iLinc Announces Second Quarter Fiscal 2009 Results

iLinc (AMEX:ILC), a leader in web conferencing, desktop video conferencing software and collaboration solutions, today announced results for the second fiscal quarter ended September 30, 2008.

Significant Change to Financial Statement Presentation: With the sale of the Company’s audio conferencing assets in June, the Company has reclassified the results of its audio conferencing business operations into discontinued operations. With that reclassification, audio conferencing revenue and associated audio conferencing expenses were netted into income from discontinued operations for the first six months of fiscal 2009, and on a proforma basis, for the same six months last fiscal year, respectively. Likewise, the gain on the sale of audio conferencing assets is included in discontinued operations. Therefore, all comparisons to prior periods take into account the reclassification of audio conferencing operations and the gain on sale into discontinued operations.

Total revenues from continuing operations for the three months ended September 30, 2008 were $1.6 million, a decrease of 39% or $1.0 million when compared to total revenue of $2.6 million for the same three-month period last fiscal year. Total revenues from continuing operations for the six months ended September 30, 2008 were $3.5 million, a decrease of 31% or $1.6 million when compared to revenue of $5.1 million for the same six-month period last fiscal year.

The Company reported a net loss of $1.3 million or ($0.04) per basic and diluted share during the second quarter ended September 30, 2008, as compared with a net loss of $239,000, or ($0.01) per basic and diluted share, for the same three-month period last fiscal year. The Company recorded a net loss of $117,000 for the six months ended September 30, 2008 as compared to a net loss of $161,000 for the same six-month period last fiscal year.

The Company reported adjusted EBITDA¹ of ($615,000) from continuing and discontinued operations for the second quarter, as compared to ($28,000) of adjusted EBITDA¹ for the same three-month period last fiscal year. The Company also reported adjusted EBITDA¹ of ($867,000) during the six months ended September 30, 2008, as compared to adjusted EBITDA¹ of $44,000 for the same six-month period last fiscal year.

James M. Powers, Jr., President and Chief Executive Officer of iLinc, said, "iLinc shifted its sales focus in January to a software-as-a-service ("SaaS”) model. This shift will provide a more meaningful and valuable foundation for recurring revenue upon which long-term success can be built, but it has reduced our short-term revenue as anticipated. We are excited about the success we are having with rapid customer growth, sales bookings, subscription contract backlog and recurring revenue from our new SaaS model and recognize that traditional revenue and income comparisons between current and prior periods under the previous sales model may not be meaningful,” continued Dr. Powers.

"We have seen continued growth in nearly all sales metrics from both new and existing customers, in spite of current economic conditions that are causing a global reduction in corporate spending,” added Dr. Powers. "We believe that our continued sales success is directly related to the value that our product brings to enterprise and small-medium business customers alike. With shrinking travel budgets, increasing hassles associated with travel and initiatives within many organizations to be much more efficient with resources, we see increasing demand for our web and video conferencing products. iLinc is well-positioned as an independent provider focused intensely on web and video conferencing, and we intend to grow our market share by taking advantage of these favorable market drivers. We will provide additional sales metrics and details during the earnings conference call later today so that you may judge for yourself the results of our new SaaS sales efforts,” concluded Dr. Powers.

James L. Dunn, Jr., Chief Financial Officer of iLinc, said, "The sale in June of our audio conferencing assets provided needed cash that is being used to support our shift from a purchase to a subscription sales strategy. With worsening economic trends and difficult capital markets, we know how important retention of that capital is when balanced against the investment in sales and marketing activities. We have reshaped our organization with reductions in headcount and expense where appropriate, while adding resources to foster sales of our award-winning product line. We plan to maintain a cash balance that provides sales growth while preserving investor and customer confidence,” concluded Mr. Dunn.

A webcast of iLinc Communications’ fiscal 2009 second quarter conference call will be hosted live at 11:00 a.m. Eastern time on October 30, 2008. Interested parties may participate in the iLinc online meeting and/or listen to the audio portion via the telephone. To join the live online session and see the presentation, please go to http://ir.ilinc.com/public/join and follow the login instructions. To hear the audio portion of the meeting, call 1-866-813-5647 and provide the operator with the confirmation number of 22991306 when requested. A replay of the event will be available after the call and accessible online through the Company’s web site at www.iLinc.com.

¹ Explanation of Certain Non-GAAP Financial Measures

With our shift from a software purchase license model to a Software-as-a-Service (SaaS) subscription model, we believe it important to report financial metrics that are not defined by Generally Accepted Accounting Principles. These Non-GAAP financial measures include sales bookings, subscription contract backlog and adjusted EBITDA. We believe that sales bookings and subscription backlog provide investors and other interested parties better insight into sales operations and future performance. We believe that adjusted EBITDA is a useful performance metric for our investors and is a measure of operating performance that is commonly reported and widely used by financial and industry analysts, investors and other interested parties because it eliminates significant non-cash and/or one-time charges to earnings. It is important to note that non-GAAP measures should be considered in addition to, not as a substitute for or superior to, net income (loss), cash flows, or other measures of financial performance prepared in accordance with GAAP. A reconciliation of net income to adjusted EBITDA is as follows for the three and six months ended September 30, 2008 and 2007.

About iLinc Communications, Inc.

iLinc, a recognized leader in web conferencing, desktop video conferencing software and collaboration solutions, aims to revolutionize the way organizations meet and communicate. Through its software and services, iLinc liberates people by enabling them to get more done, travel less, achieve work-life balance while preserving the environment. iLinc offers the only enterprise-class web and video conferencing software that allows customers to choose between a software-as-a-service (SaaS) rental model or a traditional software purchase model, in combination with hosting by iLinc or on-premise installation. iLinc is headquartered in Phoenix, Arizona. For more visit www.ilinc.com/investors.

This press release contains information that constitutes forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements involve risk and uncertainties that could cause actual results to differ materially from any future results described within the forward-looking statements. Factors that could contribute to such differences are disclosed in the Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, and other reports filed with the Securities and Exchange Commission. The forward-looking information provided herein represents the Company’s estimates and expectations as of the date of the press release, and subsequent events and developments may cause the Company’s estimates and expectations to change. The Company specifically disclaims any obligation to update the forward-looking information in the future. Therefore, this forward-looking information should not be relied upon as representing the Company’s estimates and expectations of its future financial performance as of any date subsequent to the date of this press release.

iLinc, iLinc Communications, iLinc Suite, MeetingLinc, LearnLinc, ConferenceLinc, SupportLinc, EventPlus, iReduce, iLinc Enterprise, iLinc Essentials and their respective logos are trademarks or registered trademarks of iLinc Communications, Inc.