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Zix Corporation Reports Another Record-High Revenue Quarter as Company Announces Second Quarter 2009 Financial Results
Date:7/28/2009

DALLAS, July 28 /PRNewswire-FirstCall/ -- Zix Corporation (ZixCorp((R))), (Nasdaq: ZIXI), the leader in hosted services for email encryption and payor-sponsored e-prescribing, today announced financial results for the second quarter ended June 30, 2009. ZixCorp recorded second quarter revenues of $7.4 million and a GAAP net loss of $1.9 million for the quarter, or $0.03 loss per share, compared with revenues of $7.0 million and a GAAP net loss of $1.4 million, or $0.02 loss per share, in the corresponding quarter in 2008. Adjusted net loss (see "Use of Non-GAAP Financial Information" below and the attached Reconciliation of GAAP to Non-GAAP Financial Measures) was $0.8 million, or $0.01 loss per share, compared with an adjusted net loss of $0.7 million, or $0.01 loss per share, in the corresponding quarter in 2008.

"Another solid quarter, particularly in our Email Encryption business, led to our highest results for both overall revenue and total orders for Email," said Rick Spurr, Chairman and Chief Executive Officer for ZixCorp. "Regulatory compliance with specific measures, such as the expansion of HIPAA in the American Recovery and Reinvestment Act, also known as the stimulus package, and new state laws such as those in Massachusetts and Nevada, combined with an overall shift under the current administration to a more stringent regulatory environment, led to strong sales results in both healthcare and financial services. The impact from the economy and competition that we saw in our renewal rate in the second quarter was more than offset by the strong demand for our services from new customers, and we believe there will continue to be strong demand in the Email Encryption market over the next several quarters. As a recognized leader in the Email Encryption industry, with a superior SaaS architecture, management of encryption keys 'in the cloud' and a growing stable of industry-leading OEM partners, we are optimistic that we should see continued growth in this business. While we assess strategic alternatives for our e-Prescribing business, we continue to believe that the capability to deliver real-time, patient-specific information to physicians at the point of care, such as through our PocketScript((R)) ePrescribing platform, will be a key element to the successful reform of this country's healthcare system."

Corporate Highlights

  • Company-wide second quarter 2009 revenue of $7.4 million is up 6 percent over the comparable quarter in 2008, meeting previously-issued revenue guidance of $7.3 to $7.6 million
  • Cash and cash equivalents at June 30, 2009 were $12.5 million compared with $12.2 million at the end of the first quarter of 2009 and $13.2 million at December 31, 2008. Cash and cash equivalents remain below the December 31, 2008 level, primarily because of a slow-down in customer payments and certain non-recurring cash items in the quarter.
  • ZixCorp rejoined the Russell 3000 Index when the index was reconstituted on June 26, 2009

Business Highlights

Email Encryption

  • Email Encryption revenue for second quarter 2009 was $6.4 million, up 13 percent when compared with the same quarter in 2008
  • New first-year orders were $1.7 million, compared with $1.4 million in the same period in 2008. Total orders for the quarter were a record $10.0 million, compared with $8.4 million in the same period of 2008
  • ZixCorp reported a renewal rate for eligible contracts of 86 percent, lower than the historical rate of 93 to 95 percent due to customers' budget constraints resulting from the poor economy and competitive threats in the form of pricing pressure and bundled solutions
  • ZixCorp announced enhancements to its Email Encryption service, including the introduction of two new filters to comply with recent state privacy regulations in Massachusetts and Nevada
  • The Company launched a series of well-attended compliance webinars on topics including state privacy laws and enhancements to HIPAA in the American Recovery and Reinvestment Act
  • ZixCorp entered into an OEM partnership with Webroot, who announced that it was embedding ZixCorp's Email Encryption service into the Webroot Email Security SaaS

e-Prescribing

  • e-Prescribing revenue for second quarter 2009 was $1.0 million, down 23 percent when compared with the same quarter in 2008
  • The Company's PocketScript business met the e-Prescribing deployment guidance of 300 to 350 for the second quarter with 325 deployments
  • ZixCorp processed over 2.5 million e-scripts in the second quarter, an increase of approximately 19 percent over the second quarter of 2008
  • ZixCorp's PocketScript( )e-Prescribing service is among the options available to physicians on a new American Medical Association (AMA) online vendor selection tool
  • ZixCorp announced earlier that it had retained Allen & Co to assist the Company's Board of Directors in reviewing strategic alternatives for maximizing the shareholder value of its e-Prescribing business

