U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
|X| Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the quarterly period ended March 31, 1997
|_| Transition report under Section 13 or 15(d) of the Exchange Act For the
transition period from ______________ to ______________ Commission file
number 0-20887
TELIDENT, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Minnesota 41-1533060
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
One Main Street S.E., Suite 85
Minneapolis, Minnesota 55414
(Address of principal executive offices) (Zip Code)
(612) 623-0911
(Issuer's Telephone Number, Including Area Code)
- ------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes __X__
No ____.
APPLICABLE ONLY TO CORPORATE ISSUERS
Number of shares outstanding of each of the issuer's classes of common equity,
as of March 31, 1997: 6,168,726 shares of Common Stock, par value $.02 per
share.
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
TELIDENT, INC.
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, June 30,
ASSETS 1997 1996
------------ ------------
<S> <C> <C>
Current assets:
Cash $ 250,873 $ 448,654
Trade accounts receivable, net of allowance for doubtful
accounts of $40,000 :
Billed 606,284 825,358
Unbilled 32,978 15,196
Inventories, net of reserve for obsolescence of $50,000 and
$15,000 respectively 658,612 573,086
Other 58,752 37,947
------------ ------------
Total current assets 1,607,499 1,900,241
Furniture and office equipment, less accumulated
depreciation of $175,248 and $121,933, respectively 287,158 253,242
Intangible assets, less accumulated amortization of $300,470
and $225,008, respectively 116,756 443,247
Other assets -- 175,070
------------ ------------
$ 2,011,413 $ 2,771,800
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Trade accounts payable $ 154,412 $ 258,506
Accrued expenses 231,194 133,457
Deferred revenue 3,900 11,000
Notes payable - bank 199,664 130,628
Notes payable - others 42,385 1,351,258
Debentures and interest payable - related parties 230,625 11,250
Debentures and interest payable - others 787,200 38,400
------------ ------------
Total current liabilities 1,649,380 1,934,499
Debentures payable - related parties -- 225,000
Debentures payable - others -- 768,000
------------ ------------
Total liabilities 1,649,380 2,927,499
------------ ------------
Commitments
Shareholders' equity (deficit):
Preferred stock, $.02 par value, convertible into common stock at the rate of
one common share for each preferred share, 2,500,000 shares
authorized, 150,000 and 187,500 shares outstanding , respectively 3,000 3,750
Common stock, $.02 par value, 10,000,000 shares authorized, 6,172,382 and
4,903,110 shares outstanding, respectively 123,375 98,062
Additional paid-in capital 11,984,150 9,025,640
Accumulated deficit (11,748,492) (9,283,151)
------------ ------------
362,033 (155,699)
------------ ------------
$ 2,011,413 $ 2,771,800
============ ============
</TABLE>
See accompanying notes to interim financial statements.
TELIDENT, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Nine months ended
March 31, March 31,
-------------------------- --------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales $ 14,950 $ 348,437 $ 1,466,737 $ 1,786,958
Cost of Sales 4,832 115,789 457,515 531,175
----------- ----------- ----------- -----------
Gross profit 10,118 232,648 1,009,222 1,255,783
----------- ----------- ----------- -----------
Operating expenses:
Sales and marketing 439,645 246,948 1,096,625 631,664
Research and development 322,733 295,411 899,452 765,527
General and administrative 306,516 236,517 897,317 721,975
Restructuring charges 426,519 -- 426,519 --
----------- ----------- ----------- -----------
Total operating expenses 1,495,413 778,876 3,319,913 2,119,166
----------- ----------- ----------- -----------
Loss from operations (1,485,295) (546,228) (2,310,691) (863,383)
Interest income 4,941 -- 35,628 --
Interest expense - others (32,603) (71,823) (173,328) (239,956)
Interest expense - related parties (5,650) (4,373) (16,950) (39,857)
----------- ----------- ----------- -----------
Net loss $(1,518,607) $ (622,424) $(2,465,341) $(1,143,196)
=========== =========== =========== ===========
Loss per share, primary and
fully diluted $ (.25) $ (.14) $ (.42) $ (.28)
=========== =========== =========== ===========
Weighted average number of
shares outstanding 6,164,794 4,582,066 5,953,140 4,256,602
=========== =========== =========== ===========
</TABLE>
See accompanying notes to interim financial statements.
