SOURCE: Internet Commerce Corporation

June 08, 2005 09:00 ET

Internet Commerce Corporation Announces Financial Results for Third Quarter Fiscal 2005

NORCROSS, GA -- (MARKET WIRE) -- June 8, 2005 -- Internet Commerce Corporation (ICC) (NASDAQ: ICCA), a pioneer in the use of the Internet for business-to-business (B2B) e-commerce solutions, today announced financial results for its fiscal third quarter ended April 30, 2005.

"Our third quarter financial results demonstrate outstanding performance, including ICC.NET and Service Center segment growth, positive cash flow from operations and a GAAP Net Income of $296,000. It is tremendous to see the first GAAP profitable quarter in the company's history," said Thomas J. Stallings, ICC's chief executive officer. "We attribute our success to execution of our 'Growth with Profitability' strategy."

Glen Shipley, ICC's chief financial officer, said, "We continue to make significant progress toward achieving our financial goals. On a year-over-year basis, we grew our revenue 52% to $4.39 million up from $2.89 million in the third quarter of fiscal 2004. We delivered net income of $296,000 compared with net loss of $662,000 a year ago, an increase of 145%. With the acquisition of Inovis' Managed EC business, the company's performance is much more balanced and better positioned for continued growth in both segments."

Shipley continued, "We have and will continue to manage the business with expenses that are aligned with expected revenues. However, during the fourth quarter, we will manage some one-time expenses associated with the integration of the Managed EC business into our EC Service Center in Carrollton, Georgia. In spite of the additional cost of this transition, the company will still report an overall EBITDA positive fiscal 2005 and we expect strong growth in sales and profit during fiscal 2006."

The Company further reported that basic and diluted income per common share of $0.01 compared with basic and diluted loss of $0.05 per common share in the same period of fiscal 2004, an increase of 120%. It achieved Earnings Before Interest, non-cash compensation, Taxes, Depreciation and Amortization (Adjusted "EBITDA") of $802,000 in the third quarter of fiscal 2005 as compared to Adjusted EBITDA during the third quarter of fiscal 2004 of $(199,000). Adjusted EBITDA is not a financial measure within generally accepted accounting principles (GAAP). The Company believes that this presentation of Adjusted EBITDA provides useful information to investors regarding certain additional financial and business trends relating to its financial condition and results of operations. A reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure, operating cash flows, is attached in addition to a reconciliation to net income for all periods presented.

Third quarter revenue growth of 52% from third quarter fiscal 2004 to third quarter fiscal 2005 was driven by both business segments. In the ICC.NET™ segment, third quarter revenues from continuing operations were $2.74 million, up 7% from $2.56 million in the fiscal 2004 period. This revenue represented 62% of consolidated revenue in the third quarter compared to 89% of consolidated revenue in the year ago period. Revenues from the Service Bureau segment were $1.65 million, an increase of 399% compared to $331,000 in the third quarter of fiscal 2004. This revenue represented 38% of consolidated revenue in the third quarter compared to 11% of consolidated revenue in the year ago period.

The Company's total gross profit margin from continuing operations improved to 69% in third quarter fiscal 2005 from 46% in the third quarter of last fiscal year, and total expenses from continuing operations increased 16% in third quarter fiscal 2005 from the prior-year period to $4.11 million from $3.53 million.

Nine Month Fiscal 2005 Results

For the nine months ended April 30, 2005, revenues from continuing operations totaled $11.63 million, up 33% compared with first nine months of fiscal 2004 revenues of $8.75 million. Income was a net loss of $394,000 compared to a net loss of $2.98 million for the same period in fiscal 2004, a decrease of 87%. Basic and diluted loss per common share was $0.04 compared with a loss of $0.23 per basic diluted and common share for the fiscal 2004 period, a decrease of 83%.

The Company further reported that it achieved Adjusted EBITDA of $1.25 million in the first nine months of fiscal 2005 as compared to $(1.27) million of Adjusted EBITDA during the first nine months of fiscal 2004. The Company believes that this presentation of Adjusted EBITDA provides useful information to investors regarding certain additional financial and business trends relating to its financial condition and results of operations. A reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure, operating cash flows, is attached in addition to a reconciliation to net income for all periods presented.

