iMergent Reports Fiscal First Quarter 2010 Financial Results -- Correction


PHOENIX, Nov. 2, 2009 (GLOBE NEWSWIRE) -- This press release contains corrections to the Condensed Consolidated Statements of Cash Flows from the release that went out earlier today, November 2, 2009.

iMergent, Inc. (AMEX:IIG), a leading provider of eCommerce software, site development, web hosting and search engine optimization for businesses and entrepreneurs, today reported financial results for its first fiscal quarter ended September 30, 2009.

Fiscal First Quarter 2010 Compared to 2009

Net income for the first quarter of fiscal 2010 was $718,000, or $0.06 per diluted common share, compared to a net loss of $7,499,000, or $0.66 per diluted common share in the same quarter last year. Income before income tax provision for the first quarter of fiscal 2010 was $1,100,000 compared to a loss of $1,618,000 in the same quarter last year. The positive results were due in large part to the continued success of cost saving initiatives which significantly reduced our selling and marketing expenses to approximately 46% of revenue in the current quarter down from approximately 63% of revenue in the same quarter last year. The income tax provision for the first quarter of fiscal 2010 was $382,000, compared to an income tax provision of $5,881,000 in the prior year quarter. The higher than normal income tax provision in the prior year quarter was primarily due to an increase in our valuation allowance and FIN 48 liability as a result of our settlement discussions with the IRS in the prior year.

Product and other revenues for the first quarter of fiscal 2010 were $12,684,000, compared to $19,401,000 for the same quarter last year. The lower product and other revenues were a result of a 26% reduction in the number of workshops conducted during the current quarter as compared to the prior year quarter, a decrease in the percentage of attendees purchasing to 23% in the current quarter, compared to 32% in the prior year quarter, as well as a 32% reduction in principal cash collected on our receivables portfolio. Commission and other revenues for the first quarter of fiscal 2010 decreased 40% to $4,694,000, compared to $7,865,000 for same quarter last year. Commission and other revenues are derived from commissions on sales of ancillary products by independent third-party partners as well as hosting and other revenues. The lower commission and other revenues were a result of a smaller number of leads sent to the independent third-party partners as a result of the reduction in number of previews and workshops, as well as a decrease in the percentage of customers utilizing these offerings.

Total operating expenses decreased 42% to $17,591,000 for the first quarter of fiscal 2010, compared to $30,528,000 for the first quarter last year, primarily as a result of the continuing impact of cost saving initiatives initiated in the third quarter of fiscal 2009 as well as reduced costs as a result of conducting fewer workshop events. Selling and marketing expenses as a percentage of revenue decreased to 46% for the first quarter of fiscal 2010 compared to 63% for the first quarter of fiscal 2009. The decrease is attributable to the continuation of cost savings initiatives in the current quarter which reduced our cost per direct response advertising piece which in turn decreased our advertising cost per buyer.

Cash provided by operating activities was $963,000 for the first quarter of fiscal 2010, compared to cash used for operating activities of $513,000 for the same period in fiscal 2009. As of September 30, 2009, cash and cash equivalents were $20,309,000, working capital was $16,495,000, and working capital excluding deferred revenue was $37,867,000. Total current and long-term net trade receivables were $27,903,000 as of September 30, 2009.

Steven G. Mihaylo, Chief Executive Officer of iMergent, stated, "We are pleased with these results, particularly since the first fiscal quarter is typically our slowest quarter of the year. The fiscal first quarter normally includes seasonal weakness due to summer vacations which inhibit our ability to conduct events during the first several weeks of July. Our cost saving initiatives and cost controls continue to improve which were instrumental in enabling us to obtain profitability in our first fiscal quarter for the first time since the September 2006 quarter. We continued to focus our efforts on improving our StoresOnline product offerings as well as developing our Crexendo Business Solutions division. We are continuing to work with our Value Added Resellers (VARs) to identify high quality leads for our Software as a Service (SaaS) based eCommerce solutions, search engine optimization (SEO) and search engine management (SEM) offerings to the small to medium enterprise market (SME). In addition to our VAR channel, we are working on developing a direct sales channel to address opportunities which exist outside the VAR customer base or market. We are pleased with the progress made with these efforts over the past quarter. We continue to make progress in the development of our hosted telecom service lines and reaffirm our expectation to launch our hosted telecom service during the first half of calendar 2010.

