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| 8-K - FORM 8K - AVISTAR COMMUNICATIONS CORP | form8k.htm |
AVISTAR COMMUNICATIONS REPORTS FINANCIAL RESULTS
FOR THE FOURTH QUARTER OF 2010
Company posts a full year profit of $4.4 million and positive cash flow;
Investments in key go-to-market growth strategies continue
SAN MATEO, Calif., January 27, 2011 – Avistar Communications Corporation (www.avistar.com), a leader in unified visual communications solutions, today announced its financial results for the three and twelve months ended December 31, 2010.
Financial highlights included:
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Total revenue was $19.7 million and $8.8 million for the years ended December 31, 2010 and 2009, respectively. The increase was primarily due to the license and sale of patents in 2010 for $14.0 million. Total revenue for the fourth quarter of 2010 was $1.6 million, compared to $1.9 million for same quarter in 2009, a decrease of 14%, reflecting longer than expected sales cycles.
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Operating expense (research and development, sales and marketing, and general and administrative) for the year ended December 31, 2010 was $13.5 million, as compared to $11.8 million for the year ended December 31, 2009. Operating expense was $3.1 million for the fourth quarter of 2010, as compared to $2.9 million for the fourth quarter of 2009. The increase was primarily due to planned additional investments in engineering to develop new products in the Unified Communications and Virtual Desktop Infrastructure (VDI) markets.
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Net income was $4.4 million for the year ended December 31, 2010, or $0.11 per basic and diluted share, as compared to a net loss of $4.0 million, or $0.11 per basic and diluted share, for the year ended December 31, 2009, an improvement of $8.4 million. Net loss in the fourth quarter of 2010 was $1.9 million, or $0.05 per basic and diluted share, as compared to a net loss of $1.5 million, or $0.04 per basic and diluted share, in the fourth quarter of 2009.
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Cash and cash equivalents balance as of December 31, 2010 was $1.8 million. Cash generated from operations during the year ended December 31, 2010 was $6.0 million, compared to cash used in operations of $4.9 million for the year ended December 31, 2009.
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Adjusted EBITDA income (as described below) for the year ended December 31, 2010 was $5.7 million, compared to an Adjusted EBITDA loss of $1.5 million for the same period in 2009, an improvement of $7.2 million. Adjusted EBITDA loss for the fourth quarter of 2010 was $1.7 million, compared to an Adjusted EBITDA loss of $0.9 million in the same quarter of 2009.
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Total debt balance was $7.0 million as of December 31, 2010, a significant reduction from $11.3 million as of December 31, 2009.
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Bob Kirk, CEO of Avistar, said, “Our expectations for Avistar’s progress in 2010 were partially met but we are confident that we have laid a stronger foundation on which to build in 2011. We invested extensively in our product and technology strategy as we launched industry-leading desktop visual communications solutions within the Unified Communications (UC), VDI and videoconferencing markets. This enabled us to complete the componentization of our platform and provide solutions to end-user clients that directly fit their videoconferencing needs. We believe this also allowed us to better package our products to make Avistar the most cost- effective choice in the market.
“Secondly, we opened a new market with the componentization effort by offering our products to other OEMs in the Unified Communications and Video Collaboration space. This allows Avistar to market its vast industry knowledge, experience and technology to OEM partners who in return deliver enhanced and more cost-effective videoconferencing capabilities to their markets faster than they can do on their own.”
Kirk concluded, “In 2010 we completed our initial development efforts by delivering cost-effective products that serve both end-user clients and OEM partners simultaneously. Due to the delivery timing of these new products, the full level of potential revenue generation that we anticipated has not yet materialized, but we are seeing steady growth of our pipeline and related opportunities, which portends well for greater revenue growth this year. In 2011, we plan to enhance our sales efforts to both of these markets now that we have delivered all of these outstanding and industry-leading products.”
