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.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 000-13117 22-2413505
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(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
1551 South Washington Avenue
Piscataway, New Jersey 08854
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(Address of Principal Executive Offices) (Zip Code)
(Registrant's telephone number, including area code): (732) 529-0100
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events.
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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.
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(a) Not applicable.
(b) Not applicable.
(c) EXHIBITS.
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EXHIBIT NO. DESCRIPTION
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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
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Cameron Saifi
Executive Vice President and Chief
Operating Officer
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
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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
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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
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$4,281,390 $ 7,385,380
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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
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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)
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Accumulated other comprehensive (loss) income (13,269) 32,211
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Total stockholders' equity 1,496,163 4,405,189
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Total liabilities and stockholders' equity $4,281,390 $ 7,385,380
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EXHIBIT 99.2
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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.