SOURCE: Issuer Direct

Issuer Direct

February 28, 2013 08:30 ET

Issuer Direct Reports 33% Revenue Growth for Full Year 2012, 65% Gross Margins, and a 124% Increase in Operating Profit

Fourth Quarter Operating Profit Increased 262%, as ISDR Transitions to Cloud Based, SaaS, Recurring Revenue Model

MORRISVILLE, NC--(Marketwire - Feb 28, 2013) - Issuer Direct Corporation (OTCBB: ISDR), a market leader and innovator of disclosure management solutions and cloud-based compliance technologies, today reported its operating results for the fourth quarter and year ended December 31, 2012. The Company will host an investor conference call at 11:15 a.m. EST today, to discuss operating results and relevant topics of interest (see details below).

Full Year 2012 Financial Highlights:

  • Revenue increased 33% to $4.3 million
  • Gross profit increased 53% to $2.8 million
  • Gross margins increased to 65% compared to 57% in 2011
  • Operating profit increased 124% to $557,133
  • Operating margins increased to 13% compared to 8% in 2011
  • Non-GAAP net income increased 46% to $830,107
  • Non-GAAP diluted EPS increased 31% to $0.42
  • The Company's cash balance increased 45% to over $1.2 million for the full year ended December 31 2012

Fourth Quarter 2012 Financial Highlights

  • Revenue increased 65% to $1.2 million
  • Gross profit increased 111% to $790,830
  • Gross margins increased to 67%, compared to 52% in 2011
  • Operating profit increased to $244,378
  • Operating margins increased to 21%, compared to -21% in 2011
  • Non-GAAP net income increased 165% to 227,729
  • Non-GAAP diluted EPS increased 120% to $0.11

Brian R. Balbirnie, Chief Executive Officer of Issuer Direct Corporation, commented, "We set out at the beginning of 2012 to deliver higher revenues, increased profits, and to increase our overall margins. We are pleased to report that we achieved all three of these objectives in fiscal 2012."

Wes Pollard, Chief Financial Officer, stated, "A majority of our 2012 revenue growth came from our compliance and reporting segment, which includes our cloud-based technology platform for XBRL reporting, and overall generates 70% gross margins. We have also considerably increased the number of clients for whom we perform cloud based XBRL reporting, both organically and through the acquisition. As most of our clients are now under annual contracts, we anticipate that revenue from cloud based XBRL reporting will be more recurring in nature in the future. With this said, we intend to also continue to increase revenue from these cloud solutions through new client acquisition. Our transfer agent segment, which delivers 68% gross margins, grew 41% this year; while our software license revenue, which generates 99% gross margins, increased 119%."

Business Outlook

Mr. Balbirnie further stated, "In fiscal 2013, we anticipate our disclosure reporting business which includes our cloud based XBRL solutions will continue to account for a significant portion of our growth. Furthermore, we will strive to continue achieving growth from our other revenue streams. We see 2013 as a pivotal year for continued revenue growth, margin improvement and overall profits. Our plan is to focus on both organic growth and also consider acquisitions of complementary businesses that fit our long term business strategy."

Financial Results

For the quarter ended December 31, 2012, Issuer Direct reported revenue of $1.2 million, compared with $719,096 in the quarter ended December 31, 2011, an increase of 65%. Gross profit for the quarter ended December 31, 2012 increased to $790,830, versus $375,697 in the quarter ended December 31, 2011. Overall gross profit margins increased to 67% of revenue during the fourth quarter of 2012, compared with 52% in the year-earlier quarter.

For the quarter ended December 31, 2012, the Company reported net income of $113,129 or $0.05 per diluted share, compared with a net loss of $(106,241) or $(0.06) per diluted share, in the quarter ended December 31, 2011.

For the year ended December 31, 2012, Issuer Direct reported revenue of $4.3 million compared with $3.2 million in the year ended December 31, 2011, an increase of 33%. Gross profit for the year ended December 31, 2012 increased to $2.8 million, versus $1.8 million in the year ended December 31, 2011. Overall gross profit margins increased to 65% of revenue during 2012, compared with 57% in the previous year.

For the year ended December 31, 2012, the Company reported a 28% improvement in net income, which totaled $305,732, or $0.15 per diluted share, compared with $239,276 or $0.14 per diluted share, in the fourth quarter of 2011.

Non-GAAP results

The Company generated non-GAAP net income for the fourth quarter ended December 31, 2012 of $227,729, or $0.11 per share, compared with non-GAAP net income of $85,997, or $0.05 per share, in the fourth quarter ended December 31, 2011.

The Company generated Non-GAAP net income for the year ended December 31, 2012 of $830,107 or $0.42 per share, compared with non-GAAP net income of $570,683 or $0.32 per share, in the year ended December 31, 2011.

