EXHIBIT 99.1
[Wire One Technology with Vision LOGO]
NEWS ANNOUNCEMENT FOR IMMEDIATE RELEASE
Contacts:
Christopher Zigmont Stewart Lewack, Robert Rinderman
Chief Financial Officer Jaffoni & Collins Incorporated
Wire One Technologies, Inc. 212/835-8500
603/898-0800; investorrelations@wireone.com wone@jcir.com
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REMINDER:
Wire One management is conducting a conference call today, August 6th at 5:00
p.m. (Eastern time), to discuss the Company's 2003 second quarter results. The
conference call dial-in is: (612) 332-0632. Interested parties can also listen
to a live webcast of the call at: http://www.wireone.com/investor_relations.htm
or http://www.ccbn.com. The call and webcast are open to the general public.
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Wire One Reports 2003 Second Quarter
Results from Continuing Operations
HILLSIDE, N.J., August 6, 2003 - Wire One Technologies, Inc. (NASDAQ: WONE), a
video communications service provider, announced today financial results from
continuing operations for the three- and six-month periods ended June 30, 2003.
Continuing operations exclude contributions from Wire One's audio-visual
integration unit, which was sold on March 10, 2003. Continuing operations also
exclude contributions from Wire One's Video Solutions business, which the
Company has agreed to sell pursuant to a June 10, 2003 asset purchase agreement
with Gores Technology Group, subject to stockholder approval.
Summary Financial Results From Continuing Operations
(unaudited) (in thousands, except per share data)
- --------------------------------------------- ---------------------------------------- -------------------------------------
Three Months Ended June 30, Six Months Ended June 30,
- --------------------------------------------- ---------------------------------------- -------------------------------------
2003 2002 2003 2002
- --------------------------------------------- ------------------- -------------------- ------------------ ------------------
Net revenue $ 2,675 $ 1,259 $ 4,901 $ 2,358
- --------------------------------------------- ------------------- -------------------- ------------------ ------------------
Net loss (3,901) (2,668) (7,437) (4,737)
- --------------------------------------------- ------------------- -------------------- ------------------ ------------------
Net loss per share, basic & diluted $ (0.14) $ (0.10) $ (0.26) $ (0.17)
- --------------------------------------------- ------------------- -------------------- ------------------ ------------------
EBITDA (1) (1,285) (1,636) (2,443) (2,827)
- --------------------------------------------- ------------------- -------------------- ------------------ ------------------
(1) Earnings before interest, taxes, depreciation and amortization (EBITDA) is
considered a non-GAAP financial measure, but is provided to more clearly
present the financial results that management uses to evaluate its
business. Reconciliation of this non-GAAP financial measure to the most
directly comparable financial measure reported in accordance with GAAP is
presented in a separate section at the end of this press release. Investors
should not consider this measure in isolation or as a substitute for
operating income or any other measure for determining our operating
performance or liquidity that is calculated in accordance with GAAP.
(more)
Wire One Technologies Q2'03, 8/6/03 page 2 of 7
Commenting on the results for the period, Chairman and Chief Executive Officer
Rich Reiss stated, "The 112% revenue increase from the year-ago second quarter
demonstrates that we are on track to meet our target of doubling revenues from
2002 levels. Our signature Glowpoint(SM) video communications service continues
to attract new customers and win accolades from customers, as evidenced by
ESPN's(R) decision to use Glowpoint for its nationally televised broadcasts of
the 2003 NBA(R) and NFL(R) Drafts."
"Glowpoint continues to steadily grow in line with our projections," continued
Mr. Reiss. "We are installing or bringing new endpoints under contract daily and
continue to experience insignificant levels of churn from existing subscribers.
New endpoint growth during the quarter was concentrated in the health,
education, manufacturing, technology, and government markets, including new
customers such as a leading Japanese consumer electronics manufacturer, several
top universities, and a major northeastern city police department."
