IGO Intersearch Grp.

InterSearch Group, Inc. (AMEX:IGO), a leading provider of Internet search services and operator of industry specific destination portals such as: www.irs.com, www.banks.com and www.camps.com, today reported financial results for the third quarter ended September 30, 2006. Third Quarter 2006 Consolidated Financial Results: Third quarter revenue was $4.8 million, a 2% increase relative to the $4.7 million reported in the third quarter of 2005; Gross margins were 48%, in line with the third quarter a year ago; Operating income was $0.4 million as compared to $0.7 million for the same quarter of fiscal 2005; GAAP(1) earnings available to common stockholders were $0.1 million or $.00 per diluted share as compared to net earnings of $0.4 million or $.01 per diluted share in the third quarter of 2005; Cash flows from operations were $0.8 million for the three months ended September 30, 2006; Earnings before interest, taxes, depreciation and amortization (EBITDA) was $0.7 million.(2) (1) Generally accepted accounting principles in the United States of America. (2) EBITDA is a non-GAAP financial measure. This measure may be different from non-GAAP financial measures used by other companies. We encourage investors to review the section below entitled �Non-GAAP Financial Measures� and to review the reconciling adjustments between the GAAP and non-GAAP measures attached to this press release. �As we anticipated, the third quarter results as compared to our second quarter results were negatively impacted by seasonal trends inherent in our business. Recent acquisitions, including travel-related domains, will start impacting our revenues in 2007 and are expected to gradually alleviate the pronounced seasonality that we saw this quarter,� said InterSearch CFO, Gary Bogatay. �We believe our performance in the fourth quarter of 2006 will reflect seasonally stronger online traffic and better traffic conversion rates, which are typical for the holiday season,� continued Gary Bogatay. Gross margins declined sequentially from 63% in the second quarter of 2006. The decline in gross margins during the third quarter was primarily attributable to lower revenue contribution from www.irs.com, and higher contribution from the domain parking business, Parking Dots. During the quarter the Company saw an increase in sales, general and administrative expense of approximately $434,000. This was driven by costs associated with the process of listing the Company�s common stock on the American Stock Exchange, higher amortization expense due to recent acquisitions, and necessary investments in infrastructure to accommodate the anticipated revenue growth. Third Quarter Business Highlights Commenced trading on the American Stock Exchange under the ticker symbol IGO. Completed the acquisition of a premium finance-related domain, www.banks.com. Closed a $7 million non-convertible debt financing. Generated approximately 21 million paid clicks as compared to 18 million in the third quarter of 2005. �This quarter we achieved significant progress in streamlining our balance sheet and capital structure, and providing enhanced liquidity to our shareholders,� said InterSearch Chairman and CEO, Dan O�Donnell. �In July, InterSearch completed a $7 million non-convertible debt financing and used part of the proceeds to buy back common stock which was subject to mandatory redemption by August 12, 2006. In October, our common stock was approved for listing and began trading on the American Stock Exchange.� Added Dan O�Donnell, �We continued expanding our portfolio of category-level domains by acquiring www.banks.com. This property is a great fit for our initiatives in the finance vertical and is already generating interest from advertisers and our network partners.� Business Outlook InterSearch is currently observing a quiet period. During the quiet period, InterSearch representatives will not provide further comment on InterSearch�s business outlook or financial expectations in InterSearch�s earnings releases nor will InterSearch hold conference calls to discuss its quarterly results. About InterSearch Group, Inc. InterSearch is a leading provider of Internet search services through a combination of traffic aggregation and proprietary websites, such as www.irs.com, www.banks.com and www.camps.com. The Company operates in the fastest growing segments of Internet commerce including paid search, direct navigation and online marketing driving high quality traffic to advertisers and providing users with quick access to pertinent products and services. Through its InterSearch Corporate Services division, the Company also provides Internet related technology Professional Services to large corporations, predominantly to the Financial Services industry. InterSearch is headquartered in San Francisco, California at 222 Kearny Street, Suite 550, and can be reached via telephone at 415-962-9700. More information about InterSearch Group, Inc. can be found at: www.InterSearch.com. Forward Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties, including statements regarding our expected financial results for the fourth quarter of 2006. Forward-looking statements, which are based on management�s current expectations, are generally identifiable by the use of terms, such as �anticipates,� �believes,� �could,� �estimates,� �expects,� �intends,� �may,� �plans,� �possible,� �potential,� �predicts,� �projects,� �should,� �would� and similar expressions. The forward-looking statements in this press release are contained principally in the section entitled �Business Outlook.