Financial Highlights

Note: All gross profit and expenditure explanations below are based on adjusted non-GAAP amounts, the primary adjustments of which are non-cash stock-based compensation under SFAS 123R and non-recurring expense items- see "Use of Non-GAAP Financial Information" below and the "Reconciliation of GAAP to Non-GAAP Financial Measures" presented with attached financial statements.

Revenues by Product Second Quarter 2009

                                                                  3-month
                                                                  Variance
                                 3 Months Ended June 30,       2009 vs. 2008
                                 ----------------------        --------------
                                    2009        2008              $        %
                                 ----------  ----------        --------- -----
     Email Encryption            $6,379,000  $5,667,000        $712,000   13%
     e-Prescribing                  992,000   1,291,000        (299,000) (23%)
                                 ----------  ----------        ---------
     Total revenues              $7,371,000  $6,958,000        $413,000    6%
                                 ==========  ==========        ========



Revenues: The increase in Email Encryption revenue was due to the growth inherent in our successful subscription model with steady additions to the subscriber base coupled with a high rate of renewing existing customers. The decline in e-Prescribing revenue was driven primarily by fewer new prescriber deployments in 2008 and early 2009 compared with 2007, which led to a decline in deployment fees and a drop in fee revenue after reaching a contractual cap in one customer program. The Company's order backlog (contractually bound service contracts that represent future revenue to be recognized as the services are provided) was a record $41.4 million on June 30, 2009.

Gross Profit: The Company recorded an adjusted gross profit of $5.1 million (69 percent of revenue) for the second quarter 2009, compared with $4.5 million or 65 percent of revenue for the same period in 2008. The adjusted gross profit contribution by business unit was $5.3 million (83 percent) from Email Encryption and negative $0.2 million (negative 20 percent) from e-Prescribing. The gross profit improvement for the quarter came from solid revenue growth in Email Encryption on a largely fixed cost structure, partially offset by the decline in e-Prescribing revenues.

R&D and SG&A Expenditures: On an adjusted basis, the Company's R&D expenses were $1.7 million and $1.3 million in the second quarter of 2009 and 2008, respectively, with the increase in 2009 due to investment in further adapting our service for international customers and enhancing the platform for our OEM partners in Email Encryption and ongoing workflow improvements and certification requirements for e-Prescribing. SG&A expenses on an adjusted basis were $4.3 million and $4.1 million in the second quarter of 2009 and 2008, respectively, with the increase in 2009 due to higher expenses for outside service providers.

Adjusted Earnings: The Company recorded an adjusted net loss of $0.8 million, or $0.01 loss per share for the second quarter of 2009, compared with an adjusted net loss of $0.7 million or $0.01 loss per share for the comparable quarter in 2008. The increase in adjusted net loss was driven by a decline in investment and other income due primarily to a decrease in interest rates in 2009 compared with 2008. See the attached "Reconciliation of GAAP and Non-GAAP Financial Measures" for a reconciliation of GAAP to non-GAAP line items.

Outlook: The Company forecasts revenue for the third quarter to be between $7.5 and $7.8 million. e-Prescribing deployments for the third quarter are expected to be between 200 and 250 deployments. Our adjusted basic earnings per share is expected to be between $0.00 and $0.01.