TELIDENT, INC.
STATEMENTS OF SHAREHOLDERS' DEFICIT
(UNAUDITED)
<TABLE>
<CAPTION>
Number Amount of Amount of Additional
of shares Preferred Common paid-in Accumulated
issued stock Stock capital deficit
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
BALANCE, June 30, 1996 5,090,610 $ 3,750 $ 98,062 $ 9,025,640 $ (9,283,151)
Common stock issued to directors
for services 7,560 -- 152 21,348 --
Common stock issued in public offering
net of offering expenses of $532,000 1,150,000 -- 23,000 2,894,922 --
Common stock issued from
conversion of debt 95,556 -- 1,911 227,429 --
Common stock issued from
exercise of options 12,500 -- 250 12,250 --
Preferred stock redemptions (37,500) (750) -- (149,250) --
Preferred stock dividends -- -- -- (48,190) --
Net loss -- -- -- -- (2,465,341)
------------ ------------ ------------ ------------ ------------
BALANCE, March 31, 1997 6,318,726 $ 3,000 $ 123,375 $ 11,984,150 $(11,748,492)
============ ============ ============ ============ ============
</TABLE>
See accompanying notes to interim financial statements.
TELIDENT, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months ended
March 31,
--------------------------
1997 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(2,465,341) $(1,143,196)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation expense 54,000 38,166
Amortization expense 444,207 141,756
Common stock issued for services 21,500 16,250
Common stock issued in connection with notes payable 229,340 684,000
Changes in assets and liabilities:
Decrease in receivables 201,292 670,564
Increase in inventories (85,526) (196,915)
(Increase) decrease in other assets 154,266 (90,322)
Decrease in trade accounts payable (104,094) (254,622)
Increase (decrease) in accrued expenses 65,812 (180,576)
----------- -----------
Net cash used in operating activities (1,484,544) (314,895)
----------- -----------
Cash flows from investing activities:
Payments for intangible assets (117,716) (9,701)
Purchase of furniture and office equipment (87,916) (184,936)
----------- -----------
Net cash used in investing activities (205,632) (194,637)
----------- -----------
Cash flows from financing activities:
Payments on related party borrowing -- (98,827)
Payments on notes payable-bank (1,454,464) (2,287,143)
Borrowings from notes payable-bank 1,523,500 1,698,716
Payments on borrowings from others (1,345,706) (171,145)
Borrowings from others 36,833 --
Proceeds from issuance of common stock 2,930,422 1,552,139
Preferred stock dividends (48,190) (65,187)
Preferred stock redemption (150,000) (150,000)
----------- -----------
Net cash provided by financing activities 1,492,395 478,553
----------- -----------
Net decrease in cash for the period (197,781) (30,979)
Cash, beginning of period 448,654 181,744
----------- -----------
Cash, end of period $ 250,873 $ 150,765
=========== ===========
Supplemental schedule of non-cash financing
activities
Conversion of notes payable to common stock $ 229,340 $ 684,000
=========== ===========
Common stock issued for services $ 21,500 $ 16,250
=========== ===========
</TABLE>
See accompanying notes to interim financial statements.
TELIDENT, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
March 31, 1997
INTERIM REPORTING
The interim financial statements included in this Form 10-QSB are
unaudited. However, in the opinion of the Company, the interim statements
include all adjustments, consisting of normal recurring adjustments, necessary
for the fair statement of the results and balances for the interim periods.
