Exhibit 99.1
Investor Relations
eOn Communications
800-955-5321
investorrelations@eoncc.com
For Release 4:30 PM ET, December 13, 2005
eOn Communications Reports Profitable First Quarter Fiscal 2006 Results
ATLANTA(December 13, 2005) – eOn Communications Corporation™ (NASDAQ: EONC), a leading provider of telecommunications solutions, today reported financial results for the first fiscal quarter ended October 31, 2005.
Excluding Cortelco Shanghai, revenues for the quarter were $3,172,000, a decrease of 30.6% compared with $4,571,000 for the same period last year. Excluding Cortelco Shanghai, income from continuing operations was $181,000, or $0.01 per common share, an increase of 120.7% compared to income from continuing operations of $82,000 or $0.01 per share in the quarter ended October 31, 2004.
On October 26, 2005, the Company announced that it signed a memorandum of understanding to sell its 54% interest in Cortelco Shanghai Telecom Equipment Company to the 46% minority holder, Shanghai Fortune Telecommunication Technology Development Co. Ltd. and members of management of Cortelco Shanghai. Accordingly, the results of operations of Cortelco Shanghai for all periods presented are reported as discontinued operations. Income from discontinued operations was $107,000, or $.01 per common share compared to income from discontinued operations of $16,000 or $0.00 per common share in the quarter ended October 31, 2004.
Net income for the quarter was $505,000, or $0.04 per common share, an increase of 415.3% compared to net income of $98,000, or $0.01 per common share in the quarter ended October 31, 2004. The net income of $505,000 consisted of three components: $181,000 from continuing operations, $107,000 from discontinued operations and an extraordinary gain of $217,000.
The Company issued the final amount of common stock required to be made pursuant to the original Cortelco Shanghai purchase agreement in the quarter ended October 31, 2005. Because the value of the assets acquired exceeded the value of the stock issued, the Company realized an extraordinary gain on the purchase. The extraordinary gain was $217,000, or $0.02 per common share.
“I am pleased to report that our ongoing efforts to better align our expenses and revenues have yielded profitable results for the quarter.” stated David Lee, eOn’s chairman and chief executive officer. “We expect these actions, combined with our sales initiatives here and in China, will also generate profitable results in our second quarter.”
Conference Call
The Company will host a conference call at 4:45 p.m. ET, December 13, 2005, to discuss first quarter results. To hear the call, dial 800-310-6649 or visit our investor relations website at investor.eoncc.com. A replay of the call will be posted to our investor relations website shortly following the call.
About eOn Communications™
eOn Communications Corporation™ is a global provider of innovative communications solutions. Backed by over 20 years of telecommunications engineering expertise, our solutions enable our customers to easily leverage advanced technologies in order to communicate more effectively. To find out more information about eOn Communications and its solutions, visit the World Wide Web at www.eoncommunications.com, or call 800-955-5321.
Note:
This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties, including technical and competitive factors, which could cause the Company's results and the timing of certain events to differ materially from those discussed in the forward-looking statements. Such risks are detailed in eOn Communications Corporation's most recent Form 10-Q filing with the Securities and Exchange Commission.
eOn Communications Corporation, the mark eOn, and eQueue are trademarks of eOn Communications Corporation.
