UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) November 17, 2003
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TeraForce Technology Corporation
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(Exact name of registrant as specified in its charter)
Delaware 0-11630 76-0471342
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1240 East Campbell Road, Richardson, Texas 75081
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (469) 330-4960
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ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On November 17, 2003 the Company issued a press release concerning its
results of operations for the quarter ended September 30, 2003 and providing
information regarding a conference call to be held at 3:30 CST on November 17,
2003 to discuss these results.
The text of this release is as follows:
TERAFORCE REPORTS
THIRD QUARTER 2003 RESULTS
NET REVENUES SHOW PROGRESSION OVER PRIOR QUARTER
IMPROVEMENTS EXPECTED FROM NEW SOURCES OF REVENUE
Contact: Patty Dickerson, Investor Relations - 469-330-4969
pdickerson@teraforce-tech.com
RICHARDSON, TEXAS (NOVEMBER 17, 2003) - TeraForce Technology Corporation (OTCBB:
TERA) today announced financial results for the third quarter ended September
30, 2003.
FINANCIAL RESULTS
Net revenues for the third quarter of 2003 were $1,699,000, compared to $718,000
in the same quarter last year and $1,385,000 in the second quarter of 2003. For
the nine-month periods, net revenues were $4,037,000 in 2003 compared to
$4,007,000 in the previous year.
Gross profit for the third quarter of 2003 was $591,000. This compares to gross
profit for the third quarter last year of $93,000 and $408,000 for the second
quarter of 2003.
The net loss for the third quarter of 2003 was $2,659,000 ($0.02 per share) as
compared to $4,074,000 ($0.05 per share) in the third quarter of 2002. For the
nine months ended September 30, 2003, the net loss was $6,737,000 ($0.06 per
share) versus a loss of $1,357,000 ($0.02 per share) in the previous year. The
net loss for the nine months ended September 30, 2002 includes income of
$6,300,000 from the settlement of litigation.
Net income for the third quarter of 2003 includes non-cash charges totaling
approximately $1,059,000, consisting of approximately $782,000 from the
adjustment in the carrying value of the Company's interest in and receivable
from Intelect Technologies, Inc. and approximately $277,000 related to the
amortization of warrant and other costs arising from recent financing
transactions. Third quarter results also include a charge of approximately
$290,000 related to estimated settlement and other costs related to the
resolution of a shareholder suit that has been pending since 1999.
Herman Frietsch, chairman and chief executive officer of TeraForce Technology
Corporation commented, "The increase in net revenues and decrease in operating
loss for this most recent quarter we believe indicate our steady progress in the
growth of our defense electronics business and our goal of producing sustainable
operating profits and cash flow.
"Earlier today our new collaboration with VISTA Controls was announced. We
believe that this arrangement will materially increase our business
opportunities in the coming months and that we will see a significant increase
in revenues from technology licensing.
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"We also have announced recently that we have begun to receive production orders
related to program design wins that were secured over the past several months.
Based on these new developments, we expect significant further improvement in
our operating results for the fourth quarter of 2003."
CONFERENCE CALL SCHEDULED
The Company will also host a management conference call Monday, November 17,
2003 at 3:30 p.m. Central Standard Time, to review the matters discussed in this
release. Shareholders and investors interested in attending the conference call
should dial 904-779-4708 ten minutes prior to the call, reservation code
20412289. A live webcast of the conference call will also be available on the
TeraForce website http://www.teraforcetechnology.com/.
A replay of the conference call will be available later that day from 5:30 p.m.
Eastern Standard Time through 5:30 p.m. Eastern Standard Time on December 17,
2003. To access the playback, please call 402-220-2491. The reservation code for
the replay is 20412289. A replay will be available online through the TeraForce
website http://www.teraforcetechnology.com/.
ABOUT TERAFORCE TECHNOLOGY CORPORATION
Based in Richardson, Texas, TeraForce Technology Corporation (OTCBB: TERA)
designs, develops, produces and sells high-density embedded computing platforms
and digital signal processing products, primarily for applications in the
defense electronics industry. TeraForce's primary operating unit is DNA
Computing Solutions, Inc., www.dnacomputingsolutions.com.
Except for the historical information contained herein, the statements in this
announcement are forward looking statements which involve risks and
uncertainties that could cause actual results to differ materially from those
expressed in, or implied by, the forward looking statements. Factors that might
cause such a difference include, but are not limited to, those relating to:
general economic conditions in the markets in which the Company operates;
success in the development and market acceptance of new and existing products;
dependence on suppliers, third party manufacturers and channels of distribution;
contingent liabilities; customer and product concentration; fluctuations in
customer demand; maintaining access to external sources of capital; ability to
attract and retain key management and technical personnel; issues regarding
intellectual property rights; overall management of the Company's expansion; and
other risk factors detailed from time to time in the Company's filings with the
Securities and Exchange Commission. The Company does not utilize electronic
"bulletin boards" as a means of disseminating information. The Company's
officers, directors, employees and representatives are prohibited by Company
policy from participating in such forums in regards to the Company.
