Exhibit 99.1
Investor Relations
eOn Communications
800-955-5321
investorrelations@eoncc.com
For Release 4:30 PM ET, March 16, 2006
eOn Communications Reports Record Second Quarter Results from Continuing Operations
ATLANTA(March 16, 2006) – eOn Communications Corporation™ (NASDAQ: EONC), a leading provider of telecommunications solutions, today reported record net income of $607,000 or $0.05 per common share for the second fiscal quarter ended January 31, 2006.
Net income for the quarter was $607,000, or $0.05 per common share, compared to a net loss of $528,000, or $0.04 per common share in the quarter ended January 31, 2005. Net income consisted of $180,000 from continuing operations, $149,000 from discontinued operations and a gain on disposal of discontinued operations of $278,000 related to the sale of Cortelco Shanghai.
Net income for the six months was $1,112,000, or $0.08 per common share, compared to a net loss of $430,000, or $0.03 per common share in the six months ended January 31, 2005. Net income consisted of $361,000 from continuing operations, $256,000 from discontinued operations, $278,000 gain on disposal of discontinued operations and an extraordinary gain on the purchase of Cortelco Shanghai.
Revenue from continuing operations for the quarter were $2,964,000, an increase of 16.1% compared to $2,553,000 for the same period last year. Income from continuing operations was $180,000, or $0.02 per common share, compared to a loss from continuing operations of $676,000 or $0.05 per common share in the quarter ended January 31, 2005.
Revenue from continuing operations for the six months ended January 31, 2006 were $6,136,000, a decrease of 13.9% compared with $7,124,000 for the same period last year. Income from continuing operations was $361,000, or $0.03 per common share, compared to a loss from continuing operations of $594,000 or $0.04 per common share in the six month period ended January 31, 2005.
During January 2006, the Company completed the sale of its 54% interest in Cortelco Shanghai Telecom Equipment Company to the 46% minority holder, Shanghai Fortune Telecommunications 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 for the quarter was $149,000 compared to income from discontinued operations of $148,000 in the quarter ended January 31, 2005.
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“Due to purchasing cycles in some of our key market segments, Q2 is traditionally a very challenging quarter for us. I am pleased to report that we executed remarkably well and produced record Q2 earnings. The initiatives to return the company to profitability that we launched earlier this fiscal year are proving effective and we expect this trend to continue,” stated David Lee, eOn’s chairman and chief executive officer. “Furthermore, the proceeds from the sale of Cortelco Shanghai will fuel the strategy we are architecting in order to accelerate the company’s future growth and earnings,” added Lee.
Conference Call
The Company will host a conference call at 4:45 p.m. ET, March 16, 2006, to discuss second quarter results. To hear the call, dial 800-289-0496 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.
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eOn Communications Corporation
Condensed Consolidated Statements of Operations
(Dollars in thousands, except per share data)
| Three Months Ended January 31, | Six Months Ended January 31, | |||||||||||||||
| 2006 | 2005 | 2006 | 2005 | |||||||||||||
| REVENUE | ||||||||||||||||
Net revenue | $ | 2,964 | $ | 2,553 | $ | 6,136 | $ | 7,124 | ||||||||
| COST OF REVENUE | ||||||||||||||||
Cost of revenue | 1,024 | 959 | 2,084 | 3,026 | ||||||||||||
Gross profit | 1,940 | 1,594 | 4,052 | 4,098 | ||||||||||||
| OPERATING EXPENSE | ||||||||||||||||
Selling, general and administrative | 1,176 | 1,537 | 2,436 | 3,105 | ||||||||||||
Research and development | 577 | 775 | 1,258 | 1,641 | ||||||||||||
Total operating expense | 1,753 | 2,312 | 3,694 | 4,746 | ||||||||||||