Corporate Governance: ZixCorp announced that, in accordance with Nasdaq Stock Market Rule 5635, over the past 15 months the Company has awarded 96,552 stock options to 28 newly hired employees for a variety of non-executive positions throughout the Company. Exercise prices ranged from $1.22 to $3.54 per share, with a weighted average price of $2.08. Approximately one-third of the options vest on the first anniversary of the grant, with the balance vesting on a pro rata basis over the subsequent eight quarters.

Second Quarter Conference Call Information

The Company's second quarter operating results will be released after close of the U.S. financial markets on July 28, 2009. The Company will hold a conference call to discuss this information on July 28 at 5:00 p.m. ET.

A live Webcast of the conference call will be available on the investor relations portion of ZixCorp's Web site athttp://investor.zixcorp.com. Alternatively, participants can listen to the conference call by dialing 617-213-8064 or toll-free 866-770-7051 and entering access code 40200276. An audio replay of the conference will be available until August 4, by dialing 617-801-6888 or toll-free 888-286-8010, and entering the access code 36658027, and after that date via Webcast from the Company's Web site.

About Zix Corporation

Zix Corporation is the leader in email encryption and payor sponsored e-prescribing services. ZixCorp offers the simplicity of Software as a Service with the convenience of customizable encryption policies. ZixCorp provides automated key management "in the cloud" for all its customers, resulting in a scalable, reliable, easy-to-use and simple-to-administer service. ZixDirectory is the largest email encryption directory in the world enabling seamless and secure communication among communities of interest. ZixDirectory connects over 16 million members and includes over 1,000 financial institutions, the FFIEC federal banking regulators, 20 state banking regulators, over 30 Blue Cross Blue Shield organizations and more than 1,000 hospitals. ZixCorp's PocketScript(R) e-prescribing service saves lives and saves money by automating the prescription process between payors, doctors and pharmacies. For more information, visit http://www.zixcorp.com/.

Safe Harbor Statement for ZixCorp

The following is a "Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995. Many of the foregoing statements by Mr. Spurr are forward-looking statements, not a guarantee of future performance, and involve substantial risks and uncertainties. Actual results may differ materially from those projected in these forward-looking statements. These risks and uncertainties include, but are not limited to, the following: the fact that the preliminary financial results included in this press release could be subject to change based on adjustments that are deemed appropriate by the Company during the process of finalizing its quarterly financial statements; the Company's continued operating losses and its PocketScript e-Prescribing service's use of cash resources; the Company's ability to achieve broad market acceptance for the Company's products and services, including the Company's ability to enter into new or expand existing sponsorship agreements for its PocketScript e-Prescribing business and the Company's ability to continue realizing acceptance of its Email Encryption business in its core markets of healthcare and financial and to achieve market acceptance of its Email Encryption business in other markets; the Company's ability to maintain existing and generate other revenue opportunities, including fees for scripts written or value added services for its payor customers from its PocketScript e-Prescribing business; the Company's ability to establish and maintain strategic and OEM relationships to gain customers and grow revenues, particularly in its Email Encryption business; the expected increase in competition in the Company's Email Encryption and e-Prescribing businesses; the Company's ability to successfully and timely introduce new Email Encryption and e-Prescribing products and services or related products and services and implement technological changes; and whether the Company will enter into a strategic transaction with respect to its e-Prescribing business and the effects of any such transaction on the Company and its stockholders. Further details pertaining to such risks and uncertainties may be found in the Company's public filings with the SEC. The Company does not intend, and undertakes no obligation, to update or revise any forward-looking statement, except as required by federal securities regulations.

Use of Non-GAAP Financial Information

Management evaluates and makes operating decisions using various performance measures. In addition to reporting financial results in accordance with GAAP, we also consider when making financial decisions, non-GAAP gross profit, operating income/(loss), net income/(loss), and earnings/(loss) per share which we refer to as "adjusted gross profit," "adjusted operating income/(loss)," "adjusted net income/(loss)," and "adjusted earnings/(loss) per share." In calculating adjusted gross profit, adjusted operating income/(loss), adjusted net income/(loss), and adjusted earnings/(loss) per share, management excludes certain items to facilitate its review of the comparability of the Company's operating performance on a period-to-period basis because such items are not, in management's review, related to the Company's ongoing operating performance.

