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Exhibit 99.1
ILINC ANNOUNCES FISCAL 2008 FOURTH QUARTER AND YEAR-END RESULTS
FISCAL YEAR 2008 HIGHLIGHTS AND RECENT EVENTS
o Sold majority of audio conferencing assets in May 2008, and received
$4.1 million in cash
o Gain on sale of audio assets to be recognized in the June quarter (Q1
FY 2009)
o Shifted focus to Software-as-a-Service model adding growing backlog and
monthly recurring revenue
o Added subscription bookings in Q4 of $379,000 from direct sales that
provide $22,000 in new monthly recurring revenue
o Increased subscription revenue by 37% to record $2.8 million
o Earned revenues of $8.8 million, an increase of 1% over prior fiscal
year(1)
o Recorded net loss of $2.2 million from continued and discontinued
operations(1)
PHOENIX, Arizona (May 29, 2008) - iLinc Communications, Inc. (AMEX:ILC), a
leading developer of Web conferencing software and services, today announced
results for Fiscal 2008 fourth quarter and year ended March 31, 2008 (Fiscal
2008).
Significant Change to Financial Statement Presentation: iLinc announced on May
12th that it had sold its audio conferencing assets for $4.1 million in cash.
Pursuant to the criteria established by Statement of Financial Accounting
Standard (SFAS) No. 144, ACCOUNTING FOR THE IMPAIRMENT OF DISPOSAL OF LONG-LIVED
ASSETS, iLinc has determined that its audio conferencing business should be
characterized as an "asset held-for-sale" as of March 31, 2008 and the results
of the operations of the audio conferencing business are presented as
discontinued operations. Accordingly, the Company reclassified all audio
conferencing assets and liabilities associated with the Company's audio
conferencing business as assets-held-for-sale on the Balance Sheet as of March
31, 2008, and have reclassified all audio conferencing income and expense
associated with our audio conferencing business as discontinued operations on
our Statement of Operations for the twelve months ended March 31, 2008. As a
result, for the twelve months ending March 31, 2008, $5.5 million of audio
conferencing revenue was removed from total revenue and $4.0 million of expense
was removed from the Cost of Revenue and other expense categories. These amounts
were then netted resulting in the recording of $1.5 million in Income from
Discontinued Operations. This reclassification of income and expense has the
effect of increasing the Loss from Continuing Operations.
PLEASE NOTE THAT THE TREATMENT OF THE ASSETS-HELD-FOR SALE AS OF MARCH 31, 2008
DOES NOT TAKE INTO ACCOUNT THE CLOSING OF THE TRANSACTION THAT OCCURRED
SUBSEQUENTLY IN MAY 2008. THEREFORE, RECOGNITION OF THE $4.1 MILLION OF CASH
RECEIVED AND THE GAIN ON SALE WILL OCCUR IN THE JUNE (Q1 FY2009) FINANCIAL
STATEMENTS.
James M. Powers, Jr., President and Chief Executive Officer of iLinc
Communications, said, "The divestiture of the audio assets for $4.1 million
makes iLinc a pure-play software company focused on the more industry prevalent
Software-as-a-Service ("SaaS") model. We had indicated that the shift away from
our historical software purchase model toward the SaaS model would result in a
short-term decrease in quarterly revenue. We also indicated that the shift would
provide a more predictable and sustainable revenue growth model. We clearly have
incurred the costs of that shift in license model during Fiscal 2008, and now
expect to reap the benefits of the SaaS model in Fiscal 2009, which began April
1, 2008," continued Dr. Powers.
"We have already seen increasing transaction counts, shortening sales cycles and
a renewed enthusiasm for our products and services. The release of iLinc 10 in
June marks not only the continued improvement of our award-winning software, but
product capabilities that should impact both direct and indirect distribution to
provide compounding recurring monthly revenue well into the future. As an early
indicator of that forward-looking trend, please notice that subscription
revenues were up over 37% in Fiscal 2008 compared to Fiscal 2007," concluded Dr.
Powers.
Taking into account reclassification of iLinc's audio conferencing business as a
discontinued operation, for the twelve months ended March 31, 2008, total
revenues from continuing operations were $8.8 million, which were flat when
compared to total revenue of $8.8 million for the same twelve-month period last
fiscal year. The Company also reported adjusted EBITDA(2) of $143,000 during
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Fiscal 2008, as compared to adjusted EBITDA(2) of $2.8 million for the same
twelve-month period last fiscal year. The Company reported a net loss of $2.2
million or ($0.07) per basic and diluted share for the twelve months ended March
31, 2008, as compared with net income from continuing and discontinued
operations of $56,000, or break-even per basic and diluted share, for the same
twelve-month period last fiscal year.
Taking into account reclassification of iLinc's audio conferencing business as a
discontinued operation, revenues from continuing operations for the three months
ended March 31, 2008, were $1.6 million, when compared with revenues of $2.0
million for the same three-month period last fiscal year. For the three months
ended March 31, 2008, iLinc recorded a net loss from continuing and discontinued
operations of $1.4 million or ($0.04) per basic and diluted share, compared to
net loss from continuing and discontinued operations of $199,000 or ($0.01) per
basic and diluted share for the same three-month period last fiscal year.
