EXHIBIT 99.1
ILINC ANNOUNCES THIRD QUARTER FISCAL 2008 RESULTS
THIRD QUARTER HIGHLIGHTS
o Total revenue of $3.4 million, a decrease of eight percent over the same
three-month period last year
o Increased subscription license revenue to $752,000, a 54 percent increase
over the same three-month period last year, and to $2.1 million, a 41
percent increase over the same nine-month period last year
o Maintained combined cash and certificate of deposit balance of $1.5
million
o Audio conferencing revenue declined more than the seasonal average, but is
expected to rebound in the March quarter
o Changing market conditions and a change in vertical sales focus adds
long-term subscription revenue
o Net loss before tax of $558,000, the result of continued investment in
research and development and sales and marketing activities intended to
foster revenue growth
o Continued positive cash flow with Adjusted EBITDA(1) of $1 million through
first three quarters of fiscal year
PHOENIX, Arizona (February 7, 2008) - iLinc Communications, Inc. (AMEX:ILC), a
leading developer of Web conferencing software and audio conferencing services,
today announced results for the third quarter of fiscal year 2008 ended December
31, 2007.
For the three months ended December 31, 2007, total revenue decreased eight
percent to $3.4 million, compared with revenues of $3.7 million for the same
three-month period last year. Revenues increased six percent to $11.4 million
for the nine months ended December 31, 2007, compared with revenues of $10.7
million for the same nine-month period last year.
Gross profit decreased seven percent to $2.2 million for the three months ended
December 31, 2007, compared to $2.3 million for the same three-month period last
year. Gross profit increased ten percent to $7.6 million for the nine months
ended December 31, 2007, compared to $6.9 million for the same nine-month period
last year.
"We are very disappointed that several large software license sales that had
been expected to close in December were delayed to the March quarter," said
James M. Powers, Jr., President and Chief Executive Officer of iLinc. "Four
large contracts did not close in the third quarter as planned. While we make
every attempt to close deals within a particular quarter, we continue to weather
the lumpy quarterly results that are the hallmark of the traditional software
license model. However, as we recently announced, we closed two of the deferred
transactions using our SaaS ("Software-as-a-Service") or subscription license
model, and we expect to close the remaining contracts during the March quarter,"
added Dr. Powers.
"We previously announced our focus on four key verticals and that focus is
building a sustainable foundation for long-term sales momentum," continued Dr.
Powers. "Our market place continues to change with increased adoption of SaaS
offerings, and we are expanding our offerings to accommodate that market
dynamic. To be clear, while we expect to see growth in the number of SaaS
transactions in the coming quarters, we will continue to promote our long
standing and industry unique software purchase licensing model where
appropriate. We remain committed to servicing our customers, offering
enterprise-class Web conferencing solutions under a software purchase license
model, whether it is being hosted by iLinc (in our hybrid model) or behind our
customer's firewall. We will continue to strategically exploit that competitive
advantage," concluded Dr. Powers.
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The Company reported negative Adjusted EBITDA of $15,000 for the three-month
period ended December 31, 2007, and Adjusted EBITDA of $1.0 million for the
nine-month period ended December 31, 2007.
For the three months ended December 31, 2007, we reported a net loss of
$579,000, or ($0.02) per basic and diluted share, as compared to a net loss of
$35,000, or break-even per basic and diluted share for the same three-month
period last year. For the nine months ended December 31, 2007, we reported a net
loss of $740,000 or ($0.02) per basic and diluted share as compared to net
income of $255,000, or break-even per basic and diluted share for the nine
months ended December 31, 2006.
"The obvious upside to the increasing use of the more prevalent SaaS model is
that we reap the long-term benefits of a more predictable and recurring revenue
stream, yet retain the benefits of up-front payments," said James L. Dunn, Jr.,
iLinc's Chief Financial Officer. "We believe that offering a varied license
model that fits each vertical is a better approach than attempting to force a
purchase model for the short-term benefit of quarterly revenue growth," added
Mr. Dunn. "That said, the addition, or even substitution in some cases, of a
SaaS model will have the natural accounting consequence of shifting more
immediate quarterly revenue to longer-term subscription revenue. Our revised
annual guidance is a reflection of the recent shift in our revenue model and
takes a longer-term view of revenue and bottom line improvements," continued Mr.
