LOS GATOS, Calif., Nov. 9, 2005 (PRIMEZONE) -- Semotus Solutions (AMEX:DLK), an innovative provider of real-time professional market data and intelligent wireless communications software, reported its second quarter financial results for the three and six months ended September 30, 2005.
The Company's focus on marketing and sales, and the acquisition of new wireless products, was reflected in a 50% increase in revenues to $685,721 in the three months ended September 30, 2005 from $457,562 in the three months ended September 30, 2004; and a 29% increase in revenues in the six months ended September 30, 2005 to $1,163,066 from $898,137 for the same fiscal period in 2004. The revenue increase reflects continued market penetration of existing and newly acquired wireless software products.
On March 28, 2005, Semotus acquired Expand Beyond Corporation for 1,910,961 shares of common stock. Through the acquisition of Expand Beyond, Semotus acquired additional enterprise wireless messaging and communications software applications, including PocketDBA and PocketAdmin, which are synergistic with Semotus' HiplinkXS product family and have already strengthened the Company's competitive position in that market place.
On June 23, 2005, Semotus acquired Clickmarks, Inc. for 4,107,982 shares of common stock. Through the acquisition of Clickmarks, Semotus acquired a patented Presentation Level Integration (PLI) technology which enables back end application integration.
"It is exciting to see a significant increase in our revenue this quarter," stated Anthony LaPine, Chairman, president and Chief Executive Officer of Semotus. "The remainder of this year will be devoted to reducing overall expenses by centralizing and consolidated our recent acquisitions. Expand Beyond and Clickmarks bring the fruits of $40 million of venture capital investment, including new products and customers. Consequently, Semotus remains intent on leveraging these assets to promote aggressive revenue growth. Moreover, achieving profitability is management's primary objective. As we continue to increase revenue, Semotus will have larger critical mass capable of absorbing operating costs and accelerating our drive to profitability."
Although revenues increased, Semotus' operating expenses for the three and six month periods ended September 30, 2005 increased, due largely to M&A expenses, investment in sales and marketing initiatives and the integration costs associated with the Expand Beyond and Clickmarks acquisitions. Gross profit margin on revenues for the current six month reporting period was affected by increasing data feed cost, declining to 81% from 84% reported for the comparable six month period in fiscal 2005. However, due to strong revenue growth, gross profit increased to 88% for the three months ended September 30, 2005 from 84% for the second fiscal quarter in 2004. The Company believes its cash position of $1,048,584 at September 30, 2005 provides sufficient reserves to execute its current business plan.
Semotus reported a net loss of $(318,197) or $(0.01) per share and $(790,666) or $(0.03) per share for the three and six months ended September 30, 2005 versus a net loss of $(155,909) or $(0.01) per share and net income of $159,050 or $0.01 per share for the three and six months ended September 30, 2004. The net results for the last fiscal year were affected by the reversal of the re-priced options expense due to the decline in Semotus' stock price at that time. For the six months ended September 30, 2004, on a net basis after removing the one time reversal of the re-priced option expense of $593,121, the resulting net loss was $(434,071), or $(0.02) per share. The net results for the three and six months ended September 30, 2005 and 2004 were affected by the application of the variable method of accounting for certain stock options that were re-priced. This is further discussed in the Company's Form 10-QSB, in Note 4 to the Consolidated Financial Statements, "Stock Based Compensation," in accordance with generally accepted accounting principles.
"Semotus has acquired $40 million in venture capital investments in these two acquisitions for less then $3 million in our stock. The Company maintains excellent gross profit margins (80%), a Fortune 1000 customer base, leading edge products, cash reserves, a low burn rate, a clean equity structure (common stock with no preferred shares or toxic convertibles), no litigation, no debt and a highly experienced and talented management team. The enormous upside opportunity presented by our recent acquisitions, combined with our strong revenue growth, reinforce my conviction that the market has undervalued the Company. Consequently, we intend to adopt a much more aggressive stance on communicating the Semotus story to Wall Street with a goal of winning broad market support for our Company," concluded LaPine.
About Semotus Solutions
Founded in 1993, Semotus Solutions (AMEX:DLK) is the premier provider of software for the mobile enterprise, connecting employees to critical business systems, information and processes. Semotus has a Fortune 1000-installed customer base and more than 600 corporate clients including Lockheed Martin, Blue Cross Blue Shield, Coca-Cola, Hewlett Packard, Nextel Communications, JP Morgan Chase and The United Nations. Semotus Solutions' software provides mobility, convenience, efficiency and profitability in the areas of workforce automation, finance, health care and m-commerce. For more information on the Company, please visit the following web sites: http://www.semotus.com; http://www.hiplinkwireless.com; http://www.clickmarks.com; http://www.xb.com.
This press release contains forward-looking statements, which are made pursuant to the Safe-Harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "intends," "believes," and similar expressions reflecting something other than historical fact are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. These forward-looking statements involve a number of risks and uncertainties, including the timely development and market acceptance of products and technologies, the ability to secure additional sources of finance, the ability to reduce operating expenses, and other factors described in the company's filings with the Securities and Exchange Commission. The actual results that the company achieves may differ materially from any forward-looking statement due to such risks and uncertainties. The company undertakes no obligation to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.