Breaking: IFFOR’s Tax Return: Only $208K In Revenue From .XXX; Are 90% Of All .XXX Registration Defensive?

The 2011 Tax return for IFFOR has been filed and our friend George Kirikos of Leap.com found it (pdf)

So IFFOR’s tax return is important for two reasons.

First IFFOR return shows us how how much money the non-profit, which is suppose to receive $10 for each .XXX registration, actually received from ICM the operator of the .XXX TLD and how IFFOR spent the money.

Second the return is important to see how the money ICM the registry operator of the .XXX TLD  paid to IFFOR matches up to ICM reported number of .XXX domain name registrations.

The short answer is it doesn’t

So as for IFFOR, tax return for 2011 shows revenue of just $208,000.

It also shows “deferred revenue” of $326,000.

It shows compensation of officers and directors of IFFOR in the amount of  $130,000, or roughly 65% of collected revenue;  another $100,000 in travel which again we would assume is mostly, if not fully for officers and directors or IFFOR,  plus another $37K in conference expenses.

There is also another $60K in a Board of Directors Stipend, and Policy Council Stipend of $37K.

As far as following its mission statement, only $20,000 was spent on “content labeling” which is of course is one of the main missions and purpose of the entire organization.

As far directors go Joan Irvine who was the Director received $130K in compensation, Clyde Beattie received $32K and Sebastien Bachollet received $26K.

It should be noted that Ms. Irvine didn’t even start working for IFFOR until May 2, 2011 so that $130K was only for 8 months of work which is $195,000 annualized and .XXX didn’t even go live until December 2011.

In all IFFOR the organization had a loss in 2011 of $333,000.

However, and quite important IFFOR is reporting their taxes on an accrual basis not a cash basis.

What that means is that they should be reporting the income they earned it in 2011 in 2011 even if they didn’t receive the cash, and the same for expenses.

So IFFOR should have reported and therefore we can only assume they did in fact report, all of the revenue they earned and expected to receive in 2011 on their  2011 return, even if they money wasn’t going to be paid until 2012.

So we have to disregard this “deferred income” entry and just call it like the returns says, that IFFOR only got $208,000 from 106,000+ registrations of .XXX domain names.

Now as for the for what the these numbers mean as far as the .XXX registry is concerned?

My understanding is that of the $62 wholesale cost for each .XXX domain registration, ICM gets $50, IFFOR gets $10 and ICANN gets $2.

According to the report ICM filed with ICANN, as of December 2011, there were 106,549 .XXX domain name registered, not including the 80,000 10 year blocks sold to trademark holders.

That should have generated some $1,006,000 for IFFOR.

However IFFOR says the only got $208,000.

It is showing on its return deferred income of $328,000 as a liability not an asset but we think this is unimportant as IFFOR elected to pay on the accrual rather than cash basis, but more on that later.

Of the $1,006,000 that ICM collected ($10 per registration not including blocks, ICM only paid the non-profit IFFOR, $208,000 or 20% of what it collected in the name of IFFOR

Even if it owes IFFOR another $326K (“deferred income”)  then they ICM paid IFFOR just over 50% of the money they collected for IFFOR.

What happened to the rest of the money?

The question is why IFFOR hasn’t said a peep (publicly)  about being underpaid $800K from ICM nor have they filed a lawsuit for the underpayment.

There is a thought out there that the $10 per .XXX registration ONLY gets paid to IFFOR for those domains which the registrant has elected to be a member of adult community.

Obviously those who registered a defensive .XXX registration are not electing to become a member of the adult community.

However that’s not the way ICM application to ICANN reads nor how the .XXX extension has been marketed.

If community use is how ICM based their payment to IFFOR, then it would mean that only 20,800 of the 106,000 initial .XXX registrations  are owned by members of the adult community, which are domainers and adult website owners).

Stuart Lawley CEO of ICM, the company that operates the .XXX registry has said that there are some 250,000 .XXX registrations, which include those 80,000 ten year blocks sold to trademark holders.

