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Dataram Corp. Reports Operating Results (10-Q)

September 13, 2010 | About:
10qk

10qk

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Dataram Corp. (DRAM) filed Quarterly Report for the period ended 2010-07-31.

Dataram Corp. has a market cap of $15.17 million; its shares were traded at around $1.71 with and P/S ratio of 0.34. DRAM is in the portfolios of Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

As of July 31, 2010, cash and cash equivalents amounted to approximately

$786,000 and working capital amounted to approximately $7,489,000,

reflecting a current ratio of 2.6 to 1, compared to cash and cash

equivalents of approximately $2,507,000, working capital of approximately

$8,550,000 and a current ratio of 2.4 to 1 as of April 30, 2010.



During the first three months of fiscal 2011, net cash used in operating

activities totaled approximately $1,459,000. Net loss in the period was

approximately $1,239,000. Accounts payable decreased by approximately

$1,508,000, mainly the result of decreased inventories of approximately

$1,125,000. Depreciation and amortization of approximately $280,000 was

recorded in fiscal 2011's first quarter. Non-cash stock-based compensation

expense of approximately $158,000 was also recorded. Cash used by the

increase in trade receivables and other current assets amounted to

approximately $160,000 and $123,000 respectively.



Three months ended Three months ended

July 31, 2010 July 31, 2009

________________ ________________

United States $ 10,686,000 $ 7,245,000

Europe 1,142,000 1,457,000

Other (principally Asia Pacific Region) 916,000 488,000

________________ ________________

Consolidated $ 12,744,000 $ 9,190,000

= =



Research and development expense in fiscal 2011's first quarter were

$894,000 versus $874,000 in the same prior year period. In the first quarter

of the prior fiscal year, the Company implemented a strategy to introduce

new and complementary products into its offerings portfolio. The Company is

currently focusing on the development of a line of high performance storage

caching products ("XcelaSAN"). XcelaSAN is a unique intelligent Storage Area

Network (SAN) optimization solution that delivers substantive application

performance improvement to applications such as Oracle, SQL and VMware.

XcelaSAN augments existing storage systems by transparently applying

intelligent caching algorithms that serve the most active block-level data

from high-speed storage, creating an intelligent, virtual solid state SAN.

As part of that strategy, in January 2009, the Company entered into a

software purchase and license agreement with another company whereby the

Company acquired the exclusive right to purchase specified software for a

price of $900,000 plus a contingent payment of $100,000. The Company owns

the software. The software and the storage products, which incorporate the

software, are currently under development. We expect to make further

investments in this area.



Other income (expense), net for the first quarter of fiscal 2011 totaled

expense of $109,000, versus $34,000 income for the same prior year period.

Other expense in fiscal 2011's first quarter consisted of $96,000 of foreign

currency transaction losses, primarily as a result of the EURO weakening

relative to the US dollar, and $16,000 of interest expense. Other income in

fiscal 2010's first quarter consisted of $10,000 of interest income and

approximately $24,000 of foreign currency transaction gains, primarily as a

result of the EURO strengthening relative to the US dollar.



Income tax benefit for the first quarter of 2011 was nil versus a benefit

of $628,000 for the same prior year period. The Company utilizes the asset

and liability method of accounting for income taxes in accordance with the

provisions of the Expenses - Income Taxes Topic of the Financial Accounting

Standards Board (FASB) Accounting Standards Codification (ASC)

(Codification). Under the asset and liability method, deferred tax assets

and liabilities are recognized for the estimated future tax consequences

attributable to differences between the financial statement carrying amounts

of existing assets and liabilities and their respective tax bases. A

valuation allowance is provided when the Company determines that it is more

likely than not that some portion or all of the deferred tax assets will not

be realized. The Company considers certain tax planning strategies in its

assessment as to the recoverability of its tax assets. In each reporting

period, the Company assesses, based on the weight of all evidence, both

positive and negative, whether a valuation allowance on its deferred tax

assets is warranted. Based on the assessment conducted in the Company's

reporting period ended January 31, 2010, the Company concluded that such an

allowance was warranted, and accordingly recorded a valuation allowance of

approximately $5.8 million in that reporting period. Deferred tax assets

and liabilities are measured using enacted tax rates in effect for the year

in which those temporary differences or tax attributes are expected to be

recovered or settled. The effect on deferred tax assets and liabilities of

a change in tax rates is recognized in earnings in the period that the tax

rate changes. The Company has Federal and State net operating loss (NOL)

carry-forwards of approximately $11.5 million and $9.7 million,

respectively. These can be used to offset future taxable income and expire

between 2023 and 2030 for Federal tax purposes and 2016 and 2030 for state

tax purposes. As a result, the Company does not expect to record any income

tax expense (benefit) in fiscal 2011. The Company's NOL carry-forwards are a

component of its deferred tax assets which are reported net of a full

valuation allowance in the Company's consolidated financial statements at

July 31, 2010.



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