ICCA Internet Commerce (MM)

ICC Announces Fourth Quarter and Fiscal 2003 Financial Results NEW YORK, Oct. 29 /PRNewswire-FirstCall/ -- Internet Commerce Corporation ("ICC" or the "Company") , a leader in the e-commerce business-to-business communication services market, today announced financial results for its fourth quarter and fiscal year ended July 31, 2003. (Logo: http://www.newscom.com/cgi-bin/prnh/20030611/ICCALOGO ) G. Michael Cassidy, President and Chief Executive Officer of ICC, commented, "We are pleased that during the fourth quarter, our core VAN services revenue grew 33.8% year-over-year, despite an ongoing economic slowdown. We also substantially reduced our cash used in operations to $159,000 in the fourth quarter of fiscal 2003 compared to $809,000 in the third quarter of fiscal 2003." During fiscal 2002, the Company recognized $3.0 million in revenue from a technology license with Triaton, a subsidiary of ThyssenKrupp Information Services. No revenue from Triaton related to this license was recorded in fiscal 2003. For comparative purposes, the fiscal 2002 full year and quarterly pro forma results referred to throughout this press release exclude all revenue related to this technology license. Consolidated Three-Month Results * Revenue for the fourth quarter increased 12.3% to $3.1 million from pro forma revenue of $2.8 million in the year-ago period. Revenue for the fourth quarter was essentially flat from the third quarter of 2003. * Gross margin improved to 38.5% versus pro forma gross margin of 17.4% and 33.6% in the year-ago period and the third quarter of 2003, respectively. Excluding impairment of software development costs of $134,000 in the third quarter of 2003, gross margin improved to 37.9%. * The Company incurred a net loss of $2.1 million, or $0.16 per diluted share, compared to a pro forma net loss of $3.7 million, or $0.33 per diluted share, last year. This compares to a net loss of $1.1 million, or $0.11 per diluted share, in the third quarter of 2003. Excluding impairment of software development costs of $15,000 and impairment of goodwill of $982,000 in the fourth quarter of 2003, the Company incurred a net loss of $1.1 million, or $0.08 per diluted share. Mr. Cassidy continued, "We completed a $2.1 million private placement in May 2003 and successfully executed an accounts receivable financing agreement under which the Company can now borrow up to 80% of its outstanding receivables up to $2 million. To date, we have not utilized this facility. We are confident that these initiatives, coupled with our on-going cost containment programs, will provide our company with a more solid platform for growth and improved financial performance." Consolidated Results for Fiscal 2003 * Revenue increased 7.7% to $12.1 million from pro forma revenue of $11.2 million last year. * Gross margin improved to 33.6% from pro forma gross margin of 21.8% last year, primarily due to the Company's continued cost structure optimization plan and increased revenue. Excluding $397,000 of impairment charges in fiscal 2003, gross margin improved to 36.9%. * The Company narrowed its net loss to $6.0 million, or $0.53 per diluted share, from a pro forma net loss of $9.5 million, or $0.96 per diluted share last year. * Fiscal 2003 results were adversely impacted by write-offs of $1.7 million, or $0.14 per diluted share, reflecting impairments of software development costs, software inventory, marketable securities acquired by ICC as part of its August 2000 acquisition of Intercoastal Data and goodwill for its Service Bureau. Mr. Cassidy concluded, "Fiscal 2003 was a challenging year given world events and challenging economic conditions. Nevertheless, our company made significant strides and the ICC.NET service, which represents more than 73% of our business, continues to reach new records, month over month, in the volume of data transmitted. With the benefit of additional funding from our May 2003 private placement, we look forward to increasing