Altigen Communications, Inc. Reports Third Quarter and Nine Months 2019 Financial Results

SAN JOSE, CA / ACCESSWIRE / July 24, 2019 / Altigen Communications, Inc. (OTCQB: ATGN), a Silicon Valley based Microsoft ISV and Cloud Solutions provider, announced today its financial results for the third quarter ended June 30, 2019.

Third Quarter 2019 Financial Results

Total revenue for fiscal 2019 third quarter grew 4% to $2.7 million, in comparison to $2.5 million in the preceding quarter, and compared to $2.6 million during the same period in fiscal 2018.

GAAP net income for the third quarter of fiscal 2019 was $612,000, or $0.02 per diluted share, compared with net income of $403,000, or $0.02 per diluted share in the preceding quarter, and compared to net income of $92,000, or $0.00 per diluted share during the same period a year ago. Non-GAAP net income for the third quarter of fiscal 2019 was $662,000, or $0.03 per diluted share, compared with non-GAAP net income of $440,000, or $0.02 per diluted share in the preceding quarter, and compared to non-GAAP net income of $458,000, or $0.02 per diluted share in the same period of the prior year.

GAAP operating expenses totaled $1.6 million for the third quarter of fiscal 2019, compared with $1.7 million in the preceding quarter, and compared with $2.0 million during the third quarter of fiscal 2018. Non-GAAP operating expenses totaled $1.5 million for the third quarter of fiscal 2019, compared with $1.6 million in the preceding quarter, and $1.7 million in the comparable period last year. The year-over-year expense decrease was primarily due to reduced litigation related costs. For additional information, please refer to the Company’s filings with the OTC Markets, including the Company’s most recent Quarterly Report filed on May 20, 2019.

Year-to-Date Financial Results

For the nine months of fiscal year 2019, revenue grew 9% to $7.9 million, in comparison to $7.3 million during the same period in fiscal 2018.

GAAP net income for the nine months ended June 30, 2019 was $1.6 million, or $0.06 per diluted share, compared with GAAP net income of $813,000, or $0.03 per diluted share in the prior year period. Non-GAAP net income for the nine months of fiscal year 2019 was $1.8 million, or $0.07 per diluted share, compared with non-GAAP net income of $1.2 million, or $0.05 per diluted share during the same period a year ago.

For the nine-month period ending June 30, 2019, GAAP operating expenses totaled $4.9 million, compared to $5.3 million during the same period a year ago, a decrease of $396,00, or 7%. Non-GAAP operating expenses decreased 4% to $4.7 million for the nine months of fiscal 2019, compared to $4.9 million for the same period in fiscal 2018. The expense decrease was primarily due to reduced litigation related costs. For additional information, please refer to the Company’s filings with the OTC Markets, including the Company’s most recent Quarterly Report filed on May 20, 2019.

Cash, Cash Equivalents and Restricted Cash

Our cash, cash equivalents and restricted cash totaled $4.6 million at June 30, 2019, compared to $4.7 million at the end of the second quarter of fiscal 2019.

Working capital was $3.4 million at the end of the third quarter of fiscal 2019, compared with $2.9 million at the end of the preceding quarter.

Non-GAAP Financial Measures

In calculating non-GAAP financial measures, we exclude certain items to facilitate a review of the comparability of our core operating performance on a period-to-period basis. The excluded items represent stock-based compensation expense, depreciation and amortization expenses and other non-recurring or unusual items that may arise from time to time that we do not consider to be directly related to core operating performance. We use non-GAAP measures to evaluate the core operating performance of our business and to perform financial planning. Since we find these measures to be useful, we believe that investors benefit from seeing results reviewed by management in addition to seeing GAAP results. We believe that these non-GAAP measures, when read in conjunction with our GAAP financials, provide useful information to investors by facilitating: (i) the comparability of our on-going operating results over the periods presented and (ii) the ability to identify trends in our underlying business.

The following are explanations of each type of adjustment that we incorporate into non-GAAP financial measures:

Stock-based compensation expense

Stock-based compensation expense is impacted by the Company’s future hiring and retention needs and the future fair market value of the Company’s common stock, all of which are difficult to predict and subject to constant change. Furthermore, stock-based compensation expense is generally fixed at the time of grant, then amortized over a period of several years, and generally cannot be changed or influenced by management after the grant. The Company believes that the exclusion of stock-based compensation expense assists investors in the comparisons of operating results to peer companies. Stock-based compensation expense can vary significantly based on the timing, size and nature of awards granted.

Depreciation and amortization expenses

Depreciation and amortization expense includes the depreciation of property and equipment, as well as amortization of intangible assets. Such expenses are fixed at the time of an acquisition, then amortized over a period of several years. While depreciation and amortization are considered operating costs under GAAP, these expenses primarily represent non-cash current period expense which vary widely from company to company. Management believes that the exclusion of depreciation and amortization expense provides a supplemental measure of the Company’s ongoing operating performance.

Other non-recurring or unusual charges

The Company has excluded certain other expenses that are the result of other, non-comparable events to measure operating performance. These events arise outside of the ordinary course of continuing operations. Given the unique nature of the matters relating to these costs, the Company believes these items are not normal operating expenses. For example, legal settlements and judgments vary significantly, in their nature, size and frequency, and, due to this volatility, the Company believes the costs associated with legal settlements and judgments are not normal operating expenses. The Company believes that the exclusion of such out-of-the-ordinary-course amounts provides supplemental information to assist in the comparison of the financial results of the Company from period to period and, therefore, provides useful supplemental information to investors.

Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation. They should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.

Conference Call

Altigen will be discussing its financial results and outlook on a conference call today at 2:00 p.m. Pacific Time (5:00 p.m. ET). The conference call can be accessed by dialing (888) 645-4404 (domestic) or (862) 298-0720 (international). A live webcast will also be made available at http://www.altigen.com. To access the replay, dial (877) 481-4010 (domestic) or (919) 882-2331 (international), conference ID #49979. A web archive will be made available at www.altigen.com for 90 days following the call’s conclusion.

About Altigen Communications

Altigen Communications, Inc. (OTCQB: ATGN), a leading Microsoft Cloud Solutions provider, delivers fully managed Unified Communications services, combining Hosted Skype for Business, Advanced Cloud PBX, and Innovative Cloud Contact Center applications with seamless integration to Office 365 for small-to-medium sized businesses and mid-size to large enterprises. Our robust suite of applications integrate with Skype for Business, Microsoft Teams and Office 365 to deliver unparalleled capabilities to organizations using these Microsoft solutions. With thousands of customers around the world, Altigen solutions are designed for high reliability, ease of use, seamless integration to Microsoft infrastructure technologies, and are built on a scalable, open standards platform. Altigen’s worldwide headquarters is in Silicon Valley, CA. For more information, call 1-888- ALTIGEN or visit the web site at www.altigen.com.

Safe Harbor Statement

This press release contains forward‐looking information. The statements are based on reasonable assumptions, beliefs and expectations of management and the Company provides no assurance that actual events will meet management’s expectations. Furthermore, the forward-looking statements contained in this press release are based on the Company’s views of future events and financial performances which are subject to known and unknown risks and uncertainties, many of which are outside of the Company’s control. There can be no assurances that the Company will achieve expected results, and actual results may be materially different than expectations and from those stated or implied in forward-looking statements. Please refer to the Company’s most recent Annual Report filed with the OTCQB over-the-counter market for a further discussion of risks and uncertainties. Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. The Company does not undertake any obligation to update any forward-looking statements.

Contact:
Carolyn David
Vice President of Finance
Altigen Communications, Inc.

Phone: 408-597-9033
www.altigen.com

Altigen Communications, Inc.
Condensed Consolidated Statements of Operations
(Unaudited; amounts in thousands, except per share data)

Third Quarter Ended Nine Months Ended
June 30, June 30,
FY 2019 FY 2018 FY 2019 FY 2018
Net Revenue
$ 2,651 $ 2,553 $ 7,970 $ 7,327
Gross profit
2,136 2,142 6,515 6,134
Operating Expenses:
Research and development
675 733 1,935 2,183
Selling, general & administrative
890 973 2,974 2,793
Litigation
342 13 342
Operating income
571 94 1,593 816
Other income/(expense), net
43 (1 ) 52
Net income before provision for income taxes
614 93 1,645 816
Income tax benefit (expense)
(2 ) (1 ) (18 ) (3 )
Net income
$ 612 $ 92 $ 1,627 $ 813
Per share data:
Basic
$ 0.03 $ 0.00 $ 0.07 $ 0.04
Diluted
$ 0.02 $ 0.00 $ 0.06 $ 0.03
Weighted average shares outstanding:
Basic
22,887 22,833 22,865 22,812
Diluted
25,876 25,047 25,759 24,731
Altigen Communications, Inc.
Condensed Consolidated Balance Sheets
(amounts in thousands)
June 30, 2019 September 30, 2018
Cash, cash equivalents and restricted cash
$ 4,614 $ 3,080
Accounts receivable, net
446 531
Other current assets
318 1,622
Net property and equipment
1,054 405
Deferred tax asset
8,713 8,713
Other long-term assets
36 11
Total Assets
$ 15,181 $ 14,362
Current liabilities
$ 2,017 $ 2,928
Long-term liabilities
299 221
Stockholders??? equity
12,865 11,213
Total liabilities and stockholders??? equity
$ 15,181 $ 14,362

Reconciliation of GAAP and Non-GAAP Financial Measures (amounts in thousands, except per share data)

Third Quarter Ended Nine Months Ended
June 30, June 30,
FY 2019 FY 2018 FY 2019 FY 2018
Net income (GAAP)
$ 612 $ 92 $ 1,627 $ 813
Adjustments:
Litigation
342 13 342
Section 382 study (1)
65
Depreciation and amortization
46 17 105 37
Stock-based compensation
4 7 16 19
Net income (Non-GAAP)
$ 662 $ 458 $ 1,826 $ 1,211
Per share data:
Basic
$ 0.03 $ 0.02 $ 0.08 $ 0.05
Diluted
$ 0.03 $ 0.02 $ 0.07 $ 0.05
Weighted average shares outstanding:
Basic
22,887 22,833 22,865 22,812
Diluted
25,876 25,047 25,759 24,731

(1) During the first quarter of fiscal 2019, the Company performed a section 382 ownership change analysis to determine if there were any limitations on the utilization of its NOLs.

SOURCE: Altigen Communications, Inc.

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