NetNation Reports Second Quarter 2002 Financials; Company States Sixth Consecutive Profitable Quarter and Fifth Consecutive Quarter of Positive Cash Flow for Q2.Business Editors & High Tech Writers VANCOUVER Vancouver, city, Canada Vancouver, city (1991 pop. 471,844), SW British Columbia, Canada, on Burrard Inlet of the Strait of Georgia, opposite Vancouver Island and just N of the Wash. border. , British Columbia--(BUSINESS WIRE)--Aug. 8, 2002 NetNation Communications, Inc. (Nasdaq:NNCI NNCI non-lamellar, non-erythrodermic congenital ichthyosis ), a global web hosting Making a Web site available on the Internet. Many ISPs host a few personal Web pages for an individual at no additional cost above the monthly service fee, but the address is subordinate to the ISP; for example, www.friendlyisp.com/pat_smith. provider and domain name registrar An organization that manages Internet domain names. Any person or company that wants a presence on the Internet must register a unique name with one of the many registrars, such as Network Solutions (www.netsol.com) or Go Daddy (www.godaddy.com). , announced today financial results for its second quarter ended June June: see month. 30, 2002. Revenues for the quarter were US$1,740,954, compared to revenues of US$1,615,550 for the same period in 2001 - an increase of US$125,404 or approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 8 per cent. Revenues for the first half of 2002 were US$3,427,385, compared to revenues of US$3,190,336 for the same period of 2001 - an increase of US$237,049 or approximately 7 per cent. The second quarter of 2002 marks the sixth consecutive profitable quarter for the Company. Net earnings for the quarter ended June 30, 2002 were US$151,707 or approximately US$0.01 per share, compared to net earnings of US$14,596 or approximately US$0.00 per share for the same period in 2001. Net earnings for the first half of 2002 were US$366,028 or approximately US$0.02 per share, compared to net earnings of US$32,656 or approximately US$0.00 per share for the same period in 2001. NetNation's cash balance continued to increase. The cash balance increased to US$2,511,245 from US$2,139,876 at the end of the previous quarter and US$1,678,950 at the end of last year - increases of US$371,369 and US$832,295, respectively. This increase in cash was generated entirely through Company operations and not through external financing In the theory of capital structure, External financing is the phrase used to describe funds that firms obtain from outside of the firm. It is contrasted to internal financing which consists mainly of profits retained by the firm for investment. . About NetNation Communications, Inc. NetNation Communications, Inc. (http://www.netnation.com) is a pioneer in web hosting and domain name registration. Since inception INCEPTION. The commencement; the beginning. In making a will, for example, the writing is its inception. 3 Co. 31 b; Plowd. 343. Vide Consummation; Progression. in 1997, the Company has extended its products to offer enhanced-dedicated servers, co-location Placing equipment owned by a customer or competitor in an organization's own facility. Telephone companies often allow co-location in order to provide the best interconnection between devices. and shared hosting services to clients worldwide. NetNation is recognized by industry evaluators for its excellent customer service and support, as reflected by its frequent top web host rankings worldwide. NetNation's wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , DomainPeople, Inc. (http://www.domainpeople.com), was the eighth ICANN-accredited domain name registrar in the world and offers registration for the most popular domain extensions - notably dot-com (1) Refers to the period (dot) followed by the abbreviation of the commercial domain (.com) at the end of an Internet address. Since the .com domain is so widely used, the Internet became known as the "dot-com" world, and dot-com companies are those formed to offer services or , dot-net, dot-org See .org. , dot-info See .info. and dot-biz See .biz. . DomainPeople is a founding member of Afilias Afilias Limited. is the registry operator of the .info and .aero TLDs, and the service provider of the .org generic top-level domain (gTLD), .mobi mobile phone TLD, and a provider of domain name registry services for several countries around the world, including . Limited, the registry The configuration database in all 32-bit versions of Windows that contains settings for the hardware and software in the PC it is installed in. The Registry is made up of the SYSTEM.DAT and USER.DAT files. Many settings previously stored in the WIN.INI and SYSTEM. selected to operate dot-info. Financial Statements for Second Quarter 2002 Follow
NETNATION COMMUNICATIONS, INC.