Adjustments from GAAP to non-GAAP during the three- and twelve-month periods ended December 31, 2012 and 2011, respectively, primarily involved the amortization of intangible assets resulting from acquisitions, litigation expenses, and stock-based compensation (see detail in table at end of this release).

Non-GAAP Information

Certain non-GAAP financial measures are included in this press release. In the calculation of these measures, the Company generally excludes certain items such as amortization and impairment of acquired intangibles, non-cash stock-based compensation charges, and unusual, non-recurring gains and charges. The Company believes that excluding such items provides investors and management with a representation of the Company's core operating performance and with information useful in assessing its prospects for the future and underlying trends in the Company's operating expenditures and continuing operations. Management uses such non-GAAP measures to evaluate financial results and manage operations. The release and the attachments to this release provide a reconciliation of each of the non-GAAP measures referred to in this release to the most directly comparable GAAP measure. The non-GAAP financial measures are not meant to be considered a substitute for the corresponding GAAP financial measures.

RECONCILATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES

       
    Year ended December 31,  
    2012   2011  
    Amount   Per diluted share   Amount     Per diluted share  
                             
Net income:   $ 305,732   $ 0.15   $ 239,276     $ 0.14  
Adjustments:                            
Amortization of intangible assets (1)     108,500     0.06     24,000       0.01  
Stock based compensation (2)     415,875     0.21     101,144       0.06  
Former shareholder dispute (3)     -     -     206,263       0.11  
Non-GAAP net income:   $ 830,107   $ 0.42   $ 570,683     $ 0.32  
         
         
    Quarter ended December 31,  
    2012   2011  
    Amount   Per diluted share   Amount     Per diluted share  
                             
Net income:   $ 113,129   $ 0.05   $ (106,241 )   $ (.06 )
Adjustments:                            
Amortization of intangible assets (1)     26,583     0.02     6,833       -  
Stock based compensation (2)     88,017     0.04     31,639       0.02  
Former shareholder dispute (3)     -     -     153,766       0.09  
Non-GAAP net income:   $ 227,729   $ 0.11   $ 85,997     $ 0.05  
                             

(1) The adjustments represent the amortization of intangible assets related to acquired companies.

(2) The adjustments represent stock-based compensation expense recognized related to awards of stock options or common stock in exchange for services.

(3) The adjustments represent legal fees incurred to attempt to resolve a dispute by a former holder of Series A Preferred Stock as disclosed in Note 8 of our financial statements in our Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2012. The dispute has been fully resolved and there have been no expenses incurred related to this dispute during the three-month period or year ended December 31, 2012.

Conference Call Information

To participate in the conference call, please dial 1-877-317-6789 (international callers dial 1-412-317-6789) approximately five minutes prior to 11:15 a.m. Eastern Time (EST). A replay of the conference call will be available one hour after completion of the call until Friday, March 8, 2013, at 5:00 p.m. EST. To access the replay, dial 1-877-344-7529 (international callers dial 1-412-317-0088) and enter the conference I.D. # 10025436.

About Issuer Direct Corporation: Issuer Direct Corporation ("IDC") is a market leader and innovator of disclosure management solutions and cloud-based compliance technologies. With a focus on corporate issuers, the Company alleviates the complexity of maintaining compliance with its integrated portfolio of products and services that enhance companies' ability to efficiently produce and distribute their financial and business communications both online and in print. The Issuer Direct logo is available here.

Learn more about Issuer Direct today: http://ir.issuerdirect.com/tearsheet/html/isdr

Forward-Looking Statements. This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (which Sections were adopted as part of the Private Securities Litigation Reform Act of 1995). Statements preceded by, followed by or that otherwise include the words "believe," "anticipate," "estimate," "expect," "intend," "plan," "project," "prospects," "outlook," and similar words or expressions, or future or conditional verbs such as "will," "should," "would," "may," and "could" are generally forward-looking in nature and not historical facts. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance or achievements to be materially different from any anticipated results, performance or achievements. The Company disclaims any intention to, and undertakes no obligation to, revise any forward-looking statements, whether as a result of new information, a future event, or otherwise. For additional risks and uncertainties that could impact the Company's forward-looking statements, please see the Company's Annual Report on Form 10-K for the year ended December 31, 2011, including but not limited to the discussion under "Risk Factors" therein, which the Company has filed with the SEC and which may be viewed at http://www.sec.gov.

