eOn Communications Reports Increased Fourth Quarter and Total Year Revenue and Profitability

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Nov 01, 2010, 10:00 ET

SAN JOSE, Calif., Nov. 1, 2010 /PRNewswire-FirstCall/ -- eOn Communications Corporation™ (Nasdaq: EONC) (the "Company"), a leading provider of telecommunications solutions, today reported fourth quarter and fiscal year ended July 31, 2010 results.

Fourth quarter revenue increased 8% to $5,477,000 from $5,089,000 in the fourth quarter of last year and increased 53% compared to revenues of $3,576,000 in the third quarter of this year. Net income for the quarter attributable to equity holders of the Company was $383,000 or $0.14 per common share compared to net income of $111,000 or $0.04 per common share in the quarter ended July 31, 2009. Included in net income for the quarter was $174,000 of imputed interest expense due to the amortization of the difference between the face value of the contingent obligation to the former Cortelco shareholders and the discounted present value of the note payable recorded on the balance sheet. Net income for the quarter excluding the impact of the imputed interest expense was $557,000 or $0.20 per common share.

Total year revenue increased 61% to $17,094,000 from $10,645,000 in fiscal year 2009. The Company generated income, net of non-controlling interest, for the fiscal year ended July 31, 2010 of $467,000 or $0.17 per common share compared to a net loss of $339,000 or $0.12 per common share for the fiscal year ended July 31, 2009. Net income for the year excluding the impact of imputed interest expense of $674,000 was $1,141,000 or $0.41 per common share.

Financial results for the fourth quarter and fiscal year include a gain from the bargain purchase of majority interest in Cortelco Systems Puerto Rico of $497,000 and Cortelco Systems Puerto Rico income, net of non-controlling interest, of $41,000 from the June 9, 2010 acquisition date through July 31, 2010.

Cash, cash equivalents and marketable securities increased 36% to $4,108,000 as of July 31, 2010 from $3,010,000 as of July 31, 2009.

Mr. David Lee, Chairman of eOn's Board of Directors noted, "Our current positive results show the commitment we have to increase revenue and profitability. The acquisition of majority interest in Cortelco Systems Puerto Rico on June 9, 2010 has increased the company's value and we intend to continue efforts to maximize results."

About eOn Communications™

eOn Communications Corporation™ is a global provider of innovative communications solutions. Backed by over 20 years of telecommunications engineering expertise, our solutions enable our customers to easily leverage advanced technologies in order to communicate more effectively. To find out more information about eOn Communications and its solutions, visit the World Wide Web at www.eoncommunications.com, or call 800-955-5321.

Note:

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties, including technical and competitive factors, which could cause the Company's results and the timing of certain events to differ materially from those discussed in the forward-looking statements. Such risks are detailed in eOn Communications Corporation's most recent Form 10-Q filing with the Securities and Exchange Commission.

eOn Communications Corporation, the mark eOn, and eQueue are trademarks of eOn Communications Corporation.

eOn Communications Corporation
Condensed Consolidated Statements of Operations
(Dollars in thousands, except per share data)
Unaudited

			For the Years Ended July 31,
			2010	2009

REVENUE
	Third party revenue		$ 17,094	$ 10,355
	Related party revenue		-	290
		Net revenue	17,094	10,645


COST OF REVENUE
	Third party cost of revenue		10,908	5,659
	Related party cost of revenue		-	204
		Cost of revenue	10,908	5,863
		Gross profit	6,186	4,782

OPERATING EXPENSE
	Selling, general and administrative		4,784	3,633
	Research and development		502	926
	Other		52	120
		Total operating expense	5,338	4,679
		Income from operations	848	103

OTHER INCOME (EXPENSE)
	Interest expense, net		(671)	(466)
	Equity earnings of unconsolidated investee		61	29
	Gain on bargain purchase		497	-
	Gain on investment		15	-
		Total other expense	(98)	(437)
		Income (loss) before income taxes	750	(334)

Income tax expense			(248)	(5)
	Net income (loss)		502	(339)
		Less: Net income attributable to the noncontrolling interest	35	-
	Net income (loss) attributable to eOn Communications Corp. shareholders		$ 467	$ (339)

Weighted average shares outstanding:
	Basic		2,760	2,735
	Diluted		2,762	2,735

Basic income (loss) income per share			$ 0.17	$ (0.12)
Diluted income (loss) income per share			$ 0.17	$ (0.12)

eOn Communications Corporation
Condensed Consolidated Balance Sheets
(Dollars in thousands, except share and per share amounts)


			As of July 31,
			2010	2009

ASSETS
Current assets:
	Cash and cash equivalents		$ 4,108	$ 3,010
	Trade accounts receivable, net of allowance of $235 and $332, respectively		4,168	2,943
	Trade accounts receivable - related party		8	228
	Inventories		4,948	5,032
	Deferred income taxes		-	270
	Prepaid and other current assets		257	242
		Total current assets	13,489	11,725

Property and equipment, net			279	209
Intangibles, net			847	410
Investments			990	1,136
Investment in unconsolidated equity investee			-	140
		Total assets	$ 15,605	$ 13,620

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Trade accounts payable		$ 2,361	$ 1,127
	Trade accounts payable - related party		-	11
	Notes payable - related parties		674	1,157
	Accrued expenses and other		1,977	1,628
		Total current liabilities	5,012	3,923

	Notes payable - related parties, net of current portion		3,647	3,891
		Total liabilities	8,659	7,814

Commitments and contingencies

Stockholders' equity:
	Preferred stock, $0.001 par value, (10,000,000 shares authorized, no shares
		issued and outstanding)	-	-
	Common stock, $0.005 par value (10,000,000 shares authorized, 2,989,269
		and 2,873,992 shares issued, respectively)	15	14
	Additional paid-in capital		56,269	56,048
	Treasury stock, at cost (139,580 shares)		(1,503)	(1,503)
	Accumulated deficit		(48,389)	(48,856)
	Accumulated other comprehensive income		110	103
		Total eOn Communications Corp. stockholders' equity	6,502	5,806
	Noncontrolling interest		444	-
		Total stockholders' equity	6,946	5,806
		Total liabilities and stockholders' equity	$ 15,605	$ 13,620