Zix Corporation Announces Second Quarter 2005 Financial Results.DALLAS Dallas, city (1990 pop. 1,006,877), seat of Dallas co., N Tex., on the Trinity River near the junction of its three forks; inc. 1871. The second largest Texas city, after Houston, and the eighth largest U.S. -- Zix Corporation Zix Corporation (NASDAQ: ZIXI) is an American company based in Dallas, Texas that provides email encryption to health care organizations, financial institutions and government agencies. (ZixCorp(R)), (Nasdaq:ZIXI), a global provider of secure e-messaging, e-prescribing e-prescribing Therapeutics The use of handheld electronic products to communicate with pharmacies and provide prescribing information , and e-transaction applications and services, today announced financial results for the second quarter ended June June: see month. 30, 2005. ZixCorp recorded second quarter revenues of $3.45 million. ZixCorp recorded a second quarter 2005 net loss of $8.92 million, or $0.28 per share, compared with a net loss of $9.88 million, or $0.31 per share, in the corresponding 2004 quarter. As of June 30, 2005, the company's cash, cash equivalents, and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has balances approximated $18.1 million, including restricted cash of $10.4 million. "ZixCorp continues to deliver results," said Rick Spurr Spurr can refer to:
1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations for the eSecure business ahead of schedule, signed a contract with Aetna Aetna, volcano: see Etna, Italy. to sponsor an e-prescribing program, and are close to signing an agreement with another significant payor payor (payer) n. The one who must make payment on a promissory note. . We also expanded our addressable Reachable. When something is addressable, it can be identified and manipulated independently of its surroundings. For example, screen pixels and RAM memory are addressable. Each of the screen's picture elements can be individually turned on and off, and each of the memory's bytes can be markets and product capabilities through agreements with targeted industry leaders. "Strategic business decisions, our results-oriented culture, and our proven technology have enabled us to take the lead in two exciting, high-growth segments: secure e-messaging and e-prescribing. And with first-mover advantage First-mover advantage is the advantage gained by the initial occupant of a market segment. This advantage may stem from the fact that the first entrant can gain control of resources that followers may not be able to match. and our strong reputation for quality and dependability dependability - software reliability , the company is well positioned to sustain this leadership." Business Highlights --The company received record new eSecure orders of $5.33 million for the quarter, which represents a more than 20 percent compounded quarterly growth rate over the last four quarters. ZixCorp ended the quarter with an order backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. of $25.9 million. --Momentum continues to build for e-prescribing with a signed contract for a pilot program from Aetna and a Letter of Engagement from another prominent payor. With a growing number of the largest and most recognized healthcare organizations working with ZixCorp, the company's model for achieving broad adoption and utilization is being validated val·i·date tr.v. val·i·dat·ed, val·i·dat·ing, val·i·dates 1. To declare or make legally valid. 2. To mark with an indication of official sanction. 3. . --Progress with the eRx Collaborative in Massachusetts Massachusetts (măsəch  `sĭts), most populous of the New England states of the NE United States. continued,
with 615 prescribers signed by ZixCorp to use PocketScript(R)
e-prescribing. During the second quarter, 522 prescribers were deployed
and more than 616,800 e-scripts were transmitted.
--ZixCorp announced the availability of PocketScript 5.52, which supports direct computer connectivity to transmit To send data over a communications line. See transfer. prescriptions electronically to pharmacies This article is a list of major pharmacies (also known as chemists and drugstores) by country. Australia Pharmacies in Australia are mostly independently-owned by pharmacists, often operated as franchises of retail brands offered by the three major via the SureScripts Electronic Prescribing Network, enhances alternative formulary formulary /for·mu·lary/ (for´mu-lar?e) a collection of recipes, formulas, and prescriptions. National Formulary see under N. for·mu·lar·y n. messaging, and provides additional logging/reporting functions. --ZixCorp has formed strategic alliances with MedAptus and eClinicalWorks. PocketScript now interfaces with MedAptus' charge capture system and will also interface with eClinicalWorks' electronic medical record (EMR (ElectroMagnetic Radiation) The emanation of energy from everything in the universe. Although the EMR from electrical and electronic devices is