2014

Tigrent Inc. Reports Q1 2011 Results

CAPE CORAL, Fla., May 20, 2011 /PRNewswire/ -- Tigrent Inc. (OTC: TIGE) today announced its unaudited first quarter 2011 financial results.

Highlights of the reported results include first quarter revenue in 2011 of $15.7 million (under generally accepted accounting principles or "GAAP") compared with revenue of $29.6 million in 2010, a decrease of 47%. Factors contributing to the decreased GAAP revenue recognized in 2011 include a decline in electronic media deliveries due to production delays. Cash sales for 2011 (a non-GAAP financial measure) decreased 38%, from $ 27.5 million in 2010 to $21.6 million in 2011.  The decrease in cash sales was primarily due to a reduction in the number of live events held in 2011 in an effort to improve the profitability of each event in the face of continued soft demand.

Adjusted EBITDA (a non-GAAP financial measure) for the first quarter of 2011 improved to a positive $2.0 million, as compared to a negative $ 2.5 million in the first quarter of 2010.  This increase reflects the favorable impact of staff reductions and other cost-cutting measures, as well as improved efficiency in media-spending.  The Company reported an operating loss for the first quarter of  2011 of $2.9 million, as compared to a loss of $1.0 million for the first quarter of 2010.  The increased loss was  primarily due to significantly lower electronic media deliveries in 2011 which reduced recorded revenue but which did not have an impact on the Company's cash flow.

"In 2010, we right-sized the business to align with the demand in the marketplace, which required deep cuts in our overhead costs and significant reductions in our live event schedule," said Steven C. Barre, Tigrent's Chief Executive Officer.  We are pleased to see the positive impact on our Adjusted EBITDA that these actions had  in the first quarter vs the prior year.

About Tigrent Inc.

Tigrent Inc. (OTC: TIGE, http://www.tigrent.com) provides practical, high-quality training, technology-based tools and mentoring to help its customers become financially knowledgeable. The Company offers comprehensive instruction on real estate and financial instruments investing and entrepreneurship in the United States, the United Kingdom, and Canada.

Non-GAAP Financial Measures

Cash Sales

The following table provides a reconciliation of our cash sales to our reported revenue. Cash sales performance is a metric used by management in assessing the performance of our business.  Deferred revenue represents the difference between our cash sales and the impact of applying our revenue recognition policies to those cash sales. Cash sales are not a financial performance measurement in accordance with GAAP; therefore we are presenting a table to reconcile the cash sales to revenue reported in accordance with GAAP (table presented in millions):






Quarter ended

March 31,


2011

2010

Cash received from course and product sales

21.5

27.5




Total consolidated change in deferred revenue

-5.8

2.1




Total consolidated revenue for financial reporting purposes

15.7

29.6





Adjusted EBITDA

As used in our operating data, EBITDA is defined as net income (loss) excluding the impact of: interest expense; interest income; income tax provision; and depreciation and amortization.  We define "Adjusted EBITDA" as EBITDA adjusted for: asset impairments; special items (including the costs associated with the SEC and the Department of Justice investigations and the related class action and derivative lawsuits); litigation settlement and related legal expenses related to non-core business activities; other income, net; stock-based compensation expense; equity loss from investments in real estate; severance expenses; the net change in deferred revenue; and the net change in deferred course expenses.  Adjusted EBITDA is not a financial performance measurement according to GAAP.

We use Adjusted EBITDA as a key measure in evaluating our operations and decision making. We feel it is a useful measure in determining our performance since it takes into account the change in deferred revenue and deferred course expenses in combination with our operating expenses. We reference Adjusted EBITDA frequently, since it provides supplemental information that facilitates internal comparisons to historical operating performance of prior periods and external comparisons to competitors' historical operating performance in our industry. We plan and forecast our business using Adjusted EBITDA, with comparisons of actual to planned and forecasted Adjusted EBITDA and we provide incentives to management based on Adjusted EBITDA goals. In addition, we provide Adjusted EBITDA because we believe investors and security analysts find it to be a useful measure for evaluating our performance.

