iMergent Clarifies Results of Annual Meeting of Shareholders
OREM, Utah, November 20, 2008 - iMergent, Inc., (AMEX: IIG) a leading provider of eCommerce software for small businesses and entrepreneurs, conducted its 2008 annual shareholder meeting on Wednesday, November 19, 2008.
The company’s shareholders ratified the following:
- The election of two Class I directors for terms of two years, expiring at the annual meeting of stockholders to be held for the fiscal year ending June 30, 2010 or until each of their respective successors has been duly elected and qualified. The directors re-elected to the board were Todd Georgen and David Williams. Notably the company added Steve Mihaylo and Dr. Anil Puri to its board of directors in November.
- The appointment of Tanner LC as the company’s independent registered public accounting firm for the fiscal year ending June 30, 2009.
A policy stating independent directors shall serve on the Board for no more than ten years was not ratified by the company’s shareholders.
About iMergent
iMergent provides eCommerce solutions to entrepreneurs and small businesses enabling them to market and sell their business products or ideas via the Internet. Headquartered in Orem, Utah, the company sells its proprietary StoresOnline software and training services, which help users build successful Internet strategies to market products, accept online orders, analyze marketing performance, and manage pricing and customers. In addition to software, iMergent offers website development, web hosting and marketing 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 as well as offers StoresOnline Express for sale. These sessions lead to a follow-up Workshop Conference, where product and technology experts train potential users on the software and sell upgrades to StoresOnline Pro and StoresOnline Platinum. iMergent, Inc. and StoresOnline are trademarks of iMergent, Inc.
Company Contact:
Steven G. Mihaylo, CEO
iMergent, Inc.
801.431.4695
Stevemihaylo@imergentinc.com
Investor Relations Contact:
Becky Herrick
Lippert/Heilshorn & Associates
415.433.3777
bherrick@lhai.com
Thursday, November 20, 2008
iMergent Clarifies Results of Annual Meeting of Shareholders
Wednesday, November 19, 2008
iMergent Appoints Business and Economics Expert to its Board of Directors
iMergent Appoints Business and Economics Expert to its Board of Directors
Dr. Anil Puri, California State University - Fullerton Business School Dean Joins Board
OREM, Utah, November 19, 2008 – iMergent, Inc. (AMEX: IIG) a leading provider of eCommerce software for small businesses and entrepreneurs, announced Dr. Anil Puri, 59, has been appointed to the board of directors, bringing the total board count to seven members.
Steven G. Mihaylo, iMergent chief executive officer, said, “We are excited Anil has accepted a position on our board. He joins us as an independent advisor and a respected economist. Anil’s expertise will be of tremendous value as we work to continue executing on our strategy of long-term growth and increasing shareholder value.”
Dr. Anil Puri is the Dean of the College of Business and Economics at California State University – Fullerton and co-director of its Institute for Economic and Environmental Studies. Prior to becoming dean in 1998, Puri was department chair and professor of economics at Cal State Fullerton. He is a noted economist and scholar who serves as the executive director of the Western Economic Association International, the second largest professional association of economists in the nation. He is a member of the American Economic Association, the National Association of Business Economists, and the Association of University Bureaus of Economic Research.
Dr. Puri received his doctorate and master’s degrees in economics from the University of Minnesota and his B.A. and M.A. in economics from Panjab University in India. His research has been published in leading academic journals such as the National Tax Journal, Policy Studies Journal, Journal of Conflict Resolution and the International Journal of Forecasting. His annual Economic Forecast Conference, now in its fourteenth year, is held each October in partnership with the Orange County Business Council.
About iMergent
iMergent provides eCommerce solutions to entrepreneurs and small businesses enabling them to market and sell their business products or ideas via the Internet. Headquartered in Orem, Utah, the company sells its proprietary StoresOnline software and training services, which help users build successful Internet strategies to market products, accept online orders, analyze marketing performance, and manage pricing and customers. In addition to software, iMergent offers website development, web hosting and marketing 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 as well as offers StoresOnline Express for sale. These sessions lead to a follow-up Workshop Conference, where product and technology experts train potential users on the software and sells upgrades to StoresOnline Pro and StoresOnline Platinum. iMergent, Inc. and StoresOnline are trademarks of iMergent, Inc.