The results of operations for the three month and nine month periods
ended March 31, 1997 do not necessarily indicate the results to be expected from
the full year. These statements should be read in conjunction with the Company's
financial statements and notes thereto, contained in the Company's Annual Report
on Form 10-KSB for the year ended June 30, 1996.
INVENTORIES
Inventories are stated at the lower of cost or market using the first
in, first out method, and consisted of the following:
March 31, June 30,
1997 1996
---------- ----------
Raw materials $ 435,984 $ 360,465
Work in progress 169,613 156,762
Finished goods 103,015 70,859
Inventory reserve (50,000) (15,000)
---------- ----------
$ 658,612 $ 573,086
========== ==========
LOSS PER COMMON SHARE
Loss per common share is computed by dividing the net loss (less the
preferred stock dividend) by the weighted average number of shares of common
stock outstanding during the year. Common stock equivalents such as options or
warrants were not included in the calculation as their effect on amounts
reported would be antidilutive.
MAJOR CUSTOMERS
No customers accounted for more than 10% of the Company's total product
sales for the nine months ending March 31, 1997. Sales during the first nine
months of fiscal 1996 to Fujitsu Business Communication Systems amounted to
19.7% of total product sales and accounted for 5.2% of accounts receivable as of
March 31, 1996.
RESTRUCTURING CHARGES
During the third quarter of fiscal 1997, the Company reorganized its
operations and recorded a restructuring charge of approximately $427,000 as a
result of a change in senior management and a reduction in its work force. These
changes will result in strengthening management, reducing costs, and enhancing
performance by re-focusing the Company's strategies on opportunities for
achieving profitability with existing business relationships. As a result of the
restructuring, the Company's plan should reduce expenses by approximately
$300,000 per quarter, or $1,200,000 per year, which includes a 35% reduction in
personnel, a reduction in general and administrative expenses, and tighter cost
controls.
PART I - FINANCIAL INFORMATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
TELIDENT, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This discussion and analysis contains forward-looking terminology such
as "believes," "anticipates," "expects" and "intends," or comparable
terminology. Such statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from those projected. Potential
purchasers of the Company's securities are cautioned not to place undue reliance
on such forward-looking statements which are qualified in their entirety by the
cautions and risks described herein.
Telident, Inc. (the "Company") designs, manufactures and markets
proprietary hardware and software systems which provide the exact location of a
911 telephone call to the emergency dispatcher who receives the call. The
Company's systems provide information which can shorten the response time to a
911 call, reduce the costs associated with responses to incorrect locations and
improve the safety of individuals within a private branch exchange ("PBX")
telephone system. In addition, the Company manufactures and markets network
hardware that provides switching, selective routing and data interfacing
capabilities to public and private telephone networks and city, county and state
government agencies. The Company also provides these customers with a variety of
emergency information processing and management software systems.
RESULTS OF OPERATIONS
Revenues for the three and nine month periods ended March 31, 1997 were
$14,950 and $1,466,737, respectively, compared to $348,437 and $1,786,958 for
the same periods in 1996, a decrease of 95.7% and 17.9%. The decrease in
revenues for the three month and nine month periods ended March 31, 1997, was
the result of several factors including a significant reduction in the Company's
workforce including a change in senior management, the hiring of two new sales
people during the quarter ended March 31, 1997 to replace two former sales
people, and a slowdown in Station Translation Systems ("STS") sales by PBX
manufacturers and value-added resellers. Additionally, the Company implemented a
change in shipping policies to reflect more consistent revenues in the future.
As of March 31, 1997, the Company had a backlog of 2-ANI Control Systems and
23-STS units (approximately $315,000 of revenue) which will be shipped in the
fourth quarter of fiscal 1997.
Gross margin increased to 67.7% and decreased to 68.8% for the three
and nine month periods ended March 31, 1997, respectively, compared to 66.8% and
70.3%, respectively, for the same periods in 1996. The decrease in gross margin
for the 1997 nine month period is due to the discounted pricing offered to
distributors and value-added resellers.
