ION NETWORKS ANNOUNCES FISCAL FIRST QUARTER FINANCIAL RESULTS
PISCATAWAY, NJ - July 31, 2002 - ION Networks Incorporated (NASDAQ: IONN), a
leading provider of security and management solutions that protect critical
infrastructure from internal and external security threats, today announced its
financial results for its fiscal first quarter ended June 30, 2002. The Company
reported revenue for the quarter of $960,000. This compares to revenue of $2.1
million in the previous quarter and $1.9 million for the first quarter of the
previous fiscal year. Company management cited a lengthening of its sales cycle
due to the impact of continued economic pressure on capital spending and IT
spending as a reason for the drop in revenue.
Kam Saifi, ION's President and CEO, commented on the first quarter, "We continue
to expand our presence in verticals such as financial services, healthcare,
utilities, and government agencies. The prolonged economic pressures have
temporarily impacted our sales cycle, but not our progress. As corporations
develop more confidence in their earnings prospects, we anticipate IT spending
to increase, resulting in shortened sales cycles." Mr. Saifi continued, "We have
developed a focused marketing effort and process intended to maximize sales
opportunities. Worldwide security concerns, especially in light of terrorist
alerts, have made corporations and services aware of their technological
vulnerability. Growing interest in our products and services has been highly
reassuring."
ION incurred a cash loss for the first quarter, defined as after tax earnings
before depreciation and amortization charges, of $1.8 million compared to a
comparable loss of $0.8 million in the prior quarter and $1.5 million in the
same period of the previous fiscal year. The net loss was $2.1 million, or $0.09
per share, for the fiscal first quarter, an increase of $0.9 million over the
prior quarter level of $1.2 million, or $0.06 per share, and an increase of $0.1
million as compared to $2.0 million or $0.11 per share for the same period of
the prior year. Gross margins increased to 63 percent in the first quarter as
compared to 54 percent during the prior fiscal quarter and 56 percent during the
same period of the prior year.
Mr. Saifi added, "The coordinated effort of our current team will help ensure
that ION maximizes its exposure to and penetration of target markets, while
maintaining operational efficiencies. Everyone at our company is primed and
committed to achieve our mission of becoming the leading infrastructure security
company, worldwide. The market is increasingly recognizing the necessity of
securing technological assets from security breaches. Inadequate security
measures could result in damages beyond monetary measure. Given our results for
the first half of calendar 2002 and the continued difficult economic environment
in which we are operating, we no longer expect to achieve $12 million in revenue
for the current calendar year. Because of the continued uncertainty of the
market, it is difficult to provide revenue guidance at this time. Our sales
pipeline is healthy and continues to grow despite the difficult economic
environment. We are evaluating various alternatives for raising additional
capital and we believe that we are taking all necessary steps to reduce costs
and improve margins, enabling us to reach profitability as quickly as possible.
Based on our plan, we expect to reach profitability by the end of the second
quarter of 2003."
Conference Call
ION Networks will host a conference call at 5 p.m. (EDT) today, Wednesday, July
31, to discuss the Company's operating performance for its fiscal first quarter.
To participate in the conference call, dial 212-896-6038. A replay will be
available approximately one hour after the completion of the call until 7:00
p.m. (EDT) on August 7, 2002 by dialing 402-977-9140 and providing the following
pass code: 20761355.
The conference call will also be available on the Internet through
www.ion-networks.com
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About ION Networks
ION Networks, Inc. is a leading provider of infrastructure security and
management solutions. The ION Secure suite helps customers protect critical
infrastructure and maximize operational efficiency while lowering operational
costs. ION Networks' customers include AT&T, Bank of America, British Telecom,
Citigroup, Entergy, Fortis Bank, Oracle, Qwest, SBC, Sprint and the U.S.
Government. Headquartered in Piscataway, New Jersey, the Company has installed
tens of thousands of its products worldwide from its sales and operations
facilities in the United States, Livingston, Scotland and Antwerp, Belgium, and
its distribution channels on four continents.
