SOURCE: iPerceptions Inc.

August 28, 2007 16:30 ET

iPerceptions Announces Delays in the Release of Its June 30, 2007 Interim Consolidated Financial Statements and Expected Restatement of 2006 Annual Financial Statements

MONTREAL--(Marketwire - August 28, 2007) - iPerceptions Inc. (TSX-V: IPE) announced today that upon the recommendation of its newly appointed CFO and Audit Committee and with the concurrence of its independent public accountants, its management has decided to delay the release of 2nd quarter 2007 interim consolidated financial statements and will restate its previously issued financial statements for the fiscal year ending December 31, 2006.

The current discussions over accounting matters relate strictly to the interpretation of accounting principles relating to revenue recognition and deferred revenues, and have no bearing on the Company's cash flows. As well, the Company's financial situation is sound, and all material information concerning its affairs has been properly disclosed.

The decision to restate and delay arose from management's review of applicable accounting principles applied in the past with regards to revenue recognition and deferred revenues. As a result, the Company's Audit Committee, after discussing these issues with RSM Richter LLP, the Company's independent auditor, has concluded that the financial statements for the fiscal year ending December 31, 2006 should no longer be relied upon.

RSM Richter LLP and the management of the Company have indicated that additional time will be required in order to reevaluate accounting principles and measures concerning revenue recognition and deferred revenues. This delay will allow sufficient time to properly assess accounting principles as to the correct reporting. The Company's objective is to file its restated December 31, 2006 annual consolidated financial statements, as well as its 2nd quarter interim consolidated financial statements and MD&A no later than September 28, 2007.

iPerceptions has self-initiated this restatement based on the discovery of new facts which may indicate a misinterpretation of accounting principles, namely with regards to revenue recognition and deferred revenues during the recorded period of January 1, 2006 to December 31, 2006. This restatement was not requested by regulating authorities, but self-initiated by the Company. The restatement is expected only to impact the timing of revenue recognized and does not call into question the validity of the underlying transactions or cash flows. iPerceptions' revenues primarily come from renewable annual contracts that generate recurring revenues for the Corporation. Revenue is generally comprised of subscription fees from customers accessing our applications as well as initial in-depth report and quarterly or monthly update reporting. In the past, the application subscription and quarterly or monthly updates revenue was recognized ratably over the life of the application agreement, based on their relative fair value and revenue associated with the initial in-depth report was recognized at the time of delivery based on its relative fair value. Based on review of the facts, management concluded that revenue associated with in-depth initial reports is inseparable from the subscription revenue and quarterly or monthly reports and should be recognized ratably over the term of the contracts. As a result, commission expenses will also be corrected as they are deferred and amortized on the same basis as revenue. The revised results are not anticipated to have any effect on the company's reported cash and other liquid asset positions.

"There is no change on the Company's business potential and the strength of current customer adoption, but rather a misallocation of revenues between reported periods," said Martin Faucher, Chief Financial Officer iPerceptions. "These restatements involve very complex software revenue recognition practices. However, after review of past practices, we are committed to getting it right. The restatements are not a reflection on our core business, but an indication of our commitment to address past accounting issues, correct them, and put them behind us. We decided to review the previous year's financial statements to ensure facts were properly taken into account and properly recorded," Mr. Faucher added.

The Company has applied to the Autorité des marches financiers for a management cease trade order, which will restrict trading on the Company's securities by the Company's directors, officers and insiders until the matter is resolved.

The date that is two months after the filing deadline of the Company's interim financial statements for the three months ended June 30, 2007, is October 29, 2007. The Autorité des marchés financiers or other regulating authorities in jurisdictions in which the Company is a reporting issuer may impose an issuer cease trade order instead of a management cease trade order if the 2nd quarter interim consolidated financial statements of the Company are not filed by that time. Also, an issuer cease trade order may be imposed sooner if the Company fails to file the required Default Status Reports as per the applicable regulation.

About iPerceptions:

iPerceptions is one of North America's leading web-focused attitudinal analytics providers. Its webValidator Continuous Listening solution and its Proprietary Satisfaction Index (iPSI) turn thousands of data points into easy-to-understand strategic and tactical decision support for website marketers. iPerceptions' clients include such well known brands as InterContinental Hotels, General Motors, Dell Computers, Hyundai, CompUSA, LG Electronics, Toshiba, Choice Hotels International, BMW and Hilton Hotels. iPerceptions has offices in New York, Toronto and Montreal.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this press release.

Contact Information

  • Media information:
    Jonathan Levitt
    Vice-President Marketing
    iPerceptions Inc.
    Tel: 514-488-3600
    Fax: 514-484-2600

    Investor information:
    Jerry Tarasofsky
    Chief Executive Officer
    iPerceptions Inc.
    Tel: 514-488-3600
    Fax: 514-484-2600

    Martin Faucher
    Chief Financial Officer
    iPerceptions Inc.
    Tel : 514-488-3600
    Fax: 514-484-2600