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TERAFORCE TECHNOLOGY CORPORATION AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(Thousands of dollars, except share data)
September 30, December 31,
2003 2002
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(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 31 $ 55
Temporary cash investments -- 457
Accounts receivable net of allowance of $30 in 2003
and $0 in 2002 1,042 573
Receivable from affiliate -- 699
Inventories 1,790 2,354
Prepaid services -- 193
Prepaid expenses and other current assets 632 587
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Total current assets 3,495 4,918
Property and equipment, net 421 573
Investment in and receivable from affiliate 250 702
Other assets 2,102 531
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$ 6,268 $ 6,724
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Liabilities and Stockholders' Deficit
Current liabilities:
Notes payable $ 5,075 $ 4,047
Accounts payable 1,863 1,919
Accrued liabilities 1,603 1,392
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Total current liabilities 8,541 7,358
Long-term notes payable 3,960 900
Other long-term liabilities 725 1,100
Stockholders' deficit:
Common Stock, $.01 par value; authorized 200,000,000 shares; 118,556,587 and
114,255,518 shares issued in 2003 and 2002, respectively 1,185 1,143
Additional paid-in capital 187,324 184,953
Accumulated deficit (193,880) (187,143)
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(5,371) (1,047)
Less 400,474 shares of common stock in treasury at cost (1,587) (1,587)
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Total stockholders' deficit (6,958) (2,634)
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$ 6,268 $ 6,724
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TERAFORCE TECHNOLOGY CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Operations
(Thousands of dollars, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
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2003 2002 2003 2002
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(unaudited)
Net revenues $ 1,699 $ 718 $ 4,037 $ 4,007
Cost of revenue 1,108 625 2,765 2,344
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Gross profit 591 93 1,272 1,663
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Expenses:
Engineering and development 582 546 2,063 2,486
Selling and administrative 1,171 1,537 3,522 4,499
Write-off of receivable from unconsolidated
affiliate 449 -- 449 --
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2,202 2,083 6,034 6,985
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Operating loss (1,611) (1,990) (4,762) (5,322)
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Other income (expense):
Litigation settlement -- -- -- 6,300
Litigation costs, net of
insurance reimbursement (292) (206) (417) (115)
Share of loss and adjustment to carrying
value of unconsolidated affiliate (333) (295) (702) (401)
Interest expense (407) (130) (775) (388)
Interest income and other (16) 67 (81) 89
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(1,048) (564) (1,975) 5,485
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Income (loss) from continuing operations (2,659) (2,554) (6,737) 163
Loss from discontinued operations -- (1,520) -- (1,520)
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Net loss $ (2,659) $ (4,074) $ (6,737) $ (1,357)
============ ============ ============ ============
Basic and diluted loss per share:
Continuing operations $ (.02) $ (.03) $ (.06) $ --
Discontinued operations -- (.02) -- (.02)
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Net loss per share $ (.02) $ (.05) $ (.06) $ (.02)
============ ============ ============ ============
Weighted average number of common shares
outstanding (thousands) basic and diluted 118,138 88,725 117,102 87,968
============ ============ ============ ============
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TERAFORCE TECHNOLOGY CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
(Thousands of dollars)
Nine Months Ended September 30,
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2003 2002
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(unaudited)
Cash flows from operating activities:
Net loss $ (6,737) $ (1,357)
Adjustments to reconcile net loss to net cash used in operating activities:
Litigation settlement -- (6,300)
Utilization of prepaid services 193 679
Depreciation and amortization 190 177
Amounts related to unconsolidated affiliate 1,151 401
Other 48 927
Changes in operating assets and liabilities:
Accounts receivable (469) 29
Inventories 564 569
Accounts payable and accrued liabilities 155 (1,241)
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Net cash used in operating activities (4,905) (6,116)
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Cash flows from investing activities:
Proceeds from litigation settlement -- 6,300
Capital expenditures (22) (154)
Investment in temporary cash investments 457 (609)
Net proceeds from disposal of discontinued operations -- 1,337
Software development costs (105) --
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Net cash used in investing activities 330 6,874
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Cash flows from financing activities:
Proceeds from issuance of notes payable 4,260 500
Proceeds from issuance of common stock 516 100
Principal payments on notes payable (225) (1,354)
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Net cash provided by (used in) investing activities 4,551 (754)
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Net increase (decrease) in cash and cash equivalents (24) 4
Cash and cash equivalents, beginning of period 55 1
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Cash and cash equivalents, end of period $ 31 $ 5
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business to Be Acquired: N/A
(b) Pro Forma Financial Information: N/A
(c) Exhibits: N/A
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TeraForce Technology Corporation
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(Registrant)
Date: November 17, 2003 By: /s/ Herman M. Frietsch
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(Signature)
Herman M. Frietsch
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