VOXW Voxware (MM)

Voxware, Inc. (Nasdaq: VOXW), a leading supplier of software for voice-driven warehousing operations, reported results for the three and nine months ended March 31, 2010. Overall revenues decreased 17% to $3.354 million for the quarter ended March 31, 2010 from $4.021 million during the comparable prior year period. Revenues decreased 12% to $9.465 million for the nine months ended March 31, 2010 from $10.724 million during the comparable prior year period. Net loss on a Generally Accepted Accounting Principles (“GAAP”) basis was $591,000 for the quarter ended March 31, 2010, compared to $560,000 for the comparable prior year period. Net loss on a GAAP basis was $2.334 million for the nine months ended March 31, 2010, compared to a net loss of $4.223 million for the nine months ended March 31, 2009, an improvement of $1.889 million. Voxware's financial statements for the quarter ended March 31, 2010, can be found in its Form 10-Q filed with the Securities and Exchange Commission on May 17, 2010.

“During our third fiscal quarter, we saw revenue remain steady compared to our second quarter of fiscal 2010,” said Scott Yetter, Voxware CEO. “As we have previously stated, we have taken steps to ensure that expenses excluding non-cash stock-based compensation will be more closely aligned with expected revenue during the remainder of fiscal 2010. Our third quarter results are in line with where we expected to be at this point of our fiscal year. Furthermore, our cash position remains strong at $3.4 million as we move into the remainder of the year.

“Large enterprises continue to seriously evaluate Voxware’s software, and we are confident that cost containment projects such as implementing voice in distribution centers will be among the first to be funded as the economic climate improves.”

Net loss on a non-GAAP basis was $229,000 and $1.249 million, respectively, for the three and nine months ended March 31, 2010. The difference between the GAAP and non-GAAP net loss is attributable to non-cash stock-based compensation, which was $362,000 and $1.085 million, respectively for the three and nine months ended March 31, 2010. A reconciliation of GAAP measures with non-GAAP measures can be found at the end of this release.

About Voxware

Voxware, Inc. (NASDAQ: VOXW), provides voice-driven software products that optimize the full spectrum of warehouse operations for greater accuracy, productivity and flexibility in supply chain execution. Voxware’s corporate headquarters are in Hamilton, New Jersey, with operating offices in Cambridge, Massachusetts, the United Kingdom, and France. Additional information about Voxware can be obtained at http://www.voxware.com.

Voxware, Inc. and Subsidiaries Consolidated Balance Sheets (in thousands, except share data)   March 31, 2010   June 30, 2009 (unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 3,353 $ 4,342

Accounts receivable, net of allowance for doubtful accounts of $174 and $158 at March 31, 2010 and June 30, 2009, respectively

2,639 3,350 Inventory, net 373 564 Deferred project costs 10 33 Prepaid expenses and other current assets   350     337   Total current assets 6,725 8,626   Property and equipment, net 373 454 Capitalized software development costs 51 - Other assets   152     184   TOTAL ASSETS $ 7,301   $ 9,264     LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current portion of long-term debt $ 150 $ 525 Accounts payable and accrued expenses 1,992 2,541 Current portion of deferred revenues   2,693     2,365   Total current liabilities 4,835 5,431 Long-term portion of deferred revenues 105 85 Long-term debt, net of current maturities   50     163   Total liabilities   4,990     5,679     COMMITMENTS AND CONTINGENCIES   STOCKHOLDERS' EQUITY

Common Stock, $0.001 par value, 15,000,000 shares authorized as of March 31, 2010 and 12,000,000 shares authorized at June 30, 2009; 8,072,828 and 8,007,766 shares issued and outstanding at March 31, 2010 and June 30, 2009, respectively

8 8 Additional paid-in capital 84,203 83,143 Accumulated deficit   (81,900 )   (79,566 ) Total stockholders' equity   2,311     3,585   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,301   $ 9,264  

Financial statements should be read in conjunction with the Notes to Consolidated Financial Statements contained in Forms 10-K and 10-Q.