Many costs to acquire customers have been expended before a customer attends any basic or advanced training. Those costs include media, travel, facilities and instructor fees for the preview workshops and are expensed when incurred. Rich Dad licensing fees and telemarketing and speaker commissions are deferred and recognized when the related revenue is recognized. Revenue recognition of course fees paid by customers to enroll in any basic or advanced training courses at registration is deferred until (i) the course is attended by the customer, (ii) the customer has received the course content in an electronic format, (iii) the contract expires, or (iv) revenue is recognized through course breakage. It is only after one of those four occurrences that revenue is considered earned. Thus, reporting in accordance with GAAP creates significant timing differences between the receipt and disbursement of cash with the recognition of the related revenue and expenses, both in our Condensed Consolidated Statements of Cash Flows and Condensed Consolidated Statements of Operations. As a result of these factors, our operating cash flows can vary significantly from our results of operations for the same period. For this reason, we believe Adjusted EBITDA is an important non-GAAP financial measure.

Adjusted EBITDA has material limitations and should not be considered as an alternative to net income (loss), cash flows provided by operations, investing or financing activities or other financial statement data presented in the Condensed Consolidated Financial Statements as indicators of financial performance or liquidity. Items excluded from Adjusted EBITDA are significant components in understanding our financial performance. Because Adjusted EBITDA is not a financial measurement calculated in accordance with GAAP and is subject to varying calculations, Adjusted EBITDA as presented may not be comparable to other similarly titled measures of performance used by other companies.

The table below is a reconciliation of our net income to EBITDA and Adjusted EBITDA for the periods set forth below (in millions):



Three months ended March 31,


2011


2010





Net earnings (loss)

$        (3.0)


$               (2.0)

Impairment of assets

-


0.2

Provision (benefit) for income taxes

0.1


1.1

Depreciation and amortization

0.1


0.2

Minority interest and equity earnings

0.1


-

EBITDA

(2.7)


(0.5)





Net change in deferred revenue

5.8


(2.1)

Net change in deferred course costs

(1.1)


0.1

Adjusted EBITDA

$          2.0


$               (2.5)





Adjusted EBITDA as a percentage of cash received from course and product sales

9.3%


-9.1%




See the Attached Unaudited Financial Statements









TIGRENT INC.

Condensed Consolidated Financial Statements

(Unaudited)

For the three months ended March 31, 2011






TIGRENT INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited)

(dollar amounts in thousands, except per share data)




Three months ended March 31,


2011


2010





Revenue

$ 15,733


$ 29,605





  Advertising and sales expenses

6,235


9,793

  Direct course expenses

8,840


14,494

  General and administrative expenses

3,509


5,320

  Impairment of investments in real estate

-


221

  Severance expense

-


745









Loss from operations

(2,851)


(968)





  Other income, net

(12)


40





Loss before income taxes

(2,863)


(928)





  Provision for income taxes

(101)


(1,094)





Net loss

(2,964)


(2,022)





  Net loss attributable to the noncontrolling interest

-


(930)





Net loss attributable to Tigrent Inc.

$ (2,964)


$ (1,092)





Basic and diluted net loss per share attributable




  to Tigrent Inc. common stockholders

$   (0.23)


$   (0.09)





Basic and diluted weighted average shares outstanding

13,089


11,739





Comprehensive loss income:




  Net loss

$ (2,964)


$ (2,022)

  Foreign currency translation adjustments

(343)


155

Comprehensive loss

(3,307)


(1,867)

  Comprehensive loss attributable to




     noncontrolling interest

-


(959)

Comprehensive loss attributable to Tigrent Inc.

$ (3,307)


$    (908)




See accompanying notes






TIGRENT INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(dollar amounts in thousands)




March 31


December 31,


2010


2010

Assets

(Unaudited)



Current assets:




Cash and cash equivalents

$        4,828


$            3,992

Restricted cash

12,918


12,573

Deferred course expenses, current portion

12,939


11,770

Prepaid expenses and other current assets

1,868


1,407

Inventory

130


262





Total current assets

32,683


30,004





Property and equipment, net

1,932


2,066

Investments in real estate

1,226


1,208

Other assets

245


254





Total assets

$      36,086


$          33,532





Liabilities and Stockholders' Deficit




Current liabilities:




Accounts payable

$        3,202


$            3,345

Income taxes payable

283


1,188

Royalties Payable

575


3,625

Accrued course expenses

1,980


752

Other accrued expenses

2,382


2,935

Accrued salaries, wages and benefits

871


623

Long-term debt, current portion

798


899

Deferred revenue, current portion

68,583


62,661





Total current liabilities

78,674


76,028





Long-term debt, net of current portion

887


1,080

Related party note payable

3,500


-

Other long term liabilities

572


664





Total liabilities

83,633


77,772





Commitments and contingencies








Tigrent's stockholders' deficit:




Common stock

3,175


3,175

Paid-in capital

2,583


2,583

Cumulative foreign currency translation adjustment

(909)


(566)

Accumulated deficit

(52,396)


(49,432)





Total stockholders' deficit

(47,547)


(44,240)

Total liabilities and stockholders' deficit

$      36,086


$          33,532




See accompanying notes






TIGRENT INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(dollar amounts in thousands)





Three months ended March 31,



2011


2010






Cash flows from operating activities:




Net loss

$ (2,964)


$ (2,022)

Adjustments to reconcile net loss to net cash used in operating activities:




  Depreciation and amortization

131


210

  Impairment of investments in real estate

-


221

  Equity loss from investments in real estate

54


30

  Changes in operating assets and liabilities:





Restricted cash

(345)


(179)


Deferred course expenses

(1,155)


144


Inventory

132


113


Other assets

(5)


10


Prepaid expenses and other current assets

(479)


610


Accounts payable

(143)


626


Income taxes payable

(905)


942


Deferred revenue

5,834


(2,082)


Current and Deferred Royalties Payable

257


-


Accrued course expenses

1,228


291


Accrued salaries, wages and benefits

248


394


Other accrued expenses

(553)


597


Other liabilities

(3)


(37)

Net cash (used for) provided by operating activities

1,332


(132)






Cash flows from investing activities:




  Purchases of property and equipment

3


(80)

  Proceeds from repayment of notes receivable

18


45

  Investments in and advances to investments in real estate

(72)


(114)

Net cash used for investing activities

(51)


(149)






Cash flows from financing activities:




  Payments on secured and unsecured debt

(102)


(214)

Net cash used for financing activities

(102)


(214)






Effect of foreign currency exchange rates on cash and cash equivalents

(343)


155






Net increase (decrease) in cash and cash equivalents

836


(340)

Cash and cash equivalents at beginning of period

3,992


10,764

Cash and cash equivalents at end of period

$  4,828


$ 10,424




See accompanying notes






TIGRENT INC.

CONDENSED CONSOLIDATED STATEMENT OF ADJUSTED EBITDA

(Unaudited)

(dollar amounts in thousands)




Three months ended March 31,


2011


2010





Adjusted Net Cash Sales

$ 21,567


$ 27,523





Operating costs and expenses:




Advertising and sales expenses

6,534


9,722

Direct course expenses

9,694


14,422

General and administrative expenses

3,509


6,285





Total operating costs and expenses

19,737


30,429





Other income (expense), net

(12)


40









Net income before income tax

1,818


(2,866)





Income Tax Expense

(101)


(1,094)





Net income before income tax

1,717


(3,960)





EBITDA Items:




Impairment of assets

-


221

Other Income

(17)


(45)

Interest income

(1)


(111)

Interest expense

(25)


86

Provision for income taxes

101


1,094

Depreciation and amortization

131


220

Other

55


41





Adjusted EBITDA

$   1,961


$ (2,454)



See accompanying notes






TIGRENT INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Three months ended March 31, 2011




Note 1—Business Description and Basis of Presentation

The consolidated financial statements have been prepared without audit.  In the opinion of the Company's management, all adjustments (including normal recurring adjustments) necessary to present fairly the Company's financial position, results of operations and changes in cash flows have been made.  Certain information and footnote disclosures normally includes in financial statements prepared in accordance with generally accepted accounting principles, have been condensed or omitted.  The Company's annual report to stockholders for the year ended December 31, 2010 contains consolidated financial statements and related footnote disclosures which should be read in conjunction with the accompanying consolidated financial statements.  The results of operations for the period ended March 31, 2011 are not necessarily indicative of the operating results for the full year.