Company Contact:
Robert Lewis, CFO
iMergent, Inc.
801.431.4695
investor_relations@imergentinc.com
Investor Relations Contact:
Kirsten Chapman
Lippert/Heilshorn & Associates
415.433.3777
kchapman@lhai.com
Dr. Anil Puri, California State University - Fullerton Business School Dean Joins Board
OREM, Utah, November 19, 2008 – iMergent, Inc. (AMEX: IIG) a leading provider of eCommerce software for small businesses and entrepreneurs, announced Dr. Anil Puri, 59, has been appointed to the board of directors, bringing the total board count to seven members.
Steven G. Mihaylo, iMergent chief executive officer, said, “We are excited Anil has accepted a position on our board. He joins us as an independent advisor and a respected economist. Anil’s expertise will be of tremendous value as we work to continue executing on our strategy of long-term growth and increasing shareholder value.”
Dr. Anil Puri is the Dean of the College of Business and Economics at California State University – Fullerton and co-director of its Institute for Economic and Environmental Studies. Prior to becoming dean in 1998, Puri was department chair and professor of economics at Cal State Fullerton. He is a noted economist and scholar who serves as the executive director of the Western Economic Association International, the second largest professional association of economists in the nation. He is a member of the American Economic Association, the National Association of Business Economists, and the Association of University Bureaus of Economic Research.
Dr. Puri received his doctorate and master’s degrees in economics from the University of Minnesota and his B.A. and M.A. in economics from Panjab University in India. His research has been published in leading academic journals such as the National Tax Journal, Policy Studies Journal, Journal of Conflict Resolution and the International Journal of Forecasting. His annual Economic Forecast Conference, now in its fourteenth year, is held each October in partnership with the Orange County Business Council.
About iMergent
iMergent provides eCommerce solutions to entrepreneurs and small businesses enabling them to market and sell their business products or ideas via the Internet. Headquartered in Orem, Utah, the company sells its proprietary StoresOnline software and training services, which help users build successful Internet strategies to market products, accept online orders, analyze marketing performance, and manage pricing and customers. In addition to software, iMergent offers website development, web hosting and marketing 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 as well as offers StoresOnline Express for sale. These sessions lead to a follow-up Workshop Conference, where product and technology experts train potential users on the software and sells upgrades to StoresOnline Pro and StoresOnline Platinum. iMergent, Inc. and StoresOnline are trademarks of iMergent, Inc.
Company Contact:
Robert Lewis, CFO
iMergent, Inc.
801.431.4695
investor_relations@imergentinc.com
Investor Relations Contact:
Kirsten Chapman
Lippert/Heilshorn & Associates
415.433.3777
kchapman@lhai.com
Thursday, November 6, 2008
iMergent Announces Board and Management Changes
SME Business Communication and Software Veteran
Steven G. Mihaylo Joins as CEO and Director
Donald Danks Resigns as CEO and Continues to Advise
Steven G. Mihaylo Joins as CEO and Director
Donald Danks Resigns as CEO and Continues to Advise
OREM, Utah, November 6, 2008 – iMergent, Inc. (AMEX: IIG) a leading provider of eCommerce software for small businesses and entrepreneurs, announced changes to its management and board. Donald L. Danks resigned as CEO and as a director; he will become a consultant to the company. Steven G. Mihaylo assumed the role of CEO and has been appointed to the board of directors. The total board count remains six members.
Todd A. Goergen, Chairman of iMergent, stated, “The board is committed to driving iMergent’s long-term growth and shareholder value. We are excited to welcome Steve who will be leading our company and exploring additional revenue opportunities in small-to-medium enterprise (SME) initiatives.”
“In addition, we thank Don for his valued contribution as iMergent grew from less than $50 million in 2003 annual sales to exceed $125 million in fiscal 2008 under his leadership. Don will continue to assist management as a consultant in the area of investor relations,” concluded Goergen.