our marketing and sales efforts to reach a larger customer base." Consolidated Results for Fourth Quarter and Fiscal 2003 (Including Triaton technology license) Fourth Fiscal Quarter 2003 * Consolidated revenue for the three months ended July 31, 2003 was $3.1 million compared to $5.7 million in the year-ago period. * Gross margin declined to 38.5% from 60.4% in the year-ago period. * The Company incurred a net loss for the three months ended July 31, 2003 of $2.1 million, or $.16 per diluted share, compared to a net loss of $682 thousand, or $.06 per diluted share, in the year ago period. Fiscal 2003 * Consolidated revenue for the fiscal year ended July 31, 2003 was $12.1 million compared to $14.2 million in the year-ago period. * Gross margin declined to 33.6% from 38.3% in the year-ago period. * The Company incurred a net loss for the fiscal year ended July 31, 2003 of $6.0 million, or $0.53 per diluted share, compared to a net loss of $6.5 million, or $0.68 per diluted share, last year. Segment Results - Fourth Quarter & Full Year Results ICC.NET: For comparative purposes, the fiscal 2002 full year and quarterly results referred to in the ICC.NET segment, exclude all revenue related to the Triaton technology license. For the fourth quarter of fiscal 2003, ICC.NET revenue represented 77.6% of consolidated revenue compared to 68.1% of pro forma revenue in the year ago period and 74.3% in the third quarter of 2003. Fourth Fourth Third (000's) Quarter Quarter Quarter Fiscal Fiscal 2003 2002 2003 2003 2002 Pro forma Pro forma Revenue $2,400 $1,900 $2,300 $8,900 $7,400 Gross Margin 46.1% 19.5% 43.5% 41.7% 22.7% Core Van Services Revenue $2,300 $1,700 $2,200 $8,300 $6,300 Gross Margin 59.2% 40.0% 56.5% 54.9% 8.4% Mapping Revenue* $150 $189 $93 $571 $1,100 * Declines in mapping revenue reflect the continued challenging economic environment and the resulting decline in demand for mapping services. Service Bureau Fourth Fourth Third (000's) Quarter Quarter Quarter Fiscal Fiscal 2003 2002 2003 2003 2002 Revenue $291 $415 $341 $1,500 $1,600 Gross Margin 35.1%* 57.7% 9.3%** 40.6%*** 48.6% * Excluding a $15,000 write-off of software development costs, gross margin was 40.1% for the fourth quarter of fiscal 2003. ** Excluding a $134,000 write-off of software development costs, gross margin was 48.6% for the third quarter of fiscal 2003. *** Excluding the aforementioned write-offs of software development costs, gross margin was 50.6% for Fiscal 2003. Professional Services (000's) Fourth Fourth Third Quarter Quarter Quarter Fiscal Fiscal 2003 2002 2003 2003 2002 Revenue $404 $467 $456 $1,700 $2,200 Gross Margin (4.9%) (27.3%) 2.0% (13.8%)* (1.8%) * Excluding a $248,000 write-off of software inventory, gross margin was 0.5% for fiscal 2003. The Company will post its investor presentation and supplemental financial information on its website, http://www.icc.net/ on the morning October 29, 2003, the date of its quarterly webcast. About Internet Commerce Corporation Internet Commerce Corporation (NASDAQ:ICCA) is a leader in the e-commerce business-to-business communication services market. ICC.NET, the company's global Internet-based value added network, provides complete supply chain connectivity solutions for EDI/EC while also offering users a sophisticated vehicle to securely transact files of any format and size. ICC offers a broad range of consulting services including, XML technologies, data transformation, custom application development, an EDI service bureau, as well as comprehensive e-commerce education. ICC uniquely bridges the legacy investments of yesterday to today's Internet technologies. For further information, visit us at http://www.icc.net/. Except for the historical information contained herein, this press release includes forward looking statements which are subject to a number of risks and uncertainties, including the risks and uncertainties associated with rapidly changing technologies such as the Internet, the risks of technology development and the risks of competition. Actual results could differ materially. For more information about these risks and uncertainties, see the SEC filings of Internet Commerce Corporation. INTERNET COMMERCE CORPORATION Consolidated Statements 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, 2003 2002 2003 2002 Revenues: Services $3,102 $2,762 $12,083 $11,222 Technology license 3,000 -- 3,000 Total revenues 3,102 5,762 12,083 14,222 Expenses: Cost of services (excluding non-cash compensation of ($15) and $119 for the three months and twelve months ended July 31, 2002, respectively.) 