typically measured for practical, every-day situations, every object, including humans, emanates energy. ) and practice management systems (PMS (Pantone Matching System) A color matching system that has a unique number assigned to more than 500 different colors and shades. This standard for the printing industry has been built into many graphics and desktop publishing programs to ensure color accuracy. ). As the healthcare technology market evolves, integration of ZixCorp solutions with other systems and applications used in physicians' offices has become increasingly important. --ZixCorp successfully achieved operating level cash flow breakeven in its eSecure business one quarter earlier than predicted due to cash receipts in the quarter exceeding the company's estimates of costs specifically related to the eSecure business. --eSecure new first year orders increased 28 percent over first quarter levels, as the company continued to strengthen its leadership position in the email encryption The reversible transformation of data from the original (the plaintext) to a difficult-to-interpret format (the ciphertext) as a mechanism for protecting its confidentiality, integrity and sometimes its authenticity. Encryption uses an encryption algorithm and one or more encryption keys. market. The financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. segment continues to gain momentum, with 15 new customers added during the second quarter, including significant contracts with Commerce Bank in Missouri Missouri, state, United States Missouri (mĭz  r`ē, –ə), one of the midwestern states of the United States. and Northwestern Mutual. ZixCorp also added 31 new healthcare
organizations to its network of users, including Thomas Jefferson
University It began as Jefferson Medical College in 1824. On July 1, 1969 the institution officially became Thomas Jefferson University.The university is made up of three colleges:
People
--ZixCorp's eSecure services were selected as a proven option for the members of the Conference of State Bank Supervisors. This association interacts with over 6,300 financial institutions throughout all 50 states and U.S. territories. Its approval of the ZixCorp solution demonstrates the growing importance of secure email within the financial community. --With ZixCorp continuing to grow in its primary vertical markets -- healthcare and financial services -- the company has added expertise and vision from veteran industry leaders Charles Charles, archduke of Austria Charles, 1771–1847, archduke of Austria; brother of Holy Roman Emperor Francis II. Despite his epilepsy, he was the ablest Austrian commander in the French Revolutionary and Napoleonic wars; however, he was handicapped by N. "Chip" Kahn Kahn , Louis Isadore 1901-1974. Estonian-born American architect whose bold monumental designs include the Yale University Art Gallery (1954) and the Kimbell Art Museum in Fort Worth, Texas (1972). Noun 1. III and Paul Paul, 1901–64, king of the Hellenes (1947–64), brother and successor of George II. He married (1938) Princess Frederika of Brunswick. During Paul's reign Greece followed a pro-Western policy, and the Cyprus question was temporarily resolved. E. Schlosberg, who joined ZixCorp's board of directors in June. Kahn is president of the Federation of American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Hospitals, the national advocacy organization for investor-owned hospitals and health systems, and has extensive health policy and policy-making pol·i·cy·mak·ing or pol·i·cy-mak·ing n. High-level development of policy, especially official government policy. adj. Of, relating to, or involving the making of high-level policy: experience. Schlosberg, with nearly 30 years of experience in investment banking, is currently the founder, chairman, and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of INCA Group LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , a newly formed entity facilitating corporate restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). , merger, acquisition, and capital funding activities for both public and private enterprises. --Increased activity from secure e-messaging customers and the accelerated ramp of e-prescribing deployments enabled the ZixData Center(TM) to process over 291 million transactions in the second quarter, an increase of 14 percent when compared with 255 million transactions in the first quarter of 2005. e-Prescribing transactions (electronic scripts) increased to more than 610,000, for a 20 percent increase over first quarter levels. Financial Highlights for the Quarter Revenues: Revenues in second quarter 2005 were $3.45 million. Although essentially flat with those reported in the first quarter 2005, the company sold its Inspector product line on March 11, 2005, and when normalized to remove Inspector revenue in prior periods, second quarter revenue increased by $1.0 million over the prior-year quarter and by $494,000 over the first quarter.
