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inContact Inc. Reports Operating Results (10-Q/A)

March 06, 2009 | About:
10qk

inContact Inc. (SAAS) filed Amended Quarterly Report for the period ended 2007-06-30.

inContact Inc. operates as a hosted software as a service company offering a range of hosted contact handling and performance management software services in addition to a variety of connectivity options for carrying an inbound call into its inContact suite of services.The Company sells telecom services unbundled from its inContact service offering including dedicated switched toll free and data lines.The company also operates as a reseller of domestic and international long distance and other services provided by national and regional wholesale providers.It was formerly known as UCN Inc. and is based in Midvale Utah..

Highlight of Business Operations:

Consolidated revenues decreased $3.8 million or 8.7% to $39.8 million for the six months ended June 30, 2007 from $43.6 million compared to the same period in 2006. The decrease is primarily due to the continued revenue decrease in our Telecom segment, which was down $8.3 million compared to the same period in 2006. The decrease in our Telecom segment is due to the discontinuation of services to several high volume, low margin customers during the second quarter of 2006 which affected each subsequent quarter. Additionally, we experienced a significant movement of our customers from the Telecom to the inContact segment during 2006 as they added inContact to their services. As mentioned above, when current Telecom customers start using our inContact services, their entire revenue balance moves to the inContact segment. These losses were offset by significant increases in inContact segment revenue, which increased $4.4 million to $10.8 million through June 30, 2007 compared to $6.4 million during the same period in 2006.

General and administrative expenses for the three months ended June 30, 2007 increased 29% or $1.0 million to $4.2 million compared to $3.2 million in the same period in 2006. The increase is primarily due to an overall increase in salaries and benefits during the year due to the growth of the company. Our general and administrative staff grew substantially through the addition of employees related to the BenchmarkPortal and ScheduleQ acquisitions closed during the first quarter of 2007. During the first quarter of 2007, UCN granted a significant number of stock options to certain senior members of management, which added and an additional $137,000 of stock-based compensation expense for a total of $214,000 during the three months ended June 30, 2007 compared to $77,000 during the same period in 2006.

General and administrative expenses for the six months ended June 30, 2007 increased 21% or $1.4 million to $7.9 million compared to $6.5 million in the same period in 2006. The increase is primarily due to an overall increase in salaries and benefits during the year due to the growth of the company. Our general and administrative staff grew substantially through the addition of employees related to the BenchmarkPortal and ScheduleQ acquisitions closed during the first quarter of 2007. During the first quarter of 2007, UCN granted a significant number of stock options to certain senior members of management, which added and an additional $174,000 of stock-based compensation expense for a total of $321,000 during the six months ended June 30, 2007 compared to $147,000 during the same period in 2006.

For the three months ended June 30, 2007, the inContact segment revenue of $6.0 million includes $2.5 million of related long distance voice and data services and $3.5 million of inContact technology services. For the three months ended June 30, 2006, the inContact segment revenue of $3.5 million includes $2.6 million of long distance voice and data services and $.9 million of inContact technology services.

For the six months ended June 30, 2007, the inContact segment revenue of $10.8 million includes $5.2 million of related long distance voice and data services and $5.6 million of inContact technology services. For the six months ended June 30, 2006, the inContact segment revenue of $6.4 million includes $4.8 million of long distance voice and data services and $1.6 million of inContact technology services.

Our working capital surplus of $1.6 million at December 31, 2006 decreased to $1.0 million at June 30, 2007. The primarily reason for the reduction in working capital was due to a $2.2 million decrease in cash. This decrease in cash was driven by a $1.2 million reduction in accounts payable as well as an increase of $445,000 in accounts receivable due to the normal business timing of cash payments and collections. This decrease in cash was partially offset by an $117,000 decrease in the current portion of long-term debt due to the conversion of the of the ComVest $3.4 million convertible term note. This conversion will save us an estimated $468,000 in cash payments during 2007 and will significantly improve the current ratio in future periods by eliminating the associated current portion of long-term debt.

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