Glowpoint Operating Highlights
- ------------------------------------------------------- ------------ ----------- ----------- ----------- ------------
Q2 2003 Q2 2002 % Change Q1 2003 % Change
- ------------------------------------------------------- ------------ ----------- ----------- ----------- ------------
# Endpoints Installed or Under Contract 1,720 600 187% 1,450 19%
- ------------------------------------------------------- ------------ ----------- ----------- ----------- ------------
# Glowpoint Customers 280 135 107% 245 14%
- ------------------------------------------------------- ------------ ----------- ----------- ----------- ------------
Total Number of Calls Over 3 Minutes 21,880 3,642 501% 16,716 31%
- ------------------------------------------------------- ------------ ----------- ----------- ----------- ------------
Average # Endpoints Receiving Invoices 1,068 274 290% 806 33%
- ------------------------------------------------------- ------------ ----------- ----------- ----------- ------------
Average Revenue Per Endpoint $661 $735 -10% $649 2%
- ------------------------------------------------------- ------------ ----------- ----------- ----------- ------------
Total Glowpoint Revenue (in millions) $2.2 $0.6 248% $1.7 31%
- ------------------------------------------------------- ------------ ----------- ----------- ----------- ------------
Proposed Video Solutions Business Sale
On June 10, 2003, Wire One entered into a definitive agreement to sell
substantially all of the assets of its videoconferencing equipment division to
Gores Technology Group. The aggregate transaction, valued at approximately $23
to $25 million including $22 million in cash, covers the Company's
videoconferencing equipment distribution, system design and engineering,
installation, operation and maintenance activities. The transaction is expected
to close in the third quarter of 2003, subject to a vote by Wire One
stockholders and other customary closing conditions.
"The sale of the Video Solutions business will position us to focus 100% of our
resources on accelerating the growth of Glowpoint," added Mr. Reiss. "We are
working hard to effect a seamless and productive transition with Gores
Technology Group, and we expect a positive vote on the proposed transaction
later this month."
(more)
Wire One Technologies Q2'03, 8/6/03 page 3 of 7
About Wire One Technologies
Wire One Technologies, Inc. (www.wireone.com) operates Glowpoint(SM), the first
IP-based subscriber network service dedicated to video communications. Launched
in late 2000, Glowpoint carries video calls within the United States and to
Europe and South America on a network provisioned through carrier-class backbone
and last mile access partners over a variety of solutions including DSL, T1, ATM
and Optical Ethernet. A recipient of Network World magazine's top rated World
Class Award for `Quality of Service-guaranteed IP videoconferencing service,'
Glowpoint presently serves over 280 customers, has 1,720 endpoints installed or
under contract, and carries an average of over 7,000 calls per month. The
network service offers guaranteed up-time, real-time billing and usage
information, gateway services to legacy ISDN-based sites, multi-point bridging,
live operator assistance, encryption, scheduling features and international
least-cost routing, among other value-added features.
The statements contained herein, other than historical information, are or may
be deemed to be forward-looking statements and involve factors, risks and
uncertainties that may cause actual results in future periods to differ
materially from such statements. These factors, risks and uncertainties include
market acceptance and availability of new products and services; the
nonexclusive and terminable-at-will nature of reseller agreements with
manufacturers; rapid technological change affecting products and services; the
impact of competitive products and services, as well as competition from other
resellers and service providers; possible delays in the shipment of new
products; and the availability of sufficient financial resources to enable the
Company to expand its operations and other risks detailed from time to time in
the Company's filings with the Securities and Exchange Commission.
WIRE ONE, GLOWPOINT and SCHEDULEPOINT are service marks of Wire One
Technologies, Inc. All other marks are trademarks or service marks of their
respective owners.
(financial tables follow)
Wire One Technologies Q2'03, 8/6/03 page 4 of 7
Wire One Technologies, Inc.
