NSO Nstor Technologies

nStor Technologies Reports 2004 Year End Results 32 Percent Year Over Year Revenue Growth CARLSBAD, Calif., March 29 /PRNewswire-FirstCall/ -- nStor Technologies, Inc. (AMEX:NSO), an innovative developer of storage network solutions, today announced operating results for the fourth quarter and year ended December 31, 2004. During the fourth quarter, the company's revenues from continuing operations rose by 33 percent or $719,000 when compared to the corresponding period of 2003. Revenues for the year ended December 31, 2004 increased by 32 percent or $2,490,000 over 2003 revenues. Revenues from the company's previously-owned telemanagement subsidiary, Stonehouse Technologies, are not included in these amounts. Stonehouse's operating results have been reclassified as discontinued operations as a result of the sale of Stonehouse, which closed effective November 13, 2004. The company's fourth-quarter net loss was $1,989,000 or $.01 per common share on revenues of $2,907,000 compared to a net loss of $1,628,000 or $.01 per common share on revenues of $2,188,000 during the corresponding quarter of 2003. These amounts include a loss from discontinued operations of $8,000 and $214,000 during the 2004 and 2003 quarters, respectively. The company's net loss for the full year was $9,835,000 or $.06 per common share, compared to a net loss of $5,988,000 or $.04 per common share during the prior year. The 2004 net loss reflects a $2.5 million loss from discontinued operations including a $2.6 million charge for impairment of goodwill in connection with the Stonehouse disposition. The 2003 results include a $927,000 loss from discontinued operations. "The growing demand for storage infrastructure products which target small-to-medium users is demonstrated in our revenue increase. nStor continues to make substantial inroads in its target markets, as well as, bolstering sales efforts with the addition of strategic OEM customers and solutions integrators worldwide. With increased R&D investments, we are poised to take advantage of emerging market opportunities with new products in 2005," said Todd Gresham, nStor's president and CEO. "We increased revenues and margins, captured new business, and developed market-leading solutions and service offerings for our customers. We remain focused on building strong partnerships with our customers and delivering the best return for our investors through the continued execution of the strategy we initiated during 2004 and the ongoing development of superior products. The company continues to face operating cash constraints, but overall, I am pleased with the progress the organization has made." Mr. Gresham further added that although not reflected in the 2004 year end balance sheet, "Effective January 13, 2005, we satisfied the $9.1 million of current borrowings from H. Irwin Levy, our chairman and one of our principal shareholders, through the issuance of a newly created Series M Convertible Preferred Stock with a stated value of $9.1 million." If this transaction had occurred on December 31, 2004, nStor's shareholders' equity and working capital would have been a positive $2.6 million and $3.3 million, respectively. The company's only remaining borrowings consist of $3.65 million, including $3.3 million from Mr. Levy, maturing April 2006. Additional Business Highlights: * Greater focus in the storage business with the disposition of the telemanagement segment, Stonehouse Technologies, Inc. * Overall gross margin improvement from 25% in 2003 to 30% in 2004 through the success of various operational excellence programs that yielded cost savings * Shipment of the newly introduced NexStor 4900 Fibre Channel storage subsystem in Q404, securing several key customer wins from the offering * Penetration of key vertical and geographic markets including defense, medical and video. Increased sales traction in EMEA (Europe, Middle East & Africa) and Japanese markets. About nStor Technologies, Inc. Headquartered in Carlsbad, Calif., nStor Technologies, Inc. (AMEX:NSO), through its wholly-owned subsidiary, nStor Corporation, Inc., is a developer of data storage solutions that are ideally suited for both large enterprises as well as small to mid-sized businesses. The Company's flagship controller technology and StorView software form the foundation for the NexStor family of turnkey solutions that support today's popular operating systems including Microsoft Windows and Linux. Designed for storage-intensive environments and mission-critical applications, nStor's products are offered in various architectures including Fibre Channel, SCSI and SATA and are focused on addressing customers' business needs and applications. The Company markets its storage solutions through a global network of OEM partners and systems integrators. For more information, visit http://www.nstor.com/. This press release includes statements that may constitute "forward-looking" statements, usually containing the words "believe," "estimated," "project," "expect," "anticipate," or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, the Company's inability to increase sales to current customers and to expand its customer base, continued acceptance of the Company's products in the marketplace, the Company's inability to improve the gross margin on its products, competitive factors, dependence upon third-party vendors, outcome of litigation, insufficient funding and other risks detailed in the Company's periodic report filings with the Securities and Exchange Commission. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release. nStor and StorView are registered trademarks of nStor Technologies, Inc. nStor Technologies, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (in thousands, except per share data) Three Months Ended Year Ended December 31, December 31, 2004 2003 2004 2003 Sales $2,907 $2,188 $10,286 $7,796 Cost of sales 2,121 1,762 7,201 5,866 Gross margin 786 426 3,085 1,930 Operating expenses: Selling, general and administrative 2,047 928 6,366 3,646 Research and development 970 709 3,413 2,547 Depreciation and amortization 30 37 194 113 Total operating expenses 3,047 1,674 9,973 6,306 Loss from operations (2,261) (1,248) (6,888) (4,376) Interest expense (290) (170) (995) (713) Other income 570 4 574 28 Loss from continuing operations (1,981) (1,414) (7,309) (5,061) Loss from discontinued operations (including impairment loss of $2,619 in 2004) (8) (214) (2,526) (927) Net loss $(1,989) $(1,628) $(9,835) $(5,988) Basic and diluted net loss per common share: Loss from continuing operations $(.01) $(.01) $(.04) $(.03) Loss from discontinued operations (.00) (.00) (.02) (.01) Net loss $(.01) $(.01) $(.06) $(.04) Weighted average number of common shares considered outstanding, basic and diluted 165,098 165,063 165,088 156,886 nStor Technologies, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (in thousands) December 31, December 31, 2004 2003 ASSETS Current assets: Cash and cash equivalents $1,272 $-- Receivables, net 2,431 482 Inventories 1,882 1,571 Prepaid expenses and other 295 295 Assets held for sale (1) -- 10,582 Total current assets 5,880 12,930 Property and equipment, net 512 323 Goodwill, net 1,989 1,989 Note receivable 417 -- $8,798 $15,242 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Borrowings: Affiliate (2) $9,100 $6,941 Other 78 561 Accounts payable and other 2,465 2,402 Liabilities held for sale (1) -- 2,077 Total current liabilities 11,643 11,981 Long-term debt 3,650 -- Total liabilities 15,293 11,981 Shareholders' (deficit) equity (2) (6,495) 3,261 $8,798 $15,242 (1) Assets and liabilities of Stonehouse Technologies, sold effective November 13, 2004. (2) Effective January 13, 2005, the Company satisfied the $9.1 million of current Affiliate Borrowings through the issuance of Convertible Preferred Stock with a stated value of $9.1 million. If this transaction had occurred on December 31, 2004, the Company's Shareholders' Equity and Working Capital would have been a positive $2.6 million and $3.3 million, respectively. DATASOURCE: nStor Technologies, Inc. CONTACT: Veena Raman of nStor Technologies, Inc., +1-760-683-2500,

Copyright