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Issuer Direct Reports Fourth Quarter and Full Year 2015 Financial Results

Full Year Operating Cash Flow and Accesswire Revenue Grow to Record Levels; EBITDA Margins Expand to 20%

MORRISVILLE, NC / ACCESSWIRE / March 3, 2016 / Issuer Direct Corporation (NYSE MKT:ISDR) (the “Company”), a market leader and innovator of disclosure management solutions and cloud-based compliance technologies, today reported its operating results for the three and twelve months ended December 31, 2015. The Company will host an investor conference call today at 4:30 PM Eastern Time, to discuss its operating results and relevant topics of interest.

Fourth Quarter 2015 Financial Highlights with Prior Year Quarter Comparison:
Year Ended December 31, 2015 Financial Highlights with Prior Year Comparison:
Fourth Quarter Key Performance Indicators
Twelve Month Key Performance Indicators

Brian Balbirnie, CEO of Issuer Direct commented, “In 2015, despite the decrease in revenue, we more than doubled cash from operations, benefiting from steady expense management and maintaining 70% gross margins. At the end of 2015, we launched two new cloud-based solutions, Blueprint™ for SEC and XBRL filings and Classify™, an investor and media targeting platform. These new product launches represent important milestones in our transition from a pure services company to a scalable, technology company, positioning Issuer Direct for what we believe will be future growth.”

Mr. Balbirnie continued, “Our press release business, Accesswire, saw strong growth in virtually all revenue categories: full year 2015 over 2014, fourth quarter year-over-year, fourth quarter sequentially compared to third quarter, as well as an increase in the average price of an Accesswire sale. Our Accesswire business also partially offset the anticipated decline in our shareholder communications business, attributable to our Annual Report Service (ARS) converting from print distribution to digital platforms. We expect growth in the Accesswire business to continue to be strong, especially as consolidation in the press release market occurs, which is creating opportunities for us in client acquisition and team member expansion.”

Mr. Balbirnie concluded, “In 2016, we are leveraging the accelerating interest in our comprehensive platform and investing for growth. We intend to use some of the cash we are generating from operations to increase marketing and hiring of sales executives in order to support our newswire and new cloud-based products. Early results are positive, and with continued growth in our platform pipeline, we expect strong market adoption for both our new products. While 2015 was a staging year in getting these products launched, in 2016 we are fully focused on selling these subscription-based, high margin, scalable software solutions, and completing the transition to a platform technology company.”

Financial Results for the Fourth Quarter ended December 31, 2015:

Total revenue was $2.7 million during the three months ended December 31, 2015, compared to $3.3 million during the same period of 2014. The decrease in revenue is primarily due to a decline in the Annual Report Service offerings as issuers shift from hardcopy fulfillment of annual reports to digital fulfillment and as a result, either downgrade their service to digital or elect to discontinue the service altogether. Additionally, the Company experienced declines in traditional Edgar and XBRL service offerings due to increased pricing pressure as the market continues to mature as well as declines in the stock transfer business as customers performed less corporate directives in 2015 as compared to the same period in 2014. These decreases were partially offset by an increase in revenue from the press release business due to the acquisition of Accesswire, which has experienced both sequential quarter growth and year over year growth.

Gross profit was $1.9 million, or a gross profit margin of 70%, for the quarter, compared to $2.3 million, or 70% gross profit margin, during the fourth quarter of 2014. Despite the downward pressure on revenue, it is anticipated that the Company will be able to maintain or increase gross margin percentages as the Company transitions customers to electronic dissemination of corporate information as well as begins to generate sales from its new cloud-based solutions.

Operating loss was $(313,296) compared to operating income of $231,094 during the same period of last year. However, operating expenses during the fourth quarter of 2015 included an impairment loss on intangible assets of $547,000. The impairment loss related to certain trademarks acquired through the acquisition of PrecisionIR in 2013, some of which the Company elected not to renew during the fourth quarter of 2015 and others that the Company plans to discontinue over the next few years as the Annual Report Service is rebranded as Investor Network™.

Fourth quarter EBITDA was $533,059, or 20%, compared to $560,023, or 17%, in the same period of 2014. Non-GAAP net income, excluding amortization and impairment of intangible assets, stock based compensation, integration of acquisition costs, non-cash interest expense, impact of changes to the deferred tax asset valuation allowance and tax impact of adjustments was $356,623 or $0.12 per diluted share, compared to $441,374 or $0.16 per diluted share during the same period in 2014. Please refer to the tables below for the calculation of EBITDA and the reconciliation of GAAP income and earnings per share to Non-GAAP income and earnings per share.

On a GAAP basis, the Company reported net loss of $(293,839), or $(0.10) per diluted share, compared to a loss of $(65,129), or $(0.03) per diluted share during the same period of 2014.

Financial Results for the Year ended December 31, 2015:

Total revenue was $11.6 million, compared to $13.6 million. The decrease in revenue for the twelve-month period ended December 31, 2015 is due to the same factors noted above for the fourth quarter.

Gross profit was $8.2 million, or 70% gross profit margin, compared to $9.6 million, or 70% gross profit margin, for the prior year. Operating income was $634,236 during 2015 compared to $1.5 million in the prior year, however 2015 operating income includes a $547,000 impairment charge as noted above for the fourth quarter. Despite the impairment loss noted above, the Company was able to decrease operating expenses by over $550,000 for the year ended December 31, 2015, compared to the prior year.