� The potential risks and uncertainties that could cause actual results to differ materially from those expressed or implied herein include, among others,�the Company�s relationships with its current and future advertising and distribution network partners, the Company�s ability to achieve anticipated results from acquisitions, and market development of Internet advertising and paid search services. Further information on the factors that could affect the Company�s financial results is included in the Company�s SEC filings, including the most recent registration statement filed with the SEC under the heading �Risk Factors.� Except as required by law, InterSearch Group assumes no obligation to update these forward-looking statements publicly, even if new information becomes available in the future. Non-GAAP Financial Measures This press release includes the following financial measure defined as non-GAAP financial measure by the Securities and Exchange Commission: EBITDA (earnings before interest, tax, depreciation and amortization. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles. See �Reconciliation of GAAP Net Earnings to Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)� table included in this press release for further information regarding these non-GAAP financial measures. InterSearch�s management evaluates and monitors performance for InterSearch primarily through earnings before interest, income taxes, depreciation and amortization (�EBITDA�). In addition, EBITDA is presented because management believes it is frequently used by securities analysts, investors and others in the evaluation of companies. EBITDA is calculated by adding income taxes, interest expense, depreciation and amortization to net earnings. EBITDA is not defined under GAAP and should not be considered in isolation or as a substitute for net earnings and other consolidated earnings data prepared in accordance with GAAP or as a measure of InterSearch�s profitability. INTERSEARCH GROUP, INC. AND SUBSIDIARIES Consolidated Statements of Earnings (In thousands, except share and per share data) (Unaudited) Three Months Ended September 30, 2006� 2005� Revenues: Internet search services $4,231� 3,922� Corporate services 585� 778� � Total revenues 4,816� 4,700� � Cost of revenues: Traffic acquisition cost 2,096� 1,836� Cost of consulting services 397� 599� � Total cost of revenues 2,493� 2,435� � Gross profit 2,323� 2,265� � Operating expenses: Sales and marketing expense 188� 330� General and administrative expense 1,766� 1,190� � Total operating expenses 1,954� 1,520� � Earnings from operations 369� 745� � Interest expense 210� 44� � Earnings before income taxes 159� 701� � Income taxes 79� 173� � Net earnings 80� 528� � Preferred stock dividends -� 168� � Net earnings available to common stockholders 80� 360� � Basic earnings per share -� 0.02� � Diluted earnings per share -� 0.01� � Unaudited proforma tax and loss available to common stockholders and per share information for S Corporation periods � � � Net earnings available to common stockholders 360� � Proforma income tax expense adjustment 32� � Proforma net earnings 328� � Proforma basic earnings per share 0.02� � Proforma diluted earnings per share 0.01� INTERSEARCH GROUP, INC. AND SUBSIDIARIES Consolidated Statements of Earnings (In thousands, except share and per share data) (Unaudited) Nine Months Ended September 30, 2006� 2005� Revenues: Internet search services $17,221� 10,413� Corporate services 2,051� 2,168� � Total revenues 19,272� 12,581� � Cost of revenues: Traffic acquisition cost 5,913� 5,053� Cost of consulting services 1,464� 1,648� � Total cost of revenues 7,377� 6,701� � Gross profit 11,895� 5,880� � Operating expenses: Sales and marketing expense 689� 666� General and administrative expense 5,624� 3,554� � Total operating expenses 6,313� 4,220� � Earnings from operations 5,582� 1,660� � Interest expense 246� 110� � Loss on derivative instrument 19� -� � Earnings before income taxes 5,317� 1,550� � Income taxes 2,176� 608� � Net earnings 3,141� 942� � Preferred stock dividends -� 496� � Net earnings available to common stockholders 3,141� 446� � Basic earnings per share 0.12� 0.03� � Diluted earnings per share $ 0.11� 0.02� � Unaudited proforma tax and earnings available to common stockholders and per share information for S Corporation period � � � Net earnings available to common stockholders $ 446� � Proforma income tax expense adjustment 32� � Proforma net earnings 414� � Proforma basic earnings per share 0.02� � Proforma diluted earnings per share $ 0.02� INTERSEARCH GROUP, INC. AND SUBSIDIARIES Consolidated Balance Sheets (In thousands, except share and per share data) � � September 30, � December 31, 2006� 2005� (Unaudited) Assets � Current assets: Cash $645� 576� Accounts receivable 3,369� 3,206� Prepaid expenses and other 518� 227� Deferred income taxes 22� -� � Total current assets 4,554� 4,009� � Office equipment, net 1,131� 257� Debt issuance costs, net 664� -� Patents and trademarks, net 85� 71� Domains, net 13,651� 12,694� Goodwill 573� 573� Deferred income taxes 505� 554� � Total Assets $21,163� 18,158� � Liabilities and Stockholders' Equity � Current liabilities: Revolving line of credit 629� 726� Accrued liabilities 1,540� 1,831� Accounts payable 1,638� 1,226� Deferred revenue -� 300� Deferred income taxes -� 89� Note payable -� 1,540� Common stock subject to mandatory redemption -� 6,150� Common stock warrants -� 3,264� � Total current liabilities 3,807� 15,126� � Notes payable, net of discount 6,537� -� � Total Liabilities 10,344� 15,126� � Stockholders' equity: Preferred Stock -� -� Common Stock 25� 25� Additional paid-in capital 8,635� 4,054� Retained earnings (accumulated deficit) 2,159� (982) Notes receivable for common stock issued -� (65) � Total stockholders' equity 10,819� 3,032� � Total liabilities and stockholders' equity $21,163� 18,158� INTERSEARCH GROUP, INC. AND SUBSIDIARIES Reconciliation of GAAP Net Earnings to Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) (In thousands) (Unaudited) � Three Months Ended September 30, 2006� 2005� � Net earnings available to common stockholders $ 80� 360� � Preferred Stock Dividends -� 168� � Net earnings 80� 528� � Income taxes 79� 173� � Earnings before income taxes 159� 701� � Interest expense 210� 44� � Earnings from operations 369� 745� � Depreciation 55� 29� � Amortization 236� -� � Earnings before interest, taxes, depreciation, amortization (EBITDA) $ 660� $ 774� � � Nine Months Ended September 30, 2006� 2005� � Net earnings available to common stockholders $ 3,141� 446� � Preferred Stock Dividends -� 496� � Net earnings 3,141� 942� � Income taxes 2,176� 608� � Earnings before income taxes 5,317� 1,550� � Interest expense 246� 110� � Earnings from operations 5,563� 1,660� � Depreciation 129� 83� � Amortization 722� -� � Earnings before interest, taxes, depreciation, amortization (EBITDA) $ 6,414� $ 1,743� InterSearch Group, Inc. (AMEX:IGO), a leading provider of Internet search services and operator of industry specific destination portals such as: www.irs.com, www.banks.com and www.camps.com, today reported financial results for the third quarter ended September 30, 2006. Third Quarter 2006 Consolidated Financial Results: -- Third quarter revenue was $4.8 million, a 2% increase relative to the $4.7 million reported in the third quarter of 2005; -- Gross margins were 48%, in line with the third quarter a year ago; -- Operating income was $0.4 million as compared to $0.7 million for the same quarter of fiscal 2005; -- GAAP(1) earnings available to common stockholders were $0.1 million or $.00 per diluted share as compared to net earnings of $0.4 million or $.01 per diluted share in the third quarter of 2005; -- Cash flows from operations were $0.8 million for the three months ended September 30, 2006; -- Earnings before interest, taxes, depreciation and amortization (EBITDA) was $0.7 million.(2) (1) Generally accepted accounting principles in the United States of America. (2) EBITDA is a non-GAAP financial measure. This measure may be different from non-GAAP financial measures used by other companies. We encourage investors to review the section below entitled "Non-GAAP Financial Measures" and to review the reconciling adjustments between the GAAP and non-GAAP measures attached to this press release. "As we anticipated, the third quarter results as compared to our second quarter results were negatively impacted by seasonal trends inherent in our business. Recent acquisitions, including travel-related domains, will start impacting our revenues in 2007 and are expected to gradually alleviate the pronounced seasonality that we saw this quarter," said InterSearch CFO, Gary Bogatay. "We believe our performance in the fourth quarter of 2006 will reflect seasonally stronger online traffic and better traffic conversion rates, which are typical for the holiday season," continued Gary Bogatay. Gross margins declined sequentially from 63% in the second quarter of 2006. The decline in gross margins during the third quarter was primarily attributable to lower revenue contribution from www.irs.com, and higher contribution from the domain parking business, Parking Dots. During the quarter the Company saw an increase in sales, general and administrative expense of approximately $434,000. This was driven by costs associated with the process of listing the Company's common stock on the American Stock Exchange, higher amortization expense due to recent acquisitions, and necessary investments in infrastructure to accommodate the anticipated revenue growth. Third Quarter Business Highlights -- Commenced trading on the American Stock Exchange under the ticker symbol IGO. -- Completed the acquisition of a premium finance-related domain, www.banks.com. -- Closed a $7 million non-convertible debt financing. -- Generated approximately 21 million paid clicks as compared to 18 million in