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INVESTOR CONTACT:
Science Dynamics Corporation Reports Second Quarter 2001 Results CHERRY HILL, NJ—(August 15, 2001)—Science Dynamics “SciDyn” (NASDAQ: SIDY), a developer of Internet Protocol-based (IP) telephony solutions and services, announced today financial results for its second quarter 2001, ended June 30, 2001. SciDyn’s second quarter 2001 net sales totaled $178,501, down modestly from first quarter 2001 net sales of $194,113. This figure compared to net sales of $2,104,271 in the corresponding second quarter of fiscal 2000. The decline in net sales in the year over year comparison is related to Cascadent Communications, Inc., which accounted for $1,920,990 of net sales in the second quarter of 2000. The Company posted a net loss for the second quarter 2001 of $1,471,455 or ($0.08) per share, compared with net loss of $1,259,835, or ($0.07) per share in the first quarter 2001, and a net income of $323,719, or $0.02 per share, during the corresponding second quarter of 2000. Sheldon Hofferman, Chairman, stated, “Over the past six months, we have continued to see unprecedented challenges in the telecommunications sector, as many of our peers have disappeared from the landscape. SciDyn is focused on positioning itself for success as the telecommunications sector returns to health. We have recently seen the migration of VoIP technology towards the mainstream, as major technology players such as Cisco Systems and Microsoft have included applications of this technology in their latest respective platforms. We feel that this marks the beginning of the next generation of VoIP development and sets the stage for VoIP as a compelling solution for the mass market.” Joy Hartman, President and Chief Executive Officer of SciDyn stated, “In the second quarter, we have continued to enact key initiatives which we believe will yield positive results and a gradual rise in revenue as the second half of fiscal 2001 unfolds. To that end, we have focused on establishing international partnerships and reseller agreements for all our products. Our recent marketing and OEM agreement with Thales Contact Solutions to add fully integrated digital recording and playback capabilities to our Commander products reflects our focus on integrating the most robust suite of technical features with our hardware. The addition of debitcall functions, Web administration and live real-time monitoring during the second quarter are further evidence of the comprehensive capabilities that SciDyn Call Control Solutions are bringing to market. “The recent addition of Dr. Denny Ko as our Chief Technology Officer (CTO), who has extensive management experience at such companies as Lucent Technologies and Bell Laboratories, will also play a major role in the design of our next generation of SciDy’s VoIP solutions. We continue to believe that Science Dynamics can provide a robust, high quality and feature rich solution to networks of all sizes and configurations”, continued Ms. Hartman. About Science Dynamics Corporation SciDyn’s third generation of Call Control Solutions follows the previous Collect Call Timing Device introduced in 1986 and current Commander models that serve thousands of inmate beds nationwide. The System operates on SciDyn’s BubbleLINK® software architecture and offers the latest security and call control features to effectively manage inmate telephone calls. Standard features include a wide array of editable call control parameters, advanced call monitoring, real-time call recording and SciDyn’s patented 3-way call fraud detection featuring 36 tunable parameters that test the call path end-to-end. Headquartered in Cherry Hill, New Jersey, Science Dynamics Corporation (SciDyn) is a leading developer of telecommunications solutions. SciDyn’s IP telephony products enable the seamless connection between traditional circuit-switch based networks and the next generation of packet-based networks. Products include: The IntegratorC-2000® series of IP telephony gateways, the Commander Call Control System for correctional facilities (also based on the IntegratorC-2000® architecture) and the VFX-200 series of Video over Frame Relay Access Devices. The Company is making this statement in order to satisfy the “safe harbor” provisions contained in the Private Securities Litigation Reform Act of 1995. This press release includes forward-looking statements relating to the business of the Company. Forward-looking statements contained herein or in other statements made by the Company are made based on management's expectations and beliefs concerning future events impacting the Company and are subject to risks, uncertainties and factors relating to the other factors, which Company's operations and business environment, all of which are difficult to predict and many of which are beyond the control of the Company, that could cause actual results of the Company to differ materially from those set forth above and elsewhere in the Annual Report. The Company may encounter competitive, technological, and financial and business challenges making it more difficult to market its products and services, the impact of which may in matters expressed in or implied by forward-looking statements. Although the Company expects to close upon a loan which will provide working capital shortly, until the loan is