We present adjusted gross profit, adjusted operating income/(loss), adjusted net income/(loss), and adjusted earnings/(loss) per share because we consider each to be an important supplemental measure of our performance. Management uses these non-GAAP financial measures to make operational and investment decisions, to evaluate the Company's performance, to forecast and to determine compensation. Further, management utilizes these performance measures for purposes of comparison with its business plan and individual operating budgets and allocation of resources

We believe that these non-GAAP financial measures are useful to investors in providing greater transparency to the information used by management in its operational decision making. We believe that calculating adjusted gross profit, adjusted operating income/(loss), adjusted net income/(loss), and adjusted earnings/(loss) per share also facilitates a comparison of ZixCorp's underlying operating performance with that of other companies in our industry, which may from time to time use similar non-GAAP financial measures to supplement their GAAP results. However, non-GAAP measures have limitations as analytical tools, and you should not consider these measures in isolation or as a substitute for GAAP gross profit, operating income/(loss), net income/(loss), and earnings/(loss) per share, or any other performance measure determined in accordance with GAAP. In the future, we expect to continue to incur expenses similar to certain of the non-GAAP adjustments described above and exclusion of these items in the presentation of our non-GAAP financial measures should not be construed as an inference that all of these costs are unusual, infrequent or non-recurring.

Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures contained within this press release with our GAAP gross profit, operating income and net income. For more information, see the consolidated statements of income and the "Reconciliation of GAAP to Non-GAAP Financial Measures" contained in this press release.

                                  ZIX CORPORATION
                       CONDENSED CONSOLIDATED BALANCE SHEETS

                                                    June 30,
                                                      2009       December 31,
                                                   (unaudited)      2008
                                                   ------------     ----
    ASSETS
    Current assets:
      Cash and cash equivalents                    $12,494,000   $13,245,000
      Marketable securities                             25,000             -
      Receivables, net                                 628,000       476,000
      Prepaid and other current assets               1,163,000     1,145,000
                                                    ----------    ----------
        Total current assets                        14,310,000    14,866,000
    Restricted cash                                          -        28,000
    Property and equipment, net                      2,254,000     2,236,000
    Goodwill and other assets                        2,220,000     2,227,000
                                                   -----------   -----------
        Total assets                               $18,784,000   $19,357,000
                                                   ===========   ===========


    LIABILITIES AND STOCKHOLDERS' DEFICIT
    Current liabilities:
      Accounts payable and accrued expenses         $4,122,000    $2,916,000
      Deferred revenue                              14,537,000    14,960,000
      License subscription note payable                121,000             -
                                                       -------       -------
        Total current liabilities                   18,780,000    17,876,000
    Long-term liabilities:
      Deferred revenue                               2,888,000     2,484,000
      License subscription note payable,
       non-current                                     250,000             -
      Deferred rent                                    267,000       300,000
                                                       -------       -------
        Total long-term liabilities                  3,405,000     2,784,000
                                                     ---------     ---------
        Total liabilities                           22,185,000    20,660,000
        Total stockholders' deficit                 (3,401,000)   (1,303,000)
                                                    -----------   ----------
        Total liabilities and
         stockholders' deficit                     $18,784,000   $19,357,000
                                                   ===========   ===========



                                   ZIX CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                    (Unaudited)

                               Three Months Ended        Six Months Ended
                                    June 30,                  June 30,
                               ------------------        ----------------
                               2009         2008         2009         2008
                               ----         ----         ----         ----
    Revenues                $7,371,000   $6,958,000  $14,627,000  $14,157,000