Mihaylo, 64, is a retired chairman and chief executive officer of Inter-Tel, Incorporated, which he founded in 1969. He led the Inter-Tel evolution from providing business telephone systems to offering complete managed services and software that help businesses facilitate communication and increase customer service and productivity. Before selling Inter-Tel to Mitel for $720 million in 2007, Mihaylo grew the business to nearly $500 million in annual sales.
Mihaylo earned an honorary PhD from California State University - Fullerton and received a Bachelor of Arts in Business Administration in Accounting & Finance from the university in 1969. He has served on boards of numerous community organizations including the Arizona Heart Foundation, Junior Achievement of Arizona, Arizona Museum of Science and Technology and the Arizona State University College of Business Dean’s Council of 100. Committed to education, Mihaylo is involved with the Karl Eller College of Management at the University of Arizona and has served on the advisory board of Junior Achievement of Central Arizona for over 25 years, as a member of the board of directors of the Big Bear High School Education Foundation and on the Dean’s Advisory Board of CSU-Fullerton.
About iMergent
iMergent provides eCommerce solutions to entrepreneurs and small businesses enabling them to market and sell their business products or ideas via the Internet. Headquartered in Orem, Utah, the company sells its proprietary StoresOnline software and training services, which help users build successful Internet strategies to market products, accept online orders, analyze marketing performance, and manage pricing and customers. In addition to software, iMergent offers website development, web hosting and marketing 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 as well as offers StoresOnline Express for sale. These sessions lead to a follow-up Workshop Conference, where product and technology experts train potential users on the software and sells upgrades to StoresOnline Pro and StoresOnline Platinum.
Company Contact:
Robert Lewis, CFO
iMergent, Inc.
801.431.4695
investor_relations@imergentinc.com
Investor Relations Contact:
Becky Herrick
Lippert/Heilshorn & Associates
415.433.3777
bherrick@lhai.com
Wednesday, November 5, 2008
iMergent Reports First Quarter Fiscal 2009 Financial Results
OREM, Utah, November 5, 2008 - iMergent, Inc., (AMEX: IIG) a leading provider of eCommerce software for small businesses and entrepreneurs, reported financial results for its fiscal first quarter ended September 30, 2008.
“While we were not satisfied with our fiscal first quarter results, we are encouraged that our marketing improvements and cost reductions are beginning to have an impact,” stated Don Danks, chief executive officer of iMergent. “In December 2007, we reduced our Workshop teams by 33%. Consequently, first quarter of fiscal 2009 revenue of $27.3 million was in line with our expectations when compared to revenue of $32.5 million for the first quarter of fiscal 2008. Operating loss improved to $3.3 million, compared to $3.4 million for the same period last year. In addition, operating metrics are improving. For example, approximately 32% of buying units made a purchase at the Workshops during the quarter, compared to 26% in the prior year quarter and the average selling price during the quarter was $5,400, compared to $5,100 in the prior year quarter. We are also excited about the improvements in our advertising and our recurring and other commission revenues. In addition, we reduced costs at our Preview Seminars and Workshops on a per attendee basis and reduced travel costs on a per employee basis during the quarter, even during these tough economic conditions.”
“As discussed last quarter, we have dramatically improved our advertising campaigns. Our responses were better than expected and attendance at our Preview Seminars was much higher than anticipated. Consequently, the sheer volume of attendees at our Preview Seminars negatively impacted our July and August conversion rates from the Preview Seminars to Workshops, resulting in lower attendance at our Workshops and higher selling and marketing costs as a percentage of Net Dollar Volume of Contracts Written. However, we were able to make the necessary adjustments to our business model and return to profitability in the month of September. Because of the momentum we have gained from the response to our advertising and the operating adjustments made in September, we plan to launch our seventh Workshop team in late November 2008, sooner than anticipated.”
IRS Audit
In October 2008, the company received notice from the Internal Revenue Service (IRS) contesting the company’s deduction of 50% of the cost of meals provided to attendees at the company’s Preview Seminars and Workshops. The company contends that these meals are excluded from the deduction limitations of IRS Code Section 274. The IRS also challenged the company’s ability to utilize more than $460,000 of its Net Operating Losses per year. The company contends the limitations are significantly higher than $460,000 per year under IRS Code Section 382. While the company believes it will be able to defend its positions, based on the analyses performed in accordance with FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement 109 (FIN 48), the company has established a reserve of $6.6 million as of September 30, 2008 for the potential tax, penalties and interest costs.