Condensed Consolidated Balance Sheets
(Expressed in U.S. dollars)
June 30, December 31,
2002 2001
----------- ------------
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $ 2,511,245 $ 1,678,950
Accounts receivable, net of allowance
for doubtful accounts of $27,302
(December 31, 2001 - nil) 89,473 107,208
Prepaid expenses and deposits 213,129 245,733
Deferred expenses 620,980 557,941
Deferred tax asset 250,000 250,000
----------- ------------
3,684,827 2,839,832
Deferred expenses 204,038 135,734
Fixed assets, net of accumulated
depreciation of $1,440,142
(December 31, 2001 - $1,092,999) 763,792 1,050,862
Investments 100,000 100,000
----------- ------------
$ 4,752,657 $ 4,126,428
----------- ------------
----------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $ 242,506 $ 235,880
Contingent lease payments 381,254 381,254
Customer deposits 65,697 83,335
Deferred revenue 2,033,064 1,934,936
Capital lease liability 21,651 19,183
----------- ------------
2,744,172 2,654,588
Deferred revenue 502,025 455,228
Capital lease liability 14,348 24,652
Stockholders' equity:
Common stock
Authorized:
50,000,000 common shares with a par
value of $0.0001 each
Issued:
15,218,002 (December 31, 2001 -
15,245,321) common shares 1,522 1,525
Additional paid-in capital 5,911,202 5,988,123
Deferred stock-based compensation (76,506) (287,554)
Accumulated other comprehensive income 14,601 14,601
Deficit (4,358,707) (4,724,735)
----------- ------------
1,492,112 991,960
----------- ------------
$ 4,752,657 $ 4,126,428
----------- ------------
----------- ------------
NETNATION COMMUNICATIONS, INC.
Condensed Consolidated Statements of Operations and Deficit
(Expressed in U.S. dollars)
Three month period Six month period
ended June 30, ended June 30,
2002 2001 2002 2001
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)
Sales $ 1,740,954 $ 1,615,550 $ 3,427,385 $ 3,190,336
Cost of sales 574,743 519,496 1,117,815 1,023,814
----------- ----------- ----------- -----------
Gross profit 1,166,211 1,096,054 2,309,570 2,166,522
Expenses:
Sales and marketing 252,905 351,340 519,154 764,965
General and
administration 570,267 570,147 1,077,247 1,054,057
Depreciation and
amortization 191,332 159,971 347,141 314,844
----------- ----------- ----------- -----------
1,014,504 1,081,458 1,943,542 2,133,866
----------- ----------- ----------- -----------
Net earnings 151,707 14,596 366,028 32,656
Deficit, start
of period (4,510,414) (5,464,592) (4,724,735) (5,482,652)
----------- ----------- ----------- -----------
Deficit, end
of period $(4,358,707) $(5,449,996) $(4,358,707) $(5,449,996)
----------- ----------- ----------- -----------
Earnings per share,
basic and diluted $ 0.01 $ 0.00 $ 0.02 $ 0.00
----------- ----------- ----------- -----------
Weighted average
number of common
shares outstanding,
basic 15,218,002 15,238,134 15,222,040 15,252,945
Weighted average
number of common
shares outstanding,
diluted 15,218,002 15,327,190 15,222,040 15,357,768
----------- ----------- ----------- -----------
NETNATION COMMUNICATIONS, INC.
Condensed Consolidated Statements of Cash Flows
(Expressed in U.S. dollars)
Six month Six month
period ended period ended
June 30, June 30,
2002 2001
------------ ------------
(unaudited) (unaudited)
Cash flows from operating activities:
Net earnings $ 366,028 $ 32,656
Items not involving cash:
Depreciation and amortization 347,141 314,844
Employee stock-based compensation 116,227 189,584
Changes in non-cash operating assets
and liabilities:
Accounts receivable 17,735 5,718
Prepaid expenses and deposits 32,604 33,126
Deferred expenses (131,343) 83,586
Accounts payable and accrued
liabilities 6,626 (280,274)
Deferred revenue 144,925 (141,330)
Customer deposits (17,638) 14,040
------------ ------------
Net cash provided by operating
activities 882,305 251,950
------------ ------------
Investing:
Purchase of fixed assets (60,071) (117,241)
------------ ------------
Net cash used in investing activities (60,071) (117,241)
------------ ------------
Financing:
Proceeds from sale of common stock 18,355 2,250
Lease financing repayments (7,836) (9,715)
Cancellation of shares (458) (780)
------------ ------------
Net cash provided by (used in)
financing activities 10,061 (8,245)
------------ ------------
Increase in cash and cash equivalents 832,295 126,464
Cash and cash equivalents,
beginning of period 1,678,950 748,745
------------ ------------
Cash and cash equivalents, end of
period $ 2,511,245 $ 875,209
------------ ------------
------------ ------------
This release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " provisions of the U.S. Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These statements are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include the following: (1) technological changes or changes in the competitive environment adversely affecting the service-packages, market share, revenues or margins of the combined business; (2) changes in general economic, financial or business conditions adversely affecting the combined business or the markets in which it operates and adversely affecting future revenues; (3) availability of financial resources to carry out plans; and (4) authorization The right or permission to use a system resource; the process of granting access. See access control. from third parties to carry out plans (ie. ICANN's approval for registration of new TLDs). The matters discussed in this news release also involved risks and uncertainties described from time to time in NetNation's filings with the Securities and Exchange Commission, including the most recent Form 10-Q Form 10-Q See 10-Q. filed on August 8, 2002. NetNation assumes no obligation to update any forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. information contained in this news release. NetNation is a registered trademark of NetNation Communications, Inc. and DomainPeople is a trademark of DomainPeople, Inc. All other products and company names are the trademarks or registered trademarks of their respective owners. |
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