ION Networks Reports Q4

PISCATAWAY, N.J. -- ION Networks Incorporated (Nasdaq: IONN), a leading provider of security and management solutions that protect critical infrastructure from internal and external security threats, today announced results for the fiscal fourth quarter and year ended December 31, 2002. Net sales for the quarter ended December 31, 2002 were approximately $853,000 compared to approximately $1.5 million in the previous quarter ended September 30, 2002. Net sales were approximately $2.2 million in the quarter ended December 31, 2001. The Company incurred a net loss for the quarter ended December 31, 2002 of approximately $2.2 million or $0.10 per share, which includes restructuring and impairment of asset charges of $508,000 or $0.02 per share. This compares with a net loss of approximately $1.35 million or $0.06 per share for the previous quarter and approximately $1.4 million or $0.07 per share for the quarter ended December 31, 2001. For the quarter ended December 31, 2002, gross margins fell to 40 percent, compared to 63 percent for the previous quarter and 51 percent for the quarter ended December 31, 2001. The anticipated gross margin of 65 percent for the quarter ended December 31, 2002 was not achieved as a result of the discontinuation of ION Secure 3200 appliances and the lower than expected revenues in that quarter. "The challenges that continue to weigh on the technology sector have slowed our progress in achieving our objective to reach break-even," commented Kam Saifi, ION Network's President and CEO. "While our pipeline continues to advance, the sales cycle remains extended far beyond normal terms. As we negotiate the task of restarting the company amid unfavorable market conditions, we firmly believe ION has the potential to emerge as a leader in the security market with its unique and differentiated solutions. For ION to continue its operations, our immediate plans are (a) to secure approximately $1 million in additional capital and (b) very carefully managing operating costs. As more companies become cognizant of their intellectual property's vulnerability to expensive and time-consuming security breaches, we expect the significance of ION's comprehensive solution to gain further market penetration." ION Networks Inc.