James L. Dunn, Jr., Senior Vice President and Chief Financial Officer of iLinc
Communications, said, "We knew that the transition from the immediate
recognition of revenue provided by the software sales model and toward the
deferred recognition of revenue provided by the SaaS model would yield some
negative short-term results. As a part of those changes, we have also taken some
aggressive steps to reduce overhead so that we preserve working capital,"
continued Mr. Dunn. "We plan to judiciously deploy that capital toward strategic
objectives while funding operations from internal working capital," continued
Mr. Dunn.
"With growing backlog and building monthly recurring revenue, we expect to
leverage our high margin software to again take advantage of our flattened cost
structure. To that end, we expect to see substantial growth in gross margin and
ultimately operating margin as monthly recurring revenue continues to rise, with
a return to profitability as soon as practicable in this fiscal year. We remain
well-positioned in the marketplace from an operational and financial standpoint
to achieve the goals we established for this fiscal year," concluded Mr. Dunn.
A Webcast of iLinc Communications' Fiscal 2008 fourth quarter and year-end
conference call will be hosted live at 11:00 a.m. Eastern time on May 29, 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 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 1-800-282-9233 and
provide the operator with the confirmation number of 40075693 when requested. A
replay of the event will be available after the call and accessible online
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) ADJUSTMENT FOR AUDIO ASSETS Pursuant to the criteria established by
Financial Accounting Statement No. 144, iLinc has determined that its audio
conferencing business should be characterized as an "asset held-for-sale" as of
March 31, 2008. Accordingly, we have reclassified all assets and all liabilities
associated with our audio conferencing business on the Balance Sheet as of March
31, 2008, and have reclassified all income and expense associated with our audio
conferencing business as a discontinued operation on our Statement of Operations
for the for the twelve months ended March 31, 2008.
(2) EXPLANATION OF ADJUSTED EBITDA, 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 (loss), cash flows, or other measures of financial
performance prepared in accordance with GAAP. The net income for the twelve
months ended March 31, 2007 was partially offset by the non-recurring loss of
$162,000 on extinguishment of debt resulting from the extension of the Company's
senior debt. This was a one-time charge to accelerate the interest expense
accounted for as debt discount and deferred offering costs under the original
terms of the senior debt and accounted for as an "extinguishment of debt for
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accounting purposes" under the Guidance of EITF 96-19. Excluding this one-time
charge, net income for the twelve months ended March 31, 2007 was $218,000. A
reconciliation of net loss to adjusted EBITDA is as follows for the three and
twelve months ended March 31, 2008 and 2007.
THREE MONTHS ENDED YEAR ENDED
MARCH 31, MARCH 31,
-------------------- ---------------------
2008 2007 2008 2007
------- ------- ------- -------
(IN THOUSANDS) (IN THOUSANDS)
Net income (loss) ................ $(1,445) $ (199) $(2,185) $ 56
Loss on extinguishment of debt ... -- 2 -- 162
------- ------- ------- -------
Pro forma net income (loss) (1,445) (197) (2,185) 218
Non-cash charges and credits:
Interest expense ................. 334 332 1,371 1,524
Financing and late fees .......... 8 1 27 33
Warrant expense .................. -- -- 21 15
Gain on debt settlement .......... -- -- -- (8)
Gain on sale of assets ........... (11) (4) (31) (7)
Income tax ....................... 21 85 85 85
Interest income .................. (5) (7) (21) (32)
Stock compensation expense ....... 48 34 185 140
Depreciation ..................... 80 35 289 315
Amortization ..................... 102 117 402 468
------- ------- ------- -------
Adjusted EBITDA ........... $ (868) $ 396 $ 143 $ 2,751
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ABOUT ILINC COMMUNICATIONS, INC.
iLinc Communications, Inc. is a leading developer of Web conferencing software
and solutions for highly secure and cost-effective online meetings,
presentations, Webinars and virtual classroom 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, Arizona. More
information about the Phoenix-based Company may be found on the Web at
WWW.ILINC.COM.
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, iReduce, iLinc Enterprise, iLinc
Essentials and their respective logos are trademarks or registered trademarks of
iLinc Communications, Inc.