Conference Call

The company is hosting a conference call today, November 2, 2009, at 1:30 p.m. PT (4:30 p.m. ET). The conference call will be broadcast live over the Internet at www.imergentinc.com. If you do not have Internet access, the telephone dial-in number is 800-990-8058 for domestic participants and 973-638-3325 for international participants. Please dial in five to ten minutes prior to the beginning of the call at 1:30 p.m. PT (4:30 p.m. ET). A telephone replay will be available two hours after the call through February 2, 2010 by dialing 800-642-1687 for domestic callers or 706-645-9291 for international callers and entering access code 95395409. Online webcast replay will be available for 90 days from the date of the call.

About iMergent

iMergent provides eCommerce solutions to entrepreneurs and businesses enabling them to market and sell their business products or ideas via the Internet. The company sells its proprietary software and training services which help users build Internet strategies to allow entrepreneurs and businesses to market and sell their products, accept online orders, analyze marketing performance and manage pricing and customers over the Internet. In addition to software and training, iMergent offers site development, web hosting and search engine optimization (SEO). iMergent, StoresOnline and Crexendo Business Solutions, Inc. are trademarks of iMergent, Inc.

Safe Harbor Statement

This press release contains forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for such forward-looking statements. The words "believe," "expect," "anticipate," "estimate," "will" and other similar statements of expectation identify forward-looking statements. Specific forward-looking statements in this press release include information about iMergent, (1) continuing to focus on the small to medium enterprise market (SME) through its Crexendo Business Solutions division, 2) expecting to launch its hosted telecom service during the first half of calendar 2010. You are cautioned not to place undue reliance on our forward-looking statements. We do not undertake any obligation to publicly update any forward-looking statements to reflect events, circumstances or new information after the release of this press release, or to reflect the occurrence of unanticipated events.

For a more detailed discussion of risk factors that may affect iMergent's operations and results, please refer to the company's Form 10-Q for the quarter ended September 30, 2009 and Form 10-K for the year ended June 30, 2009. These forward-looking statements speak only as of the date on which such statements are made, and the company undertakes no obligation to update such forward-looking statements, except as required by law.



                   iMERGENT, INC. AND SUBSIDIARIES
                Condensed Consolidated Balance Sheets
          (In thousands, except shares and per share data)
                            (unaudited)


                                                 Sept. 30,    June 30,
                                                   2009        2009
                                                 --------    --------
 Assets

 Current Assets:
   Cash and cash equivalents                     $ 20,309    $ 20,474
    Restricted cash                                 1,773       1,802
   Trade receivables, net of allowance for
    doubtful accounts of $6,304
    as of September 30, 2009 and $9,670
    as of June 30, 2009                            19,427      20,771
   Inventories                                        439         256
   Income taxes receivable                            137       1,826
   Deferred income taxes                            1,051       2,171
   Prepaid expenses and other                       4,650       1,524
                                                 --------    --------
     Total Current Assets                          47,786      48,824

 Certificate of deposit                               500         500
 Long-term trade receivables, net of
  allowance for
  doubtful accounts of $4,114
  as of September 30, 2009 and $4,437 as
  of June 30, 2009                                  8,476       9,985
 Property and equipment, net                        1,473       1,322
 Deferred income taxes                              5,650       4,975
 Intangible assets, net                             1,303       1,400

 Other assets                                         331         348
                                                 --------    --------
     Total Assets                                $ 65,519    $ 67,354
                                                 ========    ========

 Liabilities and Stockholders' Equity

 Current Liabilities:
   Accounts payable                              $  3,124    $  2,265
   Accrued expenses                                 6,566       6,257
   Income taxes payable                               160          41
   Dividend payable                                    --         229
   Deferred revenue, current portion               21,372      23,627
   Note payable, current portion                       69          68
                                                 --------    --------
      Total Current Liabilities                    31,291      32,487


 Deferred revenue, net of current portion           8,693      10,236
 Note payable, net of current portion                  30          47
 Other long-term liabilities                          187         184
                                                 --------    --------
      Total Liabilities                            40,201      42,954
                                                 --------    --------

