Fusion Reports Fourth Quarter and Full Year 2010 Results
NEW YORK, April 14, 2011 /PRNewswire/ -- Fusion (OTC BB: FSNN) today announced financial results for the quarter and full year ended December 31, 2010.
Fusion reported consolidated revenues of $41.8 million and $11.3 million for the year and quarter ended December 31, 2010, respectively. This represented an increase in consolidated revenues of 2% for the year and a decrease of 1.2% for the quarter, when compared to revenues of $40.9 million and $11.4 million for the year and quarter ended December 31, 2009. The increase over the prior year was primarily attributable to a 64% revenue increase in the Corporate Services segment due to growth in customer acquisition. The decrease in consolidated revenue for the fourth quarter of 2010 was primarily due to lower traffic volumes in the Carrier Services segment resulting from constraints on working capital availability, the challenging economic environment, resource limitations resulting from the Company's focus on cost-control, and normally expected quarter-to-quarter variations in traffic.
Consolidated gross margin increased 16.2% to 9.4% for the full year as compared to 8.3% for 2009. Consolidated gross margin decreased $.02 million to 8.8% for the fourth quarter of 2010 compared to 10.2% for the fourth quarter of 2009. The increase in consolidated gross margin for the full year is a result of stronger gross margins in the Carrier Services segment, as well as an increased contribution from the higher margin Corporate Services segment, which achieved a gross margin for the fourth quarter and full year 2010 of 38.1% and 39.3% respectively.
In addition, despite slightly lower revenues for the Carrier Services segment, revenues for the Corporate Services segment increased by 64.1% when comparing 2010 to 2009 and by 36% when comparing the fourth quarter of 2010 to the fourth quarter of 2009. The fourth quarter was our twelfth successive quarter of growth in both revenue and margin for the Corporate Services segment, and reflects our strong and continuing commitment to building this segment.
Selling, general and administrative costs decreased by 4% when comparing 2010 to 2009. SG&A costs increased 1.3% when comparing the fourth quarter of 2010 with the fourth quarter of 2009, as a result of a one-time non-cash reversal of a gain on legal expenses during the fourth quarter of 2009. Excluding this one-time reversal, SG&A costs decreased 2.1% in the fourth quarter of 2010 compared to the fourth quarter of 2009.
For the year ended December 31, 2010, adjusted EBITDA loss (earnings before interest, taxes, depreciation, amortization, and specific non-recurring and non-cash adjustments) decreased $.0.9 million or 17%, to ($4.5) million, compared to ($5.4) million for the year ended December 31, 2009. Excluding the impact of reclassification to discontinued operations, adjusted EBITDA loss for 2010 decreased by $2.6 million or 36% to ($4.5) million, compared to ($7.1) million in 2009.
Fusion also reported a decrease in net loss for the year ended December 31, 2010, compared to the year ended December 31, 2009. For 2010, Fusion reported a net loss of ($5.8) million, and a net loss applicable to common stockholders of ($6.4) million or ($0.06) per share, compared to a net loss of ($9.6) million, and a net loss applicable to common stockholders of ($10.2) million or ($0.16) per share, during the year ended December 31, 2009.
As of December 31, 2010, and December 31, 2009, the Company had current assets of $2.9 million. Total liabilities as of December 31, 2010, were $13.0 compared to $12.7 at December 31, 2009. Stockholders' equity (deficit) at December 31, 2010 was ($8.1) million, compared to ($7.3) million at December 31, 2009.
Commenting on the results, Matthew Rosen, Chief Executive Officer of Fusion, said, "Last year was the first full year of operations since our exit from the consumer business in 2009. During the year we continued our sharp focus on both the corporate and carrier segments of our business which, coupled with our cost-cutting measures and a company-wide commitment to drive operating efficiencies, led to a 39.5% improvement in net loss and a 17% improvement in adjusted EBITDA when comparing 2010 to 2009. While raising the capital required to fund our operations remains a key objective, we made significant financial and operational progress this past year in achieving our long term business goals, and we remain optimistic about our ability to have a strong 2011."