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ILINC COMMUNICATIONS, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED YEAR ENDED
MARCH 31, MARCH 31,
---------------------- -----------------------
2008 2007 2008 2007
-------- -------- -------- --------
(Unaudited) (Unaudited)
Revenues
Software licenses .................................................. $ 205 $ 922 $ 3,235 $ 4,177
Subscription and hosting services .................................. 671 530 2,810 2,044
Software maintenance and other services ............................ 678 505 2,749 2,517
-------- -------- -------- --------
Total revenues ................................................. $ 1,554 $ 1,957 $ 8,794 $ 8,738
-------- -------- -------- --------
Cost of revenues
Software licenses .................................................. 1 (1) 126 131
Subscription and hosting services .................................. 93 100 437 383
Software maintenance and other services ............................ 210 77 803 787
Amortization of technology ......................................... 53 -- 158 --
-------- -------- -------- --------
Total cost of revenues ......................................... 357 176 1,524 1,301
-------- -------- -------- --------
Gross profit .......................................................... 1,197 1,781 7,270 7,437
-------- -------- -------- --------
Operating expenses
Research and development ........................................... 594 348 2,128 1,117
Sales and marketing ................................................ 1,157 1,070 4,571 3,342
General and administrative ......................................... 828 640 2,744 2,404
-------- -------- -------- --------
Total operating expenses ....................................... 2,579 2,058 9,443 6,863
-------- -------- -------- --------
(Loss) income from operations ......................................... (1,382) (277) (2,173) 574
Interest expense ................................................... (310) (303) (1,242) (993)
Amortization of beneficial debt conversion ......................... (24) (29) (116) (531)
-------- -------- -------- --------
Total interest expense ......................................... (334) (332) (1,358) (1,524)
Net gain (loss)on settlement of debt and other obligations ......... -- -- -- 8
Loss on extinguishment of debt ..................................... -- (2) -- (162)
Interest income (charges) and other ................................ (2) 6 (25) (14)
-------- -------- -------- --------
Loss from continuing operations before income taxes ................ (1,718) (605) (3,556) (1,118)
Income taxes ...................................................... (21) (85) (85) (85)
-------- -------- -------- --------
Loss from continuing operations .................................... (1,739) (690) (3,641) (1,203)
Income from discontinued operations ............................... 294 491 1,456 1,259
-------- -------- -------- --------
Net (loss) income .................................................... (1,445) (199) (2,185) 56
Series A and B preferred stock dividends ........................... (32) (36) (134) (153)
-------- -------- -------- --------
Loss available to common shareholders................................ $ (1,477) $ (235) $ (2,319) $ (97)
-------- -------- -------- --------
Loss per common share, basic and diluted
From continuing operations ......................................... (0.05) (0.02) $ (0.11) $ (0.04)
From discontinued operations ....................................... 0.01 0.01 0.04 0.04
-------- -------- -------- --------
Loss per common share .......................................... $ (0.04) $ (0.01) $ (0.07) $ 0.00
-------- -------- -------- --------
Number of shares used in calculation of loss per share:
Basic and diluted ................................................. 34,369 33,411 33,881 32,110
======== ======== ======== ========
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ILINC COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA
MARCH 31, 2008 MARCH 31, 2007
(Unaudited) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents .......................................................... $ 669 $ 1,057
Certificates of deposit ............................................................ 373 504
Accounts receivable, net of allowance for doubtful accounts of $100 and
$117, at March 31, 2008 and 2007, respectively ................................... 630 1,479
Note receivable .................................................................... -- 14
Prepaid expenses and other current assets .......................................... 272 766
Assets - Held for Sale ............................................................ 2,575 3,111
-------- --------
Total current assets ........................................................... 4,519 6,931
Property and equipment, net ........................................................ 566 427
Goodwill ........................................................................... 10,087 10,087
Intangible assets, net ............................................................. 869 879
Other assets ....................................................................... 14 14
-------- --------
Total assets ................................................................... $ 16,055 $ 18,338
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt ................................................. $ 95 $ 143
Accounts payable trade ............................................................ 612 683
Accrued liabilities ............................................................... 751 853
Current portion of capital lease liabilities ...................................... 120 45
Deferred revenue .................................................................. 1,507 1,483
Liabilities - Held for Sale ...................................................... 778 752
-------- --------
Total current liabilities ...................................................... 3,863 3,959
Long-term debt, less current maturities, net of discount and beneficial conversion
feature of $791 and $993, at March 31, 2008 and 2007, respectively ............. 7,535 7,406
Capital lease liabilities, less current maturities ................................. 256 223
Deferred tax liability ............................................................. 384 299
-------- --------
Total liabilities .............................................................. 12,038 11,887
Commitments and contingencies
Shareholders' equity:
Preferred stock series A and B, 10,000,000 shares authorized:
Preferred stock series A, $.001 par value, 105,000 and 115,000 shares issued
and outstanding, liquidation preference of $1,050,000 and $1,150,000, at
March 31, 2008 and 2007, respectively ........................................... -- --
Preferred stock series B, $.001 par value, 55,000 and 59,500 shares issued and
outstanding, liquidation preference of $550,000 and $595,000, at March 31, 2008
and 2007, respectively .......................................................... -- --
Common stock, $.001 par value, 100,000,000 shares authorized, 35,456,228 and ....
35,017,843 issued, at March 31, 2008 and 2007, respectively ..................... 35 35
Additional paid-in capital ........................................................ 46,498 46,614
Accumulated deficit ............................................................... (41,108) (38,790)
Less: 1,432,412 treasury shares at cost ........................................... (1,408) (1,408)
-------- --------
Total shareholders' equity ..................................................... 4,017 6,451
Total liabilities and shareholders' equity ..................................... $ 16,055 $ 18,338