Significant 2010 developments include:
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Avistar technology partners such as LifeSize Communications launched desktop videoconferencing and Unified Communications solutions built using Avistar’s knowledge, experience and technology
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Avistar initiated the industry’s single largest deployment of desktop videoconferencing endpoints and associated infrastructure to 35,000 end users
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Avistar delivered the industry’s first and only “all software” VDI-enabled desktop videoconferencing solution, including VDI support for Microsoft OCS and other UC solutions
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Avistar received numerous industry accolades including the Unified Communications Magazine Product of the Year, Citrix Synergy Best in Show and Internet Telephony Excellence awards
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About Avistar Communications Corporation
Avistar (AVSR.PK) is an innovation leader in the unified visual communications industry, with more than 15 years of experience providing proven business-class desktop videoconferencing technology. Avistar’s solutions are used across a broad spectrum of industries with deployments ranging in size from 30-35,000 users. Avistar’s technology also helps to power solutions from IBM, LifeSize, Logitech and many other leading unified communications vendors, while delivering end-user videoconferencing solutions to some of the world’s largest corporations, in more than 40 countries. For more information, please visit www.avistar.com.
Cautionary Note Regarding Forward-Looking Statements
The statements made in this press release that are not historical facts are "forward-looking statements." These forward-looking statements, include, but are not necessarily limited to, statements regarding availability of funds under our line of credit, expansion of our product portfolio, the impact of our new products on our business, the future performance of our sales and distribution channels, the impact of changes in our pricing model, growth in our business and the videoconferencing industry, our ability to capture market share in the videoconferencing industry, future patent license royalty revenues and product revenues associated with our intellectual property and product businesses, and our positioning to emerge as a leader in the desktop visual communications industry. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties. The Company cautions readers of this release that a number of important factors could cause actual future events and results to differ materially from those expressed in any such forward-looking statements. Such factors include, without limitation, Avistar’s lengthy sales cycle, volatility associated with Avistar’s sales and licensing activities, market acceptance of Avistar’s products, increased competition in the market for unified communications, technical challenges associated with product development and completion of our deliverables to customers, ongoing technological developments and changing industry standards, the ability of Avistar’s distributors to sell our products to end users, the capital markets for both debt and equity, and challenges associated with protecting and licensing Avistar’s intellectual property. These important factors and other factors that potentially could cause actual future results to differ materially from current expectations are described in our filings with the Securities and Exchange Commission, including the Company's most recent annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Readers of this release are referred to such filings. The forward-looking statements in this release are based upon information available to the Company as of the date of the release, and the Company assumes no obligations to update any such forward-looking statements.
Non-GAAP Financial Measures
This press release and the accompanying tables include a discussion of Adjusted
EBITDA, excluding stock-based compensation expense, which is a non-GAAP financial measure provided as a complement to results provided in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The term "Adjusted EBITDA" refers to a financial measure that we define as earnings before net interest, income taxes, depreciation, and amortization, as further adjusted for stock-based compensation. This non-GAAP measure should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. In addition, our definition of Adjusted EBITDA may not be comparable to the definitions as reported by other companies. We believe Adjusted EBITDA is relevant and useful information to our investors as this measure is an integral part of our internal management reporting and planning process and is a primary measure used by our management to evaluate the operating performance of our business. The components of Adjusted EBITDA include the key revenue and expense items and income from settlement and patent licensing for which our operating managers are responsible and upon which we evaluate their performance. Furthermore, we intend to provide this non-GAAP financial measure as part of our future earnings releases and, therefore, the inclusion of this non-GAAP financial measure will provide consistency in our financial reporting. A reconciliation of this non-GAAP measure to GAAP is provided in the accompanying tables.