    Cost of revenues         2,368,000    2,542,000    4,839,000    5,122,000
                             ---------    ---------    ---------    ---------
    Gross profit             5,003,000    4,416,000    9,788,000    9,035,000
    Operating expenses:
      Research and
       development           1,747,000    1,381,000    3,478,000    2,926,000
      Selling, general and
       administrative        5,228,000    4,607,000    9,872,000    9,424,000
                             ---------    ---------    ---------    ---------
        Total operating
         expenses            6,975,000    5,988,000   13,350,000   12,350,000
                             ---------    ---------   ----------   ----------

    Operating loss          (1,972,000)  (1,572,000)  (3,562,000)  (3,315,000)

    Other income, net           73,000      222,000      141,000      338,000

    Loss before income
     taxes                  (1,899,000)  (1,350,000)  (3,421,000)  (2,977,000)
    Provision for income
     taxes                     (26,000)           -      (46,000)     (77,000)
                               --------   ---------      --------     --------

    Net loss               $(1,925,000) $(1,350,000) $(3,467,000) $(3,054,000)
                           ============ ============ ============ ============

    Basic and diluted loss
     per common share           $(0.03)      $(0.02)      $(0.05)      $(0.05)
                                =======      =======      =======      =======

    Basic and diluted
     weighted average
     common shares
     outstanding            63,319,482   62,903,431   63,319,482   62,803,638
                            ==========   ==========   ==========   ==========



                                 ZIX CORPORATION
                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                    Six Months Ended June 30,
                                                    -------------------------
                                                        2009         2008
                                                        ----         ----
    Operating activities:
      Net loss                                      $(3,467,000) $(3,054,000)
      Non-cash items in net loss                      2,024,000    2,517,000
      Changes in operating assets and liabilities     1,204,000    1,680,000
                                                      ---------    ---------
          Net cash (used in) provided by operating
           activities                                  (239,000)   1,143,000

    Investing activities:
      Purchases of property and equipment              (515,000)    (544,000)
      Restricted cash investments and marketable
       securities, net                                    3,000    1,734,000
                                                          -----    ---------
          Net cash (used in) provided by investing
           activities                                  (512,000)   1,190,000

    Financing activities:
      Proceeds from exercise of stock options                 -      150,000
                                                        -------      -------
          Net cash provided by financing activities           -      150,000
                                                        -------      -------

    Increase (decrease) in cash and cash equivalents   (751,000)   2,483,000
    Cash and cash equivalents, beginning of period   13,245,000   10,524,000
                                                     ----------   ----------
    Cash and cash equivalents, end of period        $12,494,000  $13,007,000
                                                    ===========  ===========



                                 ZIX CORPORATION
              RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
                                  (Unaudited)

                                      Three Months Ended June 30, 2009
                                      --------------------------------

                                  Non-Cash         Strategic
                                   Stock-    Non-    Alter-  Income
                                   based  Recurring  native  Tax     Non-GAAP
                       GAAP         Comp.   Items    Review  Impact  ("Adj.")
                      Results       (A)      (B)      (C)    (D)     Net Loss
                      -------    --------   -----   ------  ------  ---------
    Revenues        $ 7,371,000  $      -                          $7,371,000

    Cost of
     revenues         2,368,000   (59,000) (42,000)                 2,267,000
                      ---------    ------   ------  ------  ------  ---------
    Gross
     profit           5,003,000    59,000   42,000       -       -  5,104,000
    Operating
     expenses:
      Research and
       development    1,747,000   (49,000)  (8,000)                 1,690,000
      Selling,
       general and
       administrative 5,228,000  (425,000)(434,000)(75,000)         4,294,000
                      ---------   -------  -------  ------ -------  ---------
    Total
     operating
     expenses         6,975,000  (474,000)(442,000)(75,000)      -  5,984,000
                      ---------   -------  -------  ------ -------  ---------
    Operating
     income/
     (loss)          (1,972,000)  533,000  484,000  75,000       -   (880,000)

    Other
     income,
     net                 73,000                                        73,000

