- Reports Results for the Three and Six Months Ended December 31, 2005 -
- Files SEC Form 10-K for the Fiscal Year Ended June 30, 2005 Including the Restated Fiscal Years Ended June 30, 2004 and 2003 –
- Files SEC Forms 10-Q for the Fiscal Quarters Ended September 30, 2005 and December 31, 2005 –
OREM, Utah, March 9, 2006 - iMergent, Inc. (AMEX: IIG), a leading provider of eCommerce and software for small businesses and entrepreneurs, today announced the results for the three and six months ended December 31, 2005. Also today, the Company is filing with the Securities Exchange Commission (SEC) its Form 10-K for the fiscal year ended June 30, 2005 including the restated fiscal years ended June 30, 2004 and 2003 and its Forms 10-Q for the fiscal quarters ended September 30, 2005 and December 31, 2005.
Don Danks, chairman and chief executive officer, stated, “Completing our fiscal 2005 audited financial statements marks a significant milestone for iMergent, and we are gratified to move forward and provide updates on our progress in running the business. While we devoted attention to completing our 2005 financial statements and restatements of prior years, we remained focused on our established growth strategy of enhancing our technology, ensuring outstanding customer service, increasing sales teams and workshops to leverage our corporate and support infrastructure, and developing additional marketing partnerships.” “We have accomplished that and more. StoresOnline™ Pro, a major upgrade to our core product, enhances customers’ ability to manage and grow their businesses. In the last year, we have introduced ancillary products such as our proprietary Marketing Tool-kit and a thirdparty small business tax preparation service offering. In addition, we have broadened our training offerings to serve existing customers wishing to drive their businesses to the next level. Perhaps what I am most proud of throughout these past nine months is our ability to maintain and expand our marketing relationships. To date, we have begun initial product testing with a major national financial institution and a national marketing partner to expand our reach further into established small business markets. The response has been quite positive.”
In December 2005, the Company changed its business model to: (1) limit certain “free” services to a period of one year for all customers who purchased the StoresOnline software prior to December 20, 2005, and (2) begin charging customers for those services as part of customer support. This change in business model resulted in the recognition of product and other revenue of $108.0 million of previously deferred revenue, which would have been recognized in future periods had the change in business model not occurred. The company’s revenue recognition policies and a table summarizing the changes within the deferred revenue account for the three and six-month periods ended December 31, 2005 and 2004 follow in this press release.
In addition to revenue recognized each period in the statement of operations, management believes the net dollar volume of contracts written each period is a relevant and meaningful statistic to the understanding of the operations of the Company. Net dollar volume of contracts written represents gross dollar sales contracts executed during the period less estimates for bad debts and discounts incurred on sales of trade receivables (“financial discounts”). As net dollar volume of contracts written is not a U.S. generally accepted accounting principles (GAAP) measure, a table reconciling GAAP revenue to net dollar volume of contracts written follows in this press release.
Three-months Ended December 31, 2005
• Revenues for the three months ended December 31, 2005 increased to $120.5 million from $9.8 million for the three months ended December 31, 2004. The $110.7 million increase includes $108.0 million of previously deferred revenue, which would have been recognized in future periods had the change in the company’s business model not occurred.
• Product and other revenue increased to $117.5 million for the three months ended December 31, 2005 from $5.9 million for the three months ended December 31, 2004. The $111.6 million increase includes $108.0 million of previously deferred revenue, which would have been recognized in future periods had the change in the company’s business model not occurred.
• Net contracts written were $25.1 million for the three months ended December 31, 2005 compared to $23.6 million for the three months ended December 31, 2004. A table reconciling GAAP revenue to net contracts written follows in this press release.
• Total operating expenses were $21.6 million in the three months ended December 31, 2005 compared to $18.9 million in the comparable period of the previous fiscal year.
• Net income was $111.2 million, or $8.92 per diluted common share, for the three months ended December 31, 2005 compared to a net loss of $8.3 million, or $0.71 per diluted common share, for the comparable period of the previous year. Net income for the three months ended December 31, 2005 includes an $11.7 million income tax benefit resulting primarily from the reversal of a valuation allowance against the Company’s deferred income tax assets due to those assets becoming more likely than not of being realized due to the change in business model.
Brandon Lewis, president and chief operating officer, said, “By executing on our growth strategy the demand for Internet training workshops increased. Therefore, in September 2005, we launched our sixth sales team, and the team is now fully productive and posting positive results. During the second quarter of fiscal 2006, we conducted 200 workshops including 65 international workshops compared to 185 workshops including 51 international workshops during the comparable quarter of the prior fiscal year. We have increased our offerings at the workshops, and through our back-end marketing partners we have further optimized the value of our database by selling additional training and marketing solutions.” “Our long-term strategy is to further diversify our customer base and drive new opportunities from multiple revenue streams. To this end, we expect to roll out new proprietary product offerings while adding to our list of industry-leading partners. For example, our recently announced StoresOnline Pro edition gives customers total control of their businesses on the Internet while streamlining the operations and functionality of their web sites, creating a more user-friendly interface for online customers. Looking ahead, we expect to further leverage our in-house capabilities by partnering with industry-leading companies and introducing innovative new product offerings for our StoresOnline customers,” added Lewis.