Exhibit 99.1
ILINC ANNOUNCES SECOND QUARTER FISCAL 2008 RESULTS
SECOND QUARTER HIGHLIGHTS AND RECENT EVENTS
o Generated total revenue of $3.9 million, an increase of 13 percent
over the same three-month period last year
o Increased license revenue from software sales by 33 percent to $1.2
million, compared to the second quarter of fiscal year 2007
o Audio conferencing revenue declined more than the seasonal average
o Reported income from operations of $121,000
o Reported net loss before tax of $217,000, the result of continued
investment in sales and marketing activities intended to foster
revenue growth
o Achieved combined cash and certificate of deposit balance of $1.6
million, and continued positive cash flow with Adjusted EBITDA(1) of
$1 million through first half of fiscal year
o Sales pipeline at record levels as a result of changes in sales
leadership and indirect sales model
PHOENIX, Arizona (October 25, 2007) - iLinc Communications, Inc. (AMEX:ILC), a
leading developer of Web conferencing software and audio conferencing services,
today announced results for the second quarter of fiscal year 2008 ended
September 30, 2007.
For the three months ended September 30, 2007, total revenue increased 13
percent to $3.9 million, compared with revenues of $3.5 million for the same
three-month period last year. Revenues increased 14 percent to $8.0 million for
the six months ended September 30, 2007, compared with revenues of $7.1 million
for the same six-month period last year.
Gross profit increased 18 percent to $2.7 million (or 68 percent of total
revenue) for the three months ended September 30, 2007, from $2.3 million (or 65
percent of total revenue) for the three months ended September 30, 2006. Gross
profit increased 19 percent to $5.5 million (or 68 percent of total revenue) for
the six months ended September 30, 2007, from $4.6 million (or 65 percent of
total revenue) for the six months ended September 30, 2006.
Income from operations decreased 78 percent to $121,000, compared to income from
operations of $539,000 for the same three-month period last year. Income from
operations decreased 45 percent to $598,000, compared to income from operations
of $1.1 million for the same six-month period in the prior fiscal year.
We recorded a net loss of $239,000, or ($0.01) per basic and diluted share for
the three months ended September 30, 2007, as compared to net income of
$156,000, or break-even per basic and diluted share for the same three-month
period ended September 30, 2006. For the six months ended September 30, 2007, we
reported a net loss of $161,000, or ($0.01) per basic and diluted share as
compared to net income of $290,000, or $0.01 per basic and diluted share for the
six months ended September 30, 2006.
The Company reported Adjusted EBITDA(1) of $352,000 and $1.0 million for the
three and six months ended September 30, 2007, respectively.
"We are pleased to report consistently increasing revenues, including a 33
percent increase in software license revenues that exceeds Web conferencing
industry growth rates," said James M. Powers, Jr., President and Chief Executive
Officer of iLinc Communications. "Total revenue for the quarter was up a
respectable 13 percent over the same three-month period last year. This overall
growth in total revenue comes despite seasonal declines in audio conferencing
revenue as well as declines in other non-core services.
The changes made in January to the sales leadership and continued enhancements
to the sales staff that were implemented in the first quarter are beginning to
produce more predictable revenue trends. We recently closed our largest sale in
the history of iLinc to a Fortune 100 customer and have grown our pipeline
dramatically over the past two quarters. Additionally, we achieved record
software sales transactions during the quarter, booking 56 contracts. However,
even with 33 percent software license sales growth for the quarter, three large
transactions that had been targeted to close in the September quarter were
delayed, and are now anticipated to close in the third quarter. As a result of
changes in the competitive landscape, we expect that our growing pipeline will
provide an increased number of large deals that will drive our average sales
price above the levels attained thus far and continue to advance revenues
exceeding the projected industry growth rates in the remainder of our fiscal
2008 year."
Dr. Powers continued, "There have been many changes in the Web conferencing
industry over the past six months. With the acquisition of the market share
leader WebEx by Cisco for over 8 times revenue, or the most recent acquisition
by AT&T of Interwise (a VoIP-focused Web conferencing provider), iLinc remains
one of the very few, if not the only publicly-traded Web conferencing providers
with the ability to deliver enterprise-class Web conferencing software
solutions. We are doing everything we can to capitalize upon the opportunity
presented by these industry changes, including providing an alternative to
customers who feel threatened or even abandoned by these recent industry events.
Specifically, some of the larger transactions in our growing pipeline are the
direct consequence of these industry changes, momentum we expect to continue to
seize upon in the coming quarters."