    Income/ (loss)
     before income
     taxes           (1,899,000)  533,000  484,000  75,000       -   (807,000)
    Provision for
     income taxes        26,000                              2,000     28,000
                         ------   -------  -------  ------   -----  ---------
    Net income/
     (loss)         $(1,925,000) $533,000 $484,000 $75,000 $(2,000) $(835,000)
                    ============ ======== ======== ======= ======== ==========
    Basic and
     diluted loss
     per common
     share               $(0.03)                                       $(0.01)
    Basic and
     diluted
     weighted
     average
     shares
     outstanding     63,319,482                                    63,319,482
                     ==========                                    ==========

    (A) Non-cash stock-based compensation charges relating to stock option
    grants awarded to employees and third-party service providers and
    accounted for in accordance with SFAS123R, "Share-Based Payment"

    (B) Severance payments related to reduction in force

    (C) Expenses related to strategic review of the Company's e-Prescribing
    business segment

    (D) The Company's U.S. operations' net losses for U.S. tax purposes are
    fully provisioned.  The non-GAAP provision for income taxes represents
    expected cash taxes to be paid



                              ZIX CORPORATION
             RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
                               (Unaudited)

                                   Six Months Ended June 30, 2009
                                   ------------------------------

                                  Non-Cash         Strategic
                                   Stock-    Non-    Alter-  Income
                                   based  Recurring  native  Tax     Non-GAAP
                       GAAP         Comp.   Items    Review  Impact  ("Adj.")
                      Results       (A)      (B)      (C)    (D)     Net Loss
                      -------    --------   -----   ------  ------  ---------
    Revenues        $14,627,000                                   $14,627,000

    Cost of
     revenues         4,839,000  (185,000) (42,000)                 4,612,000
                      ---------  -------- --------  ------ ------- ----------
    Gross profit      9,788,000   185,000   42,000       -       - 10,015,000
    Operating
     expenses:
      Research and
       development    3,478,000  (150,000)  (8,000)                 3,320,000
      Selling,
       general and
       administrative 9,872,000(1,035,000)(434,000)(75,000)         8,328,000
                      --------- ---------  -------  ------ -------  ---------
    Total operating
     expenses        13,350,000(1,185,000)(442,000)(75,000)      - 11,648,000
                     ---------- ---------  -------  ------ ------- ----------
    Operating
     income/
     (loss)          (3,562,000)1,370,000  484,000  75,000       - (1,633,000)

    Other income,
     net                141,000                                       141,000

    Income/(loss)
     before income
     taxes           (3,421,000)1,370,000  484,000  75,000       - (1,492,000)
    Provision for
     income taxes        46,000                             (6,000)    40,000
                         ------ --------- --------  ------  -------    ------
    Net
     income/(loss)  $(3,467,000)$1,370,000$484,000 $75,000  $6,000$(1,532,000)
                      =========  ========= ======= =======   ====== =========
    Basic and
     diluted loss
     per common
     share               $(0.05)                                       $(0.02)
    Basic and diluted
     weighted average
     shares
     outstanding     63,319,482                                    63,319,482
                     ==========                                    ==========

    (A) Non-cash stock-based compensation charges relating to stock option
    grants awarded to employees and third-party service providers and
    accounted for in accordance with SFAS123R, "Share-Based Payment"

    (B) Severance payments related to reduction in force

    (C) Expenses related to strategic review of the Company's e-Prescribing
    business segment

    (D) The Company's U.S. operations' net losses for U.S. tax purposes are
    fully provisioned.  The non-GAAP provision for income taxes represents
    expected cash taxes to be paid



                              ZIX CORPORATION
              RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

                                                (Unaudited)

                                         Three Months Ended June 30, 2008
                                         --------------------------------

                                               Non-Cash   Income
                                             Stock-based    Tax     Non-GAAP
                                   GAAP      Compensation  Impact ("Adjusted")
                                  Results        (A)        (B)      Net Loss
                                  -------    ------------  ------ ------------
    Revenues                    $6,958,000                         $6,958,000

