First Quarter Highlights and Recent Events
-
Sold audio conferencing assets for $4.5 million in cash
-
Recorded net income of $1.2 million or $0.04 per basic share1
-
Increased Software-as-a-Service (“SaaS”)
revenue by almost 10% over previous quarter adding 129 new customer
contracts
-
Earned revenues of $1.9 million1, an increase
of 23% over the March quarter
-
Reported adjusted EBITDA2 of $1.7 million
iLinc (AMEX:ILC), a leader in web conferencing, desktop video
conferencing software and collaboration solutions, today announced
results for the first fiscal quarter ended June 30, 2008.
Significant Change to Financial Statement Presentation: With the
sale of the Company’s audio conferencing assets1
the Company has reclassified the results of its audio conferencing
business operations into discontinued operations. With that
reclassification, audio conferencing revenue and associated audio
conferencing expenses were netted into income from discontinued
operations for the first quarter of fiscal 2009, and on a proforma
basis, for the same quarter last fiscal year, respectively. Likewise,
the gain on the sale of audio conferencing assets is included in
discontinued operations. Therefore, all comparisons to prior periods
take into account the reclassification of audio conferencing operations
and the gain on sale into discontinued operations.
First quarter total revenues from continuing operations were $1.9
million, a decrease of 24% when compared to total revenue of $2.5
million for the same quarter last fiscal year. Total revenues increased
by $353,000 or 23% when compared to the March quarter.
The Company reported a net income from continuing and discontinued
operations of $1.2 million or $0.04 per basic and $0.04 per diluted
share during the first quarter, as compared with net income of $78,000,
or break-even per basic and diluted share, for the same quarter last
fiscal year. The Company recorded a gain of $2 million on the sale of
its audio conferencing business.
The Company reported adjusted EBITDA2 of $1.7
million from continuing and discontinued operations for the first
quarter, as compared to $687,000 of adjusted EBITDA2
for the same quarter last fiscal year. The Company also reported
adjusted EBITDA2 from continuing operations of
($254,000) during the first quarter, as compared to adjusted EBITDA2
of $30,000 from continuing operations for the same quarter last fiscal
year.
James M. Powers, Jr., President and Chief Executive Officer of iLinc,
said, “iLinc has undergone some significant
changes in the past six months and is very well positioned in this high
growth web and video conferencing market. First, we redirected our sales
strategy toward the more prevalent Software-as-a-Service model in early
2008. Our goal is to grow long-term subscription revenue while
continuing to sell software in those vertical markets where
advantageous. We are well underway with that effort and have begun to
see the results in the form of shortened sales cycles, increased
transaction counts and continued enthusiasm in the market for our
products. Sales this quarter provided a record number of subscription
transactions, monthly recurring revenue and growing backlog. To further
our transition to a SaaS provider of award-winning collaboration
software, we successfully sold our audio conferencing assets. That sale
resulted in almost $4.5 million in cash and a $2 million gain from an
asset that customers and investors alike perceived as increasingly
commoditized,” added Dr. Powers.
“The transition to the SaaS model reduced our
short-term quarterly revenue and we planned for this impact, but we
believe over time it will provide long-term compounding subscription
revenue that will greatly enhance the value of our company. After only
four months, we see increasing rates of adoption that should provide
recurring monthly revenue well into the future. As an early indicator of
that forward-looking trend, our total subscription revenues were up
almost 10% when compared to the March quarter. We look forward to
further describing the sales trends that give us confidence about our
future on the earnings call today,” concluded
Dr. Powers.
James L. Dunn, Jr., Chief Financial Officer of iLinc, said, “Because
of the reclassification from the sale of audio and the shift from
software to SaaS revenue, we felt it important to provide not only
comparisons to the same period last fiscal year but also to the more
relevant March quarter (Q4 of FY2008). We are pleased to have raised
capital in difficult capital markets and plan to judiciously deploy that
capital to foster the growth of our increasingly popular SaaS model,”
concluded Mr. Dunn.
A webcast of iLinc Communications’ fiscal
2009 first quarter conference call will be hosted live at 11:00 a.m.
Eastern time on August 14, 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 1-800-447-0521 and provide the operator with the
confirmation number of 22369731 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.
1 Adjustment for Audio Asset Sale
iLinc sold its audio conferencing assets in the June quarter of fiscal
2009. 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 had characterized its audio
assets as “assets held-for-sale”
as of March 31, 2008 and the results of the audio conferencing
operations as discontinued operations. With the consummation of the sale
of those assets in June, iLinc has reclassified audio conferencing
assets and liabilities as “related to
discontinued operations” on the Balance Sheet
and all audio conferencing income and expense as discontinued operations
on the Statement of Operations. The results of prior periods have been
reclassified to provide proforma comparisons to current periods after
taking into effect the reclassification required by SFAS 144.