Dunn.
Addressing overhead and the recent losses incurred, Mr. Dunn continued, "In
Fiscal 2008 we invested aggressively in sales and marketing activities that were
designed to provide more short-term purchase license transactions. In doing so,
expenditures outpaced sales success, a trend that we have taken steps to
correct. Given the shift in focus and model of our sales organization, we can
also adjust our marketing spend to adapt to new markets and a more focused
vertical strategy. By doing so, we plan to reduce overhead where appropriate to
be more targeted in our overall sales and marketing approach. We believe that it
is important that we return as quickly as possible to a profitable status at the
bottom line, to bolster investor and customer confidence. Therefore, we have
already in January implemented adjustments to our overhead structure that are
designed to reduce overhead while maintaining necessary product development for
long-term sales success. We expect to see a more normalized overhead structure
and a return to profitability in the March quarter and thereafter. We will
provide more information about the December quarter and our expectations for the
remainder of the 2008 fiscal year during our quarterly earnings conference call
and online meeting later today," 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 $15 million to $15.5 million.
o For the fiscal year ending March 31, 2008, with these projected revenues, we
anticipate a range between break-even net income and a net loss of $500,000.
A Webcast of iLinc Communications' third quarter fiscal 2008 conference call
will be hosted live at 11:00 a.m. Eastern time on February 7, 2008. 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
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presentation, please go to [http://ir.ilinc.com/public/join] and follow the
login instructions. To hear the audio portion of the meeting, call
1-800-341-2312 and refer to confirmation number 40040461. 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 ("GAAP"). 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 nine months
ended December 31, 2007 and 2006.
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
2007 2006 2007 2006
---- ---- ---- ----
(IN THOUSANDS) (IN THOUSANDS)
Net (loss) income ........... $ (579) $ (35) $ (740) $ 255
Non-cash charges and credits:
Interest expense ............ 342 394 1,037 1,192
Financing and late fees ..... 4 9 19 32
Warrant expense ............. -- -- 21 15
Gain on debt extinguishment . -- 160 -- 160
Gain on debt settlement ..... -- -- -- (8)
Gain on sale of assets ...... (17) -- (20) (3)
Interest income ............. (3) (9) (16) (25)
Stock compensation expense .. 41 33 136 106
Income tax expense .......... 21 -- 64 --
Depreciation ................ 73 54 209 280
Amortization ................ 103 117 300 351
------- ------- ------- -------
Adjusted EBITDA ...... $ (15) $ 723 $ 1,010 $ 2,355
======= ======= ======= =======
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.
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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.