Nine month revenue growth of 33% was driven by both business segments. In the ICC.NET™ segment, nine month revenues from continuing operations were $8.31 million, up 6% from $7.84 million the same fiscal 2004 period. This revenue represented 71% of consolidated revenue in the first nine months of fiscal 2005 compared to 90% of consolidated revenue in the year ago period. Revenues from the Service Bureau segment were $3.32 million, an increase of 265% compared with $910,000 in the first nine months of fiscal 2004. This revenue represented 29% of consolidated revenue compared to 10% of consolidated revenue in the year ago period

The Company's total gross profit margin from continuing operations improved to 65% in the first nine months of fiscal 2005 from 41% in the first nine months of fiscal 2004, and total expenses from continuing operations increased 2% in first nine months of fiscal 2005 from the prior-year period to $12.05 million from $11.76 million.

The Company ended the first nine months of fiscal 2005 with over $3.58 million of cash on hand. The balance sheet remains strong, and the Company is well positioned to take advantage of opportunities.

Forward-Looking and Cautionary Statements

Except for the historical information and discussion contained herein, statements contained in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, as discussed in the company's filings with the U.S. Securities and Exchange Commission (SEC).

About Internet Commerce Corporation (ICC)

Internet Commerce Corporation (ICC), headquartered in Norcross, GA, is a pioneer in the use of the Internet for business-to-business (B2B) e-commerce solutions. Thousands of customers rely on ICC's comprehensive line of solutions, in-depth expertise, and unmatched customer service to help balance cost, fit, and function required to meet unique requirements for trading partner compliance, coordination, and collaboration. With its software solutions, network services, hosted web applications, managed services, and consulting services, ICC is the trusted provider of B2B solutions for businesses, regardless of size and level of technical sophistication, to connect with their trading communities. For more information, visit www.icc.net.


          Internet Commerce Corporation Consolidated Balance Sheets
                             (in thousands)

                                                     April 30,    July 31,
                                                       2005         2004
                                                     --------     --------
                                                   (unaudited)
ASSETS
Current assets:
  Cash and cash equivalents                          $  3,576     $  3,790
  Accounts receivable, net of allowance for
   doubtful accounts of $405 and $309, respectively     2,990        2,154
  Prepaid expenses and other current assets               422          245
                                                     --------     --------
    Total current assets                                6,988        6,189

Restricted cash                                           530          108
Property and equipment, net                               578          296
Software development costs, net                             -           18
Goodwill                                                3,820        2,539
Other intangible assets, net                            2,103        2,265
Other assets                                               14           14
                                                     --------     --------
    Total assets                                     $ 14,033     $ 11,429
                                                     ========     ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                   $    264     $    524
  Accrued expenses                                      1,196        1,004
  Accrued dividends - preferred stock                     131          233
  Deferred revenue                                        154          133
  Capital lease obligation                                 11           52
  Other current liabilities                             1,289           45
                                                     --------     --------
    Total current liabilities                           3,045        1,991

Capital lease obligation - less current portion             -            3
Other liabilities                                       1,293            -
                                                     --------     --------
    Total liabilities                                   4,338        1,994
                                                     --------     --------

Commitments and contingencies

Stockholders' Equity:
Preferred Stock                                             *            *
Common Stock                                              194          191
Additional paid-in capital                             95,794       95,143
Accumulated deficit                                   (86,293)     (85,900)
                                                     --------     --------
    Total stockholders' equity                          9,695        9,434
                                                     --------     --------

    Total liabilities and stockholders' equity       $ 14,033     $ 11,429
                                                     ========     ========


             See notes to consolidated financial statements.