Income (loss) from continuing operations | 187 | (718 | ) | 358 | (648 | ) | ||||||||||
Interest income | 33 | 23 | 67 | 44 | ||||||||||||
Other income (expense), net | (40 | ) | 19 | (64 | ) | 10 | ||||||||||
Income (loss) from continuing operations before income taxes | 180 | (676 | ) | 361 | (594 | ) | ||||||||||
Income tax expense | — | — | — | — | ||||||||||||
Income (loss) from continuing operations after income taxes | 180 | (676 | ) | 361 | (594 | ) | ||||||||||
| DISCONTINUED OPERATIONS | ||||||||||||||||
Income from discontinued operations, net of tax and minority interest of $167, $164, $289 and $181, respectively | 149 | 148 | 256 | 164 | ||||||||||||
Gain on disposal of discontinued operations, net of tax of $20 | 278 | — | 278 | — | ||||||||||||
Income from discontinued operations | 427 | 148 | 534 | 164 | ||||||||||||
Income (loss) before extraordinary item | 607 | (528 | ) | 895 | (430 | ) | ||||||||||
| EXTRAORDINARY ITEM | ||||||||||||||||
Extraordinary gain, net of income taxes of $0 | — | — | 217 | — | ||||||||||||
Net income (loss) | $ | 607 | $ | (528 | ) | $ | 1,112 | $ | (430 | ) | ||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 13,402 | 12,836 | 13,291 | 12,898 | ||||||||||||
Diluted | 13,469 | 12,836 | 13,356 | 12,898 | ||||||||||||
Basic income (loss) per share: | ||||||||||||||||
From continuing operations after income taxes | $ | 0.02 | $ | (0.05 | ) | $ | 0.03 | $ | (0.04 | ) | ||||||
From discontinued operations, net of tax and minority interest | 0.03 | 0.01 | 0.04 | 0.01 | ||||||||||||
From extraordinary gain, net of income taxes | — | — | 0.01 | — | ||||||||||||
Basic income (loss) per share | $ | 0.05 | $ | (0.04 | ) | $ | 0.08 | $ | (0.03 | ) | ||||||
Diluted income (loss) per share: | ||||||||||||||||
From continuing operations after income taxes | $ | 0.02 | $ | (0.05 | ) | $ | 0.03 | $ | (0.04 | ) | ||||||
From discontinued operations, net of tax and minority interest | 0.03 | 0.01 | 0.04 | 0.01 | ||||||||||||
From extraordinary gain, net of income taxes | — | — | 0.01 | — | ||||||||||||
Diluted income (loss) per share | $ | 0.05 | $ | (0.04 | ) | $ | 0.08 | $ | (0.03 | ) | ||||||
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eOn Communications Corporation
Condensed Consolidated Balance Sheets
(Dollars in thousands, except share and per share amounts)
| January 31, 2006 | July 31, 2005 | |||||||
| (unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 694 | $ | 870 | ||||
Marketable securities | 2,800 | 3,600 | ||||||
Trade accounts receivable, net of allowance of $569 and $1,106, respectively | 3,212 | 2,145 | ||||||
Trade accounts receivable - related party | 48 | 19 | ||||||
Proceeds receivable from sale of discontinued operations | 1,840 | — | ||||||
Notes receivable - related party | 300 | — | ||||||
Inventories | 2,210 | 2,155 | ||||||
Prepaid and other current assets | 309 | 206 | ||||||
Current assets of discontinued operations | — | 7,408 | ||||||
Total current assets | 11,413 | 16,403 | ||||||
Property and equipment, net | 361 | 434 | ||||||
Goodwill | 21 | 21 | ||||||
Non-current assets of discontinued operations | — | 271 | ||||||
Total assets | $ | 11,795 | $ | 17,129 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Trade accounts payable | $ | 713 | $ | 703 | ||||
Trade accounts payable - related party | 79 | 157 | ||||||
Deferred acquisition payment | — | 914 | ||||||
Accrued expenses and other | 1,782 | 1,603 | ||||||
Current liabilities of discontinued operations | — | 4,952 | ||||||
Total current liabilities | 2,574 | 8,329 | ||||||
Minority interest of discontinued operations | — | 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, 14,079,567 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 | (44,260 | ) | (45,372 | ) | ||||
Accumulated other comprehensive income | — | 61 | ||||||
Total stockholders’ equity | 9,221 | 7,655 | ||||||
Total liabilities and stockholders’ equity | $ | 11,795 | $ | 17,129 | ||||