First Quarter: 2009 Compared to 2008
During the three months ended September 30, 2008, the company held 208 Workshops, including 8 internationally, compared to 291 Workshops, including 13 internationally, in the same quarter of last year.
Revenues for the first quarter of fiscal 2009 were $27.3 million, compared to $32.5 million for the first quarter of fiscal 2008, reflecting the lower number of Workshops. Revenue was negatively impacted by an additional accrual of $630,000 for customer refunds pursuant to various legal matters. Net Dollar Volume of Contracts Written was $28.7 million for the first quarter of fiscal 2009, compared to $35.6 million for the first quarter last year. Total operating expenses were lower at $30.6 million for the first quarter of fiscal 2009, compared to $35.9 million for the first quarter last year. Other income was $1.6 million for the first quarter of fiscal 2009, which included $1.9 million in interest income, compared to $2.4 million of other income for the first quarter last year, which included $2.3 million in interest income.
For the first quarter of fiscal 2009, our loss from operations was $3.3 million, compared to a loss from operations of $3.4 million in the same quarter last year. As a result of the income tax reserve described above, the provision for income taxes for the first quarter of fiscal 2009 was $5.9 million, compared to an income tax benefit of $238,000 in the same quarter last year. Net loss for the first quarter of fiscal 2009 was $7.5 million, or $0.66 per common share, compared to a net loss of $800,000, or $0.07 per common share in the same quarter last year.
The company believes the recent economic downturn has impacted how our customers buy, lowering the percent of cash purchases at the Workshops to 40% in the first quarter of fiscal 2009 from 50% in the prior year quarter. Because the company records revenue as cash is received and not at the time of sale, the decrease in percent of cash purchases at the Workshops negatively impacted revenue, operating income, and cash flows from operating activities during the first quarter of fiscal 2009.
Cash used in operating activities was $513,000 for the first quarter of fiscal 2009, compared to cash provided by operating activities of $426,000 for the same period in fiscal 2008. As of September 30, 2008, cash and cash equivalents were $25.3 million, working capital was $19.2 million, and working capital excluding deferred revenue was $51.1 million. Total current and long-term net trade receivables were $39.8 million as of September 30, 2008.
Outlook
“Due to the momentum we have gained from the response to our advertising and the planned launch of our seventh Workshop team in late November 2008, we are increasing our guidance in the second quarter of fiscal 2009. We previously believed that revenue and Net Dollar Volume of Contracts Written would decrease 15% to 20% from to the same period of fiscal 2008. We now expect revenue and Net Dollar Volume of Contracts Written will be flat to a 15% decrease from the second quarter of fiscal 2008. We continue to expect revenue and Net Dollar Volume of Contracts Written will grow up to 10% during the second half of fiscal 2009 compared to the same period of fiscal 2008. As a reminder, in late December 2007 we reduced our Workshop teams by 33% and introduced our new business model. As such, during the first half of fiscal 2009 we will have fewer Workshops teams compared to the same period last year and, therefore, we believe we will have a more comparable business model in the second half of fiscal 2009,” concluded Danks.
Conference Call
The company is hosting a conference call today at 1:30 p.m. PT (4:30 p.m. ET). 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 participants and 706-634-7417 for international participants. Please dial in five to ten minutes prior to the beginning of the call at 1:30 p.m. PT (4:30 p.m. ET). A telephone replay will be available three hours after the call through November 10, 2008 by dialing 800-642-1687 for domestic callers or 706-645-9291 for international callers and entering access code 68331707.