2 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 (loss), 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 ended June 30, 2008
and 2007.
|
|
|
Three months ended
June 30,
|
|
|
|
2008
|
|
2007
|
|
|
|
(in thousands)
|
|
Net Income
|
|
$
|
1,206
|
|
|
$
|
78
|
|
|
Non-cash charges and credits:
|
|
|
|
|
|
Interest expense
|
|
|
337
|
|
|
|
364
|
|
|
Financing and late fees
|
|
|
9
|
|
|
|
13
|
|
|
Warrant expense
|
|
|
—
|
|
|
|
21
|
|
|
Gain on sale of assets
|
|
|
1
|
|
|
|
—
|
|
|
Income tax
|
|
|
21
|
|
|
|
21
|
|
|
Interest income
|
|
|
(12
|
)
|
|
|
(7
|
)
|
|
Stock compensation expense
|
|
|
43
|
|
|
|
36
|
|
|
Depreciation
|
|
|
66
|
|
|
|
66
|
|
|
Amortization
|
|
|
53
|
|
|
|
95
|
|
|
Adjusted EBITDA
|
|
$
|
1,724
|
|
|
$
|
687
|
|
About iLinc Communications, Inc.
iLinc, a recognized leader in web conferencing, desktop video
conferencing software and collaboration solutions, aims to revolutionize
the way organizations meet and communicate. Through its software and
services, iLinc liberates people by enabling them to get more done,
travel less, achieve work-life balance while preserving the environment.
iLinc offers the only enterprise-class web and video conferencing
software that allows customers to choose between a software-as-a-service
(SaaS) rental model or a traditional software purchase model, in
combination with hosting by iLinc or on-premise installation. iLinc is
headquartered in Phoenix, Arizona. For more visit www.ilinc.com/investors.
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.
|
iLINC COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share data)
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
|
|
2008
|
|
2007
|
|
Revenues
|
|
|
|
|
|
Software licenses
|
|
$
|
585
|
|
|
$
|
1,152
|
|
|
Subscription services
|
|
|
469
|
|
|
|
511
|
|
|
Software maintenance, hosting and other services
|
|
|
866
|
|
|
|
855
|
|
|
Total revenues
|
|
|
1,920
|
|
|
|
2,518
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
|
|
|
|
Software licenses
|
|
|
45
|
|
|
|
67
|
|
|
Subscription services
|
|
|
66
|
|
|
|
103
|
|
|
Software maintenance, hosting and other services
|
|
|
127
|
|
|
|
211
|
|
|
Amortization of technology
|
|
|
53
|
|
|
|
—
|
|
|
Total cost of revenues
|
|
|
291
|
|
|
|
381
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
1,629
|
|
|
|
2,137
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
Research and development
|
|
|
531
|
|
|
|
362
|
|
|
Sales and marketing
|
|
|
900
|
|
|
|
1,172
|
|
|
General and administrative
|
|
|
613
|
|
|
|
663
|
|
|
Total operating expenses
|
|
|
2,044
|
|
|
|
2,197
|
|
|
|
|
|
|
|
|
(Loss) from operations
|
|
|
(415
|
)
|
|
|
(60
|
)
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(258
|
)
|
|
|
(256
|
)
|
|
Amortization of beneficial debt conversion
|
|
|
(79
|
)
|
|
|
(81
|
)
|
|
Total interest expense
|
|
|
(337
|
)
|
|
|
(337
|
)
|
|
Interest income (charges) and other
|
|
|
3
|
|
|
|
(27
|
)
|
|
Loss from continuing operations before income taxes
|
|
|
(749
|
)
|
|
|
(424
|
)
|
|
Income taxes
|
|
|
(21
|
)
|
|
|
(21
|
)
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
|
(770
|
)
|
|
|
(445
|
)
|
|
Income from discontinued operations
|
|
|
1,976
|
|
|
|
523
|
|
|
|
|
|
|
|
|
Net income
|
|
|
1,206
|
|
|
|
78
|
|
|
Series A and B preferred stock dividends
|
|
|
(29
|
)
|
|
|
(35
|
)
|
|
Income available to common shareholders
|
|
$
|
1,177
|
|
|
$
|
43
|
|
|
Income per common share, basic
|
|
|
|
|
|
From continuing operations
|
|
$
|
(0.02
|
)