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ILINC COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
----------------------- -----------------------
2007 2006 2007 2006
-------- -------- -------- --------
Revenues
Software licenses ............................................ $ 659 $ 1,105 $ 3,029 $ 3,255
Subscription licenses ........................................ 752 488 2,140 1,515
Audio services ............................................... 1,230 1,343 4,153 3,925
Maintenance and professional services ........................ 724 715 2,071 2,012
-------- -------- -------- --------
Total revenues ........................................... 3,365 3,651 11,393 10,707
-------- -------- -------- --------
Cost of revenues
Software licenses ............................................ 58 51 125 132
Subscription licenses ........................................ 84 77 284 227
Audio services ............................................... 803 807 2,593 2,500
Maintenance and professional services ........................ 201 310 593 710
Amortization of technology ................................... 53 68 150 202
-------- -------- -------- --------
Total cost of revenues ................................... 1,199 1,313 3,745 3,771
-------- -------- -------- --------
Gross profit .................................................... 2,166 2,338 7,648 6,936
-------- -------- -------- --------
Operating expenses
Research and development ..................................... 645 307 1,596 905
Sales and marketing .......................................... 1,049 924 3,671 2,538
General and administrative ................................... 688 588 1,999 1,884
-------- -------- -------- --------
Total operating expenses ................................. 2,382 1,819 7,266 5,327
-------- -------- -------- --------
(Loss) income from operations .................................. (216) 519 382 1,609
Interest expense ............................................. (261) (244) (794) (741)
Amortization of beneficial debt conversion ................... (81) (150) (243) (451)
-------- -------- -------- --------
Total interest expense ................................... (342) (394) (1,037) (1,192)
Loss on extinguishment of debt ............................... -- (160) -- (160)
Interest income (charges) and other .......................... -- -- (21) (12)
-------- -------- -------- --------
(Loss) income from continuing operations before income
taxes .................................................... (558) (35) (676) 245
Income tax expense ........................................... (21) -- (64) --
-------- -------- -------- --------
(Loss) income from continuing operations ....................... (579) (35) (740) 245
Income from discontinued operations ............................ -- -- -- 10
-------- -------- -------- --------
Net (loss) income .............................................. (579) (35) (740) 255
Series A and B preferred stock dividends ..................... (32) (38) (101) (117)
-------- -------- -------- --------
(Loss) income available to common shareholders ................. $ (611) $ (73) $ (841) $ 138
======== ======== ======== ========
(Loss) income per common share, basic and diluted
From continuing operations ................................... $ (0.02) $ -- $ (0.02) $ --
From discontinued operations ................................. -- -- -- --
-------- -------- -------- --------
(Loss) income per common share ........................... $ (0.02) $ -- $ (0.02) $ --
======== ======== ======== ========
Number of shares used in calculation of (loss) income per share,
Basic ........................................................ 33,841 33,190 33,717 31,676
======== ======== ======== ========
Diluted ...................................................... 33,841 33,190 33,717 31,991
======== ======== ======== ========
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ILINC COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
DECEMBER 31, MARCH 31,
2007 2007
-------- --------
ASSETS
Current assets:
Cash and cash equivalents ........................................................ $ 1,085 $ 1,057
Certificate of deposit ........................................................... 368 504
Accounts receivable, net of allowance for doubtful accounts of $119 and $117 at
December 31 and March 31, 2007, respectively .................................... 2,415 2,530
Note receivable .................................................................. -- 14
Prepaid and other current assets ................................................. 592 766
-------- --------
Total current assets ........................................................... 4,460 4,871
Property and equipment, net ...................................................... 807 691
Goodwill ......................................................................... 11,206 11,206
Intangible assets, net ........................................................... 1,428 1,556
Other assets ..................................................................... 14 14
-------- --------
Total assets ................................................................... $ 17,915 $ 18,338
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long term debt ................................................ $ 95 $ 143
Accounts payable trade ........................................................... 1,270 1,169
Accrued liabilities .............................................................. 1,038 1,119
Current portion of capital lease liabilities ..................................... 117 45
Deferred revenue ................................................................. 1,572 1,483
-------- --------
Total current liabilities ...................................................... 4,092 3,959
Long term debt, less current maturities, net of discount and beneficial conversion
feature of $842 and $993, at December 31 and March 31, 2007, respectively ........ 7,504 7,406
Capital lease liabilities, less current maturities .................................. 287 223
Deferred tax liability .............................................................. 363 299
-------- --------
Total liabilities .............................................................. 12,246 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
December 31 and March 31, 2007 ................................................... -- --
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 35,276,228 and
35,017,843 issued at December 31 and March 31, 2007, respectively ................ 35 35
Additional paid-in capital ........................................................ 46,673 46,614
Accumulated deficit ............................................................... (39,631) (38,790)
Less: 1,432,412 treasury shares at cost .......................................... (1,408) (1,408)
-------- --------
Total shareholders' equity ..................................................... 5,669 6,451
-------- --------
Total liabilities and shareholders' equity ..................................... $ 17,915 $ 18,338
======== ========
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