   
ISSUER DIRECT CORPORATION AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
AS OF DECEMBER 31, 2012 AND 2011  
   
    December 31,  
    2012     2011  
ASSETS                
Current assets:                
  Cash and cash equivalents   $ 1,250,643     $ 862,386  
  Accounts receivable (net of allowance for doubtful accounts of $117,030 and $125,987, respectively)     544,684       361,191  
  Deferred project costs     -       76,106  
  Deferred income tax asset - current     49,000       135,000  
  Other current assets     38,710       35,093  
    Total current assets     1,883,037       1,469,776  
Furniture, equipment and improvements, net     55,611       66,611  
Deferred income tax asset - noncurrent     159,000       64,000  
Other long-term assets     12,069       22,074  
Intangible assets (net of accumulated amortization of $187,666 and $79,166, respectively)     431,529       109,029  
    Total assets   $ 2,541,246     $ 1,731,490  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities:                
  Accounts payable   $ 62,886     $ 103,566  
  Accrued expenses     37,347       39,324  
  Income taxes payable     226,406          
  Accrued litigation     -       130,000  
  Deferred revenue     112,906       177,708  
  Line of credit     150,000       -  
    Total current liabilities     589,545       450,598  
Other long-term liabilities     105,554       69,287  
    Total liabilities     695,099       519,885  
                 
Stockholders' equity:                
  Preferred stock, $0.001 par value, 30,000,000 shares authorized, no shares issued and outstanding as of December 31, 2012 and 2011.     -       -  
  Common stock $0.001 par value, 100,000,000 shares authorized, 1,937,329 and 1,752,175 shares issued and outstanding as of December 31, 2012 and 2011, respectively     1,937       1,752  
  Additional paid-in capital     2,070,369       1,741,744  
  Accumulated deficit     (226,159 )     (531,891 )
    Total stockholders' equity     1,846,147       1,211,605  
    Total liabilities and stockholders' equity   $ 2,541,246     $ 1,731,490  
   
   
ISSUER DIRECT CORPORATION AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF INCOME  
   
    For the Three Months Ended     For the Year Ended  
    December 31,     December 31,     December 31,     December 31,  
    2012     2011     2012     2011  
   
Revenues   $ 1,185,022     $ 719,096     $ 4,305,566     $ 3,228,099  
Cost of services     394,192       343,399       1,501,158       1,391,967  
Gross profit     790,830       375,697       2,804,408       1,836,132  
Operating costs and expenses:                                
  General and administrative     318,517       193,758       1,309,166       965,159  
  Sales and marketing     193,606       163,986       799,760       361,641  
  Litigation     -       153,766       -       206,263  
  Depreciation and amortization     34,329       14,804       138,349       54,704  
Total operating costs and expenses     546,452       526,314       2,247,275       1,587,767  
Net operating income     244,378       (150,617 )     557,133       248,365  
Other income (expense):                                
  Interest income (expense), net     (3,749 )     6,164       (401 )     12,711  
Total other income (expense)     (3,749 )     6,164       (401 )     12,711  
Net income before taxes     240,629       (144,453 )     556,732       261,076  
    Income tax expense     (127,500 )     38,212       (251,000 )     (21,800 )
Net income   $ 113,129     $ (106,241 )   $ 305,732     $ 239,276  
Income per share - basic   $ 0.06     $ (0.06 )   $ 0.16     $ 0.14  
Income per share - fully diluted   $ 0.05     $ (0.06 )   $ 0.15     $ 0.14  
                                 
   
   
ISSUER DIRECT CORPORATION AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
   
    For the Years ended
December 31,
 
    2012     2011  
Cash flows from operating activities                
  Net income   $ 305,732     $ 239,276  
  Adjustments to reconcile net income to net cash provided byoperating activities:                
    Bad debt expense     65,327       121,949  
    Depreciation and amortization     138,349       54,704  
    Deferred income taxes     (9,000 )     21,800  
    Excess tax benefit from share based compensation     (11,000 )     -  
    Stock-based expenses     415,875       101,144  
    Changes in operating assets and liabilities:                
      Decrease (increase) in accounts receivable     (248,820 )     (307,804 )
      Decrease (increase) in deferred project costs and other assets     72,494       (101,116 )
      Increase (decrease) in accounts payable     (40,680 )     37,996  
      Increase (decrease) in deferred revenue     (64,802 )     126,326  
      Increase (decrease) in accrued expenses     130,696       183,883  
Net cash provided by operating activities     754,171       478,158  
                 
Cash flows from investing activities                
  Purchase of intangible assets     (281,000 )     (40,000 )
  Purchase of furniture, equipment, and improvements     (18,849 )     (43,940 )
Net cash used by investing activities     (299,849 )     (83,940 )
                 
Cash flows from financing activities                
  Repurchase of common stock     -       (36,545 )
  Proceeds from exercise of stock options, net of taxes     43,525       -  
  Payment of dividend     (270,590 )     -  
  Excess tax benefit from share based compensation     11,000       -  
  Advance from line of credit     275,000       -  
  Repayment on line of credit     (125,000 )     -  
Net cash used by financing activities     (66,065 )     (36,545 )
                 
Net change in cash     388,257       357,673  
Cash - beginning     862,386       504,713  
Cash - ending   $ 1,250,643     $ 862,386  
                 
Supplemental disclosures:                
  Cash paid for interest   $ 12,034     $ 28  
  Cash paid for income taxes   $ 22,594     $ --  

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