* Less than $1,000


       Internet Commerce Corporation Condensed Consolidated Statements of
                Operations and Comprehensive Loss (unaudited)
                 (in thousands, except for per share amounts)

                           Three Months Ended         Nine Months Ended
                                April 30,                 April 30,
                            2005         2004         2005         2004
                         ----------   ----------   ----------   ----------
Revenue:
    Services             $    4,388   $    2,892   $   11,628   $    8,751
                         ----------   ----------   ----------   ----------
Expenses:
  Cost of services
   administrative
   (excluding non-cash
   compensation of $2
   and $5 for the three
   and nine months ended
   April 30, 2005,
   respectively, and of
   $16 and $35 for the
   three and nine months
   ended April 30, 2004)      1,339        1,562        4,097        5,173
Impairment of capitalized
 software                         -            -            -           45
Product development and
 enhancement (excluding
 non-cash compensation of
 $7 and $22 for the three
 and nine months ended
 April 30, 2005,
 respectively, and of
 $7 and $118 for the
 three and nine months
 ended April 30, 2004)          197          233          662          685
Selling and marketing
 (excluding non-cash
 compensation of
 $3 and $14 for the
 three and nine months
 ended April 30, 2005,
 respectively, and of
 $17 and $92 for the
 three and nine months
 ended April 30, 2004)          593          734        2,134        2,371
General and
 administrative
 (excluding non-cash
 compensation of $133
 and $509 for the three
 and nine months ended
 April 30, 2005,
 respectively, and of
 $73 and $393 for the
 three and nine months
 ended April 30, 2004)        1,831          893        4,604        2,843
Non-cash charges for
 stock-based
 compensation and
 services                       145          112          549          638
                         ----------   ----------   ----------   ----------
                              4,105        3,534       12,046       11,755
                         ----------   ----------   ----------   ----------
Operating Income/(loss)         283         (642)        (418)      (3,004)
                         ----------   ----------   ----------   ----------

Other income and
 (expense):
    Interest and
     investment income           14            1           28            2
    Investment gain/(loss)        -            -            -           68
    Interest expense             (1)         (21)          (4)         (48)
                         ----------   ----------   ----------   ----------
                                 13          (20)          24           22
                         ----------   ----------   ----------   ----------

Net income/(loss)        $      296   $     (662)  $     (394)  $   (2,982)

Dividends on
 preferred stock                (97)         (98)        (299)        (301)
                         ----------   ----------   ----------   ----------

Income/(loss)
 attributable to
 common stockholders     $      199   $     (760)  $     (693)  $   (3,283)
                         ==========   ==========   ==========   ==========

Basic and diluted
 income/(loss)
 per common share        $     0.01   $    (0.05)  $    (0.04)  $    (0.23)
                         ==========   ==========   ==========   ==========

Weighted average number
 of common shares
 outstanding -
   basic and diluted         19,328       14,545       19,170       14,050
                         ==========   ==========   ==========   ==========

COMPREHENSIVE INCOME/
 (LOSS):
Net income/(loss)        $      296   $     (662)  $     (394)  $   (2,982)

Other comprehensive
 income:
Unrealized gain -
 marketable securities            -            -            -           42
Reclassification of
 unrealized gain on
 marketable securities            -            -            -          (68)
                         ----------   ----------   ----------   ----------
Comprehensive income/
 (loss)                  $      296   $     (662)  $     (394)  $   (3,008)
                         ==========   ==========   ==========   ==========


             See notes to consolidated financial statements.



       Internet Commerce Corporation Condensed Consolidated Statements of
                           Cash Flows (unaudited)
                               (in thousands)

                                                      Nine Months Ended
                                                          April 30,
                                                      2005         2004
                                                   ----------   ----------
Cash flows from operating activities:
 Net loss                                          $     (394)  $   (2,982)
 Adjustments to reconcile net loss to net cash
  (used in) provided by operating activities
  (net of effect of MEC acquisition):
      Depreciation and amortization                     1,115        1,097
      Bad debt expense                                    143            5
      Non-cash interest expense                             -           25
      Realized (gain) loss on sale of
       marketable securities                                -          (68)
      Impairment of capitalized software                    -           45
      Non-cash charges for equity instruments
       issued for compensation and services               549          638
Changes in:
          Accounts receivable                            (978)         (29)
          Prepaid expenses and other assets               (87)         (82)
          Accounts payable                               (259)        (420)
          Accrued expenses                                  2         (426)
          Deferred revenue                                 21          (65)
          Other liabilities                              (130)         (93)
                                                   ----------   ----------