Consolidated Statements of Operations (Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
------------------------------ -------------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
Net revenue $ 2,674,630 $ 1,258,556 $ 4,901,488 $ 2,357,977
Cost of revenue 2,604,320 1,206,306 4,898,606 2,175,847
------------ ------------ ------------ ------------
Gross margin 70,310 52,250 2,882 182,130
------------ ------------ ------------ ------------
Operating expenses:
Selling 1,654,784 1,157,238 2,941,463 2,183,805
General and administrative 1,397,348 1,215,844 2,632,012 2,367,718
Restructuring -- 260,000 -- 260,000
------------ ------------ ------------ ------------
Total operating expenses 3,052,132 2,633,082 5,573,475 4,811,523
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Loss from continuing operations (2,981,822) (2,580,832) (5,570,593) (4,629,393)
------------ ------------ ------------ ------------
Other (income) expense
Amortization of deferred financing costs 47,254 45,938 92,763 59,695
Interest income (611) (38,802) (5,800) (58,132)
Interest expense 413,933 79,547 786,983 105,786
Amortization of discount on subordinated debentures 458,250 -- 992,875 --
------------ ------------ ------------ ------------
Total other expenses, net 918,826 86,683 1,866,821 107,349
------------ ------------ ------------ ------------
Net loss from continuing operations (3,900,648) (2,667,515) (7,437,414) (4,736,742)
Loss from discontinued AV operations (380,045) (695,593) (1,173,067) (1,268,474)
Loss from discontinued VS operations (619,014) (852,770) (938,493) (769,170)
Loss from discontinued Voice operations -- (101,339) -- (101,339)
------------ ------------ ------------ ------------
Net loss attributable to common stockholders $ (4,899,707) $ (4,317,217) $ (9,548,974) $ (6,875,725)
============ ============ ============ ============
Basic & diluted net loss per share:
Net loss from continuing operations $ (0.14) $ (0.10) $ (0.26) $ (0.17)
============ ============ ============ ============
Loss from discontinued AV operations $ (0.01) $ (0.02) $ (0.04) $ (0.04)
============ ============ ============ ============
Loss from discontinued VS operations $ (0.02) $ (0.03) $ (0.03) $ (0.03)
============ ============ ============ ============
Loss from discontinued Voice operations $ -- $ -- $ -- $ --
============ ============ ============ ============
Net loss attributable to common stockholders $ (0.17) $ (0.15) $ (0.33) $ (0.24)
============ ============ ============ ============
Weighted average number of common shares, basic & diluted 29,195,477 28,934,509 29,113,216 28,632,548
============ ============ ============ ============
(consolidated balance sheets follow)
Wire One Technologies Q2'03, 8/6/03 page 5 of 7
Wire One Technologies, Inc.
Consolidated Balance Sheets
June 30, 2003 December 31, 2002
------------- -----------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 907,188 $ 2,762,215
Accounts receivable-net 2,016,190 1,277,891
Assets of discontinued AV operations 72,535 807,067
Assets of discontinued VS operations 34,072,174 41,314,701
Other current assets 1,636,461 727,262
------------- -------------
Total current assets 38,704,548 46,889,136
Furniture, equipment and leasehold improvements-net 12,627,010 11,512,415
Goodwill-net 2,547,862 2,547,862
Other assets 488,797 552,251
------------- -------------
Total assets $ 54,368,217 $ 61,501,664
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,968,035 $ 1,055,427
Accrued expenses 625,253 681,369
Liabilities of discontinued VS operations 17,838,861 17,333,120
Current portion of capital lease obligations 165,974 --
------------- -------------
Total current liabilities 20,598,123 19,069,916
Bank loan payable 4,519,741 5,845,516
------------- -------------
Total liabilities 25,117,864 24,915,432
------------- -------------
Commitments and contingencies
Subordinated debentures 4,888,000 4,888,000
Discount on subordinated debentures (4,066,373) (4,888,000)
------------- -------------
Subordinated debentures, net 821,627 --
------------- -------------
Stockholders' Equity:
Preferred stock, $.0001 par value;
5,000,000 shares authorized, none issued and outstanding -- --
Common Stock, $.0001 par value; 100,000,000 authorized;
29,551,697 and 28,931,660 shares outstanding, respectively 2,959 2,893
Treasury stock, 39,891 shares at cost (239,742) (239,742)
Additional paid-in capital 132,523,775 131,132,374
Accumulated deficit (103,858,267) (94,309,293)
------------- -------------
Total stockholders' equity 28,428,725 36,586,232
------------- -------------
------------- -------------
Total liabilities and stockholders' equity $ 54,368,217 $ 61,501,664
============= =============
(consolidated statements of cash flows follows)
Wire One Technologies Q2'03, 8/6/03 page 6 of 7
Wire One Technologies, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended June 30,
-------------------------------------
2003 2002
------------- -------------
Cash flows from Operating Activities:
Net loss $ (9,548,974) $ (6,875,725)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation and amortization 3,016,236 2,513,055
Amortization of deferred financing costs 92,763 59,695