Total operating expenses increased by $716,537 and $1,200,747 in the
three and nine month periods ended March 31, 1997, respectively, compared to the
same periods in 1996. Sales and marketing expenses increased $192,697 and
$464,961 in the three and nine month periods ended March 31, 1997, respectively,
compared to the same periods in 1996. The increase for the respective 1997
periods was due to the addition of three sales offices in Atlanta, San
Francisco, and Los Angeles, five sales personnel, increased travel, telephone
and marketing materials. As of the date of this filing, the Atlanta and Los
Angeles offices have been closed as part of the Company's restructuring.
Research and development expenses increased $43,883 and $240,265 in the
three and nine month periods ended March 31, 1997, respectively, compared to the
same periods in 1996, due to the addition of one software programmer, two
hardware engineers, and the use of outside consultants.
General and administrative expenses and restructuring charges for the
three and nine month periods ended March 31, 1997, increased $479,957 and
$485,521, respectively, compared to the same periods in 1996, due primarily to
the $427,000 restructuring charge taken in the third quarter of fiscal 1997,
additional office rent, increased travel, and professional fees. See "Liquidity
and Capital Resources."
Interest expense, net of interest income, decreased $42,884 and
$125,163 in the three and nine month periods, respectively, compared to the same
periods in 1996. The decrease is due to the public offering of 1,150,000 shares
of the Company's common stock completed in August 1996, which generated net
proceeds of $2.9 million, and the conversion of debt into the Company's common
stock during fiscal 1996.
INFLATION
Inflation has not had a material impact on the Company's net sales or
results of operations.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997, the Company had cash of $250,873 and accounts
receivable of approximately $639,000. During the first nine months of fiscal
1997, net cash used in the Company's operating activities was approximately
$1,485,000, consisting primarily of the Company's loss from operations of
$2,465,000. The Company invested approximately $118,000 related to intangible
assets, and $88,000 for additional office equipment and computers. Funds
required to finance the Company's operations and investments during fiscal 1997
were provided by the August 1996 public offering of 1,150,000 shares of common
stock, resulting in net proceeds of approximately $2.9 million. Upon completion
of this stock offering, the Company repaid $1,020,000 of bridge notes issued by
the Company in May 1996. The Company has relied on debt and equity capital to
fund its operating losses during fiscal 1997 and prior periods.
RESTRUCTURING CHARGES AND CERTAIN ONE-TIME CHARGES
During the third quarter of fiscal 1997, the Company reorganized its
operations and recorded a restructuring charge of approximately $427,000 as a
result of a change in senior management and a reduction in its workforce. In
addition, the Company expensed $178,000 in a one-time write down of certain
other assets. These changes will result in strengthening management, reducing
costs, and enhancing performance by re-focusing the Company's strategies on
opportunities for achieving profitability with existing business relationships.
As a result of the restructuring, the Company's plan should reduce expenses by
approximately $300,000 per quarter, or $1,200,000 per year, which includes a 35%
reduction in personnel, a reduction in general and administrative expenses, and
tighter cost controls.
Based on the projected revenues and expenses and the current backlog,
the Company believes that the proceeds from an existing line of credit, and its
collections from accounts receivable will be adequate to fund the Company's
working capital requirements through June 30, 1997. However, current cash
resources are not adequate to enable the Company to retire $993,000 of
convertible debentures that mature on July 15, 1997, or to cover a decrease in
projected revenues in the event that the Company's sales are less than
anticipated. The Company is currently seeking to refinance or restructure its
indebtedness to debenture holders
The Company is also exploring certain financing alternatives, but has
no agreements which would provide the Company with additional debt or equity
capital, and there can be no assurance that if additional funds are required,
that they will be available, if at all on terms acceptable to the Company. Any
restructuring or extension of debt may have a possible dilutive effect on the
Company's shareholders as a result of the issuance of additional securities. If
the Company is unable to obtain additional capital and the debenture holders are
unwilling or unable to convert or extend the debentures, the Company would be in
default on the debentures. Failure to refinance the debentures could result in
the reduction or cessation of the Company's business operations. At March 31,
1997, the Company had an accumulated deficit of $11,748,492 and shareholders'
equity of $362,033. The Company has no material commitments for capital
expenditures for fiscal 1997 or 1998.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company disclosed that it was the subject of a counterclaim in a suit the
Company filed in Federal District Court for the District of Minnesota, File No.