Safe Harbor Statement
The statements made in this press release regarding iMergent's (1) being encouraged by marketing improvements and costs reductions, which are beginning to have an impact, (2) revenue being in line with our expectations in light of the 33% reduction in Workshop teams in December 2007, (3) operating metrics improving, (4) improvements in advertising and recurring and other commission revenues, (5) reduced costs at Preview Seminars and Workshops on a per attendee basis and reduced travel costs on a per employee basis during the quarter, (6) dramatic improvements to advertising campaigns, (7) responses being better than expected and attendance at Preview Seminars being much higher than anticipated, (8) sheer volume of attendees at Preview Seminars negatively impacting July and August conversion rates from the Preview Seminars to Workshops, resulting in lower attendance at our Workshops and higher selling and marketing costs as a percentage of Net Dollar Volume of Contracts Written, (9) being able to make the necessary adjustments to its business model and return to profitability in the month of September, (10) plan to launch its seventh Workshop team in late November 2008, sooner than anticipated, (11) contention that meals it serves at its seminars are excluded from the deduction limitations of IRS Code Section 274, (12) contention that limitations to utilize our Net Operating Losses are significantly higher than $460,000 per year under IRS Code Section 382, (13) belief that it will be able to defend its positions, which are contrary to the IRS, (14) belief the recent economic downturn has impacted how our customers buy, lowering the percent of cash purchases at Workshops, (15) expectation that revenue and Net Dollar Volume of Contracts Written will be flat to a 15% decrease from the second quarter of fiscal 2008 and (16) belief that revenue and Net Dollar Volume of Contracts Written will grow up to10% during the second half of fiscal 2009 compared to the same period of fiscal 2008.
Such statements are based on the current expectations and beliefs of the management of iMergent and are subject to a number of risks 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 ability to execute on its plans and expectations; the Company properly estimating customer returns and cash collections on financed contracts; the Company's ability to continue to evaluate and find ancillary products; the Company's ability to offer best solutions to its customers; the Company's ability to maintain a very solid customer base; the Company's ability to have profitable long-term relationships with its customers; that the market for the Company's products will grow; whether regulatory authorities will bring future actions against the Company; the success of StoresOnline Express™; the ability to upgrade customers from Express, the viability of the StoresOnline Express model; the ability to increase the number of Workshops; the ability to properly market the products; the ability to expand operating margins; the fluctuations in the Company's operating results because of negative publicity, seasonality, competition, economic conditions and other factors; the adverse impact of international or domestic regulatory developments affecting the internet or the Company's business; the effect of competitive and economic factors and the Company's reaction to them; possible disruption in commercial activities caused by terrorist activity and armed conflicts; changes in logistics and security arrangements; reduced purchases relative to security expectations; possible disruption in commercial activity as a result of natural disasters or major health concerns including epidemics; continued competitive pressures in the marketplace; the ability of the Company to successfully evolve its products; costs of and developments in the Company's pending litigation and investigations; the Company's ability to generate revenue and profits from current strategic partnerships; the Company's ability to generate positive cash flows from operating activities; the ability to sell receivables; the continued ability of the Company to repurchase its common shares and what effect those transactions may have on cash and liquidity; the Company's ability to expand current markets and develop new markets and establish profitable strategic partnerships; the Company's ability to continue to finance extended payment term arrangement customer contracts; whether there is continual demand for the Company's products and services in its target market of small businesses and entrepreneurs for assistance in establishing websites; that the Company can successfully adjust its product financing policy, and that such adjustments to the policy will not negatively impact business or revenues; that the Company is able to leverage its business; that the Company does improve margins and can continue to improve margins; that new products and initiatives in the pipeline will be implemented; that new products and initiatives, if implemented, will improve the customer base and margins of the Company; that the Company can broaden its training and education programs as well as offer new products and solutions; that if the Company is able to broaden its training and education programs as well as offer new products and solutions that such actions will have a positive impact on the Company, its customers, its customer relationships, its margins or revenues; and, that the growth strategy undertaken by the Company will be successful. For a more detailed discussion of risk factors that may affect iMergent's operations, please refer to the Company's Form 10-K for the year ended June 30, 2008, and Form 10-Q for the quarter ended September 30, 2008. These forward-looking statements speak only as of the date on which such statements are made, and the Company undertakes no obligation to update such forward-looking statements, except as required by law.