However if only 20,000 of those domains are actually in use by members of the adult community that would mean less than 10% of all .XXX domain names are owned by the members of the community, meaning that more than 90% of all .XXX registrations are defensive or owned not by members of the adult community.

If the $326,00 showing from IFFOR as being “deferred income” is for $10 fees paid to ICM but not yet paid in 2011 to IFFOR that would still mean that 50% of all active registration are not members of the adult community or defensive or taking into account the 10 year blocks then 50,000 out of 250,000 registrations are registered by members of the adult community and 200,000 are registered defensively but then wouldn’t follow accounting principal for accrual based taxpayers

Either way IFFOR tax return raises a LOT of questions.

Remember .XXX is not a new gTLD or a TLD but a sTLD, approved by ICANN to represent the adult community.

Under ICM proposal to operate the .XXX registry IFFOR was always suppose to get $10 of each registration.

When and how did that change?

Why didn’t IFFOR sue for the money it was owed and not paid?

Considering IFFOR was part of ICM application to ICANN to operate the .XXX registry what will ICANN say about this discrepancy in payment vs. funding?

With the funding of ICM to IFFOR based on IFFOR tax return is ICM in compliance with its contract with ICANN?

Where does it say that ICM only has to pay IFFOR $10 a registration for those registered by members of the adult community?

Most importantly as far as .XXX TLD is concerned are 90% of the 250K registration cited by Lawley or 75%  (difference based on deferred income amount showing on IFFOR’s return) .XXX registrations made by members not in the adult community and therefore defensive registration?

and if so, how can .XXX be said to represent the adult community

 

Comments

  1. elliotness29 says

    @Paul

    You are still up to your old tricks. Spin, twist, turn things around, ignore any facts nor address them with any facts of your own and then add a little something about how you agree with looking into the truth. You are so full of hogwash.

    Let’s see, you accuse Michellek of being Amanda36c, me of being hired by Manwin and you insult, slander and are completely rude to Amanda36c. Why would a so-called domainer have such hatred for Amanda36c when she has just been showing proof of what’s happened to her by ICM Registry and Webpower Inc/Ifriends for all to see? You go after Michellek for speculation about ICM Registry’s percent of .xxx defensive registrations but then make a statement like it’s a fact that ICM Registry never hired bloggers to go around defending them. Paul, how could you know that for certain? You claim not to work for them but that statement sounds very much like you do, and don’t come come back with a comment like, “I didn’t I just speculated or I asked Stuart Lawley myself”. You claim that you go after people who are running a smear campaign and you don’t like monopolies or bullies like Manwin who are trying to take over the industry. You call people paranoid, conspiracy theorists, disguntled, idiots. You are the judge, juror and executioner for Thylmann’s tax charges and you insinuated last time that I would harass you if I knew who you were. You are the one who’s paranoid and desperately trying to defend everything that has to do with people questioning ICM Registry. I think you are the idiot if you think anyone believes you Paul, you have no credibility whatsoever. You don’t show who you really are and that would be okay if you actually ever showed some kinds of facts to back up your arguments against others who have presented facts and proof to what they are saying but you never do.

    Amanda36c has every right to go after ICM Registry, in fact she should be taking them to court or at the least giving her information to Manwin’s lawyers. They took away her right to purchase her domain name under the sunrise “A” period which is against the ICANN rules as well as the rules ICM Registry stated on their own website. I am betting that there are a lot of other adult performers who were put into the same boat who haven’t come forward yet. Amanda36c has a beef with the lawyers and owners of WebpowerInc/Ifriends who also happen to be involved with ICM Registry and are on the IFFOR that is now being questioned about not doing what they said was supposed to happen in their policies. What a shock! She’s been telling people to beware of them since she discovered the lawyers, Falco and Kayton connections between Webpower Inc./Ifriends and ICM Registry. You are trying everything to discredit, belittle or insult her in hopes of making her go away or silence her. Obviously it’s not working! If ICM Registry’s Stuart Lawley doesn’t have an answer for someone like Michael Berkins who was part of the “Founders program”, then something isn’t right here and an investigation should be done on both ICM Registry and the IFFOR as well as ICANN.

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