Proforma Revenue Comparison
(expressed in $ millions)
$Change $Change
Q2 05 Q1 05 Q1 05 to Q2 04 Q2 04 to
Q2 05 Q2 05
Total revenue 3.449 3.583 (0.134) 3.521 (0.072)
Inspector
products
revenue 0.009 0.637 (0.628) 1.087 (1.078)
Normalized
revenue 3.440 2.946 0.494 2.434 1.006
% Change versus 17% 41%
Q2 05 Increase Increase
quarter year
on quarter on year
The normalized 17 percent quarter-on-quarter increase and the 41 percent year-on-year increase are mostly attributed to growth in the eSecure subscription base. Second quarter revenue exceeded company guidance of $3.0 to 3.3 million, due primarily to sales of eSecure solutions early in the quarter that led to increased in-quarter revenue recognition from new orders, and several key systems installations of the Dr. Chart(R) product. Costs: In the second quarter, ZixCorp's operating costs operating costs npl → gastos mpl operacionales totaled $11.6 million (excluding infrequent in·fre·quent adj. 1. Not occurring regularly; occasional or rare: an infrequent guest. 2. gains or losses and interest income or expense), compared with $13.4 million in both the second quarter 2004 and the first quarter of 2005. The $1.8 million decrease reflects various cost-cutting initiatives undertaken by the company in late 2004 and early 2005, as well as the sale of the Inspector product lines. Cash Utilization: The company's cash and marketable securities balance (both restricted and non-restricted) declined by $5.8 million, from $23.9 million at the end of the first quarter 2005 to $18.1 million at the end of the second quarter. This was higher than the company's previous guidance of $17.3 to $17.5 million. Net cash used by operating activities totaled $5.8 million, compared with $7.4 million in the first quarter of 2005. In the second quarter, the company collected a total of $5.1 million in cash receipts (excluding a $500,000 scheduled payment from Cyberguard associated with the Inspector sale), compared with $4.1 million in cash collected during the first quarter. The cash receipts increase of $1.0 million resulted from a $1.7 million increase in eSecure business due to strong new order input, earlier in-quarter sales, and strong renewals from existing customers. The gains in eSecure were partially offset by a decline of $500,000 in cash receipts resulting from the sale of the Inspector product line late in the first quarter. Net cash outlays Outlays Payments on obligations in the form of cash, checks, the issuance of bonds or notes, or the maturing of interest coupons. approximated $11.0 million in the most recent quarter, compared with $12.2 million in the first quarter, for an improvement of $1.2 million due primarily to various cost-cutting initiatives. Corporate Governance Corporate Governance The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. : ZixCorp announced, in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Nasdaq Marketplace Rule 4350, that the company recently awarded 236,660 stock options to 26 newly hired employees for a variety of positions throughout the company. Exercise prices ranged from $3.02 to $3.87 per share, with a weighted average price of $3.18. Approximately one-third of the options vest on the first anniversary of the grant, with the balance vesting Vesting The process by which employees accrue non-forfeitable rights over employer contributions that are made to the employee's qualified retirement plan account. Notes: on a pro rata [Latin, Proportionately.] A phrase that describes a division made according to a certain rate, percentage, or share. In a Bankruptcy case, when the debtor is insolvent, creditors generally agree to accept a pro rata share of what is owed to them. basis over the next eight quarters. About Zix Corporation Zix Corporation (ZixCorp(R)) provides easy-to-use-and-deploy e-communication services that protect, manage, and deliver sensitive information to enterprises and consumers in healthcare, finance, insurance, and government. ZixCorp's eSecure services enable policy-driven email encryption, content filtering See Web filtering and parental control software. , and send-to-anyone capability while its eHealth eHealth (also written e-health) is a relatively recent term for healthcare practice which is supported by electronic processes and communication. The term is inconsistently used: some would argue it is interchangeable with health care informatics, while others use it in the services improve patient care, reduce costs, and improve efficiency through e-prescribing and e-lab solutions. For more information, visit www.zixcorp.com. 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. Statement for ZixCorp The following is a "Safe Harbor" statement under the 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. Any 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. contained in this release are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those projected in the forward-looking statements. These risks and uncertainties include, but are not limited to, the following: the company's continued operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. and substantial utilization of cash resources; the company's ability to achieve broad market acceptance for the company's products and services, including the electronic prescribing services offered by its PocketScript, Inc. subsidiary; reliance on establishing and maintaining strategic relationships to gain customers and grow revenues; the expected increase in competition in the e-messaging protection and electronic prescription businesses; and the company's ability to successfully and timely introduce new e-messaging protection and electronic prescription products and services or related products and services and implement technological changes. Further details on such risks and uncertainties may be found in the company's public filings with the SEC.
