EXHIBIT 99.1
PRESS RELEASE
INTERNET COMMERCE CORPORATION ANNOUNCES FINANCIAL RESULTS
FOR FOURTH QUARTER AND YEAR-END FISCAL 2005
NORCROSS, GA - September 29, 2005 - Internet Commerce Corporation (ICC)
(NasdaqSC: ICCA), a pioneer in the use of the Internet for business-to-business
(B2B) e-commerce solutions, today announced financial results for its fiscal
fourth quarter and year ended July 31, 2005.
In announcing the results, Thomas J. Stallings, chief executive officer, said,
"Fiscal year 2005 was a historic year for Internet Commerce Corporation. We made
excellent progress compared to our performance a year ago with a $5.0 million
increase in revenue, $5.7 million increase in gross margin and $4.3 million
increase in net income."
Stallings continued, "An unrelenting focus on our operation plan, continued
growth through acquisition, and an unyielding employee commitment were key
drivers in our success and represent a powerful combination to further
strengthen company performance in 2006."
Fourth Quarter Fiscal Year 2005 Results
Fourth quarter revenue from continuing operations in fiscal 2005 was
approximately $5.1 million, up 71.9% compared with our fourth quarter of fiscal
2004 revenues of approximately $3.0 million. Net income was $628,000 compared
with a loss of $1.1 million a year ago. Basic and diluted earnings per common
share from continuing operations increased to $0.03 compared with a basic and
diluted loss of $0.06 per common share in the same period of fiscal 2004.
The Company's Earnings Before Interest, non-cash compensation, Taxes,
Depreciation and Amortization (Adjusted "EBITDA") was up 305% over the fourth
quarter of fiscal 2004. Adjusted EBITDA was approximately $1.2 million in the
fourth quarter of fiscal 2005 as compared to an Adjusted EBITDA loss during the
fourth quarter of fiscal 2004 of $591,000. 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.
Fourth quarter revenue growth of 72% from fourth quarter fiscal 2004 to fourth
quarter fiscal 2005 was driven by both business segments. In the ICC.NET(TM)
segment, fourth quarter revenues from continuing operations were approximately
$3.0 million, up 22% from $2.4 million in the fiscal 2004 period. This revenue
represented 58% of consolidated revenue in the fourth quarter compared to 82% of
consolidated revenue in the fiscal 2004 period. Revenues from the Service Bureau
segment were $2.1 million, an increase of 306% compared to $521,000 in the
fourth quarter of fiscal 2004. This revenue represented 42% of consolidated
revenue in the fourth quarter compared to 18% of consolidated revenue in the
fiscal 2004 period.
1
The Company's total gross profit margin from continuing operations improved to
61.8% in fourth quarter fiscal 2005 from 47.0% in the fourth quarter of last
fiscal year, and total expenses from continuing operations increased 9.3% in
fourth quarter fiscal 2005 from the prior-year period to $4.4 million from $4.1
million. The increase in expenses during the quarter was driven by the
transition of the acquired Managed EC business from New York City to Carrollton,
Georgia.
Fiscal Year 2005 Results
For the fiscal year ended July 31, 2005, revenues from continuing operations
totaled $16.7 million, up 43% compared with fiscal year 2004 revenues of $11.7
million. Income was $264,000 compared to a net loss of $4.1 million for fiscal
year 2004, an increase of 106%. Basic and diluted income per common share from
continuing operations was a loss of $0.01 compared with a loss of $0.30 per
basic diluted and common share for fiscal year 2004.
The Company further reported that it achieved Adjusted EBITDA of $2.5 million in
fiscal 2005 as compared to loss of $1.8 million of Adjusted EBITDA during 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.
Fiscal year 2005 revenue growth of 42.7% was driven by both business segments.
In the ICC.NET(TM) segment, fiscal year revenues from continuing operations were
$11.3 million, up 9.7% from $10.3 million the same fiscal 2004 period. This
revenue represented 67% of consolidated revenue in the fiscal year 2005 compared
to 88% of consolidated revenue in the fiscal year 2004. Revenues from the
Service Bureau segment were $5.4 million, an increase of 280% compared with $1.4
million in fiscal year 2004. This revenue represented 33% of consolidated
revenue compared to 12% of consolidated revenue in fiscal year 2004.
The Company's total gross profit margin from continuing operations improved to
63.9% in fiscal 2005 from 42.5% in fiscal year 2004, and total expenses from
continuing operations increased 4.2% in fiscal year 2005 from the prior-year
period to $16.5 million from $15.8 million.
The company ended fiscal 2005 with approximately $4.0 million of cash on hand.
The balance sheet remains strong, and the company is well positioned to take
advantage of opportunities.
Business Outlook
For the fiscal first quarter ending October 31, 2005, the Company expects
revenue in the range of $4.5 million to $4.75 million with a pre-tax GAAP
operating income in the range of $500,000 to $800,000.
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
filing with the U.S. Securities and Exchange Commission (SEC).
2
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.
