8-K 1 doc1.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ______________ FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported): March 18, 2003 ION NETWORKS, INC. -------------------------------------------- (Exact Name of Registrant as Specified in its Charter) Delaware 000-13117 22-2413505 -------------------------------------------------------------------------------- (State or Other Jurisdiction (Commission File Number) (I.R.S. Employer of Incorporation) Identification No.) 1551 South Washington Avenue Piscataway, New Jersey 08854 ------------------------------------------------------ (Address of Principal Executive Offices) (Zip Code) (Registrant's telephone number, including area code): (732) 529-0100 Not Applicable -------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Item 5. Other Events. ------------- On March 18, 2003, ION Networks, Inc. (the "Company") issued a press release announcing its financial results for the three month and nine month periods ended December 31, 2002. A copy of the press release, which is incorporated by reference herein and made a part hereof, is filed with this Current Report on Form 8-K as Exhibit 99.1. On March 24, 2003, the Company issued a press release announcing it will be delisted from the Nasdaq SmallCap Market at the opening of business on March 28, 2003. A copy of the press release, which is incorporated by reference herein and made a part hereof, is filed with this Current Report on Form 8-K as Exhibit 99.2. Item 7. FINANCIAL STATEMENTS AND EXHIBITS. --------------------------------- (a) Not applicable. (b) Not applicable. (c) EXHIBITS. -------- EXHIBIT NO. DESCRIPTION ----------- ----------- 99.1 Press Release of the Company dated March 18, 2003, announcing its financial results for the three month and nine month periods ended December 31, 2002. 99.2 Press Release of the Company dated March 24, 2003, announcing it will be delisted from the Nasdaq SmallCap Market at the opening of business on March 28, 2003. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: March 26, 2003 ION NETWORKS, INC. By: /S/ CAMERON SAIFI -------------------------- Cameron Saifi Executive Vice President and Chief Operating Officer EXHIBIT INDEX EXHIBIT NO. DESCRIPTION ----------- ------------ 99.1 Press Release of the Company dated March 18, 2003. 99.2 Press Release of the Company dated March 24, 2003. EXHIBIT 99.1 ------------ ION NETWORKS REPORTS FINANCIAL RESULTS FOR 3 MONTH AND 9 MONTH PERIODS ENDED DECEMBER 31, 2002 PISCATAWAY, N.J March 18, 2003--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 results for the fiscal fourth quarter and year ended December 31, 2002. Net sales for the quarter ended December 31, 2002 were approximately $853,000 compared to approximately $1.5 million in the previous quarter ended September 30, 2002. Net sales were approximately $2.2 million in the quarter ended December 31, 2001. The Company incurred a net loss for the quarter ended December 31, 2002 of approximately $2.2 million or $0.10 per share, which includes restructuring and impairment of asset charges of $508,000 or $0.02 per share. This compares with a net loss of approximately $1.35 million or $0.06 per share for the previous quarter and approximately $1.4 million or $0.07 per share for the quarter ended December 31, 2001.
-------------------------------- ------------------------------------ ------------------------------ Three months Ended Nine Months Ended (Unaudited) (Unaudited) 12/31/02 12/31/01 12/31/02 12/31/01 -------- -------- -------- -------- Net sales $ 853 $ 2,214 $ 3,335 $ 5,236 Operating Loss $(2,460) $(1,647) $(5,877) $(6,043) Net loss $(2,220) $(1,372) $(5,628) $(5,712) Net loss per share $ (0.10) $ (0.07) $ (0.25) $ (0.31) Basic and diluted shares 23,318 18,543 22,843 18,317 -------------------------------- --------------- -------------------- -------------- --------------- In 000s except "per share" amounts
For the quarter ended December 31, 2002, gross margins fell to 40 percent, compared to 63 percent for the previous quarter and 51 percent for the quarter ended December 31, 2001. The anticipated gross margin of 65 percent for the quarter ended December 31, 2002 was not achieved as a result of the discontinuation of ION Secure 3200 appliances and the lower than expected revenues in that quarter. "The challenges that continue to weigh on the technology sector have slowed our progress in achieving our objective to reach break-even," commented Kam Saifi, ION Network's President and CEO. "While our pipeline continues to advance, the sales cycle remains extended far beyond normal terms. As we negotiate the task of restarting the company amid unfavorable market conditions, we firmly believe ION has the potential to emerge as a leader in the security market with its unique and differentiated solutions. For ION to continue its operations, our immediate plans are (a) to secure approximately $1 million in additional capital and (b) very carefully managing operating costs. As more companies become cognizant of their intellectual property's vulnerability to expensive and time-consuming security breaches, we expect the significance of ION's comprehensive solution to gain further market penetration." CONFERENCE CALL ION Networks will host a conference call at 5 p.m. (EST) today, Tuesday, March 18, to discuss the Company's financial results for the quarter. The conference call can be accessed by dialing 888-214-7563 and providing the following reservation number: 21130260. It is recommended that participants call at least 10 minutes before the call is scheduled to begin. ABOUT ION NETWORKS ION Networks, Inc. is a leading provider of security and management solutions that protect critical information and infrastructure from internal and external security threats. 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, Sprint and the U.S. Government. Headquartered in Piscataway, New Jersey, the Company has installed tens of thousands of its products worldwide. More information can be obtained from WWW.ION-NETWORKS.COM. 