Expanding on Mr. Rosen's comments, Don Hutchins, President and Chief Operating Officer of Fusion, said, "We are particularly pleased with the steady quarter-over-quarter growth in revenue and gross margin in our corporate business segment, and the fact that corporate revenue and gross margin increased by 64.1% and 78.6%, respectively, when compared to the prior year. This strong performance, when combined with the 13.6% year-over-year improvement in carrier gross margin, led to an overall improvement of 16.4% in consolidated gross margin. We believe our continued focus on growing the corporate and carrier business segments during 2011, will position us well for continued progress this year in achieving our business and financial objectives."
Use of Non-GAAP Financial Measures:
The Company believes that EBITDA (earnings before interest, taxes, depreciation and amortization) is useful to investors because it is commonly used in the communications industry to analyze companies on the basis of operating performance and leverage. The Company also believes that EBITDA provides investors with a measure of the Company's operational and financial progress that corresponds with the measurements used by management as a basis for allocating resources and making other operating decisions. Adjusted EBITDA provides an adjusted view of EBITDA that takes into account certain significant nonrecurring transactions, such as impairment losses associated with divested businesses and forgiveness of debt, which vary significantly between periods and are not recurring in nature. Although the Company uses adjusted EBITDA as one of several financial measures to assess its operating performance, its use is limited as it excludes certain significant operating expenses. EBITDA and adjusted EBITDA are not intended to represent cash flows for the period presented, nor have they been presented as an alternative to operating income or as an indicator of operating performance and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with Generally Accepted Accounting Principles (GAAP). Consistent with the SEC Regulation G, the non-GAAP measures in this press release have been reconciled to the nearest GAAP measure, which can be viewed under the heading "Reconciliation of Net Income (Loss) to Adjusted EBITDA", immediately following the Consolidated Statements of Operations included in this press release.
Statements in this press release that are not purely historical facts, including statements regarding Fusion's beliefs, expectations, intentions or strategies for the future, may be "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the plans, intentions and expectations reflected in or suggested by the forward-looking statements. Such risks and uncertainties include, among others, introduction of products in a timely fashion, market acceptance of new products, cost increases, fluctuations in and obsolescence of inventory, price and product competition, availability of labor and materials, development of new third-party products and techniques that render Fusion's products obsolete, delays in obtaining regulatory approvals, potential product recalls, securing necessary funding and litigation. Risk factors, cautionary statements, and other conditions which could cause Fusion's actual results to differ from management's current expectations are contained in Fusion's filings with the Securities and Exchange Commission and are available through http://www.sec.gov.
Fusion Telecommunications International, Inc. and Subsidiaries Consolidated Statement of Operations Three Months Ended Years Ended December 31, December 31, 2010 2009 2010 2009 Revenues $ 11,297,196 $ 11,433,533 $ 41,763,002 $ 40,938,615 Operating expenses: Cost of revenues 10,303,790 10,261,872 37,830,121 37,553,727 Depreciation and amortization 209,991 341,263 847,881 1,361,798 Loss on impairment 19,018 - 19,018 243,000 Selling, general and administrative expenses 2,253,182 2,224,141 8,847,474 9,216,292 Advertising and marketing 2,419 28,186 38,973 42,705 Total operating expenses 12,788,400 12,855,462 47,583,467 48,417,522 Operating loss (1,491,204) (1,421,929) (5,820,465) (7,478,907) Other income (expenses): Interest