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Contact:
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Elias MurrayMetzger
Chief Financial Officer
Avistar Communications Corporation
+1 650-525-3300
emurraymetzger@avistar.com
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Conway Communications
Investor Relations
+1 617-244-9682
mtconway@att.net
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AVISTAR COMMUNICATIONS CORPORATION AND SUBSIDIARY
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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for the three and twelve months ended December 31, 2010 and 2009
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(in thousands, except per share data)
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Three Months Ended December 31,
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Twelve Months Ended December 31,
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2010
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2009
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2010
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2009
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(unaudited)
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(unaudited)
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Revenue:
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Product
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$ | 506 | $ | 697 | $ | 2,146 | $ | 3,932 | |||
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Licensing and sale of patents
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378 | 281 | 15,114 | 853 | |||||||
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Services, maintenance and support
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738 | 909 | 2,397 | 4,039 | |||||||
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Total revenue
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1,622 | 1,887 | 19,657 | 8,824 | |||||||
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Costs and expenses:
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Cost of product revenue*
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104 | 401 | 473 | 1,327 | |||||||
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Cost of services, maintenance and support revenue*
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333 | 565 | 1,386 | 2,965 | |||||||
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Income from settlement and patent licensing
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- | (480) | - | (3,651) | |||||||
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Research and development*
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1,494 | 1,111 | 6,577 | 3,888 | |||||||
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Sales and marketing*
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750 | 589 | 2,798 | 2,581 | |||||||
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General and administrative*
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874 | 1,155 | 4,154 | 5,298 | |||||||
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Total costs and expenses
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3,555 | 3,341 | 15,388 | 12,408 | |||||||
| Income (loss) from operations | (1,933) | (1,454) | 4,269 | (3,584) | |||||||
| Other income (expense), net | (23) | (74) | (60) | (432) | |||||||
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Income (loss) before provison for (benefit from) income taxes
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(1,956) | (1,528) | 4,209 | (4,016) | |||||||
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Provision for (benefit from) income taxes
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(77) | 8 | (240) | (29) | |||||||
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Net income (loss)
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$ | (1,879) | $ | (1,536) | $ | 4,449 | $ | (3,987) | |||
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Net income (loss) per share - basic and diluted
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$ | (0.05) | $ | (0.04) | $ | 0.11 | $ | (0.11) | |||
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Weighted average shares used in calculating
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basic net income (loss) per share
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39,121 | 38,977 | 39,061 | 37,318 | |||||||
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Weighted average shares used in calculating
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diluted net income (loss) per share
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39,121 | 38,977 | 39,874 | 37,318 | |||||||
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*Including stock based compensation of:
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Cost of products, services, maintenance and support revenue
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$ | 10 | $ | 59 | $ | 41 | $ | 234 | |||
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Research and development
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71 | 144 | 359 | 579 | |||||||
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Sales and marketing
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56 | 73 | 208 | 228 | |||||||
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General and administrative
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136 | 206 | 660 | 848 | |||||||
| $ | 273 | $ | 482 | $ | 1,268 | $ | 1,889 | ||||
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AVISTAR COMMUNICATIONS CORPORATION AND SUBSIDIARY
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CONDENSED CONSOLIDATED BALANCE SHEETS
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as of December 31, 2010 and 2009
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(in thousands, except share and per share data)
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December 31,
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December 31,
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2010
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2009
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(unaudited)
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Assets:
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Current assets:
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Cash and cash equivalents
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$ | 1,817 | $ | 294 | ||||
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Accounts receivable, net of allowance for doubtful accounts of $4 and $13 at December 31, 2010 and 2009, respectively
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721 | 1,027 | ||||||
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Inventories
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23 | 56 | ||||||
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Prepaid expenses and other current assets
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413 | 300 | ||||||
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Total current assets
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2,974 | 1,677 | ||||||
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Property and equipment, net
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184 | 147 | ||||||
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Other assets
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108 | 132 | ||||||
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Total assets
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$ | 3,266 | $ | 1,956 | ||||
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Liabilities and Stockholders' Equity (Deficit):
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Current liabilities:
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Line of credit
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$ | 7,000 | $ | 11,250 | ||||
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Accounts payable
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399 | 807 | ||||||
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Deferred services revenue and customer deposits
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2,612 | 2,008 | ||||||
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Accrued liabilities and other
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1,048 | 1,432 | ||||||
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Total current liabilities
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11,059 | 15,497 | ||||||
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Other long-term liabilities
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59 | 73 | ||||||
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Total liabilities
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11,118 | 15,570 | ||||||
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Stockholders' equity (deficit):
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Common stock, $0.001 par value; 250,000,000 shares authorized at December 31, 2010 and 2009; 40,304,235 and 40,159,466 shares issued including