About iMergent
iMergent provides eCommerce solutions to entrepreneurs and small businesses enabling them to market and sell their business products or ideas via the Internet. Headquartered in Orem, Utah, the company sells its proprietary StoresOnline software and training services, which help users build successful Internet strategies to market products, accept online orders, analyze marketing performance, and manage pricing and customers. In addition to software, iMergent offers website development, web hosting and marketing products. iMergent typically reaches its target audience through a concentrated direct marketing effort to fill Preview Seminars, in which a StoresOnline expert reviews the product opportunities and costs as well as offers StoresOnline Express for sale. These Seminars lead to a follow-up Workshop Conference, where product and technology experts train potential users on the software and sell upgrades to StoresOnline Pro and StoresOnline Platinum. iMergent, Inc. and StoresOnline are trademarks of iMergent, Inc.
Company Contact:
Robert Lewis, CFO
iMergent, Inc.
801.431.4695
investor_relations@imergentinc.com
Investor Relations Contact:
Becky Herrick
Lippert/Heilshorn & Associates
415.433.3777
bherrick@lhai.com
“While we were not satisfied with our fiscal first quarter results, we are encouraged that our marketing improvements and cost reductions are beginning to have an impact,” stated Don Danks, chief executive officer of iMergent. “In December 2007, we reduced our Workshop teams by 33%. Consequently, first quarter of fiscal 2009 revenue of $27.3 million was in line with our expectations when compared to revenue of $32.5 million for the first quarter of fiscal 2008. Operating loss improved to $3.3 million, compared to $3.4 million for the same period last year. In addition, operating metrics are improving. For example, approximately 32% of buying units made a purchase at the Workshops during the quarter, compared to 26% in the prior year quarter and the average selling price during the quarter was $5,400, compared to $5,100 in the prior year quarter. We are also excited about the improvements in our advertising and our recurring and other commission revenues. In addition, we reduced costs at our Preview Seminars and Workshops on a per attendee basis and reduced travel costs on a per employee basis during the quarter, even during these tough economic conditions.”
“As discussed last quarter, we have dramatically improved our advertising campaigns. Our responses were better than expected and attendance at our Preview Seminars was much higher than anticipated. Consequently, the sheer volume of attendees at our Preview Seminars negatively impacted our July and August conversion rates from the Preview Seminars to Workshops, resulting in lower attendance at our Workshops and higher selling and marketing costs as a percentage of Net Dollar Volume of Contracts Written. However, we were able to make the necessary adjustments to our business model and return to profitability in the month of September. Because of the momentum we have gained from the response to our advertising and the operating adjustments made in September, we plan to launch our seventh Workshop team in late November 2008, sooner than anticipated.”
IRS Audit
In October 2008, the company received notice from the Internal Revenue Service (IRS) contesting the company’s deduction of 50% of the cost of meals provided to attendees at the company’s Preview Seminars and Workshops. The company contends that these meals are excluded from the deduction limitations of IRS Code Section 274. The IRS also challenged the company’s ability to utilize more than $460,000 of its Net Operating Losses per year. The company contends the limitations are significantly higher than $460,000 per year under IRS Code Section 382. While the company believes it will be able to defend its positions, based on the analyses performed in accordance with FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement 109 (FIN 48), the company has established a reserve of $6.6 million as of September 30, 2008 for the potential tax, penalties and interest costs.
First Quarter: 2009 Compared to 2008
During the three months ended September 30, 2008, the company held 208 Workshops, including 8 internationally, compared to 291 Workshops, including 13 internationally, in the same quarter of last year.
Revenues for the first quarter of fiscal 2009 were $27.3 million, compared to $32.5 million for the first quarter of fiscal 2008, reflecting the lower number of Workshops. Revenue was negatively impacted by an additional accrual of $630,000 for customer refunds pursuant to various legal matters. Net Dollar Volume of Contracts Written was $28.7 million for the first quarter of fiscal 2009, compared to $35.6 million for the first quarter last year. Total operating expenses were lower at $30.6 million for the first quarter of fiscal 2009, compared to $35.9 million for the first quarter last year. Other income was $1.6 million for the first quarter of fiscal 2009, which included $1.9 million in interest income, compared to $2.4 million of other income for the first quarter last year, which included $2.3 million in interest income.