 Commitments and contingencies

 Stockholders' Equity:
   Preferred stock, par value $0.001 per
    share - authorized 5,000,000 shares;
    none issued                                        --          --
   Common stock, par value $0.001 per share -
    authorized 100,000,000 shares; 11,446,320
    shares outstanding as of
    September 30, 2009 and
    11,425,320 shares outstanding
    as of June 30, 2009                                11          11
   Additional paid-in capital                      52,982      52,782
   Accumulated deficit                            (27,675)    (28,393)
                                                 --------    --------
      Total Stockholders' Equity                   25,318      24,400
                                                 --------    --------
      Total Liabilities and Stockholders'
       Equity                                    $ 65,519    $ 67,354
                                                 ========    ========


                   iMERGENT, INC. AND SUBSIDIARIES
          Condensed Consolidated Statements of Operations
         (In thousands, except per share data) (unaudited)

                                               Three Months Ended
                                                  September 30,
                                           --------------------------
                                               2009           2008
                                           -----------    -----------

 Revenues:
  Product and other                        $    12,684    $    19,401
  Commission and other                           4,694          7,865
                                           -----------    -----------
       Total revenues                           17,378         27,266
                                           -----------    -----------

 Operating expenses:
  Cost of product and other revenues             5,583          8,367
  Selling and marketing                          7,904         17,066
  General and administrative                     3,601          4,512
  Research and development                         503            583
                                           -----------    -----------
         Total operating expenses               17,591         30,528
                                           -----------    -----------

 Loss from operations                             (213)        (3,262)
                                           -----------    -----------
 Other income (expense):
  Interest income                                1,343          1,861
  Interest expense                                  (3)            (4)
  Other expense, net                               (27)          (213)
                                           -----------    -----------
         Total other income, net                 1,313          1,644
                                           -----------    -----------

 Income (loss) before income
  tax provision                                  1,100         (1,618)

 Income tax provision                             (382)        (5,881)
                                           -----------    -----------

 Net income (loss)                         $       718    $    (7,499)
                                           ===========    ===========

 Net income (loss) per common share:
   Basic                                   $      0.06    $     (0.66)
   Diluted                                 $      0.06    $     (0.66)
 Dividends per common share:               $      0.02    $      0.11
 Weighted average common shares
  outstanding:
   Basic                                    11,398,115     11,338,917
   Diluted
                                            11,525,148     11,338,917


                   iMERGENT, INC. AND SUBSIDIARIES
            Condensed Consolidated Statements of Cash Flows
                            (In thousands)
                             (unaudited)

                                                  Three Months Ended
                                                     September 30,
                                                 --------------------
                                                   2009         2008
 ----------------------------------------------  --------    --------
 CASH FLOWS FROM OPERATING ACTIVITIES
  Net income (loss)                              $    718    $ (7,499)
  Adjustments to reconcile net income (loss) to
   net cash provided by (used for) operating
   activities:
     Depreciation and amortization                    354         352
     Stock-based compensation expense                 429         337
     Deferred income taxes                            445        (499)
     Changes in assets and liabilities:
        Restricted cash                                29          --
        Trade receivables                           2,853      (1,230)
        Inventories                                  (183)        (50)
        Income taxes receivable                     1,689        (536)
        Prepaid expenses and other                 (2,830)     (2,818)
        Other assets                                   17        (253)
        Accounts payable and accrued expenses       1,118       3,998
        Income taxes payable                          119        (212)
        Deferred revenue                           (3,798)      1,463
        Other long-term liabilities                     3       6,434
                                                 --------    --------
           Net cash provided by (used for)
            operating activities                      963        (513)
                                                 --------    --------

 CASH FLOWS FROM INVESTING ACTIVITIES
   Acquisition of property and equipment             (358)       (337)
   Acquisition of property held-for-sale             (296)         --
   Proceeds from sale of available-for-sale
    securities                                         --         900
                                                 --------    --------
           Net cash provided by (used for)
            investing activities                     (654)        563
                                                 --------    --------

 CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from exercise of stock options             --         296
   Principal payments on note payable                 (16)         --
   Dividend payments                                 (458)     (1,259)
                                                 --------    --------
        Net cash used for financing activities       (474)       (963)
                                                 --------    --------


 NET DECREASE IN CASH AND CASH EQUIVALENTS           (165)       (913)

 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD    20,474      26,184
                                                 --------    --------
 CASH AND CASH EQUIVALENTS, END OF PERIOD        $ 20,309    $ 25,271
                                                 ========    ========

 Supplemental cash flow information:
  Interest paid                                         4           4
  Income taxes paid                                   781         428
 Non-cash investing and financing information:
    Accrued purchases of property and equipment        50          --


            

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