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treasury shares at December 31, 2010 and 2009, respectively
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40 | 40 | ||||||
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Less: treasury common stock, 1,182,875 shares at December 31, 2010 and 2009, respectively, at cost
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(53) | (53) | ||||||
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Additional paid-in-capital
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103,817 | 102,504 | ||||||
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Accumulated deficit
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(111,656) | (116,105) | ||||||
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Total stockholders' equity (deficit)
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(7,852) | (13,614) | ||||||
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Total liabilities and stockholders' equity (deficit)
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$ | 3,266 | $ | 1,956 | ||||
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AVISTAR COMMUNICATIONS CORPORATION AND SUBSIDIARY
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FINANCIAL RESULTS: RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
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for the three and twelve months ended December 31, 2010 and 2009
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(in thousands)
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Reconciliation of Net Income (Loss) to Adjusted EBITDA
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Three Months Ended December 31,
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2010
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2009
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| (unaudited) | ||||||||
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Net income (loss)
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$ | (1,879) | $ | (1,536) | ||||
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Other expense, net
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23 | 74 | ||||||
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Provision for (benefit from) income tax
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(77) | 8 | ||||||
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Depreciation
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10 | 63 | ||||||
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EBITDA
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(1,923) | (1,391) | ||||||
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Stock-based compensation expense
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273 | 482 | ||||||
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Adjusted EBITDA
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$ | (1,650) | $ | (909) | ||||
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Twelve Months Ended December 31,
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| 2010 | 2009 | |||||||
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Net income (loss)
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$ | 4,449 | $ | (3,987) | ||||
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Other expense, net
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60 | 432 | ||||||
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Benefit from income tax
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(240) | (29) | ||||||
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Depreciation
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191 | 245 | ||||||
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EBITDA
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4,460 | (3,339) | ||||||
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Stock-based compensation expense
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1,268 | 1,889 | ||||||
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Adjusted EBITDA
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$ | 5,728 | $ | (1,450) | ||||
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AVISTAR COMMUNICATIONS CORPORATION AND SUBSIDIARY
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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for the twelve months ended December 31, 2010 and 2009
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(in thousands)
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Twelve Months Ended December 31,
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2010
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2009
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Cash Flows from Operating Activities:
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Net income (loss)
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$ | 4,449 | $ | (3,987) | ||||
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Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
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Depreciation
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191 | 245 | ||||||
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Compensation on equity awards issued to consultants and employees
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1,268 | 1,889 | ||||||
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Provision for doubtful accounts
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(9) | (7) | ||||||
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Changes in assets and liabilities:
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Accounts receivable
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315 | 1,681 | ||||||
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Inventories
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33 | 251 | ||||||
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Prepaid expenses and other current assets
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(113) | 20 | ||||||
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Deferred settlement and patent licensing costs
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- | 1,100 | ||||||
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Other assets
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24 | 25 | ||||||
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Accounts payable
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(408) | 228 | ||||||
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Deferred income from settlement and patent licensing and other
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(14) | (4,701) | ||||||
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Deferred services revenue and customer deposits
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604 | (1,679) | ||||||
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Accrued liabilities and other
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(384) | 50 | ||||||
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Net cash provided by (used in) operating activities
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5,956 | (4,885) | ||||||
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Cash Flows from Investing Activities:
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Purchase of property and equipment
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(228) | (82) | ||||||
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Net cash used in investing activities
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(228) | (82) | ||||||
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Cash Flows from Financing Activities:
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Line of credit payments
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(11,250) | (5,049) | ||||||
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Proceeds from line of credit
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7,000 | 9,299 | ||||||
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Payment of convertible debt
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- | (4,060) | ||||||
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Net proceeds from issuance of common stock
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45 | 173 | ||||||
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Net cash provided by (used in) financing activities
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(4,205) | 363 | ||||||
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Net increase (decrease) in cash and cash equivalents
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1,523 | (4,604) | ||||||
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Cash and cash equivalents, beginning of year
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294 | 4,898 | ||||||
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Cash and cash equivalents, end of year
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$ | 1,817 | $ | 294 | ||||
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