Added Dr. Powers, "Furthermore, from a strategic standpoint, as a supplement to
our direct sales strategy, we are also actively seeking new integration and
distribution partnerships that have recently revealed themselves as a part of
the accelerating Unified Communications ("UC") land rush. As indicated in the
recent Gartner Magic Quadrant for Unified Communications, 2007(2) report,
Unified Communication systems include four key components; telecommunications
(i.e., IP-PBX and VoIP), videoconferencing, unified messaging (email, voicemail
and instant messaging), and Web conferencing. Given Web conferencing's continued
importance, iLinc has embarked on an indirect distribution and partnership
strategy that positions iLinc as a key provider of critical Web conferencing
software for those engaged in a UC strategy. We hope to soon become the core
technology partner of those who compete with Cisco`s Web conferencing product,
making iLinc the core Web conferencing component on a private-labeled basis.
Examples would include those companies in the IP-PBX sector, who are in need of
enterprise-class Web conferencing software capable of rivaling Cisco in the
marketplace.
To support our UC integration strategy and our overall sales efforts, we
continue to enhance our award-winning Web conferencing product. We recently
launched iLinc 9, a version that included a new fully native MAC client, and
multi-window two-way video; enhancements that we believe directly support our UC
integration strategy as our product is designed to be fully accessible from
other platforms on either a POWERED BY ILINC or a private labeled basis. We
remain confident in the growth plans we established for the 2008 fiscal year and
expect continued gains in revenue, earnings from operations and net income,"
concluded Dr. Powers.
James L. Dunn, Jr., Senior Vice President and Chief Financial Officer of iLinc
Communications, said, "We continue to invest in innovation and marketing
expansion activities that we believe will result in increasing revenue, and that
investment is evident in the increase in R&D and sales and marketing expenses.
However we are on track with budgeted expenditures, and while we posted a slight
loss in the second quarter, we expect to return to profitability in our third
and fourth quarters of this fiscal year. We continue to monitor expenses and
manage cash flow, which has resulted in consistent cash and cash equivalent
balances this quarter. At this level of sales and with an expectation to
continue revenue growth, we see no need for additional capital at this time.
As high margin software license sales continue to increase, we expect to see
improved gross profit and operating margins, resulting in more meaningful net
income. We remain well-positioned in the marketplace from an operational and
financial standpoint to achieve the goals we established for the 2008 fiscal
year, and the changes in the competitive landscape only serve to bolster our
enthusiasm and overall confidence," concluded Mr. Dunn.
GUIDANCE
The following contains forward-looking guidance regarding iLinc's financial
outlook. The following statements are based on current expectations.
o For the fiscal year ending March 31, 2008, iLinc anticipates revenues in
the range of $17 million to $18 million.
o For the fiscal year ending March 31, 2008, with these projected revenues,
we anticipate net income in the range of $500,000 to $1 million.
A Webcast of iLinc Communications' second quarter fiscal 2008 conference call
will be hosted live at 11:00 a.m. Eastern time on October 25, 2007. Interested
parties may participate in the iLinc online meeting and/or listen to the audio
portion via the telephone. To join the live online session and to see the
presentation, please go to HTTP://IR.ILINC.COM/PUBLIC/JOIN and follow the login
instructions. To hear the audio portion of the meeting, call 1-800-621-2411 and
refer to confirmation number 19497807. A replay of the event will be available
online shortly after the call through the Company's Web site at WWW.ILINC.COM.
CONTACT: JAMES M. POWERS, JR.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
(602) 952-1200
JAMES L. DUNN, JR.
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
(602) 952-1200
(1) EXPLANATION OF ADJUSTED EBITDA, A NON-GAAP FINANCIAL MEASURE
We report adjusted EBITDA, a financial measure that is not defined by Generally
Accepted Accounting Principles. We believe that adjusted EBITDA is a useful
performance metric for our investors and is a measure of operating performance
that is commonly reported and widely used by financial and industry analysts,
investors and other interested parties because it eliminates significant
non-cash and/or one-time charges to earnings. It is important to note that
non-GAAP measures should be considered in addition to, not as a substitute for
or superior to, net income, cash flows, or other measures of financial
performance prepared in accordance with GAAP. A reconciliation of net income to
adjusted EBITDA is as follows for the three months and six months ended
September 30, 2007 and 2006.