ZIX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
2005 2004
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $7,673,000 $3,856,000
Marketable securities -- 16,000,000
Accounts receivable, net 327,000 561,000
Notes receivable, net 971,000 --
Prepaid and other current assets 1,217,000 1,950,000
------------- -------------
Total current assets 10,188,000 22,367,000
Restricted cash 10,412,000 10,374,000
Property and equipment, net 4,686,000 5,024,000
Intangible assets, net 1,601,000 3,832,000
Goodwill 6,958,000 9,119,000
Deferred financing costs and other assets 1,134,000 1,526,000
------------- -------------
$34,979,000 $52,242,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $692,000 $1,234,000
Accrued expenses 4,476,000 4,709,000
Deferred revenue 6,988,000 6,372,000
Customer deposits 1,008,000 968,000
Capital lease obligations 249,000 130,000
Short-term note payable 112,000 193,000
Convertible promissory notes payable 7,357,000 3,848,000
------------- -------------
Total current liabilities 20,882,000 17,454,000
Long-term liabilities:
Deferred revenue 1,389,000 1,731,000
Customer deposit 2,000,000 3,000,000
Convertible promissory notes payable 9,351,000 13,347,000
Promissory notes payable 2,027,000 1,840,000
Capital lease obligations and other 299,000 105,000
------------- -------------
Total long-term liabilities 15,066,000 20,023,000
------------- -------------
35,948,000 37,477,000
Stockholders' equity (deficiency):
Common stock 348,000 346,000
Additional paid-in capital 272,157,000 269,406,000
Treasury stock, at cost (11,507,000) (11,507,000)
Accumulated deficit (261,967,000) (243,480,000)
------------- -------------
Total stockholders' equity (deficiency) (969,000) 14,765,000
------------- -------------
$34,979,000 $52,242,000
============= =============
ZIX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended June Six Months Ended June 30,
30,
------------------------- ---------------------------
2005 2004 2005 2004
------------ ------------ ------------- -------------
Revenues:
Services $3,199,000 $2,786,000 $6,497,000 $5,273,000
Hardware 241,000 293,000 426,000 322,000
Software 9,000 442,000 109,000 769,000
------------ ------------ ------------- -------------
Total
revenues 3,449,000 3,521,000 7,032,000 6,364,000
Costs and
expenses:
Cost of
revenues 3,508,000 3,704,000 7,399,000 6,878,000
Research and
development
expenses 1,535,000 2,311,000 3,510,000 5,156,000
Selling,
general and
administrative
expenses 6,559,000 7,349,000 14,061,000 15,155,000
Customer
deposit
forfeiture (960,000) -- (960,000) --
Gain of sale of
product lines -- -- (950,000) --
------------ ------------ ------------- -------------
Total costs
and expenses 10,642,000 13,364,000 23,060,000 27,189,000
------------ ------------ ------------- -------------
Operating loss (7,193,000) (9,843,000) (16,028,000) (20,825,000)
Other (expense)
income:
Investment and
other income 143,000 79,000 286,000 137,000
Interest
expense (1,996,000) (85,000) (2,826,000) (140,000)
Recovery of
previously
impaired
investment -- -- -- 70,000
------------ ------------ ------------- -------------
Total other
(expense)
income (1,853,000) (6,000) (2,540,000) 67,000
------------ ------------ ------------- -------------
Loss before
income taxes (9,046,000) (9,849,000) (18,568,000) (20,758,000)
Income taxes 131,000 (27,000) 81,000 (56,000)
------------ ------------ ------------- -------------
Net loss $(8,915,000) $(9,876,000) $(18,487,000) $(20,814,000)
============ ============ ============= =============
Basic and
diluted loss
per common
share $(0.28) $(0.31) $(0.57) $(0.67)
============ ============ ============= =============
Weighted average
common shares
outstanding 32,391,777 31,687,841 32,343,737 30,943,779
============ ============ ============= =============
ZIX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
2005 2004
------------- -------------
Operating activities:
Net loss $(18,487,000) $(20,814,000)
Non-cash items in net loss:
Depreciation and amortization 2,195,000 2,760,000
Amortization of debt financing costs,
discount on notes payable and other 2,198,000 --
Employee stock compensation expense 243,000 1,075,000
Common stock issued in lieu of cash
compensation -- 1,515,000
Common stock issued in lieu of cash
interest payment 267,000 --
Amortization of unearned stock-based
compensation 119,000 30,000
Recovery of investment in Maptuit
Corporation -- (70,000)
Customer deposit forfeiture (960,000) --
Gain on sale of product lines (950,000) --
Changes in operating assets and
liabilities, excluding effects of
acquisitions:
Accounts receivable 234,000 (176,000)
Other assets 682,000 147,000
Accounts payable (542,000) 920,000
Deferred revenue 1,820,000 1,516,000
Customer deposits received -- 4,000,000
Accrued and other liabilities (23,000) (415,000)
------------- -------------
Net cash used by operating activities (13,204,000) (9,512,000)
Investing activities:
Purchases of property and equipment (1,010,000) (1,909,000)
Purchases of marketable securities -- (5,077,000)
Sales and maturities of marketable
securities 16,000,000 6,964,000
Purchase of restricted cash investment (38,000) --
Proceeds from sale of product lines 2,340,000 --
Cash received from Maptuit Corporation -- 70,000
------------- -------------
Net cash provided by investing
activities 17,292,000 48,000
Financing activities:
Proceeds from exercise of stock options 3,000 15,338,000
Proceeds from exercise of warrants -- 5,338,000
Payment of short term note payable (165,000) --
Payment of capital lease (87,000) --
Proceeds from promissory note payable -- 3,000,000
Other (22,000) --
------------- -------------
Net cash (used) provided by financing
activities (271,000) 23,676,000
------------- -------------
Increase in cash and cash equivalents 3,817,000 14,212,000
Cash and cash equivalents, beginning of
period 3,856,000 6,599,000
------------- -------------
Cash and cash equivalents, end of period $7,673,000 $20,811,000
============= =============
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