the third quarter of 2005. "This quarter we achieved significant progress in streamlining our balance sheet and capital structure, and providing enhanced liquidity to our shareholders," said InterSearch Chairman and CEO, Dan O'Donnell. "In July, InterSearch completed a $7 million non-convertible debt financing and used part of the proceeds to buy back common stock which was subject to mandatory redemption by August 12, 2006. In October, our common stock was approved for listing and began trading on the American Stock Exchange." Added Dan O'Donnell, "We continued expanding our portfolio of category-level domains by acquiring www.banks.com. This property is a great fit for our initiatives in the finance vertical and is already generating interest from advertisers and our network partners." Business Outlook InterSearch is currently observing a quiet period. During the quiet period, InterSearch representatives will not provide further comment on InterSearch's business outlook or financial expectations in InterSearch's earnings releases nor will InterSearch hold conference calls to discuss its quarterly results. About InterSearch Group, Inc. InterSearch is a leading provider of Internet search services through a combination of traffic aggregation and proprietary websites, such as www.irs.com, www.banks.com and www.camps.com. The Company operates in the fastest growing segments of Internet commerce including paid search, direct navigation and online marketing driving high quality traffic to advertisers and providing users with quick access to pertinent products and services. Through its InterSearch Corporate Services division, the Company also provides Internet related technology Professional Services to large corporations, predominantly to the Financial Services industry. InterSearch is headquartered in San Francisco, California at 222 Kearny Street, Suite 550, and can be reached via telephone at 415-962-9700. More information about InterSearch Group, Inc. can be found at: www.InterSearch.com. Forward Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties, including statements regarding our expected financial results for the fourth quarter of 2006. Forward-looking statements, which are based on management's current expectations, are generally identifiable by the use of terms, such as "anticipates," "believes," "could," "estimates," "expects," "intends," "may," "plans," "possible," "potential," "predicts," "projects," "should," "would" and similar expressions. The forward-looking statements in this press release are contained principally in the section entitled "Business Outlook." The potential risks and uncertainties that could cause actual results to differ materially from those expressed or implied herein include, among others, the Company's relationships with its current and future advertising and distribution network partners, the Company's ability to achieve anticipated results from acquisitions, and market development of Internet advertising and paid search services. Further information on the factors that could affect the Company's financial results is included in the Company's SEC filings, including the most recent registration statement filed with the SEC under the heading "Risk Factors." Except as required by law, InterSearch Group assumes no obligation to update these forward-looking statements publicly, even if new information becomes available in the future. Non-GAAP Financial Measures This press release includes the following financial measure defined as non-GAAP financial measure by the Securities and Exchange Commission: EBITDA (earnings before interest, tax, depreciation and amortization. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles. See "Reconciliation of GAAP Net Earnings to Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)" table included in this press release for further information regarding these non-GAAP financial measures. InterSearch's management evaluates and monitors performance for InterSearch primarily through earnings before interest, income taxes, depreciation and amortization ("EBITDA"). In addition, EBITDA is presented because management believes it is frequently used by securities analysts, investors and others in the evaluation of companies. EBITDA is calculated by adding income taxes, interest expense, depreciation and amortization to net earnings. EBITDA is not defined under GAAP and should not be considered in isolation or as a substitute for net earnings and other consolidated earnings data prepared in accordance with GAAP or as a measure of InterSearch's profitability. -0- *T INTERSEARCH GROUP, INC. AND SUBSIDIARIES Consolidated Statements of Earnings (In thousands, except share and per share data) (Unaudited) Three Months Ended September 30, ------------------ 2006 2005 --------- -------- Revenues: Internet search services $4,231 3,922 Corporate services 585 778 --------- -------- Total revenues 4,816 4,700 --------- -------- Cost of revenues: Traffic acquisition cost 2,096 1,836 Cost of consulting services 397 599 --------- -------- Total cost of revenues 2,493 2,435 --------- -------- Gross profit 2,323 2,265 --------- -------- Operating expenses: Sales