAUDITED) (UNAUDITED)
----------- -----------
NET SALES:
Wireless Data Communications $ 3,414 $ 2,886
Digital Multimedia and Networking 1,029 1,546
Wireline Data Communications 327 255
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TOTAL NET SALES 4,770 4,687
Cost of sales 2,540 2,454
Depreciation and amortization 109 180
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GROSS PROFIT 2,121 2,053
44.5% 43.8%
Selling, general, and administrative expenses 2,324 2,387
Research and development expenses 277 298
Depreciation and amortization 424 489
-------- --------
OPERATING LOSS (904) (1,121)
Interest income and (expense), net (133) (20)
Profit on sale of business 250 --
Other income and (expense), net (2) 43
-------- --------
LOSS BEFORE TAXES (789) (1,098)
Provision for income taxes (4) 19
-------- --------
NET LOSS (785) (1,117)
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BASIC LOSS PER COMMON SHARE $ (0.07) $ (0.10)
DILUTED LOSS PER COMMON SHARE $ (0.07) $ (0.10)
Number of shares used in per share calculation
Basic 10,792 11,384
Diluted 10,792 11,384
-continued-
NUMEREX CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31,
2004 2003
(IN THOUSANDS) (UNAUDITED)
----------- -----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,327 $ 734
Accounts receivable, net 3,124 3,093
Notes Receivable 91 99
Inventory 2,975 3,461
Prepaid expenses and other current assets 847 700
-------- --------
TOTAL CURRENT ASSETS 8,364 8,087
PROPERTY AND EQUIPMENT, NET 1,185 1,296
GOODWILL, NET 15,014 15,014
OTHER INTANGIBLES, NET 7,758 7,979
SOFTWARE, NET 707 825
OTHER ASSETS 892 769
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TOTAL ASSETS $ 33,920 $ 33,970
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 2,407 $ 2,498
Other current liabilities 1,250 1,487
Note payable, current 500 3,500
Deferred revenues 916 775
Obligations under capital leases, current portion 269 282
-------- --------
TOTAL CURRENT LIABILITIES 5,342 8,542
LONG TERM LIABILITIES
Obligations under capital leases and other long term liabilities 2 62
Note Payable 3,806 --
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TOTAL LONG TERM LIABILITIES 3,808 62
SHAREHOLDERS' EQUITY
Preferred stock - no par value; authorized 3,000,000; none issued -- --
Class A common stock - no par value; authorized 30,000,000; issued
13,184,570 and 13,181,547 shares, respectively 36,810 36,793
Additional paid-in-capital 680 439
Treasury stock, at cost, 2,391,400 shares on March 31, 2004 and
December 31, 2003 (10,197) (10,197)
Class B common stock - no par value; authorized 5,000,000; none issued -- --
Accumulated other comprehensive income 28 97
Retained earnings (2,551) (1,766)
-------- --------
24,770 25,366
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 33,920 $ 33,970
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