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| eB2B Commerce Reports 2nd Quarter Results
NEW YORK--(BUSINESS WIRE)--Aug. 22, 2003--eB2B Commerce, Inc. (OTCBB: EBTB.OB) -- Lack of cash, working capital constrain operations Serious & personalized business, investment and technology intelligence for a serious advantage - BizVantage! -- Company in arrears on interest payments eB2B Commerce, Inc. (OTCBB: EBTB.OB), a leading provider of business-to-business integration and transaction management solutions announced today its second quarter 2003 results. Revenue for quarter ended June 30, 2003 was $1,213,000, compared to $832,000 for the same period in 2002, an increase of $381,000 or 46%. Compared to the $1,031,000 reported in the first quarter of 2003, total revenue increased by $182,000, or 18%. The revenue increase was attributable to growth of the Company's core revenue, including completion of previously announced large projects for existing customers, as well as continued growth in eB2B's Trade Gateway network of suppliers. Together, these business lines accounted for revenue of $935,000, an increase of $383,000, or 69% over the second quarter of 2002 and an increase of $189,000 or 25% over the previous period. The Company's revenue from its legacy professional services and consulting business lines was $278,000, a decline of 1% compared to the second quarter of 2002, and a decline of 3% from the first quarter of 2003. Net income in the second quarter of 2003 was $632,000, or $.20 per share, compared to a loss of $1,593,000, or $.84 per share, for the same period last year. Excluding a one-time gain mentioned below, net income was $66,000, or $.02 per share. As previously announced in a Form 8-K filed on July 22, 2003, the Company settled a liability with its largest outstanding creditor, which had been fully reserved, resulting in a gain to Net Income of $566,000. For the second quarter of 2003, the Company reported positive EBITDA (a non-GAAP measure defined as earnings before interest, taxes, depreciation and amortization) of $383,000 for the second quarter, as compared to an EBITDA loss of $435,000 a year ago. This follows EBITDA of $160,000 reported in the first quarter of 2003. eB2B Commerce believes that EBITDA is a meaningful measurement of operating performance as it allows for comparison of performance between other competitors in the transaction services industry. Please see the attached Financial Summary for a reconciliation of EBITDA to net loss. For the six months ended June 30,2003, revenue was $2,244,000 compared to $1,917,000 for the first six months of 2002, an increase of $327,000 or 17%. Income from continuing operations for the six months ended June 30,2003 was $223,000 compared to a loss of $2,845,000 for the first six months of 2002. Net income was $217,000, or $.07 per share for the six months ended June 30,2003 compared to a net loss of $3,187,000, or $1.69 per share for the same period in 2002. Net cash used in continuing operations for the six months ended June 30, 2003 was $118,000 versus net cash used in operating activities of $1,342,000 for the same period in 2002. Total cash and cash equivalents at June 30, 2003 was $307,000 and the Company' had a negative working capital position of $4,753,000. As of August 20, 2003 the Company had cash and cash equivalents of approximately $123,000. Richard Cohan, chief executive officer of eB2B Commerce commented, "Our second quarter continues the progress we have been making in building our core business, but the Company is nevertheless in a very serious and tenuous position. The Company needs more cash to resolve its outstanding obligations and to accelerate its growth. Our financial performance through the first six months should be viewed with caution. Though we are showing net income for the first time and positive EBITDA over the last three quarters, various one-time margin gains are reflected in the results due to settlements with creditors or reversals of old accruals which are no longer relevant to the operation of the business. We have used essentially all the funds from our July 2002 financing and we are seriously constrained by our current capital structure, limiting our ability to raise additional capital and making conventional bank financing extremely difficult, if not impossible, to secure. Our cash position is poor and we are in a negative working capital position. Because we owe prior and current interest payments on certain of our notes, we are either in default or likely cross-default with our noteholders for the $3,200,000 debt on our balance sheet. Given our cash position, we cannot repay our indebtedness if the noteholders demand accelerated payment of the notes. We will be seeking waivers from the noteholders on the interest payments, and proposing to pay the interest at the time of the maturity of the Notes, the earliest of which matures in January 2007. There can be no assurance that they will agree to waive or postpone their interest payments. In the event we are unsuccessful in securing their approval, the noteholders may pursue remedies up to and including making claim to all of the assets of the Company." He continued, "Even if waivers are secured, the Company remains highly dependent on its month-to-month cash flow. Though we are currently cash neutral from operations, any unforeseen collection shortfall or unplanned expense may seriously impact our operations or even cause us to suspend or cease operations. The Company is currently investigating both its strategic and structural options to resolve its issues without filing for bankruptcy under Chapter 11, but may be forced to do so. To help us evaluate our options and advise us on appropriate alternatives, the Company has retained a creditor's rights attorney and will retain other advisors as the situation warrants. Despite the challenges, the Company continues to engage current and new customers for its services, maintain its customary support levels, and keep its employee base stable." eB2B COMMERCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
June 30,
2003
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ASSETS
Current Assets
Cash and cash equivalents $ 307
Accounts receivable, net of allowance of $130 368
Other current assets 8
---------
Total Current Assets 683
Property and equipment, net 18
Product development costs, net of accumulated amortization of