ION Networks(TM) and ION Secure(TM) are trademarks of ION Networks,
Incorporated. All other trademarks and registered trademarks in this document
are the properties of their respective owners.
Any statements contained in this press release that do not describe historical
facts may constitute forward-looking statements as that term is defined in the
Private Securities Litigation Reform Act of 1995. Any forward-looking statements
contained herein are based on current expectations, but are subject to a number
of risks and uncertainties. The factors that could cause actual future results
to differ materially from the forward-looking statements include the following:
fluctuations in customer demand; fluctuations in spending on technology
generally and security solutions in particular; sufficiency of operating
capital; general economic conditions (both domestic and abroad); the rapid
technological change which characterizes the Company's markets, the risks
associated with competition; the risks associated with the expansion of the
Company's distribution channels; the risk of new product introductions and
customer acceptance of new products; the risks associated with international
sales as the Company expands its markets; and the ability of the Company to
compete successfully in the future, as well as other risks identified in the
Company's Securities and Exchange Commission Filings, including but not limited
to those appearing within the Company's most recent Form 10-KSB and amendments
thereto, filed with the Securities and Exchange Commission on July 10, 2002.
Financial Tables Follow
ION Networks, Inc. and Subsidiaries
Consolidated Balance Sheet
(Unaudited)
Assets
30-Jun-02 31-Mar-02
------------------- -----------------
Current Assets
Cash & Cash Equivalents $ 2,472,024 $ 4,050,657
Accounts Receivable 823,262 1,521,230
Other Receivables 12,900 -
Inventory 1,534,983 1,024,126
Prepaid & Other Current 185,961 492,609
Related Party Notes Receivable 83,657 83,657
------------------- -----------------
Total Current Assets $ 5,112,787 $ 7,172,279
Restricted Cash 125,700 125,700
PP&E 672,070 796,625
Capitalized Software 889,674 908,464
Security Deposits/Other 64,968 6,653
------------------- -----------------
Total Assets $ 6,865,199 $ 9,009,721
=================== =================
Liabilities & Stockholders' Equity
Current Liabilities
Current Portion Capital Leases $ 74,426 $ 74,426
Current Portion Long Term Debt 12,238 33,444
Accounts Payable 839,372 917,846
Accrued Expenses 362,186 373,766
Accrued Payroll & Related Liabilities 366,218 353,590
Deferred Income 137,625 115,927
Sales Tax Payable 137,570 188,435
Other Current Liabilities 84,245 73,923
------------------- -----------------
Total Current Liabilities $ 2,013,880 $ 2,131,357
Long Term Portion Capital Leases 126,869 146,540
Long Term Debt 5,241 4,597
------------------- -----------------
Total Liabilities $ 2,145,990 $ 2,282,494
Stockholders' Equity 4,719,209 6,727,227
------------------- -----------------
Total Liabilities & Stockholders' Equity $ 6,865,199 $ 9,009,721
=================== =================
ION Networks, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Three Months
June 30
2002 2001
------------ --------------
Net Sales $960,132 $1,933,442
Cost of Sales 356,505 857,600
------------ --------------
Gross Margin 603,627 1,075,842
Research and development expenses 235,309 479,784
Selling, general and administrative expenses 2,136,968 2,155,114
Depreciation & Amortization 281,971 471,276
------------ --------------
(Loss) from operations (2,050,621) (2,030,332)
Interest income 9,534 47,532
Interest (expense) (5,246) (9,116)
------------ --------------
(Loss) before income tax expense (2,046,333) (1,991,916)
Income tax expense 5,301 0
------------ --------------
Net (loss) $(2,051,634) $ (1,991,916)
============ ==============
Net (loss) per share:
Basic ($0.09) ($0.11)
Diluted ($0.09) ($0.11)
Weighted average number of common shares outstanding:
Basic 22,600,501 18,203,301
Diluted 22,600,501 18,203,301