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. These statements include, but are not limited to, statements regarding the Company's plans to secure additional capital and the Company's ability to gain further market recognition. The factors that could cause actual future results to differ materially from the forward-looking statements include the following: fluctuations in customer demand; changes in the Company's sales force and management; fluctuations in spending on technology generally and security solutions in particular; insufficiency 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 sales 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, and form 10-QSB, respectively filed with the Securities and Exchange Commission on August 21, 2002 and November 14, 2002. ***** Financial Tables Follow ***** ION NETWORKS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three Months Ended For the Nine Months Ended December 31, December 31, December 31, December 31, 2002 2001 2002 2001 ----------------- -------------- -------------- ------------- Net sales $852,692 $2,214,216 $3,335,160 $5,236,038 Cost of sales $513,969 $1,092,872 $ 1,428,037 $ 2,523,047 ----------------- -------------- -------------- ------------- Gross margin 338,723 1,121,344 1,907,123 2,712,991 Research and development expenses 250,319 211,929 766,521 720,426 Selling, general and administration expenses 1,768,224 1,870,157 5,519,665 6,405,442 Restructuring, asset impairment and other charges 508,458 217,467 662,828 217,467 Depreciation and amortization expenses 271,748 468,830 835,315 1,412,794 ----------------- -------------- -------------- ------------- Total Operating Expense 2,798,749 2,768,383 7,784,329 8,756,129 Loss from operations (2,460,026) (1,647,039) (5,877,206) (6,043,138) Other Income 236,728 264,725 236,728 264,725 Interest income 11,584 17,932 36,781 91,714 Interest expense (8,022) (7,510) (19,524) (25,134) ----------------- -------------- -------------- ------------- Loss before income tax expense (2,219,736) (1,371,892) (5,623,221) (5,711,833) Income tax expense - - 5,301 - ----------------- -------------- -------------- ------------- Net loss $(2,219,736) $ (1,371,892) $(5,628,522) $(5,711,833) ================= ============== ============== ============= PER SHARE DATA Net loss per share Basic & diluted $ (0.10) $(0.07) $(0.25) $ (0.31) Weighted average number of common shares outstanding: Basic & diluted 23,317,620 18,542,991 22,843,009 18,316,943
ION NETWORKS, INC AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) DECEMBER 31, DECEMBER 31, 2002 2001 ASSETS Current Assets: Cash and cash equivalents $ 865,684 $ 1,746,632 Accounts receivable, net of allowance for doubtful accounts 561,762 1,475,021 of $90,521 and $148,781 respectively Inventory, net 1,259,268 1,436,102 Prepaid expenses and other current assets 203,934 255,609 Related party notes receivable - 98,537 Total current assets 2,890,648 5,011,901 Restricted cash 125,700 375,000 Property and equipment, net 485,735 948,248 Capitalized software, less accumulated amortization of $3,920,223 and $3,197,791 respectively 764,429 967,120 Goodwill and other acquisition related intangibles, less accumulated amortization of $1,000,000 and $963,021 respectively - 63,523 Other assets 14,878 19,588 ------------- ------------ $4,281,390 $ 7,385,380 ============= ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Current portion of capital leases $ 87,057 $ 74,426 Current portion of long-term debt 4,004 61,320 Accounts payable 1,195,023 1,128,145 Accrued expenses 906,154 397,035 Accrued payroll and related liabilities 185,358 668,625 Deferred income 155,021 179,381 Other current liabilities 173,342 296,782 ------------- ------------ Total current liabilities 2,705,959 2,805,714 Long-term portion of capital leases 73,551 165,775 Long-term debt, net of current portion 5,717 8,702 Commitments and contingencies Stockholders' equity: Preferred stock-par value $.001 per share; authorized shares - 1,000,000 at December 31, 2002 and 2001, designated shares - 200,000 at December 31, 2002 and none at December 31, 2001; issued and outstanding 166,835 at December 31, 2002 & none at December 31, 2001 167 - Common stock, par value $.001 per share; authorized shares 50,000,000, issued and outstanding 24,875,500 shares at December 31, 2002; issued and outstanding 21,124,801 shares at December 31, 2001 24,876 21,125 Additional paid-in capital 44,680,740 40,764,831 Notes receivable from officers (473,405) (536,100) Accumulated deficit (42,722,946) (35,876,878) ------------- -------------- Accumulated other comprehensive (loss) income (13,269) 32,211 ------------- -------------- Total stockholders' equity 1,496,163 4,405,189 ------------- -------------- Total liabilities and stockholders' equity $4,281,390 $ 7,385,380 ============= ==============
EXHIBIT 99.2 ------------ ION NETWORKS ANNOUNCES NASDAQ DELISTING PISCATAWAY, N.J March 24, 2003--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 that it received a letter from The Nasdaq Stock Market, Inc. on March 19, 2003, advising that the Company has not regained compliance with the minimum $1.00 closing bid price per share requirement, as set forth in Marketplace Rule 4310(c)(4) and is not eligible for an additional 90 calendar day compliance period given that it does not meet the initial listing requirements of The Nasdaq SmallCap Market under Marketplace Rule 4310(c)(2)(A). ION's securities will consequently be delisted from The Nasdaq SmallCap Market at the opening of business on March 28, 2003 and may thereafter be available for immediate quotation on the OTC Bulletin Board under the same symbol, IONN. ABOUT ION NETWORKS ION Networks, Inc. is a leading provider of security and management solutions that protect critical information and infrastructure from internal and external security threats. 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, Sprint and the U.S. Government. Headquartered in Piscataway, New Jersey, the Company has installed tens of thousands of its products worldwide. More information can be obtained from WWW.ION-NETWORKS.COM. 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. These statements include, but are not limited to, statements regarding the delisting of the Company's securities from the Nasdaq SmallCap Market and subsequent immediate quotation on the OTC Bulletin Board. The factors that could cause actual future results to differ materially from the forward-looking statements include the following: fluctuations in customer demand; changes in the Company's sales force and management; fluctuations in spending on technology generally and security solutions in particular; insufficiency 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 sales 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, and form 10-QSB, respectively filed with the Securities and Exchange Commission on August 21, 2002 and November 14, 2002.