3-96-1107, against GE Capital-ResCom, L.P. ("GE") in the Form 10-QSB filed
February 14, 1997. As of April 15, 1997, the Company has dropped all claims
against GE, and GE has dropped any counterclaim against the Company as final
settlement of the matter.
ITEM 2. CHANGES IN SECURITIES NOT APPLICABLE.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES NOT APPLICABLE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS NOT APPLICABLE.
ITEM 5. OTHER INFORMATION NOT APPLICABLE.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibit 27 Financial Data Schedule.
Exhibit 99.1 Press release dated March 6, 1997.
Exhibit 99.2 Press release dated April 23, 1997.
(b) The Company did not file any reports on Form 8-K during the
quarter ended March 31, 1997.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
TELIDENT, INC.
(Registrant)
April 28, 1997 /s/ W. Edward McConaghay
Date W. Edward McConaghay, President and CEO
(Principal Executive Officer)
April 28, 1997 /s/ John F. Kromer
Date John F. Kromer, Chief Financial Officer
(Principal Financial and Accounting Officer)
EXHIBIT 99.1
FOR IMMEDIATE RELEASE From: Mark Sheffert
(612) 338-4722
TELIDENT ANNOUNCES RESTRUCTURING PLAN,
ELECTS W. EDWARD MCCONAGHAY CEO
MINNEAPOLIS, March 6 -- The board of directors of Telident, Inc.
(NASDAQ: TLDT) today outlined a plan to refocus the company on strategies that
provide the greatest opportunity for achieving profitability. At the same time,
the board named W. Edward McConaghay president and chief executive officer,
replacing Michael J. Miller who has resigned. McConaghay also was elected a
member of the Telident board of directors. McConaghay most recently was
president and chief executive officer of Digital Technics Inc., a Maryland-based
telecommunications company. He succeeds Miller effective April 1.
The company's new strategies include:
* targeting specific, high-potential customer segments, such as
hotels, schools, commercial office buildings and hospitals,
with Telident's solutions for the 9-1-1 emergency calling
network. The company's systems provide information that can
give the exact location of a 9-1-1 telephone call to the
emergency dispatcher, thus enhancing the safety of individuals
within a private branch exchange (PBX) telephone system;
* focusing sales efforts in states, such as Texas, Colorado and
Illinois, where enhanced 9-1-1 access has been mandated;
* pursuing OEM and strategic alliance opportunities with large
telecommunications providers;
* continuing to explore opportunities to provide Telident's
solutions to the cellular market; and
* continuing to work with the Federal Communications Commission
to ensure nationwide improvements in the 9-1-1 emergency
calling network.
- more -
The board also said that the company is undertaking initiatives to more
closely align operating expenses with Telident's new direction. Initiatives
include reducing staff and redirecting the sales force, as well as lowering
corporate administrative expenses.
Before joining Digital Technics, McConaghay, 47, was the president and
a principal of Key Indicators, an international management consulting firm
specializing in marketing, market development strategies, and distribution
planning and technologies for entrepreneurial firms and Fortune 500 companies in
various industries, including telecommunications. From 1983 to 1993, he held
various positions with Northern Telecom, including vice president, marketing, of
Northern Telecom Asia/Pacific and secretary to the executive office and
assistant vice president for companywide marketing programs. McConaghay also
served as senior vice president, sales and marketing, for Deluxe Corporation.