The consolidated financial statements include the accounts of Tigrent Inc. and its whollyowned and majorityowned subsidiaries and affiliates (collectively referred to herein as the "Company," "Tigrent," "we," "us" or "our"). All intercompany balances and transactions have been eliminated in consolidation.

We are a provider of practical, high-quality and value-based training, conferences, publications, technology-based tools and mentoring to help customers become financially knowledgeable. We provide customers with comprehensive instruction and mentoring on the topics of real estate and financial instruments investing and entrepreneurship in the United States, the United Kingdom, and Canada. Our training is offered in non-accredited free preview workshops, as well as basic training, advanced courses, mentoring and coaching.

Note 2—Significant Accounting Policies

Use of estimates

The preparation of financial statements in accordance with generally accepted accounting principles in the United States of America ("GAAP") requires management to make certain estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.

Cash and cash equivalents

We consider all highly liquid instruments with an original maturity of three months or less to be cash equivalents. We continually monitor and evaluate our investment positions and the creditworthiness of the financial institutions with which we invest and maintain deposit accounts. The amounts included in the consolidated financial statements are stated at cost which approximates fair value at the balance sheet date. We maintain deposits in banks which may exceed the federal deposit insurance available. Management believes the potential risk of loss on these accounts to be minimal.

Restricted cash

We use merchant account vendors to process credit card transactions. Under the terms of these agreements, the merchant account vendor has the right to withhold credit card funds to cover charge backs in the event we are unable to honor our commitments. Additionally, we may be required to maintain letters of credit in certain of the states in which we operate. At December 31, 2010 and December 31, 2009, we did not hold any letters of credit. We consider restricted cash as a current asset in the Consolidated Balance Sheet as merchant account vendors typically hold such reserve funds up to one year.

Inventory

Inventory consists primarily of books, videos and training materials held for sale to customers enrolled in our training programs. Inventory is stated at the lower of cost using the first-in, first-out method or market.

Property and equipment

Property and equipment is stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets as presented in the following table:



Buildings                                                                            

40 years

Furniture fixtures and equipment                                                         

5-7 years

Purchased software                                                                   

3 years





Leasehold improvements are amortized over the shorter of the estimated useful asset life or the remaining term of the applicable lease.

In accordance with GAAP, we evaluate the carrying amount of our long-lived assets such as property and equipment, and definitelived intangible assets subject to amortization for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets held and used is measured by the comparison of its carrying amount with the future net cash flows the asset is expected to generate. We look primarily to the undiscounted future cash flows in the assessment of whether or not long-lived assets have been impaired. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the estimated fair value of the assets.

Revenue recognition

We recognize revenue in accordance with Staff Accounting Bulletin, No. 104, Revenue Recognition ("SAB No. 104"), and ACS 605-25, Revenue Recognition – Multiple-Element Arrangements). We recognize revenue when: (i) persuasive evidence of an arrangement exists, (ii) delivery of product has occurred or services have been rendered, (iii) the price to the buyer is fixed or determinable, and (iv) collectability is reasonably assured. For product sales, these conditions are generally met upon shipment of the product to the customer or completion of the sale transaction. For training and service sales, these conditions are generally met upon presentation of the training seminar or delivery of the service.

Deferred revenue occurs from seminars, online courses, coaching sessions and website subscriptions and renewals in which payment is received before the service has been performed. Deferred revenue is recognized into revenue as courses are attended in-person or on-line, coaching and mentor sessions are provided or material is delivered by electronic media.

Deferred course expenses

We defer licensing fees paid to Rich Global and commissions and fees paid to our speakers and telemarketers until such time as the revenue is earned. Our speakers, who are all independent contractors, earn commissions on the cash receipts received at our training events and are paid approximately 45 days after the training event. The deferred course expenses are tracked as a percentage of deferred revenue and based on whether the related sale was originated by telemarketers or in basic training courses. The deferred course expenses are expensed as the corresponding deferred revenue is recognized. We also capitalize the commissions and fees paid to our speakers and expense them as the corresponding deferred revenue is recognized.

