Ashton Technology Group (fka ASTN)

[sarals]

March 2001 Year-End Financial Results

Monday July 9, 2001 05:48 PM
Company Press Release
The Ashton Technology Group, Inc. Reports March 2001 Year-End Financial Results
PHILADELPHIA--(BUSINESS WIRE)--July 9, 2001--The Ashton Technology Group, Inc. (NASDAQ:ASTN) today announced that its net loss for its fiscal year ended March 31, 2001 totaled 20.9 million compared to a net loss of 6.2 in its prior fiscal year.

The net loss applicable to common stock for the year ended March 31, 2001 totaled .79 per share, compared to a net loss of .32 per share in the prior year.

During the year ended March 31, 2001, Ashton's subsidiary, Electronic Market Center, Inc. (eMC) began the orderly winding down of its operations as a result of market conditions and a lack of financing available to complete its development.

As a result, Ashton recorded a loss from discontinued operations totaling 2.6 million for the year ended March 31, 2001 related to eMC, and a 3.1 million loss on the disposal of eMC, including the write down of its assets.

During the prior fiscal year, Ashton recorded a 5.6 million gain due to the change in accounting for its investment in Gomez, Inc. (a former Ashton subsidiary company) to the equity method, and a 2.5 million gain on the redemption of part of its Gomez series A preferred stock.

Ashton's ownership percentage in Gomez was reduced below 50 due to Gomez's private placement of its Series C Preferred Stock in December 1999. At that time, Ashton began accounting for its investment in Gomez using the equity method of accounting, rather than consolidating the results of Gomez with those of Ashton.

During the year ended March 31, 2001, Ashton also recognized a 2 million loss in affiliates representing Ashton's portion of the net loss of Kingsway ATG Asia, Ltd (KAA), another of Ashton's equity investments and of Gomez to the extent of its investment balance in Gomez.

The KAA loss was primarily a result of a decrease in the market value of KAA's trading securities portfolio. During the year ended March 31, 2001, Ashton accepted shares of Gomez common stock, valued at 884,564, in satisfaction of a note receivable and reimbursement of legal costs from a related party.

Both the note receivable and reimbursement of legal costs were in connection with litigation, which was settled by Ashton in 1998. As a result of this transaction, Ashton recorded 413,980 in other income related to the reimbursement of legal costs paid by Ashton in previous years, a 470,584 reduction in notes receivable and accrued interest, and an investment in Gomez equal to the value of the stock received, or 884,564.

However, due to Ashton's equity method of accounting for Gomez, Ashton also recorded a loss in affiliates of 884,564 to recognize Ashton's share of Gomez's net losses, to the extent of the investment balance.

Excluding eMC, KAA, and the Gomez-related transactions, Ashton incurred an adjusted net loss from continuing operations totaling 13.6 million, or 0.54 per common share, for the year ended March 31, 2001, compared to 14.4 million, or 0.65 per common share, last year.

Revenues from Ashton's intelligent matching systems business, through the operation of eVWAP(TM) and securities commissions on trades executed through Croix Securities, totaled 225,068 for the year ended March 31, 2001 compared to 32,135 in the prior year. The eVWAP system currently has enrolled 115 institutions, broker/dealers and clearing agents.

Recently, additional users have made consistent daily commitments in the eVWAP system. As a result, the eVWAP system's liquidity has increased from a 20-day moving average of 100,000 shares per day in January to 70 million shares per day in July. During July 2001, Ashton will be introducing a "Guaranteed eVWAP Execution Program" in the S&P 500 listed stocks.

Selling, general and administrative expenses (excluding Gomez) increased approximately 48 from 8.9 million to 13.2 million during the year ended March 31, 2001. The increase in selling, general and administrative expenses in the year ended March 31, 2001 was primarily a result of hiring a full-service sales and coverage team to support Ashton's products, and an increase in outsourced labor working on the development of new intelligent matching systems.

Salaries and benefits totaled 5.8 million and 3.6 million in the years ended March 31, 2001 and 2000, respectively, as staff increased from 43 to 56 employees. Approximately 1.6 million and .3 million was paid for outsourced labor in the years ended March 31, 2001 and 2000, respectively.

In addition, during the year ended March 31, 2001, losses on trading activities relating to ATG Trading LLC includes .3 million in net realized losses on trades, and .6 million in related broker commissions, execution and clearing charges.

Ashton is an eCommerce company that develops and operates electronic trading and intelligent matching systems for the global financial securities industry. Our focus is to develop and operate alternative trading systems, serving the needs of exchanges, institutional investors and broker-dealers in the U.S. and internationally.

Our goal is to enable these market participants to trade in an electronic global trading environment that provides large order size, absolute anonymity, no market impact and lower transaction fees.

The forgoing press release contains forward-looking statements based on current management expectations. A variety of important factors could cause actual results to differ materially from such statements. Factors that could cause actual results to differ from current expectations include the Company's ability to achieve expected future levels of revenue dependence on proprietary technology ability to successfully deploy eVWAP technological changes and costs of technology industry trends and competition.

These and other risks are described in greater detail in Ashton's filings with the Securities and Exchange Commission.

(Financial tables follow)

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Contact:
Ashton Technology Group, Philadelphia
Christine Geisser, 215/789-3300
Telefax: 215/789-3397
Shareholder email: [e-mail]

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