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2007 2006 2007 2006
(IN THOUSANDS) (IN THOUSANDS)
Net (loss) income............................ $ (239) $ 156 $ (161) $ 290
Non-cash charges and credits:
Interest expense............................. 344 397 695 798
Financing and late fees...................... 2 7 15 23
Warrant expense.............................. -- -- 21 15
Gain on debt settlement...................... -- (8) -- (8)
Gain on sale of assets....................... (3) (3) (3) (3)
Interest income.............................. (6) (13) (13) (16)
Stock compensation expense................... 60 46 96 73
Income tax expense........................... 22 -- 43 --
Depreciation................................. 70 55 136 226
Amortization................................. 102 117 197 234
-------------- -------------- -------------- --------------
Adjusted EBITDA...................... $ 352 $ 754 $ 1,026 $ 1,632
============== ============== ============== ==============
(2) REPORT OF GARTNER, INC., MAGIC QUADRANT FOR UNIFIED COMMUNICATIONS, 2007 BY
BERN ELLIOT, AUGUST 20, 2007. Please note that iLinc was not named in this
report. The Magic Quadrant is copyrighted May, 2007 by Gartner, Inc. and is
reused with permission. The Magic Quadrant is intended solely as a research
tool, and is not meant to be a specific guide to action.
ABOUT ILINC COMMUNICATIONS, INC.
iLinc Communications, Inc. is a leading developer of Web conferencing software
and audio conferencing solutions for highly secure and cost-effective online
meetings, presentations, and training sessions. The Company's technology allows
people in diverse locations to communicate and collaborate online while avoiding
the expense, environmental damage, and productivity losses associated with
travel. iLinc provides an award-winning, enterprise-wide suite of Web, audio and
video conferencing solutions that can be scaled up or down to meet the needs of
any size organization. Offering the industry's most flexible pricing models,
iLinc gives organizations the power to choose an on-premise installed, on-demand
hosted, or hybrid solution--whichever model delivers the highest ROI for the
customer. iLinc is headquartered in Phoenix, Ariz. with offices in Troy, New
York and Salt Lake City, Utah.
THIS PRESS RELEASE CONTAINS INFORMATION THAT CONSTITUTES FORWARD-LOOKING
STATEMENTS MADE PURSUANT TO THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. ANY SUCH FORWARD-LOOKING STATEMENTS INVOLVE RISK
AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM ANY
FUTURE RESULTS DESCRIBED WITHIN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT
COULD CONTRIBUTE TO SUCH DIFFERENCES ARE DISCLOSED IN THE COMPANY'S ANNUAL
REPORT ON FORM 10-K, QUARTERLY REPORTS ON FORM 10-Q, AND OTHER REPORTS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION. THE FORWARD-LOOKING INFORMATION
PROVIDED HEREIN REPRESENTS THE COMPANY'S ESTIMATES AND EXPECTATIONS AS OF THE
DATE OF THE PRESS RELEASE, AND SUBSEQUENT EVENTS AND DEVELOPMENTS MAY CAUSE THE
COMPANY'S ESTIMATES AND EXPECTATIONS TO CHANGE. THE COMPANY SPECIFICALLY
DISCLAIMS ANY OBLIGATION TO UPDATE THE FORWARD-LOOKING INFORMATION IN THE
FUTURE. THEREFORE, THIS FORWARD-LOOKING INFORMATION SHOULD NOT BE RELIED UPON AS
REPRESENTING THE COMPANY'S ESTIMATES AND EXPECTATIONS OF ITS FUTURE FINANCIAL
PERFORMANCE AS OF ANY DATE SUBSEQUENT TO THE DATE OF THIS PRESS RELEASE.
iLinc, iLinc Communications, iLinc Suite, MeetingLinc, LearnLinc,
ConferenceLinc, SupportLinc, EventPlus, On-Demand, iReduce, iLinc Enterprise
Unlimited and its logos are trademarks or registered trademarks of iLinc
Communications, Inc. All other company names and products may be trademarks of
their respective companies.