income 107 176 491 4,233 Interest expense (34,236) (58,786) (181,205) (387,460) Gain on settlements of debt - 12,758 159,500 12,758 Other 35,566 (67,528) 54,456 (62,043) Total other income (expenses) 1,437 (113,380) 33,242 (432,512) Loss from continuing operations (1,489,767) (1,535,309) (5,787,223) (7,911,419) Discontinued operations: Loss from discontinued operations 69,875 (206,950) (12,257) (1,674,793) Net loss $ (1,419,892) $ (1,742,259) $ (5,799,480) $ (9,586,212) Loss applicable to Common Stockholders: Loss from continuing operations $ (1,489,767) $ (1,535,309) $ (5,787,223) $ (7,911,419) Preferred stock dividends in arrears (147,099) (161,214) (583,600) (639,600) Net loss from continuing operations applicable to Common Stockholders: (1,636,866) (1,696,523) (6,370,823) (8,551,019) Income (loss) from discontinued operations 69,875 (206,950) (12,257) (1,674,793) Net loss applicable to Common Stockholders $ (1,566,991) $ (1,903,473) $ (6,383,080) $ (10,225,812) Basic and diluted net loss per common share: Loss from continuing operations $ (1,636,866) $ (1,696,523) $ (6,370,823) $ (8,551,019) Income (loss) from discontinued operations 69,875 (206,950) (12,257) (1,674,793) Net loss applicable to Common Stockholders $ (0.01) $ (0.04) $ (0.06) $ (0.16) Weighted average common shares outstanding: Basic and diluted 132,010,498 42,924,966 115,848,332 65,475,687
Fusion Telecommunications International, Inc. and Subsidiaries Consolidated Balance Sheet December 31, 2010 2009 ASSETS Current assets: Cash and cash equivalents $ 20,370 $ 99,019 Accounts receivable, net of allowance 2,721,585 2,500,319 Restricted cash, current portion - 168,176 Prepaid expenses and other current assets 103,009 130,647 Assets held for sale 1,089 6,513 Current assets reclassified to discontinued operations 12,449 32,283 Total current assets 2,858,502 2,936,957 Property and equipment, net 1,124,398 1,664,583 Other assets: Security deposits 13,330 23,008 Restricted cash, net of current portion 533,437 248,390 Intangible assets, net 409,000 489,294 Other assets 39,486 62,119 Total other assets 995,253 822,811 TOTAL ASSETS $ 4,978,153 $ 5,424,351 LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities: Promissory notes payable - non related parties $ 683,870 $ 725,000 Promissory notes payable - related parties 2,420,625 1,682,187 Capital lease/equipment financing obligations, current portion 4,550 14,831 Escrow payable 155,000 321,418 Accounts payable and accrued expenses 9,178,674 9,263,872 Current liabilities reclassified to discontinued operations 165,274 360,294 Total current liabilities 12,607,993 12,367,602 Long-term liabilities: Capital lease/equipment financing obligations, net of current portion 0 2,587 Other long-term liabilities 428,646 336,815 Total long-term liabilities 428,646 339,402 Commitments and contingencies Stockholders' deficit: Preferred stock, Class A-1, A-2, A-3 & A-4 73 80 Common stock 1,320,105 925,440 Capital in excess of par value 135,613,755 130,984,766 Accumulated deficit (144,992,419) (139,192,939) Total stockholders' deficit (8,058,486) (7,282,653) TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 4,978,153 $ 5,424,351
Fusion Telecommunications International, Inc. and Subsidiaries Reconciliation of Net Loss to Adjusted EBITDA Three Months Ended Years Ended December 31, December 31, 2010 2009 2010 2009 Net Loss $ (1,419,892) $ (1,742,259) $ (5,799,480) $ (9,586,212) Loss from discontinued operations (69,875) 206,950 12,257 1,674,793 Loss from continuing operations (1,489,767) (1,535,309) (5,787,223) (7,911,419) Adjustments: Interest (income) expense, net 34,129 58,610 180,714 383,227 Depreciation and amortization 209,991 341,263 847,881 1,361,798 Loss on impairment 19,018 - 19,018 243,000 EBITDA $ (1,226,629) $ (1,135,436) $ (4,739,610) $ (5,923,394) Adjustments to EBITDA: Forgiveness of debt - (12,758) (159,500) (12,758) Gain/(loss) on disposal of fixed assets - 71,178 - 71,178 Non cash compensation 253,496 294,601 253,496 294,601 Other taxes 132,891 131,126 132,891 131,126 Adjusted EBITDA $ (840,242) $ (651,289) $ (4,512,723) $ (5,439,247)
FUSION Philip Turits CONTACT: 212-201-2407 firstname.lastname@example.org
Released April 14, 2011