eOn Communications Corporation
Condensed Consolidated Statements of Operations
(Dollars in thousands, except per share data)
Three Months Ended October 31, | ||||||||
| 2005 | 2004 | |||||||
REVENUE | ||||||||
Net revenue | $ | 3,172 | $ | 4,571 | ||||
COST OF REVENUE | ||||||||
Cost of revenue | 1,060 | 2,067 | ||||||
Gross profit | 2,112 | 2,504 | ||||||
OPERATING EXPENSE | ||||||||
Selling, general and administrative | 1,355 | 1,568 | ||||||
Research and development | 586 | 866 | ||||||
Total operating expense | 1,941 | 2,434 | ||||||
Income from continuing operations | 171 | 70 | ||||||
Interest income | 34 | 21 | ||||||
Other expense, net | (24 | ) | (9 | ) | ||||
Income from continuing operations before income taxes | 181 | 82 | ||||||
Income tax expense | — | — | ||||||
Income from continuing operations after income taxes | 181 | 82 | ||||||
DISCONTINUED OPERATIONS | ||||||||
Income from discontinued operations, net of tax of $36 and $4, respectively and minority interest of $91 and $13, respectively | 107 | 16 | ||||||
Income before extraordinary item | 288 | 98 | ||||||
EXTRAORDINARY ITEM | ||||||||
Extraordinary gain, net of income taxes of $0 | 217 | — | ||||||
Net income | $ | 505 | $ | 98 | ||||
Weighted average shares outstanding: | ||||||||
Basic | 12,961 | 12,821 | ||||||
Diluted | 13,039 | 12,918 | ||||||
Basic income per share: | ||||||||
From continuing operations after income taxes | $ | 0.01 | $ | 0.01 | ||||
From discontinued operations, net of tax and minority interest | 0.01 | — | ||||||
Extraordinary gain, net of income taxes | 0.02 | — | ||||||
Net income | $ | 0.04 | $ | 0.01 | ||||
Diluted income per share: | ||||||||
From from continuing operations after income taxes | $ | 0.01 | $ | 0.01 | ||||
From discontinued operations, net of tax and minority interest | 0.01 | — | ||||||
Extraordinary gain, net of income taxes | 0.02 | — | ||||||
Net income | $ | 0.04 | $ | 0.01 | ||||
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eOn Communications Corporation
Condensed Consolidated Balance Sheets
(Dollars in thousands, except share and per share amounts)
| October 31, 2005 | July 31, 2005 | |||||||
| (unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 749 | $ | 870 | ||||
Marketable securities | 3,600 | 3,600 | ||||||
Trade accounts receivable, net of allowance of $1,176 and $1,106, respectively | 2,601 | 2,145 | ||||||
Trade accounts receivable - related party | 16 | 19 | ||||||
Notes receivable - related party | — | |||||||
Inventories | 2,132 | 2,155 | ||||||
Prepaid and other current assets | 195 | 206 | ||||||
Current assets of discontinued operations | 7,598 | 7,408 | ||||||
Total current assets | 16,891 | 16,403 | ||||||
Property and equipment, net | 368 | 434 | ||||||
Goodwill | 21 | 21 | ||||||
Non-current assets of discontinued operations | 53 | 271 | ||||||
Total assets | $ | 17,333 | $ | 17,129 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Trade accounts payable | $ | 653 | $ | 703 | ||||
Trade accounts payable - related party | 160 | 157 | ||||||
Deferred acquisition payment | — | 914 | ||||||
Accrued expenses and other | 1,508 | 1,603 | ||||||
Current liabilities of discontinued operations | 5,093 | 4,952 | ||||||
Total current liabilities | 7,414 | 8,329 | ||||||
Minority interest of discontinued operations | 1,236 | 1,145 | ||||||
Commitments and contingencies | — | — | ||||||
Stockholders’ equity: | ||||||||
Preferred stock, $0.001 par value, (10,000,000 shares authorized, no shares issued and outstanding) | — | — | ||||||
Common stock, $0.001 par value (50,000,000 shares authorized, 14,075,151 and 13,579,957 shares issued, respectively) | 14 | 13 | ||||||
Additional paid-in capital | 54,969 | 54,455 | ||||||
Treasury stock, at cost (676,900 shares) | (1,502 | ) | (1,502 | ) | ||||
Accumulated deficit | (44,867 | ) | (45,372 | ) | ||||
Accumulated other comprehensive income | 69 | 61 | ||||||
Total stockholders’ equity | 8,683 | 7,655 | ||||||
Total liabilities and stockholders’ equity | $ | 17,333 | $ | 17,129 | ||||
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