Dataram Reports Fiscal 2010 Second Quarter Financial Results

PRINCETON, N.J.--(BUSINESS WIRE)--Dataram Corporation (NASDAQ: DRAM) today reported its financial results for its fiscal second quarter ended October 31, 2009. Revenues for the second quarter were $10.7 million, which compares to $7.1 million for the comparable prior year period. Revenues for the first six months of the current fiscal year were $19.9 million, which compares to $14.6 million for the comparable prior year period. The Company’s recently acquired Micro Memory Bank business unit generated approximately $3.6 million and $6.5 million in revenues, respectively, in the second quarter and first six months of the current fiscal year versus nil in the prior fiscal year.

“Our financial condition remains strong. Our current ratio is 3.8 and our book value is $2.13 per share. I look forward to reporting on our progress next quarter.”

John H. Freeman, Dataram’s president and CEO, commented, “During our fiscal second quarter, we have seen demand increase as the economy recovers from the worldwide financial crises. Our memory solutions business has improved performance to the point where it is operating at a near cash break even level. I am confident that our sales and marketing strategy will drive further profitable growth. The price of memory has been volatile and we are seeing significant price increases. The upward pricing was based on consolidation of manufacturers, reduced production by manufacturers and increased demand. We expect that memory pricing will continue to increase at a slower pace and in a less volatile manner.”

Mr. Freeman continued, “We recently announced at the Storage Networking World trade show, a unique intelligent SAN optimization solution, XcelaSAN ^®. XcelaSAN is the industry's first solution to deliver substantive application performance improvement to existing applications such as Oracle, SQL, Exchange and VMware. XcelaSAN augments existing storage systems by transparently applying intelligent caching algorithms that serve the most active block-level data from high-speed solid state storage, creating an intelligent, virtual solid state SAN. This breakthrough solution allows organizations to dramatically increase the performance of their existing business-critical applications without the costly hardware upgrades or over-provisioning of storage typically found in current solutions for increased performance. This product launch supports our corporate strategy to deliver data center solutions that optimize performance, leverage existing IT investments, and make measurable reductions in the total cost of ownership associated with these assets. On a limited basis this product is currently being shipped in our fiscal third quarter to select early install clients. We expect the product to be generally available early in 2010. Over the past 18 months, the Company has made significant investments in research and development, primarily associated with the development of this product. In the second quarter and first six months of the current fiscal year, we incurred approximately $1.6 million and $2.5 million, respectively of total expense in that area which compares to approximately $254,000 and $466,000 in the comparable prior year periods. Current year second quarter expenditures include approximately $402,000 of non-recurring expense related to the development of this product. We anticipate our third quarter research and development costs to be less than $1.0 million.”

The Company incurred a net loss for the second quarter of the current fiscal year of $1.6 million, or $0.18 per diluted share, which compares to a net loss of $393,000, or $0.04 per diluted share for the comparable prior year period. Current fiscal year six months net loss totaled approximately $2.6 million, or $0.29 per diluted share, which compares to an approximate net loss of $999,000, or $0.11 per diluted share in same prior year period. Last fiscal year’s six months net loss included a charge to selling, general and administrative expense of approximately $716,000 related to a retirement agreement entered into with the Company’s former chief executive officer.

Mr. Freeman concluded, “Our financial condition remains strong. Our current ratio is 3.8 and our book value is $2.13 per share. I look forward to reporting on our progress next quarter.”

ABOUT DATARAM CORPORATION

Founded in 1967, Dataram is a worldwide leader in the manufacture of high-quality computer memory, storage and software products. Our products and services deliver IT infrastructure optimization, dramatically increase application performance and deliver substantial cost savings. Dataram solutions are deployed in 70 Fortune 100 companies and in mission-critical government and defense applications around the world. For more information about Dataram, visit www.dataram.com.

The information provided in this press release may include forward-looking statements relating to future events, such as the development of new products, pricing and availability of raw materials or the future financial performance of the Company. Actual results may differ from such projections and are subject to certain risks including, without limitation, risks arising from: changes in the price of memory chips, changes in the demand for memory systems, increased competition in the memory systems industry, order cancellations, delays in developing and commercializing new products and other factors described in the Company's most recent Annual Report on Form 10-K, filed with the Securities and Exchange Commission, which can be reviewed at http://www.sec.gov.

DATARAM CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited)
	Second Quarter Ended October 31,						Six Months Ended October 31,
		2009			2008			2009			2008
Revenues	$	10,673		$	7,059		$	19,863		$	14,622
Costs and expenses:
Cost of sales		7,937			4,660			14,592			9,595
Engineering and development		259			302			512			634
Research and development		1,621			254			2,495			466
Selling, general and administrative		3,113			2,370			5,842			5,428
Stock-based compensation expense*		225			130			380			256
Intangible asset amortization		164			-			328			-
		13,319			7,716			24,149			16,379
Loss from operations		(2,646	)		(657	)		(4,286	)		(1,757	)
Other income (expense)		(12	)		16			22			125
Loss before income taxes		(2,658	)		(641	)		(4,264	)		(1,632	)
Income tax benefit		(1,042	)		(248	)		(1,670	)		(633	)
Net loss	$	(1,616	)	$	(393	)	$	(2,594	)	$	(999	)
Net loss per share:
Basic	$	(0.18	)	$	(0.04	)	$	(0.29	)	$	(0.11	)
Diluted	$	(0.18	)	$	(0.04	)	$	(0.29	)	$	(0.11	)
Weighted average number of shares
outstanding:
Basic		8,869			8,869			8,869			8,869
Diluted		8,869			8,869			8,869			8,869

* Stock-based compensation expense is recorded as a component of selling, general and administrative expenses in the Company’s financial statements filed with the Securities and Exchange Commission on Form 10-Q.

DATARAM CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)
	October 31, 2009		April 30, 2009
ASSETS
Current assets
Cash and cash equivalents	$	4,120	$	12,525
Accounts receivable, net		5,434		3,381
Inventories		5,587		2,201
Deferred income taxes		511		300
Other current assets		213		126
Total current assets		15,865		18,533
Deferred income taxes		4,730		3,282
Property and equipment, net		1,305		1,100
Intangible assets, net		1,176		1,504
Other assets		118		136
Total assets	$	23,194	$	24,555
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	2,497	$	1,386
Accrued liabilities		1,624		1,689
Total current liabilities		4,121		3,075
Accrued liabilities		219		381
Stockholders' equity		18,854		21,099
Total liabilities and stockholders' equity	$	23,194	$	24,555