INX Inc. (NASDAQ:INXI) (the “Company”; or “INX”) today provided
an update on recent business conditions, and commented on its
on-going efforts to restate previously issued financial
statements.
BUSINESS UPDATE:
Since the Company is unable to provide operating results for the
quarter ended September 30, 2010 until its prior period financial
statements are completed and restated, in an effort to provide
investors with as much meaningful information as is possible, the
Company is providing the information below. The information
provided herein is limited to that which the Company does not
expect to be impacted by any adjustments related to correcting its
accounting for revenue recognition. Note that “bookings” as used
herein represent the dollar amount of credit approved customer
orders for products, and “billings” as used herein represent
invoicing of customers at contract amounts for products and
services, neither of which is the same as “revenue” determined in
accordance with Generally Accepted Accounting Principles.
“Bookings” and "billings" provide an indication of near-term
customer demand as well as an indication of product availability
from our suppliers.
For the Company's third quarter ended September 30, 2010
(unaudited):
- Product bookings decreased by
approximately 2% on a sequential basis compared to the second
quarter ended June 30, 2010, and increased by approximately 22%
compared to the prior year quarter.
- Product billings increased by
approximately 9% on a sequential basis compared to the second
quarter, and increased by approximately 63% compared to the prior
year period.
- Services billings increased by
approximately 10% on a sequential basis compared to the second
quarter, but decreased by approximately 9% compared to the prior
year period, which year-over-year decrease primarily relates to the
previously disclosed loss of the services contract supporting the
U.S. Army in Iraq that ended in approximately October 2009.
As of September 30, 2010 (unaudited):
- Cash and cash equivalents is expected
to be approximately $11.5 million, compared to approximately $8.7
million at June 30, 2010 and approximately $13.2 million at
December 31, 2009.
- Short-term debt is expected to be
approximately $184,000, compared to approximately $197,000 at June
30, 2010 and approximately $209,000 at December 31, 2009.
- Long-term debt is expected to be
approximately $90,000, compared to approximately $125,000 at June
30, 2010, and approximately $222,000 at December 31, 2009.
Commenting on the trends in the Company's business, Mark Hilz,
the Company's President and CEO, said, "Overall customer demand
remained strong in the third quarter as customers continued to move
forward with long delayed projects. Billings increased in Q3
compared to Q2 as product supplier lead times returned to normal.
Total product order bookings for Q3 came in as we had expected and
previously forecasted. While our services billings were down year
over year for Q3 due to the loss of a large federal contract, they
improved sequentially compared to Q2 and we expect to see continued
improvement for Q4. We currently expect that Q4 product order
bookings will be in a range of approximately minus 7% to minus 14%
compared to Q3, which would represent a year-over-year increase of
approximately 7% to 15%.”
STATUS OF THE AUDIT AND RESTATEMENT
On March 26, 2010, the Company announced that it was delaying
its fourth quarter earnings release (for the year ended December
31, 2009) and that it would not file its Form 10-K by its due date
in order to allow the Company additional time for the reexamination
of its revenue recognition under Accounting Standards Codification
(ASC) 605-25, previously referred to as Emerging Issues Task Force
No. 00-21 (“EITF 00-21”), “Revenue Arrangements with Multiple
Deliverables”.
On June 21, 2010, the Company announced that the audit committee
of its board of directors, upon the recommendation of management,
had determined that its previously issued financial statements for
the year ended December 31, 2008 and for the quarters ended March
31, 2009, June 30, 2009 and September 30, 2009, should no longer be
relied upon. This conclusion was reached as a result of the
reexamination referred to above.
Over the course of the past several months the Company has
determined that correctly accounting for revenue will require a
detailed review of far more customer contracts than had been
previously anticipated, and that the effort, time and expense
related to performing these contract reviews will be more
substantial than previously expected.
