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iMergent Announces Record
Second Quarter 2004 Results 5 February 2004, 4:05pm ET OREM, Utah, Feb. 5, 2004-- Increase in eCommerce Training Workshops and International Marketing Expansion Drives 87% Revenue Growth and 98% Earnings Growth iMergent, Inc. (AMEX: IIG - News) a leading provider of eCommerce and software for small business and entrepreneurs, announced today its results for the fiscal second quarter and six-months ended December 31, 2003. Total revenue for the second fiscal quarter ended December 31, 2003 rose to $19.8 million from $10.6 million in the same quarter of 2002, an increase of 87 percent. The higher revenue was primarily due to an increase in the total number of workshops conducted, which included the initial stages of the expansion of international marketing efforts. Net income for the second fiscal quarter increased to $1.5 million, or $0.12 per diluted share, compared to net income of $740,000, or $0.07 per diluted share, for the comparable quarter of the prior fiscal year, an increase of 98 percent. Net income included the additional cost of $883,000 in charges and customer returns associated with the successful settlement of several legal proceedings. Revenue for the six-months ended December 31, 2003 grew to $40.4 million versus $21.9 million for the comparable period in 2002, an increase of 85 percent. Net income for the six-months ended December 31, 2003 increased to $3.6 million, or $0.30 per diluted share, compared to $1.8 million, or $0.16 per diluted share for the comparable period in 2002, an increase of 98 percent.
Second Quarter and Subsequent Event Highlights
-- Expanded iMergent's international marketing efforts with
StoresOnline(TM) workshops held in Australia, which provided
$1.9 million in revenue. iMergent plans to continue its
international expansion by conducting international workshops
approximately once per month, beginning in March.
-- Increased the number of StoresOnline workshops held during the
quarter to 116 from 68 in the prior year. In addition, the
percent of closed sales to workshop attendees increased 13
percent to 34 percent from the same period a year ago.
-- Expanded our offering of Bootcamps(TM) to iMergent customers,
offering clients intensive four-hour, face-to-face workshops
to provide hands-on help with initial merchant website set up;
a review of merchant marketing concepts; and support for
clients' StoresOnline technical development. These workshops
increase the level of satisfaction among customers.
-- Instituted a nationwide three-day right to rescind policy on
all StoresOnline license contracts to improve service and
customer satisfaction.
-- Decreased the bad debt expense as a percentage of sales from
28 percent to 26 percent. The company has a goal of reducing
this expense further throughout the remainder of 2004.
Brandon Lewis, president and chief operating officer, stated, "The second quarter marked a turning point in the development of iMergent's business strategy. In addition to entering new and lucrative markets, we settled some long-standing legal issues and implemented new collection and customer service practices, including our Bootcamps and our nationwide three-day right to rescind policy. We expect these programs will enhance our service and aid in the reduction of our bad debt expense." "Our base business continues to grow rapidly; and we believe our results have exceeded our expectations, given the second quarter is seasonally our slowest," stated Don Danks, chairman and chief executive officer. "Internationally, we are expecting to continue ramping our efforts, and we will conduct workshops in South Africa and New Zealand. Internally, we are focusing on further improving our customer service and growing the operating leverage of our business." The company will hold a conference call to discuss these results on Thursday, February 5, 2004 at 4:30 p.m. EST; 1:30 p.m. PST. 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 800-639-0297 for domestic and 706-634-7417 for international participants. Please dial in five to ten minutes prior to the beginning of the call. A telephone replay will be available through February 9, 2004; dial 706-645-9291, and enter access code 5161541. About iMergent iMergent provides eCommerce solutions to entrepreneurs and small businesses enabling them to market and sell their business product or idea via the Internet. Headquartered in Orem, Utah the company sells its proprietary StoresOnline software and training services, helping users build a successful Internet strategy to market products, accept online orders, analyze marketing performance, and manage pricing and customers. In addition to software, iMergent offers site development, web hosting, marketing and mentoring products. iMergent typically reaches its target audience through a concentrated direct marketing effort to fill Preview Sessions, in which a StoresOnline expert reviews the product opportunities and costs. These sessions lead to a follow-up Workshop Conference, where product and technology experts train potential users on the software and encourage them to make purchases. iMergent, Inc., Bootcamp, and StoresOnline are trademarks of iMergent, Inc. Statements made in this press release that are not historical in nature constitute forward-looking statements within the meaning of the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995. Such statements are based on the current expectations and beliefs of the management of iMergent and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Such risks and uncertainties include, without limitation, the Company's continued ability to expand business internationally; continue to increase the number of workshops; continue to maintain/increase the closed sale to attendees percentage; continue to maintain/increase training events; the continued acceptance of Bootcamps; continue to maintain/decrees bad debt expense; continued acceptance of new customer services practices; the Company's ability to attract and retain key management and other personnel. For a more detailed discussion of factors that affect iMergent's operating results, please refer to its SEC reports including its most recent Form 10-K and Form 10-Q. The Company undertakes no obligation to update this forward-looking information.