ILINC COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------------- --------------------------------
2007 2006 2007 2006
--------------- --------------- --------------- ---------------
Revenues
Software licenses................................... $ 1,218 $ 916 $ 2,370 $ 2,150
Subscription licenses and audio services............ 1,987 1,841 4,311 3,609
Maintenance and professional services............... 699 694 1,347 1,297
--------------- --------------- --------------- ---------------
Total revenues.................................. 3,904 3,451 8,028 7,056
--------------- --------------- --------------- ---------------
Cost of revenues
Software licenses.................................... -- 36 67 81
Subscription licenses and audio services............. 988 867 1,990 1,843
Maintenance and professional services................ 208 230 392 400
Amortization of technology........................... 52 67 97 134
--------------- --------------- --------------- ---------------
Total cost of revenues........................... 1,248 1,200 2,546 2,458
--------------- --------------- --------------- ---------------
Gross profit 2,656 2,251 5,482 4,598
--------------- --------------- --------------- ---------------
Operating expenses
Research and development............................. 566 294 951 598
Sales and marketing.................................. 1,370 756 2,622 1,614
General and administrative........................... 599 662 1,311 1,296
--------------- --------------- --------------- ---------------
Total operating expenses......................... 2,535 1,712 4,884 3,508
--------------- --------------- --------------- ---------------
Income from operations.................................. 121 539 598 1,090
Interest expense..................................... (263) (246) (533) (497)
Amortization of beneficial debt conversion........... (81) (151) (162) (301)
--------------- --------------- --------------- ---------------
Total interest expense........................... (344) (397) (695) (798)
Interest income (charges) and other.................. 6 15 (21) (12)
--------------- --------------- --------------- ---------------
(Loss) income from continuing operations before
income taxes .................................... (217) 157 (118) 280
Income taxes......................................... (22) -- (43) --
--------------- --------------- --------------- ---------------
(Loss) income from continuing operations................ (239) 157 (161) 280
Income from discontinued operations.................... -- (1) -- 10
--------------- --------------- --------------- ---------------
Net (loss) income....................................... $ (239) $ 156 $ (161) $ 290
Series A and B preferred stock dividends............. (34) (40) (69) (79)
--------------- --------------- --------------- ---------------
(Loss) income available to common shareholders.......... $ (273) $ 116 $ (230) $ 211
=============== =============== =============== ===============
(Loss) income per common share, basic and diluted
From continuing operations........................... $ (0.01) $ -- $ (0.01) $ 0.01
From discontinued operations......................... -- -- -- --
--------------- --------------- --------------- ---------------
(Loss) income per common share................... $ (0.01) $ -- $ (0.01) $ 0.01
=============== =============== =============== ===============
Number of shares used in calculation of (loss) income
per share,
Basic................................................ 33,724 33,020 33,655 30,919
=============== =============== =============== ===============
Diluted.............................................. 33,724 33,227 33,655 31,104
=============== =============== =============== ===============
ILINC COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
SEPTEMBER 30, MARCH 31,
2007 2007
--------------- ---------------
ASSETS
Current assets:
Cash and cash equivalents............................................................. $ 1,121 $ 1,057
Certificate of deposit................................................................ 516 504
Accounts receivable, net of allowance for doubtful accounts of $142 and $117 at
September 30 and March 31, 2007, respectively....................................... 2,723 2,530
Note receivable....................................................................... -- 14
Prepaid and other current assets...................................................... 676 766
--------------- ---------------
Total current assets................................................................ 5,036 4,871
Property and equipment, net........................................................... 776 691
Goodwill.............................................................................. 11,206 11,206
Intangible assets, net................................................................ 1,561 1,556
Other assets.......................................................................... 14 14
--------------- ---------------
Total assets........................................................................ $ 18,593 $ 18,338
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long term debt..................................................... $ 95 $ 143
Accounts payable trade................................................................ 1,516 1,169
Accrued liabilities................................................................... 912 1,119
Current portion of capital lease liabilities.......................................... 92 45
Deferred revenue...................................................................... 1,565 1,483
--------------- ---------------
Total current liabilities........................................................... 4,180 3,959
Long term debt, less current maturities, net of discount and beneficial conversion
feature of $892 and $993, at September 30 and March 31, 2007, respectively............ 7,472 7,406
Capital lease liabilities, less current maturities....................................... 261 223
Deferred tax liability................................................................... 342 299
--------------- ---------------
Total liabilities................................................................... 12,255 11,887
--------------- ---------------
SHAREHOLDERS' EQUITY:
Preferred stock series A & B, 10,000,000 shares authorized:
Series A preferred stock, $.001 par value, 105,000 and 115,000 shares issued and
outstanding, liquidation preference of $1,050,000 and $1,150,000 at September 30
and March 31, 2007, respectively.................................................... -- --
Series B preferred stock, $.001 par value, 59,500 shares issued and outstanding,
liquidation preference of $595,000.................................................. -- --
Common stock, $.001 par value 100,000,000 shares authorized 35,267,105 and 35,017,843
issued at September 30 and March 31, 2007, respectively............................. 35 35
Additional paid-in capital............................................................ 46,730 46,614
Accumulated deficit................................................................... (39,019) (38,790)
Less: 1,432,412 treasury shares at cost.............................................. (1,408) (1,408)
--------------- ---------------
Total shareholders' equity.......................................................... 6,338 6,451
--------------- ---------------
Total liabilities and shareholders' equity.......................................... $ 18,593 $ 18,338
=============== ===============