closed, there is no guarantee that the Company will receive such funds. If the Company does not receive the funds in the near term it may need to curtail its operations. The Company believes that the following factors, among others, could affect the Companyıs results of operations and financial position, affect its future performance and cause actual results of the Company to differ materially from those expressed in or implied by forward-looking statements made by or on behalf of the Company: (a) the effect of technological changes; (b) increases in or unexpected losses; (c) increased competition; (d) fluctuations in the costs to operate the business; (e) uninsurable risks; and (f) general economic conditions. (Tables Follow: Statement of Operations, Balance Sheets, Cash Flows) Net (Loss) / Income per common share basic and diluted Science
Dynamics Corporation and Subsidiary
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Six
months ended
June
30,
|
Three
months ended
June 30, 2001
|
|||
|
2001
|
2000 |
2001
|
2000
|
|
| Net Sales |
$
372,614
|
$
3,547,753
|
$
178,501
|
$ 2,104,271 |
|
Operating costs and expenses: |
||||
| Cost of Sales |
$ 288,526
|
$ 1,284,270
|
$ 151,679
|
$ 712,227
|
| Research and development |
$ 754,790
|
$ 526,534
|
$ 334,268
|
$ 270,826
|
| Selling, general and administrative |
$
1,839,340
|
$
1,408,305
|
$
938,123
|
$
803,039
|
| Total operating expenses |
$
2,882,656
|
$
3,219,109
|
$
1,424,070
|
$
1,786,092
|
| Operating (loss)/income |
$(2,510,042)
|
$
328,644
|
$(1,245,569)
|
$
318,179
|
| Other income (expenses): | ||||
| Interest income |
$ 4,638
|
$ 8,438
|
$ 4,638
|
$ 5,540
|
| Interest expense |
$
(230,524)
|
---
|
$
-(230,524)
|
---
|
| Net Loss/income |
$(2,735,928)
|
$
337,082
|
$(1,471,455)
|
$
323,719
|
| Net (Loss) per common share basic and diluted |
$
(0.16)
|
$
0.02 )
|
$
(0.08
|
$
0.02
|
Science Dynamics Corporation and Subsidiary Balance Sheet
|
June
30 , 2001 Unaudited
|
December 31, 2000 Audited
|
|
|
ASSETS
|
||
|
Current assets: |
||
Cash and cash equivalents |
$
187,774
|
$1,351,641
|
Accounts receivable — trade |
$
113,925
|
$102,194
|
Accounts receivable — other |
$
48,447
|
$51,401
|
Inventories |
$
78,640
|
$87,623
|
Other current assets |
$
67,562
|
$84,566
|
Total current assets |
$496,348
|
$
1,677,425
|
| Property and equipment, net |
$
974,308
|
$
1,005,364
|
| Deferred income taxes |
|
---
|
| Intangible assets, net of accumulated | ||
amortization of $1,350,000 in 2001 |
||
and 1,200,000 in 2000 |
$
150,000
|
$
300,000
|
| Other assets |
$
25,363
|
$
25,363
|
Total assets |
$
1,646,019
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$
3,008,152
|
|
LIABILITIES AND SHAREHOLDERS—EQUITY |
||
| Current liabilities: | ||
Current portion of capital lease obligation |
$
63,322
|
$
57,598
|
Accounts payable |
$
490,062
|
$
358,820
|
Accrued expenses |
$
161,646
|
$
118,059
|
Total current liabilities |
$
715,030
|
$
534,477
|
| Convertible Notes |
$1,200,00
|
---
|
| Non current portion of capital lease obligation |
$
90,422
|
$
128,413
|
| Total liabilities |
2,005,452
|
$662,890
|
| Commitments | ||
| Shareholders—equity | ||
| Common stock—$0.01 par value | ||
45,000,000 shares authorized, |
||
17,783,700 and 17,286,278 issued |
||
17,657,900 and 17,160,478 outstanding |
||
in 2001 and 2000 respectively. |
$177,837
|
$
177,837
|
| Additional paid in capital |
$
14,298,021
|
$
14,266,787
|
| (Deficit) |
$
(14,437,458)
|
$11,701,529)
|
|
$
38,400
|
$
2,743,095
|
|
| Common stock held in treasury, at cost |
$
(397,833)
|
$
(397,833)
|
| Total shareholders’ equity |
$ (359,433)
|
$
2,345,262
|
| Total liabilities and shareholders’equity |
$
1,646,019
|
$
3,008,152
|
Science
Dynamics Corporation And Subsidiary
Consolidated Statements of Cash Flows (Unaudited)
|
June 30 , 2001 |
December 31, 2000 |
|
|
Cash flows from operating activities: |
||
| Net (loss) income |
$
(2,735,928)
|
$
337,082
|
| Adjustments to reconcile net (loss) income to net cash used for operating activities: | ||
| Depreciation |
140,231
|
59,880
|
| Amortization of | ||
| Intangible assets |
150,000
|
150,000
|
| Interest expense |
212,524
|
---
|
| Changes in operating assets and liabilities: | ||
| (Increase) decrease in: | ||
| Accounts receivable |
(11,731)
|
(1,413,777)
|
| Other receivable |
2,954
|
1,962
|
| Inventories |
8,983
|
(31,536)
|
| Other current assets |
17,004
|
(79,065)
|
| Other assets |
---
|
3,821
|
| Increase (decrease) in: | ||
| Accounts payable and accrued expenses |
174,829
|
8,701
|
| Total adjustments |
694,794
|
(1,300,014)
|
| Net cash used for operating activities |
(2,041,134)
|
(962,932)
|
| Cash flows from investing activities: | ||
| Purchase of property and equipment, net |
(109,176)
|
(305,384)
|
| Net cash used in investing activities |
(109,106)
|
(305,384)
|
| Cash flows from financing activities: | ||
| Increase (decrease) in Issuance of Convertible debt, net |
1,018,710
|
---
|
| Payment on capitalized leases |
(32,267)
|
---
|
| Issuance of common stock and warrants |
---
|
1,724,057
|
| Net cash provided by financing activities |
986,443
|
1,724,057
|
| Net (decrease) increase in cash and cash equivalents |
(1,163,867)
|
455,741
|
| Cash and cash equivalents - beginning of period |
1,351,641
|
674,793
|
| Cash and cash equivalents - end of period |
187,774
|
1,130,534
|
###
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