McConaghay holds a master's degree in business administration from
Harvard Business School and a bachelor's degree in engineering from the U.S.
Military Academy at West Point.
"Ed McConaghay is an experienced and highly regarded telecommunications
executive who brings a solid track record of sales and marketing know-how to
Telident," said Mark Sheffert, chairman of the Telident board of directors. "We
believe his leadership will serve Telident shareholders well as the company
moves aggressively to capitalize on market opportunities and reach its full
potential."
Telident, based in Minneapolis, designs, manufactures and markets
proprietary hardware and software systems, primarily for the enhanced 9-1-1
emergency calling network.
EXHIBIT 99.2
FOR IMMEDIATE RELEASE Contact: Ed McConaghay, (612) 623-0911
TELIDENT ANNOUNCES THIRD QUARTER RESULTS
AND RESTRUCTURING INITIATIVES
Minneapolis, Minn., April 23, 1997 --- Telident, Inc. (NASDAQ: TLDT)
today announced third quarter results and outlined restructuring actions taken
to improve its financial performance and to re-focus its resources on strategies
providing the greatest opportunity for growth and profitability.
THIRD QUARTER RESULTS
Sales for the three-month period ending March 31, 1997, were $14,950
compared with $348,437 in the same period a year ago. Net losses for the
three-month period were $1,518,607, or 25 cents per share, compared with a net
loss of $622,424, or 14 cents per share, in the same period a year ago. Losses
include one-time restructuring charges and certain other one-time expenses
totaling $605,112, or 10 cents per share, to write down certain other assets.
The decrease in sales was primarily a result of a general lack of focus
on generating new business caused by previous strategies to await an expected
Federal Communications Commission (FCC) mandate for enhanced 9-1-1 response
systems which did not occur, and impending management changes which did occur.
In addition, a more conservative shipment policy was implemented in order to
reflect more consistent revenue reporting in the future. The company said it
expects the impact of these activities will also extend into the fourth quarter,
and when combined with one-time restructuring charges, that full-year results
will be below last year's results.
For the nine-month period, sales were $1,466,737 compared with
$1,786,958 during the same period last year. Net losses were $2,465,341, or 42
cents per share, compared with $1,143,196, or 28 cents per share, during the
same period a year ago.
RESTRUCTURING ACTIONS
The company has recently taken a number of actions to strengthen
leadership, reduce costs, enhance performance and refocus the company on
strategies that provide the greatest opportunity for growth and achieving
profitability. These steps include:
* naming W. Edward McConaghay president and chief executive
officer, replacing Michael J. Miller who resigned in March.
McConaghay has 25 years of management experience in the
telecommunications industry, and holds a master's degree from
Harvard Business School and a bachelor's degree from the U.S.
Military Academy at West Point.
* implementing $1.2 million in annual cost savings actions
including a 35% reduction in the company's workforce, a
reduction in general and administrative expenses, and tighter
cost controls
* closing two sales offices in non-mandated states with plans to
replace these sales efforts through the addition of in-house
telephone sales and distributor support personnel
* repositioning the company to move toward outsourced
manufacturing
"Our restructuring actions are intended to create a structure that's
appropriate for more reasonable sales projections based on current business
opportunities independent of the expected FCC mandate. We believe we can achieve
profitability and sales growth by more aggressively capitalizing on our current
business opportunities," said W. Edward McConaghay, president and chief
executive officer. The company said it will begin to realize the full effect of
its expense reductions in the fourth quarter.
Telident is also stepping up its efforts to reduce accounts receivables
and improve working capital management. McConaghay added, "Our margins are
holding steady and we expect that to continue. Along with our restructuring
actions and projected sales levels, we believe we can meet our operating cash
needs over the next 12 months."
The company also has begun exploring alternatives to manage its
indebtedness to debenture holders which may include refinancing, restructuring,
or conversion of debentures and preferred stock holdings.