The Company has made, and continues to make, substantial
changes, and expend substantial resources, to resolve this
accounting issue. The resolution will require reviewing many
thousands of customer contracts, as well as the implementation of
more complex software systems to perform the complex multi-step
processes required to account for multiple transactions aggregated
together into arrangements accounted for as a single
arrangement.
The Company estimates that through September 30, 2010 it has
incurred approximately $2 million of non-employee expenses directly
related to this accounting restatement matter.
The Company currently expects that the restatement process will
not be completed until the middle to latter part of the first
quarter of 2011 due to the nature, complexity and level of work
required.
Commenting on the status of the 2010 audit and restatement of
previous financial statements, James Long, the Company’s Executive
Chairman, stated, "We have made substantial progress on this
project, but significant work remains. In order to speed the
process and complete the project in a more efficient manner, we
have recently made substantial changes to the methodology we are
using to perform the large quantity of contract reviews required to
complete the project. While the size and scope of this project has
grown, we are confident that we will be able to complete the
restatement process, file our delinquent and 2010 annual financial
reports, and regain compliance with our filing requirements, while
improving our processes and systems to ensure that we are able to
account for revenue properly going forward.”
SAFE HARBOR STATEMENT:
The statements contained in this document that are not
statements of historical fact including but not limited to,
statements identified by the use of terms such as “anticipate,”
“appear,” “believe,” “could,” “estimate,” “expect,” “hope,”
“indicate,” “intend,” “likely,” “may,” “might,” “plan,” “pointing
towards,” “potential,” “project,” “seek,” “should,” “will,”
“would,” and other variations or negative expressions of these
terms, are “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are based on current expectations and
are subject to a number of risks and uncertainties. The financial
information contained in this press release is preliminary and
subject to change until the Company files its Annual Report on Form
10-K for the year ended December 31, 2009 and its Quarterly Reports
on Form 10-Q for the quarterly periods ended March 31, 2010 and
June 30, 2010 with the Securities and Exchange Commission. All
numbers set forth in this press release are unaudited.
Actual results could differ materially from the forward-looking
statements contained herein due to numerous factors, including:
- Events that occur or adjustments made
after the date of this announcement.
- Market and economic conditions,
including capital expenditures by enterprises for network,
telephone communications and data center systems products and
services.
- Unexpected customer contract
cancellations.
- Currently unforeseen events that cause
the contract reviews required to complete the restatement project
to take longer than currently anticipated.
- Currently unforeseen events that
otherwise cause further delays in the Company's ability to publish
its financial results within the time period indicated herein, or
provide an accurate estimate of the time required to publish its
financial results.
- Credit and financial market conditions
that could impact customers' ability to finance purchases.
- Continuation of the Company’s credit
facility with its primary financier, which credit facility the
Company uses to finance the purchases of the majority of the
products that it sells to its customers.
- Catastrophic events.
Recipients of this document are cautioned to consider these
risks and uncertainties and to not place undue reliance on these
forward-looking statements. All information in this press release
is as of the date of this press release, and the Company expressly
disclaims any obligation or undertaking to update or revise any
forward-looking statement contained herein to reflect any change in
the Company's expectations with regard thereto, or any change in
events, conditions or circumstances upon which any statement is
based.
ABOUT INX INC.:
INX Inc. (NASDAQ:INXI) is a leading U.S. provider of IP
communications and data center solutions for enterprise
organizations. INX offers a suite of advanced technology solutions
focused around the entire lifecycle of enterprise IP network
communications and data center infrastructure. Services are
centered on the design, implementation and support of network
infrastructure, including routing and switching, wireless,
security, unified communications, and data center solutions such as
storage and server virtualization. Customers include enterprise
organizations such as corporations, as well as federal, state and
local governmental agencies. Additional information about INX can
be found on the Web at www.INXI.com.
Inx Inc. (MM) (NASDAQ:INXI)
Historical Stock Chart
From Jun 2024 to Jul 2024
Inx Inc. (MM) (NASDAQ:INXI)
Historical Stock Chart
From Jul 2023 to Jul 2024