IMERGENT, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Earnings for the
Three Months and the Six Months Ended December 31, 2003 and 2002
Three Months Ended Six Months Ended
------------------------- -------------------------
December 31, December 31, December 31, December 31,
2003 2002 2003 2002
------------ ------------ ------------ ------------
Revenue $19,827,058 $10,588,680 $40,372,194 $21,872,529
Cost of revenue 4,545,780 2,138,021 8,907,482 4,175,874
Cost of revenue -
related party - 164,936 - 585,517
------------ ------------ ------------ ------------
Total cost of
revenue 4,545,780 2,302,957 8,907,482 4,761,391
------------ ------------ ------------ ------------
Gross profit 15,281,278 8,285,723 31,464,712 17,111,138
Operating expenses
Research and
development 86,036 - 162,729 -
Selling and
marketing 6,704,292 3,601,993 12,850,729 7,983,605
Selling and
marketing -
related party - 55,608 - 195,343
General and
administrative 2,256,990 1,033,681 4,091,958 1,968,099
Depreciation and
amortization 24,448 103,886 51,872 252,303
Bad debt expense 5,142,851 2,916,827 11,363,085 5,204,560
------------ ------------ ------------ ------------
Total operating
expenses 14,214,617 7,711,995 28,520,373 15,603,910
Earnings from
operations 1,066,661 573,728 2,944,339 1,507,228
Other income (expense)
Other income
(expense), net 42,318 (1,006) 43,288 699
Interest income 366,513 174,284 641,756 331,216
Interest expense (9,755) (6,664) (11,565) (15,652)
------------ ------------ ------------ ------------
Total other
income (expense) 399,076 166,614 673,479 316,263
------------ ------------ ------------ ------------
Earnings before
income taxes 1,465,737 740,342 3,617,818 1,823,491
Provision for
income taxes - - - -
------------ ------------ ------------ ------------
Net earnings $ 1,465,737 $ 740,342 $ 3,617,818 $ 1,823,491
============ ============ ============ ============
Basic earnings per share:
Basic $ 0.13 $ 0.07 $ 0.32 $ 0.17
Diluted $ 0.12 $ 0.07 $ 0.30 $ 0.16
Weighted average shares outstanding:
Basic 11,306,384 11,007,226 11,228,705 11,001,417
Diluted 12,275,356 11,208,171 12,189,052 11,119,593
IMERGENT, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
December 31, June 30,
2003 2003
------------ ------------
(Unaudited)
Assets
Current assets
---------------------------------------------
Cash $ 2,700,583 $ 2,319,618
Trade receivables, net of allowance for
doubtful accounts of $6,214,156 at
December 31, 2003 and $4,471,667 at June 30,
2003 7,247,042 4,965,769
Other receivables - 50,000
Inventories 59,066 34,194
Prepaid expenses 526,142 687,984
Credit card reserves, net of allowance for
doubtful accounts of $63,090 at December
31, 2003 and $319,812 at June 30, 2003 465,391 450,200
------------ ------------
Total current assets 10,998,224 8,507,765
Property and equipment, net 162,727 200,174
Goodwill, net 455,177 455,177
Trade receivables, net of allowance for
doubtful accounts of $2,989,020 at December 31,
2003 and $2,131,593 at June 30, 2003 3,395,301 2,254,969
Other assets, net of allowance for doubtful
accounts of $67,908 at December 31, 2003
and $100,783 at June 30, 2003 206,690 103,460
------------ ------------
Total Assets $15,218,119 $11,521,545
============ ============
Liabilities and Stockholders' Equity
Current liabilities
---------------------------------------------
Accounts payable $ 1,628,590 $ 1,413,112
Accounts payable - related party - 114,925
Accrued wages and benefits 404,312 411,620
Accrued liabilities 362,812 204,137
Current portion of capital lease obligations 11,171 26,536
Current portion of notes payable - 121,206
Other current liabilities 53,392 35,840
Deferred revenue 173,986 653,463
------------ ------------
Total current liabilities 2,634,263 2,980,839
Capital lease obligations, net of current
portion 1,802 1,802
Notes payable, net of current portion 400,000 435,857
------------ ------------
Total liabilities 3,036,065 3,418,498
------------ ------------
Commitments and contingencies
Stockholders' Equity
---------------------------------------------
Capital stock, par value $.001 per share
Preferred stock - authorized 5,000,000
shares; none issued
Common stock - authorized 100,000,000
shares; issued and outstanding 11,321,915
and 11,062,290 shares, at December 31,
2003 and June 30, 2003, respectively 11,322 11,063
Additional paid-in capital 73,060,423 72,605,749
Deferred compensation (16,219) (22,474)
Accumulated other comprehensive loss (4,902) (4,902)
Accumulated deficit (60,868,570) (64,486,389)
------------ ------------
Total stockholders' equity 12,182,054 8,103,047
------------ ------------
Total Liabilities and Stockholders' Equity $15,218,119 $11,521,545
============ ============
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