Elcom International, Inc. Reports 2004 Operating Results NORWOOD,
Mass., March 31 /PRNewswire-FirstCall/ -- Elcom International, Inc.
(OTC Bulletin Board: ELCO; and AIM: ELC and ELCS), today announced
operating results for its year ended December 31, 2004. Financial
Summary Table (in thousands, except per share amounts) Year Ended
December 31 2004 2003 Net sales $3,807 $3,028 Gross profit 3,347
2,742 Operating loss from continuing operations (3,005) (5,686) Net
loss from continuing operations (3,272) (5,410) Net loss from
discontinued operations -- (41) Net loss $(3,272) $(5,451) Basic
and diluted net loss per share data: Continuing operations $(0.06)
$(0.18) Discontinued operations -- -- Basic and diluted net loss
per share $(0.06) $(0.18) Basic and diluted weighted average common
shares outstanding 52,504 30,902 The above table, the following
description and the condensed consolidated financial statements
should be read in conjunction with the Risk Factors and other
information contained in the Company's Forms 10-QSB for the periods
ended March 31, June 30 and September 30, 2004 and 2003 Annual
Report on Form 10-K, as amended, as well as the Company's annual
report on Form 10-KSB, which it expects to file in early April,
2005. Net revenues for the year ended December 31, 2004 increased
to $3,807,000 from $3,028,000 in the same period of 2003, an
increase of $779,000, or 26%. The increase in revenues is primarily
due to an increase in licenses and associated fees reflecting a
final (non-recurring) license fee of $1.1 million related to the
eProcurement Scotland program, earned by the Company in the first
quarter of 2004. Selling, general and administrative expenses
("SG&A") for the year ended December 31, 2004 were $6,032,000
compared to $8,273,000 in 2003, a decrease of $2,241,000, or 27%.
Throughout 2002 and 2003, the Company implemented cost containment
measures designed to better align its SG&A expenses with lower
than anticipated revenues and has generally maintained this
decreased level of expenses throughout 2004. The measures taken in
2003 included personnel reductions throughout most functional and
corporate areas. In March 2004, the Company began hiring several
staff in the U.K. and U.S. (support services) in order to service
the expanding demand in the public sector market in the U.K.
However, overall headcount has only increased by three, from 35
employees at the end of the 2003 to 38 employees (five (5) of whom
are part-time), at the end of 2004 (the Company had 57 employees at
the end of 2002). In addition to the decrease in personnel
expenses, the decrease in SG&A from 2003 to 2004 also reflects
a reduction in depreciation and amortization expense (various
Company assets have been fully depreciated/amortized). The Company
reported an operating loss from continuing operations of $3,005,000
for the year ended December 31, 2004 compared to a loss of
$5,686,000 reported in 2003, a decrease (improvement) of
$2,681,000, or 47% in the reported loss. This smaller operating
loss from continuing operations in 2004 compared to 2003 quarter
was due to both the reduction in SG&A and the increase in net
revenues. As of December 31, 2004, the Company had $390,000 of
cash, which the Company had anticipated would allow it to operate
into the first quarter of 2005. The Company intends to raise
additional funding sufficient to support its operations and is
exploring the possibility of a common stock offering under its AIM
(U.K.) listing. The Company required additional financing in the
first quarter of 2005 in order to continue to operate. The Company
has received bridge loans from the Chairman and CEO and Vice
Chairman and Director. The bridge loans are intended to provide the
Company with the necessary funds to operate while the Company
continues fundraising discussions. Through March 31, 2005, the
Company has received a total of $200,000 of such bridge loans,
however the Company requires additional funds to operate until the
anticipated common stock offering may occur. The Company is
currently in discussions with several parties regarding the raising
of additional capital, however there can be no assurance that the
Company will receive any such funding or, if raised, on what terms
or what the timing thereof may be. Without such funding the Company
would likely be forced to curtail operations and seek protection
under bankruptcy laws during April 2005. The Company, which is (as
previously announced) a member of the Consortium which is the sole
preferred bidder for the U.K. Government's Zanzibar eProcurement
tender in the U.K., believes that a general election will shortly
be called in the U.K. Because of this, the earliest the Zanzibar
agreement is anticipated to be signed is May 2, 2005. The Company
believes the Zanzibar agreement, while delayed, will be signed;
however, the date thereof remains uncertain. This further
substantial delay has impaired the Company's fundraising
opportunities. Because the Company had already expected the
Zanzibar contract to have been awarded and announced (which would
have enhanced fundraising activities), this additional delay has
exacerbated the level of the Company's shortfall of operating cash.