    Cost of revenues             2,542,000      (78,000)            2,464,000
                                 ---------      -------   ------    ---------
    Gross profit                 4,416,000       78,000        -    4,494,000
    Operating expenses:
      Research and development   1,381,000      (65,000)            1,316,000
      Selling, general and
       administrative            4,607,000     (467,000)            4,140,000
                                 ---------     ---------  ------    ---------
    Total operating expenses     5,988,000     (532,000)       -    5,456,000
                                 ---------     ---------  ------    ---------
    Operating income/(loss)     (1,572,000)     610,000        -      (962,000)

    Other income, net              222,000                            222,000

    Income/(loss) before
     income taxes               (1,350,000)     610,000        -     (740,000)
    Provision for income taxes           -               (24,000)     (24,000)
                               ------------    --------  -------    ----------
    Net income/(loss)          $(1,350,000)    $610,000  $24,000    $(716,000)
                               ===========     ========  =======    ==========
    Basic and diluted loss per
     common share                   $(0.02)                            $(0.01)
    Basic and diluted weighted
     average shares
     outstanding                62,903,431                         62,903,431
                                ==========                         ==========

    (A) Non-cash stock-based compensation charges relating to stock option
    grants awarded to employees and third-party service providers and
    accounted for in accordance with SFAS123R, "Share-Based Payment"

    (B) Actual taxes to be paid are consistent with the GAAP provision for
    income taxes



                                ZIX CORPORATION
            RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
                                 (Unaudited)

                                       Six Months Ended June 30, 2008
                                       ------------------------------

                                              Non-Cash     Income
                                            Stock-based     Tax     Non-GAAP
                                  GAAP      Compensation   Impact ("Adjusted")
                                 Results         (A)        (B)     Net Loss
                               -----------     --------- ------   -----------
    Revenues                   $14,157,000                        $14,157,000

    Cost of revenues             5,122,000     (157,000)            4,965,000
                                 ---------     --------  -------    ---------
    Gross profit                 9,035,000      157,000        -    9,192,000
    Operating expenses:
      Research and development   2,926,000     (130,000)            2,796,000
      Selling, general and
       administrative            9,424,000     (978,000)            8,446,000
                                ----------   -----------  ------   ----------
    Total operating expenses    12,350,000   (1,108,000)       -   11,242,000
                                -----------   ---------   ------   -----------
    Operating income/(loss)     (3,315,000)   1,265,000        -   (2,050,000)

    Other income, net              338,000                            338,000

    Income/(loss) before
     income taxes               (2,977,000)   1,265,000        -   (1,712,000)
    Provision for income taxes      77,000               (24,000)      53,000
                                    ------   ----------  -------       ------
    Net income/(loss)          $(3,054,000)  $1,265,000  $24,000  $(1,765,000)
                               ============  ==========  =======  ============
    Basic and diluted
     loss per common share          $(0.05)                            $(0.03)
    Basic and diluted
     weighted average
     shares outstanding         62,803,638                         62,803,638
                                ==========                         ==========

    (A) Non-cash stock-based compensation charges relating to stock option
    grants awarded to employees and third-party service providers and
    accounted for in accordance with SFAS123R, "Share-Based Payment"

    (B) Actual taxes to be paid are consistent with the GAAP provision for
    income taxes



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5. MedCath Corporation to Hold Conference Call on Third Quarter Results
6. Digirad Corporation Reports Second Quarter 2009 Financial Results
7. Service Corporation International Announces Schedule For Its Second Quarter 2009 Earnings Release and Conference Call
8. Quigley Corporation Announces Final Results of Quigley Pharmas Phase IIb Study
9. Align Technology Provides Update on Patent Litigation with Ormco Corporation
10. PTS, Inc. Subsidiary Disability Access Corporation Announces $535,000 in New Contracts and Inspection Orders for July 2009
11. PTS, Inc. Subsidiary Disability Access Corporation Announces $535,000 in New Contracts and Inspection Orders for July 2009
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