- MORE -
MARKET OPPORTUNITIES
Telident said it believes its third quarter results and its expected
fourth quarter results do not accurately reflect the company's market
opportunities. To more effectively capitalize on these opportunities, the
company's sales and marketing strategies include:
* focusing sales efforts in the five states with government
mandates for enhanced 9-1-1 response systems.
* strengthening efforts on specific, high-potential customer
segments such as hotels, educational campuses and commercial
office buildings where security and safety are primary
concerns.
* opportunistically repackaging and relaunching existing product
lines more effectively into new markets.
* enhancing the company's distributor strategies to more
productively utilize its current agreements with the market's
leading private branch exchange (PBX) manufacturers and to
pursue new OEM and strategic alliance opportunities.
Mark W. Sheffert, chairman of the board, said, "The board recognizes
that this has been a difficult time for the company's employees, shareholders,
and debt holders. However, we remain very committed to building a profitable
company based on existing business opportunities and to providing shareholder
value over time."
McConaghay added, "After several weeks at Telident, I am even more
enthusiastic about our growth opportunities. Telident has many strengths
including an intimate knowledge of the telecommunications marketplace,
intellectual property that offers competitive advantages, and strong
relationships with leading PBX manufacturers. With a re-focus on business
fundamentals and core competencies, we will be able to capitalize on our many
existing business opportunities and will be in an even stronger position to
react to an FCC mandate when it occurs."
Based in Minneapolis, Minn., Telident, Inc. designs, manufacturers and
markets proprietary hardware and software systems for providing the exact
location of a 9-1-1 telephone call within a private branch exchange system to
emergency dispatchers, thus improving response times and enhancing safety. In
addition, the company manufactures and markets network hardware that provides
switching, selective routing and data interfacing capabilities to public and
private telephone networks and government agencies, as well as a variety of
emergency information management systems.
Except for historical financial information, the information contained
in this news release is forward-looking and subject to certain risks as
described in the company's filings with the Securities and Exchange Commission,
including the company's Form 10-KSB for fiscal year ended June 30, 1996, and
Forms 10-QSB for the quarters ended September 30 and December 31.
TELIDENT, INC. -- STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, NINE MONTHS ENDED MARCH 31,
---------------------------- --------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 14,950 $ 348,437 $ 1,466,737 $ 1,786,958
Cost of sales 4,832 115,789 457,515 531,175
Gross profit 10,118 232,648 1,009,222 1,255,783
Operating expenses 1,495,413 778,876 3,319,913 2,119,166
Loss from operations (1,485,295) (546,228) (2,310,691) (863,383)
Interest expense (33,312) (76,196) (154,650) (279,813)
Net loss (1,518,607) (622,424) (2,465,341) (1,143,196)
Loss per share, primary $ (0.25) $ (0.14) $ (0.42) $ (0.28)
and fully diluted
Weighted average number 6,164,794 4,582,006 5,953,140 4,256,602
of shares outstanding
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 250,873
<SECURITIES> 0
<RECEIVABLES> 646,284
<ALLOWANCES> (40,000)
<INVENTORY> 658,612
<CURRENT-ASSETS> 1,607,499
<PP&E> 462,406
<DEPRECIATION> 175,248
<TOTAL-ASSETS> 2,011,413
<CURRENT-LIABILITIES> 1,649,380
<BONDS> 0
0
3,000
<COMMON> 123,375
<OTHER-SE> 11,984,150
<TOTAL-LIABILITY-AND-EQUITY> 2,011,413
<SALES> 1,466,737
<TOTAL-REVENUES> 1,466,737
<CGS> 457,515
<TOTAL-COSTS> 457,515
<OTHER-EXPENSES> 3,319,913
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 154,650
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,465,341)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,465,341)
<EPS-PRIMARY> (.42)
<EPS-DILUTED> (.42)
</TABLE>
