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Monday February 1, 8:28 am Eastern Time
Company Press Release
I/NET Announces Year-End Results
KALAMAZOO, Mich.--(BUSINESS WIRE)--Feb. 1, 1999--I/NET, Inc. (OTC BB:INNI) today announced the results of its fiscal year ended December 31, 1998, highlighted by increased sales and the Company's eighth consecutive quarter of profitability.
The developer and marketer of Internet- and Intranet-based software applications for mid-range computers reported its net revenues increased five percent to $1,768,379 for fiscal 1998, as compared to $1,692,170 in the same period last year. I/NET attributed the gains made to its web site consulting services and to sales of its existing Internet products as well as to development projects for Internet products for IBM and Netscape.
I/NET posted net earnings in fiscal 1998 of $287,896, representing a three percent increase over fiscal 1997's earnings of $279,775 excluding an extraordinary one-time gain of $97,946 from the extinguishment of a previously recorded debt.
''We continued to build on a solid foundation in 1998, our second year of profitable performance,'' said Stephen J. Markee, president and chief executive officer of I/NET. ''We achieved growth in our core operations and prepared to make Netscape's Internet Server available to IBM's AS/400. After more than a year of development, this is about to become a reality.''
I/NET has finalized its development efforts to bring the first of Netscape's products to the mid-range computer marketplace and has scheduled the release of the Enterprise Server in the first quarter of 1999.
''This is a dynamic time for the Company,'' said Markee. ''We are scheduled to bring new products to the marketplace and have also embarked on strategic initiatives designed to grow our Company. The recent announcement to enter into I/NET's first acquisition is an important step to grow our Company and increase shareholder value. A larger asset base should prove beneficial to raise our position in the burgeoning Internet commerce industry and to capitalize on additional and related growth opportunities.''
On January 25, 1999, I/NET announced that it signed a letter of intent to acquire Consolidated Graphics Group, Inc. (CGG), a privately-held computer graphics, multimedia, printing and direct marketing firm based in Cleveland, Ohio.
''This acquisition also enables I/NET to initiate the process for our common stock to become eligible for listing on the Nasdaq SmallCap Market, a move that should increase the liquidity and marketability of the Company's stock,'' said Markee.
I/NET reported its gross margin (gross profit as a percentage of sales) declined to 49 percent for fiscal 1998, compared with 56 percent in the 1997 fiscal year. The Company attributed the margin decline to increased expenses related to the addition of personnel for the IBM web site development project and to additional costs for resources associated with the Netscape project.
Selling, general and administrative (SG&A) expenses as a percentage of sales decreased to 29 percent in fiscal 1998 from 34 percent in the comparable period last year, reflecting I/NET's ability to lower these costs from the prior fiscal year even as the Company increased its revenues. Operating income for the year ended December 31, 1998 was $362,503, compared to the $380,074 posted in the same period a year ago.
For the fourth quarter ended December 31, 1998, I/NET reported net earnings of $47,273 on net revenues of $424,523, compared with net earnings of $209,190 on net revenues of $597,173 in the same period last year. I/NET attributed the decrease in net revenues to its agreements with IBM and Netscape, which recognized more revenue in the fourth quarter of fiscal 1997 due to start-up costs.
I/NET's AS/400 server software products allow AS/400 mid-range computers to function as Internet servers, provide encryption for secure financial transactions to occur over the Internet, and perform other Internet- or Intranet-related functions. The AS/400, recognized for its reliability and security, is the standard for back-office operating systems or servers. An estimated 500,000 AS/400s are in use today worldwide, including installations at 98 percent of Fortune 100 companies.
I/NET (http://www.inetmi.com) develops Internet computer systems and software in both public and private sectors, and is a leading research firm specializing in systems planning, development and implementation of Internet security solutions, including services to provide secure financial transactions over the Internet for international banking centers. The Company, established in Kalamazoo, Michigan in 1982, also provides web site consulting and security services.
This news release contains forward-looking statements that are made pursuant to the ''safe harbor'' provisions of the Private Securities Litigation Reform Act of 1995. Actual results may differ substantially from these forward-looking statements. Forward-looking statements involve risks and uncertainties, including the uncertainty as to whether the transaction discussed in this news release will be completed.
I/NET Inc.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Year Ended
----------
December 31, 1998 December 31, 1997
----------------- -----------------
% of Sales % of Sales
---------- ----------
Revenues $ 1,768,379 100% $ 1,692,170 100%
Cost of Revenues 899,606 51% 739,093 44%
----------- ---------- ---------- ---------
Gross Profit 868,773 49% 953,077 56%
Selling, General &
Administrative
Expense 506,270 29% 573,003 34%
----------- ---------- ---------- ---------
Earnings from
Operations 362,503 20% 380,074 22%
Interest Expense 74,607 4% 100,299 6%
----------- ---------- ---------- ---------
Earnings Before
Extraordinary
Item 287,896 16% 279,775 16%
Extraordinary Item:
Gain on
Extinguishment
of Debt -- 0% 97,946 6%
----------- ---------- ---------- ---------
Net Earnings $ 287,896 16% $ 377,721 22%
----------- ---------- ---------- ---------
----------- ---------- ---------- ---------
Net Earnings Per
Share $ 0.01 $ 0.01
----------- ----------
----------- ----------
Three Months Ended
------------------
December 31, 1998 December 31, 1997
----------------- -----------------
% of Sales % of Sales
---------- ----------
Revenues $ 424,523 100% $ 597,173 100%
Cost of Revenues 246,866 58% 262,396 44%
----------- ---------- ---------- ---------
Gross Profit 177,657 42% 334,777 56%
Selling, General &
Administrative
Expense 114,473 27% 104,414 17%
----------- ---------- ---------- ---------
Earnings from
Operations 63,184 15% 230,363 39%
Interest Expense 15,911 4% 21,173 4%
----------- ---------- ---------- ---------
Earnings Before
Extraordinary Item 47,273 11% 209,190 35%
Extraordinary Item -- 0% -- 0%
----------- ---------- ---------- ---------
Net Earnings $ 47,273 11% $ 209,190 35%
----------- ---------- ---------- ---------
----------- ---------- ---------- ---------
Net Earnings Per
Share $ 0.00 $ 0.01
----------- ----------
----------- ----------
Weighted Avg. Shares
Outstanding 31,037,652 30,987,652
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Contact:
I/NET, Inc.
Stephen J. Markee 616/344-3017 ext. 104
smarkee@inetmi.com
or
Seyferth & Associates, Inc.
John Vonder Haar, 800/435-9539
SeyferthPR@aol.com
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