EBITDA for 2015 was $2.3 million or 20% compared to $2.6 million or 19% for the prior year. Non-GAAP net income, excluding amortization and impairment of intangible assets, stock-based compensation, integration of acquisition costs, non-cash interest expense, impact of changes to the deferred tax asset valuation allowance and tax impact of adjustments, was $1.7 million or $0.66 per diluted share, compared to $1.8 million or $0.86 per diluted share. As noted earlier, Red Oak converted the remaining principal of $1,666,673 on its 8% note into 417,712 shares of the Company’s common stock, and as a result, the Company will no longer have any non-cash or cash interest expense associated with the note.

On a GAAP basis, the Company reported a net income of $144,584 or $0.06 per diluted share, compared to $42,126 or $0.02 per diluted share.

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, unusual, non-recurring gains and charges and non-cash interest expense. 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 statements and investors should evaluate them carefully. These non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies.

CALCULATION OF EBITDA

   
Three Months ended December 31,
 
   
2015
   
2014
 
   
Amount
   
Amount
 
             
Net income:   $ (293,839)     $ (65,129)  
Adjustments:                
Depreciation and amortization     299,355       329,059  
Impairment loss on intangible assets     547,000        
Interest (income) expense, net     (886)       619,099  
Income tax expense (benefit)     (18,571)       (322,876)  
EBITDA:   $ 533,059     $ 560,153  

   
Year ended December 31,
 
   
2015
   
2014
 
   
Amount
   
Amount
 
             
Net income:   $ 144,584       42,143  
Adjustments:                
Depreciation and amortization     1,099,870       1,158,642  
Impairment loss on intangible assets     547,000        
Interest expense, net     622,139       1,710,002  
Income tax benefit     (132,487)      

(279,475)

 
EBITDA:   $ 2,281,106       2,631,315  

RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES

   
Three Months ended December 31,
 
   
2015
   
2014
 
   
Amount
   
Per diluted share
   
Amount
   
Per diluted
share
 
                         
Net income:   $ (293,839)       (0.10)       (65,129)       (0.03)  
Adjustments:                                
Amortization and impairment of intangible assets (1)     804,960       0.28       243,748       0.11  
Stock based compensation (2)     178,428       0.06       95,337       0.04  
Integration and acquisition costs (3)     15,834       0.00       168,782       0.08  
Non-cash interest expense (4)                 603,565       0.27  
Tax impact of adjustments (5)     (379,704)       (0.13)       (422,344)       (0.19)  
Portion of tax benefit related to change in valuation allowance (6)     30,944       0.01       (182,585)       (0.08)  
Non-GAAP net income:   $ 356,623       0.12       441,374       0.20  

   
Year ended December 31,
 
   
2015
   
2014
 
   
Amount
   
Per diluted share
   
Amount
   
Per diluted
share
 
                         
Net income:   $ 144,584       0.06       42,146       0.02  
Adjustments:                                
Amortization and impairment of intangible assets (1)     1,542,338       0.60       934,495       0.44  
Stock based compensation (2)     549,184       0.21       410,471       0.19  
Integration and acquisition costs (3)     190,000       0.07       291,985       0.14  
Non-cash interest expense (4)     535,397       0.21       1,541,065       0.73  
Tax impact of adjustments (5)     (1,070,429)       (0.42)       (1,207,646)       (0.57)  
Portion of tax benefit related to change in valuation allowance (6)     (179,426)       (0.07)       (182,585)       (0.09)  
Non-GAAP net income:   $ 1,711,648       0.66       1,829,931       0.86  
  1. The adjustments represent the amortization and impairment of intangible assets related to acquired assets and companies.
  2. The adjustments represent stock-based compensation expense recognized related to awards of stock options, restricted stock units or common stock in exchange for services.
  3. The adjustments represent legal fees, consulting fees, integration costs, and other non-recurring costs in connection with the acquisitions of Accesswire and PrecisionIR Group, Inc., which were incurred in 2015 and 2014, respectively.
  4. The adjustment represents the amortization of debt-discount that was created as a result of a beneficial conversion feature that was embedded in a note payable that the Company issued in order to finance the acquisition of PrecisionIR Group, Inc. The amortization of the debt discount is recorded as non-cash interest expense and has no impact on the cash flows or operations of the Company.
  5. This adjustment gives effect to the tax impact of all non-GAAP adjustments at a rate of 38%, which approximates the Company’s state and federal tax rates.
  6. The adjustment eliminates the impact on income tax expense of the change in the valuation allowance established for deferred tax assets associated with net operating losses for PrecisionIR Group, Inc. at the date of acquisition.

To read the Company’s full earnings release please click here. (https://www.issuerdirect.com/issuer-direct-reports-fourth-quarter-and-full-year-2015-financial-results/)

Conference Call Information

To participate in this event, dial 866-952-7524 domestically, or 785-424-1829 internationally, approximately 5 to 10 minutes prior to 4:30 PM Eastern Time.

Additionally, you can listen to the event online at http://www.investorcalendar.com/IC/CEPage.asp?ID=174743.

If you are unable to participate during the live webcast, the event archive will be available at www.issuerdirect.com/earnings-calls-and-scripts/.

You may access the teleconference replay by dialing 800-723-0544 domestically or 402-220-2656 internationally. The replay will be available beginning approximately 2 hours after the completion of the live event, ending at midnight Eastern on April 3, 2016.

About Issuer Direct Corporation:

Issuer Direct is a disclosure management and targeted communications company. Our integrated platform provides tools, and technologies that enable our clients to disclose and disseminate information through our network. 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.

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, 2015, 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.


Contact:

Issuer Direct Corporation 
Brian R. Balbirnie 
919-481-4000 
brian.balbirnie@issuerdirect.com

Brett Maas 
Hayden IR 
(646) 536-7331 
brett@haydenir.com

James Carbonara 
Hayden IR 
(646)-755-7412 
james@haydenir.com

SOURCE: Issuer Direct Corporation

ReleaseID: 437431

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