|
|
$
|
(0.01
|
)
|
|
From discontinued operations
|
|
|
0.06
|
|
|
|
0.01
|
|
|
Net income per common share, basic
|
|
$
|
0.04
|
|
|
$
|
—
|
|
|
Income per common share, diluted
|
|
|
|
|
|
From continuing operations
|
|
$
|
(0.02
|
)
|
|
$
|
(0.01
|
)
|
|
From discontinued operations
|
|
|
0.06
|
|
|
|
0.01
|
|
|
Net income per common share, diluted
|
|
$
|
0.04
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
Number of shares used in calculation of income per share:
|
|
|
|
|
|
Basic
|
|
|
34,256
|
|
|
|
33,585
|
|
|
Diluted
|
|
|
34,256
|
|
|
|
33,585
|
|
|
iLINC COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
|
|
|
|
|
|
|
|
|
|
June 30,
2008
|
|
March 31,
2008
|
|
|
|
(unaudited)
|
|
|
|
Assets
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,232
|
|
|
$
|
669
|
|
|
Certificates of deposit
|
|
|
2,760
|
|
|
|
373
|
|
|
Accounts receivable, net of allowance for doubtful accounts of $25
and $30 at June 30 and March 31, 2008, respectively
|
|
|
785
|
|
|
|
627
|
|
|
Other receivables
|
|
|
953
|
|
|
|
—
|
|
|
Prepaid expenses and other current assets
|
|
|
301
|
|
|
|
272
|
|
|
Assets related to discontinued operations
|
|
|
594
|
|
|
|
3,145
|
|
|
Total current assets
|
|
|
6,625
|
|
|
|
5,086
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
521
|
|
|
|
566
|
|
|
Goodwill
|
|
|
9,229
|
|
|
|
9,520
|
|
|
Intangible assets, net
|
|
|
788
|
|
|
|
869
|
|
|
Other receivables
|
|
|
120
|
|
|
|
—
|
|
|
Other assets
|
|
|
14
|
|
|
|
14
|
|
|
Total assets
|
|
$
|
17,297
|
|
|
$
|
16,055
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Current portion of long term debt
|
|
$
|
95
|
|
|
$
|
95
|
|
|
Accounts payable trade
|
|
|
458
|
|
|
|
612
|
|
|
Accrued liabilities
|
|
|
993
|
|
|
|
751
|
|
|
Current portion of capital lease liabilities
|
|
|
124
|
|
|
|
120
|
|
|
Deferred revenue
|
|
|
1,509
|
|
|
|
1,507
|
|
|
Liabilities related to discontinued operations
|
|
|
707
|
|
|
|
778
|
|
|
Total current liabilities
|
|
|
3,886
|
|
|
|
3,863
|
|
|
|
|
|
|
|
|
Long term debt, less current maturities, net of discount and
beneficial conversion feature of $741 and $791, at June 30 and March
31, 2008, respectively
|
|
|
7,566
|
|
|
|
7,535
|
|
|
Capital lease liabilities, less current maturities
|
|
|
224
|
|
|
|
256
|
|
|
Deferred tax liability
|
|
|
406
|
|
|
|
384
|
|
|
Total liabilities
|
|
|
12,082
|
|
|
|
12,038
|
|
|
|
|
|
|
|
|
Shareholders’ Equity:
|
|
|
|
|
|
Preferred stock series A & B, 10,000,000 shares authorized:
|
|
|
|
|
|
Series A preferred stock, $.001 par value, 75,000 and 105,000 shares
issued and outstanding, liquidation preference of $750,000 and
$1,050,000 at June 30 and March 31, 2008, respectively
|
|
|
—
|
|
|
|
—
|
|
|
Series B preferred stock, $.001 par value, 55,000 shares issued and
outstanding, liquidation preference of $550,000 at June 30 and March
31, 2008, respectively
|
|
|
—
|
|
|
|
—
|
|
|
Common stock, $.001 par value 100,000,000 shares authorized
36,056,228 and 35,456,228 issued at June 30 and March 31, 2008,
respectively
|
|
|
35
|
|
|
|
35
|
|
|
Additional paid-in capital
|
|
|
46,519
|
|
|
|
46,498
|
|
|
Accumulated deficit
|
|
|
(39,931
|
)
|
|
|
(41,108
|
)
|
|
Less: 1,432,412 treasury shares at cost
|
|
|
(1,408
|
)
|
|
|
(1,408
|
)
|
|
Total shareholders’ equity
|
|
|
5,215
|
|
|
|
4,017
|
|
|
Total liabilities and shareholders’ equity
|
|
$
|
17,297
|
|
|
$
|
16,055
|
|
iLinc Communications, Inc., Phoenix
James L. Dunn, Jr., 602-952-1200
Senior
Vice President and Chief Financial Officer