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N2H2 Revises Business Plan

N2H2, Inc., late yesterday, unveiled a new plan to vault the company towards cash-flow positive status within 6 months, a quarter ahead of Wall Street expectations.

The company has shifted its primary focus, increasing its efforts to serve the enterprise market's need for Internet Filtering. N2H2 will largely devote its efforts now to the business and government markets.

According to the company's CFO Paul Quinn, the company will deemphasize the educational markets it had previously served, focusing on corporate and government, the two areas he feels have the largest growth potential for filtering.

On February 26 the company announced the release of its N2H2 Internet Filtering for Microsoft Internet Security and Acceleration Server 2000. The company plans additional enterprise solutions and product announcements in the future.

As part of the move towards the business and government markets, Peter Nickerson, CEO and chairman of N2H2, also announced that the company has realigned its workforce, decreasing the number of employees by 51. According to Peterson, this equates to an estimated $1.5 million reduction in expenses for 3rd Quarter.

"Our objective with this move is to achieve cash flow positive a full quarter ahead of schedule. We previously announced our intent to be cash flow positive by calendar year-end 2001," said Peter Nickerson, CEO and chairman. "We are keenly aware that shareholders expect us to be fiscally responsible. We are reducing expenses in many areas over and above payroll."

According to Amanda Spraker, Director of Human Resources, N2H2 is providing severance pay as well as out-placement counseling to all employees who have been laid off as a result of their changes.

"Decreasing staff was a difficult but necessary decision. N2H2 is extremely proud of all of our employees. Their significant contributions to our success are recognized and appreciated," said Nickerson.

Despite the company's turbulent recent past on NASDAQ, with trading falling below the 1.00 mark for over a month, Quinn maintains that the readjustments are a last minute attempt to boost stock prices.

"We've been working on this for some time, it is not a plan we just came up with in recent days," said Quinn. "It just makes good sense to get to cash-flow positive sooner, so we just said 'what can we do to get there?'"



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