          Net cash (used in) provided by
           operating activities                           (18)      (2,355)
                                                   ----------   ----------

Cash flows from investing activities:
   Additional costs of previous acquisition              (121)           -
  Cash received in connection with MEC acquisition        231            -
   Purchases of property and equipment                   (272)         (60)
  Proceeds from sales of marketable securities              -          134
                                                   ----------   ----------

          Net cash (used in) provided by
           investing activities                          (162)          74
                                                   ----------   ----------

Cash flows from financing activities:
   Borrowings under accounts receivable
    financing agreement                                     -        2,339
   Repayment of borrowings under accounts
    receivable financing agreement                          -       (1,692)
   Net payments for the issuance of common stock
    and warrants                                          (24)       4,468
   Payments of capital lease obligations                  (44)        (115)
   Dividends paid on preferred stock                        -          (60)
   Proceeds from exercise of warrants                       -           42
   Proceeds from exercise of employee stock options        35            4
                                                   ----------   ----------

          Net cash (used in) provided by
           financing activities                           (33)       4,986

Net increase (decrease) in cash and cash equivalents     (213)       2,705

Cash and cash equivalents, beginning of period          3,789        2,283
                                                   ----------   ----------

Cash and cash equivalents, end of period           $    3,576   $    4,988
                                                   ==========   ==========


Supplemental disclosure of cash flow information:
     Cash paid for interest during the period      $        4   $       18
Noncash investing and financing activities:
      Issuance of common stock for dividends
       on preferred stock                                 400          340
      Issuance of warrants in exchange for
       private placement fees                               -          226
      Acquisition of MEC business in exchange
       for assumption of building lease and
       other liabilities
           Equipment, furniture, and fixtures            (210)           -
           Goodwill                                    (1,159)           -
           Intangible asset - Customer list              (737)           -
           Restricted cash                               (420)           -
           Building lease                               2,291            -
           Accrued and other liabilities                  466            -
                                                   ----------   ----------
Cash received in MEC acquisition                          231            -
                                                   ==========   ==========


             See notes to consolidated financial statements.



      Internet Commerce Corporation Supplemental Financial Information
                             (in thousands)

Reconciliation of Net Income
to Adjusted EBITDA -
Consolidated           Three Months Three Months  Nine Months  Nine Months
                        Ended April  Ended April  Ended April  Ended April
                           30, 2005     30, 2004     30, 2005     30, 2004

Net Loss                 $      296   $     (662)  $     (394)  $   (2,982)
Less: Net interest and
 investment (income)
 expense                 $      (13)  $       20   $      (24)  $      (22)
Depreciation and
 amortization            $      374   $      331   $    1,115   $    1,097
Non-cash charges for
 stock-based
 compensation            $      145   $      112   $      549   $      638
                         ----------   ----------   ----------   ----------
Adjusted EBITDA
 (Loss) Income           $      802   $     (199)  $    1,246   $   (1,269)
                         ==========   ==========   ==========   ==========

Net interest and
 investment income
 (expense)                       13          (20)          24           22

Add (subtract):
Non-cash Interest Expense         -            8            -           25
Bad Debt Expense                 28          (25)         143            5
Realized gain on sale
 of marketable securities         -            -            -          (68)
Impairment of
 Capitalized Software             -            -            -           45
Change in Deferred Revenue      (14)         (21)          21          (65)
Changes in operating assets
 and liabilities               (548)        (176)      (1,452)      (1,050)
                         ----------   ----------   ----------   ----------
Net cash provided
 from operations         $      281   $     (433)  $      (18)  $   (2,355)
                         ==========   ==========   ==========   ==========

Contact Information

  • Media Contact:
    Terri Deuel
    Internet Commerce Corporation
    678-533-8003