Advertising and sales expenses

We expense advertising and sales costs as incurred. Advertising costs, rental fees for training facilities and direct sales expenses are expensed as incurred. Advertising paid in advance is recorded as prepaid until such time as the advertisement is published.

Income taxes

We account for income taxes in conformity with the requirements of ASC 740, Income Taxes, ("ASC 740"). Per ASC 740, the provision for income taxes is calculated using the asset and liability approach of accounting for income tax.

Foreign currency translation

We account for foreign currency translation in accordance with ACS 830, Foreign Currency Translation. The functional currencies of the Company's foreign operations are the reported local currencies. Translation adjustments result from translating our foreign subsidiaries' financial statements into United States dollars. The balance sheet accounts of our foreign subsidiaries are translated into United States dollars using the exchange rate in effect at the balance sheet date. Revenue and expenses are translated using average exchange rates for each month during the fiscal year. The resulting translation gains or losses are recorded as a component of accumulated other comprehensive income in shareholders' equity.

Net income (loss) per share

Net income (loss) per share is computed by applying the provisions of ACS 260, Earnings Per Share. Basic net income (loss) per share is calculated using the weighted average number of common shares outstanding. Diluted income (loss) per share reflects the potential dilution that could occur from common shares issuable through stock options, warrants, restricted share grant awards and restricted performance shares, as appropriate.

Note 3—Non-GAAP Financial Measure

Statement of Adjusted EBITDA

As used in our operating data, EBITDA is defined as net income (loss) excluding the impact of: interest expense; interest income; income tax provision; and depreciation and amortization. We define "Adjusted EBITDA" as EBITDA adjusted for: asset impairments; special items; litigation settlement and related legal expenses related to non-core business activities; other income, net; stock-based compensation expense; equity loss from investments in real estate; severance expenses; the net change in deferred revenue; and the net change in deferred course expenses. Adjusted EBITDA is not a financial performance measurement according to accounting principles generally accepted in the United States ("GAAP").

We use Adjusted EBITDA as a key measure in evaluating our operations and decision-making. We feel it is the primary measure that a reader should view to understand our performance. Many costs to acquire customers have been expended before a customer attends any basic or advanced training. Those costs include media, travel, facilities and instructor fees for the preview workshops and are expensed when incurred. Licensing fees paid to Rich Global and telemarketing and speaker commissions are deferred and recognized when the related GAAP revenue is recognized. Revenue recognition of  course fees paid by customers to enroll in any basic or advanced training courses at registration is deferred until (i) the course is attended by the customer, (ii) the customer has received the course content in an electronic format, (iii) the contract expires, or (iv) revenue is recognized through course breakage. It is only after one of those four occurrences that revenue is considered earned. Thus, reporting in accordance with GAAP creates significant timing differences between the receipt and disbursement of cash with the recognition of the related revenue and expenses, both in our Consolidated Statements of Cash Flows and Consolidated Statements of Operations. As a result of these factors, our operating cash flows can vary significantly from our results of operations for the same period. For this reason, we believe Adjusted EBITDA is the most important financial measure for our business.

The table below is a reconciliation of the Company's GAAP net income (loss) to EBITDA and Adjusted EBITDA for the periods set forth below (in millions): 



Three months ended March 31,



2011


2010







Net earnings (loss)

$        (3.0)


$               (2.0)


Impairment of assets

-


0.2


Provision (benefit) for income taxes

0.1


1.1


Depreciation and amortization

0.1


0.2


Minority interest and equity earnings

0.1


-


EBITDA

(2.7)


(0.5)







Net change in deferred revenue

5.8


(2.1)


Net change in deferred course costs

(1.1)


0.1


Adjusted EBITDA

$          2.0


$               (2.5)







Adjusted EBITDA as a percentage of cash received from course and product sales

9.3%


-9.1%










Note 4 – Dispute Reserve

The company recorded a reserve of $ 356k in Q1 related to a dispute we are actively addressing with a service provider.  The amount is included in the Statement of Operations in General and Administrative Expense.

SOURCE Tigrent Inc.



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