$5,499 432
Deferred financing costs, net of accumulated amortization of
$140 326
Other intangibles, net of accumulated amortization of $2,768 326
Other assets 35
---------
Total assets $ 1.807
=========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable $ 1,224
Accrued expenses and other current liabilities 998
Current maturities of long-term debt 2,777
Deferred revenue 185
Current liabilities of discontinued operations 252
---------
Total current liabilities 5,436
Long-term debt, less current maturities 373
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Total liabilities 5,809
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Stockholders' Deficit
Preferred stock, convertible Series A - $.0001 par value;
2,000 shares authorized; 7 shares issued and outstanding -
Preferred stock, convertible Series B - $.0001 par value;
4,000,000 shares authorized; 2,211,675 shares issued and
outstanding -
Preferred stock, convertible Series C - $.0001 par value;
1,750,000 shares authorized; 732,875 shares issued and
outstanding -
Common stock - $.0001 par value; 200,000,000 shares
authorized; 3,157,431 shares issued and outstanding -
Additional paid-in capital 157,291
Accumulated deficit (161,293)
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Total stockholders' deficit (4,002)
---------
Total liabilities and stockholders' deficit $ 1,807
=========
eB2B COMMERCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
Six Months
Three Months Ended Ended
June 30, June 30,
---------------- ----------------
2003 2002 2003 2002
------ ------ ------ ------
Revenue $1,123 $ 832 $2,244 $1,917
Costs and expenses:
Cost of revenue 300 282 600 533
Marketing and selling (exclusive
of stock based compensation
expense of $0 and $75 for the
three months ended March 31,
2003 and 2002, respectively) 100 101 225 248
Product development costs
(exclusive of stock-based
compensation expense of $0 and
$2 for three months ended March
31, 2003 and 2002 respectively) 54 350 182 695
General and administrative
(exclusive of stock-based
compensation expense of $0 and
$4 for the three months ended
March 31, 2003 and 2002,
respectively) 430 884 853 2,074
Amortization of other
intangibles 82 195 324 389
Depreciation 30 543 72 1,086
Restructuring charge - (655) - (655)
Settlement of licensing
liability (566) - - -
Stock-based compensation
expense - 81 - 81
------ ------ ------ ------
Total costs and expenses 430 1,781 1,690 4,532
------ ------ ------ ------
Income (loss) from continuing
operations before other income
expenses, net 783 (949) 554 (2,615)
Interest and other expenses,
net (168) (115) (331) (230)
------ ------ ------ ------
Income (loss) from continuing
operations 615 (1,064) 223 (2,845)
Income (loss) from discontinued
operations 17 (529) (6) (342)
------ ------ ------ ------
Net income (loss) $ 632 $(1,593) $ 217 $(3,187)
====== ======= ====== =======
Income (loss) per common share
from continuing operations $ 0.19 $(0.56) $ 0.07 $(1.51)
Loss income per common share
from discontinued operations 0.01 (0.28) - (0.18)
------ ------ ------ ------
Net loss per common share $ 0.20 $(0.84) $ 0.07 $(1.69)
====== ====== ====== ======
Weighted average number of
common shares outstanding 3,157,416 1,892,196 3,140,931 1,883,730
========= ========= ========= =========
eB2B COMMERCE, INC.
RECONCILIATION OF EBITDA(1) TO NET LOSS (UNAUDITED)
(IN THOUSANDS)
Three Months
Ended June 30,
----------------
2003 2002
------- -------
Net Income (loss) 632 $(1,593)
Depreciation and amortization 166 1,088
Interest 168 115
Settlement of Licensing Liability (566) -
Restructuring credit (655)
Income (loss) from disc ops (17) 529
Stock-based compensation - 81
------- -------
EBITDA $ 383 $ (435)
======= =======
(1) EBITDA is defined as net income (loss) adjusted to exclude:
(i) provision (benefit) for income taxes, (ii) interest income and
expense, (iii) depreciation, amortization and write-down of assets,
(iv) stock-related compensation, (v) non-recurring items such as
restructuring credit and gain on settlement of licensing liability,
and (vi ) income or loss from discontinued operations
About eB2B Commerce, Inc. eB2B Commerce is a leading provider of business-to-business transaction management services that simplify trading partner integration, automation, and collaboration across the order management life cycle. The eB2B Trading Network and Transaction Lifecycle Management solutions provide enterprises large and small with a total solution for improving trading partner relationships that enhance productivity and bottom line profitability. FORWARD LOOKING STATEMENTS - Certain statements contained in this news release which are not based on historical facts are forward-looking statements, as the term is defined in the Private Securities Litigation Reform Act of 1995, and are subject to uncertainties and risks that may cause actual results to materially differ from projections. While these statements reflect the Company's current judgment, they are subject to risks and uncertainties. Actual results may differ significantly from projected results due to a number of factors, including, but not limited to, the Company's limited operating history; the Company's negative working capital and stockholders' deficit; the Company's ability to raise additional capital; our limited cash resources; the risk of our secured noteholders will seek our assets in view of default in payment of interest, the soundness of our business strategies relative to the perceived market opportunities; our ability to successfully develop, market, sell and improve our business to business transaction services to retailers, suppliers, buyers or sellers; our ability to compete effectively on price and support services; the risks associated with rapidly changing technologies, such as the internet; and our assessment of our specific vertical industry's need to become technology efficient. These factors and other risk factors are more fully discussed in the Company's filings with the Securities and Exchange Commission, which you are strongly urged to read. eB2B expressly disclaims any intent or obligation to update any forward-looking statements. When used in this Report, the words "believes," "estimated," "estimates," "expects," "expected," "anticipates," "may" and similar expressions are intended to identify forward-looking statements.
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