1,894 2,283 7,622 8,776 Impairment of software inventory -- -- 248 -- Impairment of capitalized software 15 -- 148 -- Product development and enhancement 282 247 1,111 977 Selling and marketing (excluding non-cash compensation of $7 and $30 for the three and twelve months ended July 31, 2002, respectively.) 714 676 3,035 3,499 General and administrative (excluding non-cash compensation of $68 and $101 for the three and twelve months ended July 31, 2002, respectively and $57 and $139 for the three and twelve months ended July 31, 2003 respectively.) 1,205 1,684 4,439 5,849 Non-cash charges for stock-based compensation and services 57 60 139 250 Impairment of goodwill and acquired intangibles 982 1,711 982 1,711 5,149 6,661 17,724 21,062 Operating loss (2,047) (899) (5,641) (6,840) Other income and (expense): Interest and investment income 3 3 13 27 Investment gain (loss) -- 15 (19) 121 Interest expense (18) (8) (39) (70) Impairment of marketable securities -- -- (318) -- Other income -- 207 -- 214 (15) 217 (363) 292 Net loss $(2,062) $(682) $(6,004) $( 6,548) Dividends on preferred stock (101) (101) (400) (365) Beneficial conversion feature for repricing and issuance of warrants in warrant exchange offer -- -- -- (461) Beneficial conversion feature related to series D preferred stock -- -- (107) -- Loss attributable to common stockholders $(2,163) $(783) $(6,511) $(7,374) Basic and diluted loss per common share $(0.16) $(0.06) $(0.53) $(0.68) Weighted average number of common shares outstanding- basic and diluted 13,765,885 11,488,172 12,303,367 10,867,447 COMPREHENSIVE LOSS: Net loss $(2,062) $(682) $(6,004) $(6,548) Other comprehensive loss: Unrealized gain (loss) - marketable securities 15 (43) 35 (118) Reclassification for impairment of marketable securities -- -- 318 -- Comprehensive loss $(2,047) $(725) $(5,651) $(6,666) INTERNET COMMERCE CORPORATION Consolidated Balance Sheets (in thousands) July 31, July 31, 2002 2002 (unaudited) ASSETS Current assets: Cash and cash equivalents $2,283 $2,088 Marketable securities 92 131 Accounts receivable, net of allowance for doubtful accounts of $220 and $242, respectively 1,733 2,976 Prepaid expenses and other current assets 296 478 Total current assets 4,404 5,673 Restricted cash 128 157 Property and equipment, net 557 1,152 Software development costs, net 128 327 Goodwill 1,212 2,194 Other intangible assets, net 2,151 3,107 Other assets 18 15 Total assets $ 8,598 $12,625 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 918 $862 Accrued expenses 1,179 1,409 Accrued dividends - preferred stock 232 232 Deferred revenue 97 164 Capital lease obligation 148 182 Other liabilities 130 203 Total current liabilities 2,704 3,052 Capital lease obligation - less current portion 46 192 Other non-current liabilities 8 -- Total liabilities 2,758 3,244 Commitments and contingencies -- -- Stockholders' Equity: Preferred stock * * Common stock 138 117 Additional paid-in capital 87,489 85,401 Accumulated deficit (81,813) (75,809) Accumulated other comprehensive income (loss) 26 (328) Total stockholders' equity 5,840 9,381 Total liabilities and stockholders' equity $ 8,598 $12,625 * less than 1,000 http://www.newscom.com/cgi-bin/prnh/20030611/ICCALOGODATASOURCE: Internet Commerce Corporation CONTACT: Victor Bjorge of Internet Commerce Corporation, +1-212-271-7681, Web site: http://www.icc.net/

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