For the first quarter of fiscal 2009, our loss from operations was $3.3 million, compared to a loss from operations of $3.4 million in the same quarter last year. As a result of the income tax reserve described above, the provision for income taxes for the first quarter of fiscal 2009 was $5.9 million, compared to an income tax benefit of $238,000 in the same quarter last year. Net loss for the first quarter of fiscal 2009 was $7.5 million, or $0.66 per common share, compared to a net loss of $800,000, or $0.07 per common share in the same quarter last year.
The company believes the recent economic downturn has impacted how our customers buy, lowering the percent of cash purchases at the Workshops to 40% in the first quarter of fiscal 2009 from 50% in the prior year quarter. Because the company records revenue as cash is received and not at the time of sale, the decrease in percent of cash purchases at the Workshops negatively impacted revenue, operating income, and cash flows from operating activities during the first quarter of fiscal 2009.
Cash used in operating activities was $513,000 for the first quarter of fiscal 2009, compared to cash provided by operating activities of $426,000 for the same period in fiscal 2008. As of September 30, 2008, cash and cash equivalents were $25.3 million, working capital was $19.2 million, and working capital excluding deferred revenue was $51.1 million. Total current and long-term net trade receivables were $39.8 million as of September 30, 2008.
Outlook
“Due to the momentum we have gained from the response to our advertising and the planned launch of our seventh Workshop team in late November 2008, we are increasing our guidance in the second quarter of fiscal 2009. We previously believed that revenue and Net Dollar Volume of Contracts Written would decrease 15% to 20% from to the same period of fiscal 2008. We now expect revenue and Net Dollar Volume of Contracts Written will be flat to a 15% decrease from the second quarter of fiscal 2008. We continue to expect revenue and Net Dollar Volume of Contracts Written will grow up to 10% during the second half of fiscal 2009 compared to the same period of fiscal 2008. As a reminder, in late December 2007 we reduced our Workshop teams by 33% and introduced our new business model. As such, during the first half of fiscal 2009 we will have fewer Workshops teams compared to the same period last year and, therefore, we believe we will have a more comparable business model in the second half of fiscal 2009,” concluded Danks.
Conference Call
The company is hosting a conference call today at 1:30 p.m. PT (4:30 p.m. ET). 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 participants and 706-634-7417 for international participants. Please dial in five to ten minutes prior to the beginning of the call at 1:30 p.m. PT (4:30 p.m. ET). A telephone replay will be available three hours after the call through November 10, 2008 by dialing 800-642-1687 for domestic callers or 706-645-9291 for international callers and entering access code 68331707.
Safe Harbor Statement
The statements made in this press release regarding iMergent's (1) being encouraged by marketing improvements and costs reductions, which are beginning to have an impact, (2) revenue being in line with our expectations in light of the 33% reduction in Workshop teams in December 2007, (3) operating metrics improving, (4) improvements in advertising and recurring and other commission revenues, (5) reduced costs at Preview Seminars and Workshops on a per attendee basis and reduced travel costs on a per employee basis during the quarter, (6) dramatic improvements to advertising campaigns, (7) responses being better than expected and attendance at Preview Seminars being much higher than anticipated, (8) sheer volume of attendees at Preview Seminars negatively impacting July and August conversion rates from the Preview Seminars to Workshops, resulting in lower attendance at our Workshops and higher selling and marketing costs as a percentage of Net Dollar Volume of Contracts Written, (9) being able to make the necessary adjustments to its business model and return to profitability in the month of September, (10) plan to launch its seventh Workshop team in late November 2008, sooner than anticipated, (11) contention that meals it serves at its seminars are excluded from the deduction limitations of IRS Code Section 274, (12) contention that limitations to utilize our Net Operating Losses are significantly higher than $460,000 per year under IRS Code Section 382, (13) belief that it will be able to defend its positions, which are contrary to the IRS, (14) belief the recent economic downturn has impacted how our customers buy, lowering the percent of cash purchases at Workshops, (15) expectation that revenue and Net Dollar Volume of Contracts Written will be flat to a 15% decrease from the second quarter of fiscal 2008 and (16) belief that revenue and Net Dollar Volume of Contracts Written will grow up to10% during the second half of fiscal 2009 compared to the same period of fiscal 2008.