As a result, the Company will soon be unable to fund operations or
other obligations. While the Company continues to explore several
opportunities to raise additional funding, the Company has limited
funds to operate and there can be no assurance that any new funding
will be received, or on what terms. In addition, as previously
disclosed, the Company believed that its liquidity sources would
allow it to operate into the first quarter. Hence, if the Company
is unable to secure funding to operate and pay its creditors by
April 2005, it will be forced to seek protection under Federal
bankruptcy laws and may not be able to operate as a going concern.
STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT Except
for the historical information contained herein, the matters
discussed in this press release may include forward-looking
statements or information. All statements, other than statements of
historical fact, including, without limitation, those with respect
to the Company's objectives, plans and strategies set forth herein
and those preceded by or that include the words "believes,"
"expects," "given," "targets," "intends," "anticipates," "plans,"
"projects", "forecasts" or similar expressions, are forward-looking
statements. Although the Company believes that such forward-looking
statements are reasonable, it can give no assurance that the
Company's expectations are, or will be, correct. These
forward-looking statements involve a number of risks and
uncertainties which could cause the Company's future results to
differ materially from those anticipated, including: (i) the
Company's history of ongoing operating losses; (ii) the overall
marketplace and clients' acceptance and usage of eCommerce software
systems, including corporate demand therefore, the impact of
competitive technologies, products and pricing, particularly given
the substantially larger size and scale of certain competitors and
potential competitors, control of expenses, revenue generation by
the acquisition of new customers, the acceptance of the
eProcurement Scotland program by public entities, and corporate
demand for eProcurement and eMarketplace solutions; (iii) the
consequent results of operations given the aforementioned factors;
and (iv) the requirement for the Company to raise additional
working capital to fund operations during April 2005 and the
availability and terms of any such funding to the Company. Without
any such funding, the Company will have no option but to seek
protection under bankruptcy laws. Other risks are detailed from
time to time in the Company's 2003 Annual Report on Form 10-K, as
amended, its Quarterly Reports on Form 10-QSB for the quarterly
periods ended March 31, June 30, and September 30, 2004, as well as
the Company's annual report on Form 10-KSB, which it intends to
file in early April, 2005, and in its other SEC reports and
statements. The Company assumes no obligation to update any of the
information contained or referenced in this press release. The
financial data set forth below should be read in conjunction with
the Consolidated Financial Statements and other disclosures
contained in the Company's 2003 Annual Report on Form 10-K, as
amended and Forms 10-QSB for the periods ended March 31, June 30,
and September 30, 2004, as well as the Company's annual report on
Form 10-KSB, which it expects to file in early April 2005.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, in
thousands, except per share data) For the year ended December 31,
2004 2003 Net revenues: License and other fees $2,997 $2,118
Professional services 810 910 3,807 3,028 Cost of sales 460 286
Gross profit 3,347 2,742 Operating Expenses: Selling, general and
administrative 6,032 8,273 Research and development 320 155 Asset
impairment charges -- -- Total operating expenses 6,352 8,428
Operating loss (3,005) (5,686) Interest expense (251) (188)
Interest and other income (expense), net (16) (94) Income loss
before income taxes (3,272) (5,968) Income tax benefit -- 558 Loss
from continuing operations (3,272) (5,410) Discontinued operations,
net of tax: Net loss from discontinued operations -- (41) Net loss
(3,272) (5,451) Comprehensive income, net of tax 33 62
Comprehensive loss $(3,239) $(5,389) Basic and diluted net loss per
share data: Continuing operations $(0.06) $(0.18) Discontinued
operations -- -- Basic and diluted net loss per share $(0.06)
$(0.18) Weighted average number of basic and diluted shares
outstanding 52,504 30,902 CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands) December 31, December 31, 2004 2003
ASSETS CURRENT ASSETS: Cash and cash equivalents $390 $515 Accounts
receivable, net 307 1,027 Prepaids and other current assets 53 43
Total current assets 750 1,585 PROPERTY, EQUIPMENT AND SOFTWARE,
NET 1,019 783 OTHER ASSETS 10 15 NON-CURRENT ASSETS OF DISCONTINUED
OPERATIONS 48 80 $1,827 $2,463 LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES: Loans payable $-- $1,113 Other current
liabilities 3,429 3,374 Current liabilities of discontinued
operations 303 444 Total current liabilities 3,732 4,931 Other long
term liabilities 573 -- Convertible debentures, net of discount 362
254 Total liabilities 4,667 5,185 TOTAL STOCKHOLDERS' DEFICIT
(2,840) (2,722) $1,827 $2,463 For more information, contact:
Investor Relations E-mail: DATASOURCE: Elcom International, Inc.
Contact: Investor Relations of Elcom International, Inc., Web site:
http://www.elcom.com/
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