Amortization of discount on subordinated debentures 992,875 --
Non cash compensation 673,536 160,690
Increase (decrease) in cash attributable to changes in assets and
liabilities, net of effects of acquisitions:
Accounts receivable (738,300) 1,357,727
Inventory -- (1,393,635)
Net assets of discontinued AV operations 734,532 --
Net assets of discontinued VS operations 6,874,911 --
Other current assets (1,770,059) (4,883,513)
Other assets (10,196) (484,832)
Accounts payable 581,906 2,004,417
Accrued expenses (56,117) 872,434
Deferred revenue -- (1,641,890)
Other current liabilities (66,127) (1,465,049)
------------- -------------
Net cash provided by (used in) operating activities 776,986 (9,776,626)
------------- -------------
Cash flows from Investing Activities
Purchases of furniture, equipment and leasehold improvements (1,409,578) (2,998,969)
------------- -------------
Net cash used in investing activities (1,409,578) (2,998,969)
------------- -------------
Cash flows from Financing Activities
Proceeds from common stock offering -- 20,257,962
Cost of issuance of subordinated debentures (171,248) --
Exercise of warrants and options, net 293,700 371,494
Proceeds from bank loans 51,820,394 11,498,264
Payments on bank loans (53,146,169) (13,646,992)
Deferred financing costs (19,112) --
Payments on capital lease obligations -- (32,053)
------------- -------------
Net cash provided by (used in) financing activities (1,222,435) 18,448,675
------------- -------------
Increase (decrease) in cash and cash equivalents (1,855,027) 5,673,080
Cash and cash equivalents at beginning of period 2,762,215 1,689,451
------------- -------------
Cash and cash equivalents at end of period $ 907,188 $ 7,362,531
============= =============
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 225,059 $ 105,786
============= =============
Taxes $ -- $ --
============= =============
(supplementary tables follow)
Wire One Technologies Q2'03, 8/6/03 page 7 of 7
EBITDA Reconciliation
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
------------------------------ ------------------------------
2003 2002 2003 2002
------------- ------------- ------------- -------------
Net loss from continuing operations $ (3,900,648) $ (2,667,515) $ (7,437,414) $ (4,736,742)
Depreciation and amortization 1,641,950 889,859 3,016,236 1,641,383
Amortization of deferred financing costs 47,254 45,938 92,763 59,695
Amortization of discount on subordinated debentures 458,250 -- 992,875 --
Non cash compensation 429,993 54,986 673,536 160,690
Interest expense, net 38,591 40,745 219,242 47,654
------------- ------------- ------------- -------------
EBITDA from continuing operations (1,284,610) (1,635,987) (2,442,762) (2,827,320)
EBITDA loss from discontinued AV operations (380,045) (695,593) (1,173,067) (1,268,474)
EBITDA gain/loss from discontinued VS operations (8,878) (424,684) 53,643 102,502
EBITDA loss from discontinued Voice operations -- (101,339) -- (101,339)
------------- ------------- ------------- -------------
Total EBITDA $ (1,673,533) $ (2,857,603) $ (3,562,186) $ (4,094,631)
============= ============= ============= =============
Summary Income Statement of Discontinued AV Operation
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
------------------------------ ------------------------------
2003 2002 2003 2002
------------- ------------- ------------- -------------
Net revenues $ 1,631,897 $ 3,281,284 $ 3,873,822 $ 9,093,235
Cost of revenues 1,837,475 2,761,666 3,856,476 7,853,621
------------- ------------- ------------- -------------
Gross profit (205,578) 519,618 17,346 1,239,614
------------- ------------- ------------- -------------
Operating expenses:
Selling 174,467 1,140,785 1,128,391 2,359,235
General and administrative -- 74,426 62,022 148,853
------------- ------------- ------------- -------------
Total operating expenses 174,467 1,215,211 1,190,413 2,508,088
------------- ------------- ------------- -------------
Loss from discontinued operations $ (380,045) $ (695,593) $ (1,173,067) $ (1,268,474)
============= ============= ============= =============
Summary Income Statement of Discontinued VS Operation
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
------------------------------ ------------------------------
2003 2002 2003 2002
------------- ------------- ------------- -------------
Net revenues $ 21,977,752 $ 23,472,446 $ 40,253,589 $ 41,565,209
Cost of revenues 16,833,236 16,983,592 30,445,864 28,921,006
------------- ------------- ------------- -------------
Gross profit 5,144,516 6,488,854 9,807,725 12,644,203
------------- ------------- ------------- -------------
Operating expenses:
Selling 4,909,848 5,966,308 9,450,251 11,386,296
General and administrative 853,682 675,316 1,295,967 1,327,077
Restructuring -- 700,000 -- 700,000
------------- ------------- ------------- -------------
Total operating expenses 5,763,530 7,341,624 10,746,218 13,413,373
------------- ------------- ------------- -------------
Loss from discontinued operations $ (619,014) $ (852,770) $ (938,493) $ (769,170)
============= ============= ============= =============
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