PSINAPTIC INC.

 

FOR IMMEDIATE RELEASE                                                                            January 17, 2005

 

PSINAPTIC ANNOUNCES FINANCIAL AND OPERATING RESULTS

FOR THE YEAR ENDED SEPTEMBER 30, 2004

 

Calgary, Alberta – PsiNaptic Inc. (“PsiNaptic” or “the Company”) announces its financial and operating results for the year ended September 30, 2004. 

 

The success of PsiNaptic is dependent on the demand for simplicity created by a society that is embracing technology at an ever increasing rate. Management continues to believe that PsiNaptic’s technology and products will play an important role in enabling this seamless communication between mobile and embedded devices.

 

As a result of the successful closing of the IPO on January 21, 2004, the Company was able to operate within its forecast cash requirements throughout the year and ended its 2004 fiscal year with working capital of $401,629.

 

Financial Highlights

                                                                                           For the Years ended          September 30

                                                                                        2004                               2003

 

Revenue                                                              $                                  $                 –

Net earnings (loss)                                               $       (774,877)                $        (55,359)

     per share – basic                                            $        (0.0451)                 $        (0.0046)

Cash flow from operations                                     $       (736,344)                $         54,631

Working capital                                                   $        401,629                 $       147,633

Total assets                                                        $        496,408                 $       333,625

Capital expenditures                                            $           4,498                 $              959

Long-term debt                                                    $                 –                 $                 –

Shareholders’ equity                                            $        459,849                 $       290,633

Weighted average shares outstanding

     basic                                                                  17,166,964                      12,069,535

Shares outstanding at period end                               18,906,812                      13,049,809

 

Financing Activities

Financing activities during the year ended September 30, 2004 resulted in gross proceeds of $1,300,000 of which $1,250,000 was received from the initial public offering (IPO) of 5 million Class A common shares at $0.25 each.

 

Liquidity

Until PsiNaptic is able to achieve substantial revenues or profitability over several quarters, the Company remains dependent on financing resources for cash flows to meet operating expenses. The present working capital is insufficient to maintain long-term operations. Therefore the Company is presently investigating both public and private sources of funds, and is taking steps to reduce its expenses and maximize the use of its available funds.

 

Other Income

PsiNaptic had expected two licensing agreements signed in the third quarter of fiscal 2004 to generate modest licensing fees to be recorded in the fourth quarter of fiscal 2004.  However, the integration of its products into the bundled products was not completed as anticipated and the resulting royalty recognition will now be postponed to the first fiscal quarter of 2005. Thereafter, the revenues generated are dependent on the volume of bundled products delivered by PsiNaptic’s partners to their customers. At this time, the Company is unable to reliably quantify such volume.

 

Operating Expenses

Total operating expenses increased to $854,685 in the year ended September 30, 2004 from $373,174 in the year ended September 30, 2003. Salaries, including consultants, and benefits were $566,766 in the year ended September 30, 2004 compared to $182,373 in the prior fiscal year. This increase reflects the addition of personnel and recommencement of salaries in the second fiscal quarter. Other general and administrative costs increased to $165,444 in the past year from $128,727 in the previous year. This increase reflects the additional costs involved as a public company.

 

Other marketing expenses increased to $74,323 in the year ended September 30, 2004 from $16,724 in the prior fiscal year, reflecting increased marketing research, travel and promotion.

 

Operating Results

The past year saw renewed interest in research and development of wireless capabilities on the part of many manufacturers and suppliers. Accordingly, PsiNaptic vigorously pursued the milestones set out in its prospectus of January 6, 2004 and was successful in completing many of them.

 

PsiNaptic was able to complete the integration of JMatos with the Sony Ericsson P800 Bluetooth-enabled cellular telephone. In addition, work has commenced on the integration of the Company’s product onto a second Bluetooth-enabled cellular phone from one of the world’s leading cellular phone manufacturers. The integration of JMatos with cellular phones is key to the enabling of PsiNaptic’s vision and will allow value-added communication applications to be developed in the future.

 

PsiNaptic also completed the integration of CMatos with the CSR BlueCore2 Bluetooth chip manufactured by Cambridge Silicon Radio (U.K.). While the Company has yet to sign a formal co-marketing agreement with CSR, it continues to work closely with them to advance their joint solution. CSR promoted PsiNaptic’s product at the Wireless Connectivity World conference in Amsterdam in June 2004 and at the Wireless Connectivity Americas conference in Santa Clara in November 2004.

 

PsiNaptic continues to work towards a formal partnership agreement with Dallas Semiconductor Inc., a major designer, manufacturer and marketer of mixed-signal, specialty semi-conductors.

 

The Company was unable to gain the necessary support for integrating its software into vending machine and parking meter applications; however, PsiNaptic feels these remain viable opportunities.

 

While the Company was unable to generate revenue from services to be provided by its engineers to a major automobile manufacturer, dialogue with the manufacturer continues. Indeed, the acceptance of PsiNaptic’s presentation of its joint work with the Ford Research Group at the JavaOne Conference in San Francisco in June 2004 gives the Company further confidence that its development project will yield results in the near future.

 

 

About PsiNaptic Inc.

PsiNaptic implements distributed computing frameworks such as JiniNetwork Technology for use in very small microprocessors. By combining this technology with Java technology and standard wireless protocols such as Bluetooth, PsiNaptic works with Original Equipment Manufacturers to add low-cost, low-power, wireless networking and spontaneous interaction capabilities to everyday objects. 

 

For further information, please contact:

Aaron Dagan, President and CEO, or

Morris Bleviss, CFO

Telephone: 403-775-2236

E-mail : adagan@psinaptic.com or mbleviss@psinaptic.com

Web site: www.psinaptic.com

 

Statements in this release which describe the Company's intentions, expectations or predictions, or which relate to matters that are not historical facts are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties which may cause the actual results, performances or achievements of the Corporation to be materially different from any future results, performances or achievements expressed in or implied by such forward-looking statements.  The Company may update or revise any forward-looking statements, whether as a result of new information, future events or changing market and business conditions.

 

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy and accuracy of this release.