3
INTERNET COMMERCE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME AND OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
(in thousands, except for share and per share amounts)
THREE MONTHS ENDED TWELVE MONTHS ENDED
JULY 31, JULY 31,
---------------------------- ----------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
Revenues:
Services $ 5,077 $ 2,953 $ 16,705 $ 11,705
------------ ------------ ------------ ------------
Total revenues 5,077 2,953 16,705 11,705
------------ ------------ ------------ ------------
Expenses:
Cost of services (excluding non-cash compensation of $3
and $8 for the three months and twelve months ended July 31,
2005, respectively) 1,941 1,564 6,038 6,736
Impairment of software inventory -- -- -- --
Impairment of capitalized software development costs -- -- -- 45
Product development and enhancement (excluding non-cash
compensation of $8 and $30 for the three months and twelve
months ended July 31, 2005, respectively) 163 267 825 953
Selling and marketing (excluding non-cash compensation of
$11 and $25 for the three months and twelve months ended July
31, 2005, respectively) 512 699 2,646 3,070
General and administrative (excluding non-cash compensation
of $121 and $629 for the three and twelve months ended July
31, 2005, respectively and of $149 and $542 for the three and
twelve months ended July 31, 2004 respectively.) 1,673 1,362 6,277 4,205
Non-cash charges for stock-based compensation and services 143 163 692 802
Impairment of goodwill -- -- -- --
------------ ------------ ------------ ------------
4,432 4,055 16,478 15,811
------------ ------------ ------------ ------------
Operating income(loss) 645 (1,102) 227 (4,106)
------------ ------------ ------------ ------------
Other income and (expense):
Interest and investment income 11 -- 39 3
Investment gain (loss) -- -- -- 67
Interest expense -- (2) (4) (51)
Other income (expense) 2 -- 2 --
------------ ------------ ------------ ------------
13 (2) 37 19
------------ ------------ ------------ ------------
NET INCOME(LOSS) BEFORE PROVISION FOR INCOME TAXES 658 (1,104) 264 (4,087)
Provision for income taxes 30 -- 30 --
------------ ------------ ------------ ------------
NET INCOME 628 (1104) 234 (4,087)
------------ ------------ ------------ ------------
Dividends on preferred stock (101) (101) (400) (401)
------------ ------------ ------------ ------------
NET INCOME(LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS $ 527 $ (1,205) $ (166) $ (4,488)
============ ============ ============ ============
Basic and diluted income(loss) per common share $ 0.03 $ (0.06) $ (0.01) $ (0.30)
============ ============ ============ ============
Weighted average number of common shares outstanding -
basic and diluted 19,329,934 17,928,601 19,230,869 15,025,524
============ ============ ============ ============
INTERNET COMMERCE CORPORATION
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
JULY 31, JULY 31,
2005 2004
-------- --------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 3,983 $ 3,790
Marketable securities -- --
Accounts receivable, net of allowance for doubtful accounts of
$439 and $309, respectively 3,620 2,154
Prepaid expenses and other current assets 388 245
-------- --------
Total current assets 7,991 6,189
Restricted cash 417 108
Property and equipment, net 630 296
Software development costs, net -- 18
Goodwill 3,820 2,539
Other intangible assets, net 1,773 2,265
Other assets 32 14
-------- --------
Total assets $ 14,663 $ 11,429
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 226 $ 524
Accrued expenses 1,619 1,004
Accrued dividends - preferred stock 232 233
Deferred revenue 153 133
Capital lease obligation 4 52
Other current liabilities 894 45
-------- --------
Total current liabilities 3,128 1,991
Capital lease obligation - less current portion -- 4
Other non-current liabilities 1,216 --
-------- --------
Total liabilities 4,344 1,995
-------- --------
Commitments and contingencies -- --
Stockholders' Equity:
Preferred stock * *
Common stock 194 191
Additional paid-in capital 95,790 95,143
Accumulated deficit (85,665) (85,900)
Accumulated other comprehensive income (loss) -- --
-------- --------
Total stockholders' equity 10,319 9,434
-------- --------
Total liabilities and stockholders' equity $ 14,663 $ 11,429
======== ========
* less than 1,000
INTERNET COMMERCE CORPORATION
SUPPLEMENTAL FINANCIAL DATA
RECONCILIATION OF NET INCOME TO ADJUSTED
EBITDA - CONSOLIDATED Three Three Twelve Twelve
Months Ended Months Ended Months Ended Months Ended
(in thousands) July 31, 2005 July 31, 2004 July 31, 2005 July 31, 2004
- -------------- ------------- ------------- ------------- -------------
Net income (loss) $ 628 $(1,104) $ 234 $(4,087)
Less: Net interest and investment (income)
expense (13) 2 (37) (19)
Impairment of marketable securities -- -- -- --
Depreciation and amortization 422 348 1,538 1,445
Income taxes 30 -- 30 --
Impairment of software inventory -- -- -- --
Impairment of capitalized software -- -- -- 45
Non-cash charges for stock-based
compensation 143 163 692 801
Impairment of goodwill -- -- -- --
------- ------- ------- -------
Adjusted EBITDA income (loss) $ 1,210 $ (591) $ 2,457 $(1,815)
======= ======= ======= =======