Such statements are based on the current expectations and beliefs of the management of iMergent and are subject to a number of risks 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 ability to execute on its plans and expectations; the Company properly estimating customer returns and cash collections on financed contracts; the Company's ability to continue to evaluate and find ancillary products; the Company's ability to offer best solutions to its customers; the Company's ability to maintain a very solid customer base; the Company's ability to have profitable long-term relationships with its customers; that the market for the Company's products will grow; whether regulatory authorities will bring future actions against the Company; the success of StoresOnline Express™; the ability to upgrade customers from Express, the viability of the StoresOnline Express model; the ability to increase the number of Workshops; the ability to properly market the products; the ability to expand operating margins; the fluctuations in the Company's operating results because of negative publicity, seasonality, competition, economic conditions and other factors; the adverse impact of international or domestic regulatory developments affecting the internet or the Company's business; the effect of competitive and economic factors and the Company's reaction to them; possible disruption in commercial activities caused by terrorist activity and armed conflicts; changes in logistics and security arrangements; reduced purchases relative to security expectations; possible disruption in commercial activity as a result of natural disasters or major health concerns including epidemics; continued competitive pressures in the marketplace; the ability of the Company to successfully evolve its products; costs of and developments in the Company's pending litigation and investigations; the Company's ability to generate revenue and profits from current strategic partnerships; the Company's ability to generate positive cash flows from operating activities; the ability to sell receivables; the continued ability of the Company to repurchase its common shares and what effect those transactions may have on cash and liquidity; the Company's ability to expand current markets and develop new markets and establish profitable strategic partnerships; the Company's ability to continue to finance extended payment term arrangement customer contracts; whether there is continual demand for the Company's products and services in its target market of small businesses and entrepreneurs for assistance in establishing websites; that the Company can successfully adjust its product financing policy, and that such adjustments to the policy will not negatively impact business or revenues; that the Company is able to leverage its business; that the Company does improve margins and can continue to improve margins; that new products and initiatives in the pipeline will be implemented; that new products and initiatives, if implemented, will improve the customer base and margins of the Company; that the Company can broaden its training and education programs as well as offer new products and solutions; that if the Company is able to broaden its training and education programs as well as offer new products and solutions that such actions will have a positive impact on the Company, its customers, its customer relationships, its margins or revenues; and, that the growth strategy undertaken by the Company will be successful. For a more detailed discussion of risk factors that may affect iMergent's operations, please refer to the Company's Form 10-K for the year ended June 30, 2008, and Form 10-Q for the quarter ended September 30, 2008. These forward-looking statements speak only as of the date on which such statements are made, and the Company undertakes no obligation to update such forward-looking statements, except as required by law.
About iMergent
iMergent provides eCommerce solutions to entrepreneurs and small businesses enabling them to market and sell their business products or ideas via the Internet. Headquartered in Orem, Utah, the company sells its proprietary StoresOnline software and training services, which help users build successful Internet strategies to market products, accept online orders, analyze marketing performance, and manage pricing and customers. In addition to software, iMergent offers website development, web hosting and marketing products. iMergent typically reaches its target audience through a concentrated direct marketing effort to fill Preview Seminars, in which a StoresOnline expert reviews the product opportunities and costs as well as offers StoresOnline Express for sale. These Seminars lead to a follow-up Workshop Conference, where product and technology experts train potential users on the software and sell upgrades to StoresOnline Pro and StoresOnline Platinum. iMergent, Inc. and StoresOnline are trademarks of iMergent, Inc.
Company Contact:
Robert Lewis, CFO
iMergent, Inc.
801.431.4695
investor_relations@imergentinc.com
Investor Relations Contact:
Becky Herrick
Lippert/Heilshorn & Associates
415.433.3777
bherrick@lhai.com
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