and marketing expense 188 330 General and administrative expense 1,766 1,190 --------- -------- Total operating expenses 1,954 1,520 --------- -------- Earnings from operations 369 745 Interest expense 210 44 --------- -------- Earnings before income taxes 159 701 Income taxes 79 173 --------- -------- Net earnings 80 528 Preferred stock dividends - 168 --------- -------- Net earnings available to common stockholders 80 360 --------- -------- Basic earnings per share - 0.02 --------- -------- Diluted earnings per share - 0.01 --------- -------- Unaudited proforma tax and loss available to common stockholders and per share information for S Corporation periods Net earnings available to common stockholders 360 Proforma income tax expense adjustment 32 -------- Proforma net earnings 328 -------- Proforma basic earnings per share 0.02 -------- Proforma diluted earnings per share 0.01 -------- *T -0- *T INTERSEARCH GROUP, INC. AND SUBSIDIARIES Consolidated Statements of Earnings (In thousands, except share and per share data) (Unaudited) Nine Months Ended September 30, ----------------- 2006 2005 -------- -------- Revenues: Internet search services $17,221 10,413 Corporate services 2,051 2,168 -------- -------- Total revenues 19,272 12,581 -------- -------- Cost of revenues: Traffic acquisition cost 5,913 5,053 Cost of consulting services 1,464 1,648 -------- -------- Total cost of revenues 7,377 6,701 -------- -------- Gross profit 11,895 5,880 -------- -------- Operating expenses: Sales and marketing expense 689 666 General and administrative expense 5,624 3,554 -------- -------- Total operating expenses 6,313 4,220 -------- -------- Earnings from operations 5,582 1,660 Interest expense 246 110 Loss on derivative instrument 19 - -------- -------- Earnings before income taxes 5,317 1,550 Income taxes 2,176 608 -------- -------- Net earnings 3,141 942 Preferred stock dividends - 496 -------- -------- Net earnings available to common stockholders 3,141 446 -------- -------- Basic earnings per share 0.12 0.03 -------- -------- Diluted earnings per share $0.11 0.02 -------- -------- Unaudited proforma tax and earnings available to common stockholders and per share information for S Corporation period Net earnings available to common stockholders $446 Proforma income tax expense adjustment 32 -------- Proforma net earnings 414 -------- Proforma basic earnings per share 0.02 -------- Proforma diluted earnings per share $0.02 -------- *T -0- *T INTERSEARCH GROUP, INC. AND SUBSIDIARIES Consolidated Balance Sheets (In thousands, except share and per share data) September 30, December 31, --------------------------- 2006 2005 ------------- ------------ (Unaudited) Assets Current assets: Cash $645 576 Accounts receivable 3,369 3,206 Prepaid expenses and other 518 227 Deferred income taxes 22 - ------------- ------------ Total current assets 4,554 4,009 Office equipment, net 1,131 257 Debt issuance costs, net 664 - Patents and trademarks, net 85 71 Domains, net 13,651 12,694 Goodwill 573 573 Deferred income taxes 505 554 ------------- ------------ Total Assets $21,163 18,158 ============= ============ Liabilities and Stockholders' Equity Current liabilities: Revolving line of credit 629 726 Accrued liabilities 1,540 1,831 Accounts payable 1,638 1,226 Deferred revenue - 300 Deferred income taxes - 89 Note payable - 1,540 Common stock subject to mandatory redemption - 6,150 Common stock warrants - 3,264 ------------- ------------ Total current liabilities 3,807 15,126 ------------- ------------ Notes payable, net of discount 6,537 - Total Liabilities 10,344 15,126 ------------- ------------ Stockholders' equity: Preferred Stock - - Common Stock 25 25 Additional paid-in capital 8,635 4,054 Retained earnings (accumulated deficit) 2,159 (982) Notes receivable for common stock issued - (65) ------------- ------------ Total stockholders' equity 10,819 3,032 ------------- ------------ Total liabilities and stockholders' equity $21,163 18,158 ============= ============ *T -0- *T INTERSEARCH GROUP, INC. AND SUBSIDIARIES Reconciliation of GAAP Net Earnings to Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) (In thousands) (Unaudited) Three Months Ended September 30, 2006 2005 --------- -------- Net earnings available to common stockholders $80 360 Preferred Stock Dividends - 168 --------- -------- Net earnings 80 528 Income taxes 79 173 --------- -------- Earnings before income taxes 159 701 Interest expense 210 44 --------- -------- Earnings from operations 369 745 Depreciation 55 29 Amortization 236 - --------- -------- Earnings before interest, taxes, depreciation, amortization (EBITDA) $660 $774 ========= ======== Nine Months Ended September 30, 2006 2005 --------- -------- Net earnings available to common stockholders $3,141 446 Preferred Stock Dividends - 496 --------- -------- Net earnings 3,141 942 Income taxes 2,176 608 --------- -------- Earnings before income taxes 5,317 1,550 Interest expense 246 110 --------- -------- Earnings from operations 5,563 1,660 Depreciation 129 83 Amortization 722 - --------- -------- Earnings before interest, taxes, depreciation, amortization (EBITDA) $6,414 $1,743 ========= ======== *T