  Voxware, Inc. and Subsidiaries Consolidated Statements of Operations (in thousands, except per share data)     Three Months Ended March 31,   Nine Months Ended March 31, 2010   2009 2010   2009 (unaudited) (unaudited) (unaudited) (unaudited) REVENUES Product revenues $ 1,842 $ 2,597 $ 4,943 $ 6,402 Services revenues   1,512     1,424     4,522     4,322   Total revenues   3,354     4,021    

9,465

    10,724     COST OF REVENUES Cost of product revenues 826 866 2,049 2,488 Cost of services revenues   422     653     1,538     2,354   Total cost of revenues   1,248     1,519     3,587     4,842     GROSS PROFIT   2,106     2,502     5,878     5,882     OPERATING EXPENSES Research and development 799 864 2,303 2,889 Sales and marketing 1,039 1,289 3,265 4,220 General and administrative   854     898     2,599     2,977   Total operating expenses   2,692     3,051     8,167     10,086     OPERATING LOSS (586 ) (549 ) (2,289 ) (4,204 )   INTEREST EXPENSE, NET   (5 )   (10 )   (45 )   (16 )   LOSS BEFORE INCOME TAXES (591 ) (559 ) (2,334 ) (4,220 )   PROVISION FOR INCOME TAXES   -     (1 )   -     (3 )   NET LOSS $ (591 ) $ (560 ) $ (2,334 ) $ (4,223 )   NET LOSS PER SHARE Basic $ (0.07 ) $ (0.09 ) $ (0.29 ) $ (0.65 ) Diluted $ (0.07 ) $ (0.09 ) $ (0.29 ) $ (0.65 )   WEIGHTED AVERAGE NUMBER OF SHARES USED IN

COMPUTING NET LOSS PER SHARE

Basic 8,063 6,541 8,030 6,517 Diluted 8,063 6,541 8,030 6,517

Financial statements should be read in conjunction with the Notes to Consolidated Financial Statements contained in Forms 10-K and 10-Q.

  Voxware, Inc. and Subsidiaries Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Measures (in thousands)     Three Months Ended March 31, 2010

GAAP

 

Adjustments

 

Non-GAAP

NET LOSS $ (591 ) (b) $ 362 (a) $ (229 ) (b)   Nine Months Ended March 31, 2010          

GAAP

Adjustments

Non-GAAP

NET LOSS $ (2,334 ) (b) $ 1,085 (c) $ (1,249 ) (b)

Notes:

(a) Adjustment to exclude non-cash stock-based compensation of $362,000 from Net Loss of which $40,000 was reported in research and development costs, $77,000 was reported in sales and marketing costs, and $245,000 was reported in general and administrative costs.

(b) GAAP and non-GAAP net loss for the three and nine months ended March 31, 2010 are not audited.

(c) Adjustment to exclude non-cash stock-based compensation of $1,085,000 from Net Loss of which $113,000 was reported in research and development costs, $234,000 was reported in sales and marketing costs, and $738,000 was reported in general and administrative costs.

About Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with GAAP, this press release includes the following measure defined by the Securities and Exchange Commission as non-GAAP financial measures: non-GAAP net profit. This non-GAAP measure is not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may be different from non-GAAP measures used by other companies. In addition, this non-GAAP measure, the financial statements prepared in accordance with GAAP and reconciliations of Voxware’s GAAP financial statements to such non-GAAP measure should be carefully evaluated.

Management believes that the large amount of stock-based compensation charges incurred during the three and nine months ended March 31, 2010 makes non-GAAP net loss an important metric for investors to value the Company. Accordingly, we believe that non-GAAP net loss, excluding non-cash stock-based compensation costs, are meaningful measures for investors to evaluate our financial performance. Moreover, because of varying available valuation methodologies and the variety of award types that companies can use under current accounting literature, we believe that providing non-GAAP financial measures that exclude non-cash stock-based compensation allows investors to make additional comparisons between our operating results to those of other companies. The presentation of non-GAAP net profit, when read in conjunction with our reported GAAP results, can provide useful supplemental information to our management and investors regarding financial and business trends relating to our financial condition and results of operations.

Stock-based compensation has been and will continue to be for the foreseeable future a significant recurring expense in our business. In addition, other companies may calculate non-GAAP financial measures differently than us, thereby limiting the usefulness of these non-GAAP financial measures as a comparative tool. We compensate for this limitation by providing specific information regarding the GAAP amounts excluded from the non-GAAP net profit and evaluating such non-GAAP financial measures with financial measure calculated in accordance with GAAP.

This news release contains forward-looking statements. Such statements are subject to certain factors that may cause Voxware’s plans to differ or results to vary from those expected including the risks associated with Voxware’s need to introduce new and enhanced products and services in order to increase market penetration and the risk of obsolescence of its products and services due to technological change; Voxware’s need to attract and retain key management and other personnel with experience in providing integrated voice-based solutions for warehousing operations; the potential for substantial fluctuations in Voxware’s results of operations; competition from others; Voxware’s evolving distribution strategy and dependence on its distribution channels; the potential that speech products will not be widely accepted; Voxware’s need for additional capital and its ability to raise such capital on terms acceptable to Voxware; the potential for Nasdaq delisting proceedings; and a variety of risks set forth from time to time in Voxware’s filings with the Securities and Exchange Commission. Voxware undertakes no obligation to publicly release results of any of these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unexpected results.