Fusion Reports Second Quarter 2010 Results
NEW YORK, Aug. 16 /PRNewswire-FirstCall/ -- Fusion (OTC Bulletin Board: FSNN) today announced financial results for the quarter ended June 30, 2010.
The Company reported consolidated revenues of $9.7 million for the quarter ended June 30, 2010, an increase of 12.8% when compared to revenues of $8.6 million for the second quarter of 2009. Second quarter 2010 revenues for the Carrier Services segment increased 10.7% when compared to the second quarter of 2009, and second quarter 2010 revenues for the Corporate Services segment increased 78.5% when compared to the second quarter of 2009. This quarter was the tenth consecutive quarter of consistent revenue growth for the Corporate Services segment.
Consolidated gross margin increased to 10.0% for the second quarter of 2010, compared to 8.0% for the second quarter of 2009. This margin increase resulted from stronger margins in the Carrier Services segment, where the gross margin increased from 7.1% to 8.5%, and from increased business volume in the Corporate Services segment, which achieved a gross margin of 42%.
Selling, general, and administrative costs for the second quarter of 2010 were reduced by $46,000 or 2.1%, when compared to the second quarter of 2009. This improvement was primarily attributable to the Company's continuing focus on cost-containment.
As a result of the Company's increased revenues, improved gross margin, and reduced SG&A expenses, its adjusted EBITDA loss (earnings before interest, taxes, depreciation, amortization, and specific non-recurring and non-cash adjustments) of ($1.1) million for the second quarter of 2010 was a 21.4% improvement from its second quarter 2009 adjusted EBITDA loss of ($1.4) million. These figures, which are adjusted for discontinued operations, do not reflect the full benefit of the Company's exiting the consumer business.
For the quarter ended June 30, 2010, Fusion reported a net loss applicable to common stockholders of ($1.7) million or ($0.02) per share, a $1.5 million decrease when compared to a net loss applicable to common stockholders of ($3.2) million or ($0.06) per share for the quarter ended June 30, 2009. This 67% decrease in net loss per share compared to the prior year period resulted from continued improvement in the financial results of the Company's continuing operations, the impact of its exit from the consumer business, and an increase in the total number of shares outstanding.
As of June 30, 2010, the Company had current assets of $4.2 million, compared to current assets of $2.9 million as of December 31, 2009, and total assets of $6.3 million, compared to total assets of $5.4 million as of December 31, 2009. These increases were primarily due to increased cash and cash equivalents, as well as increased accounts receivable.
Total stockholders' equity/(deficit) at June 30, 2010 was ($6.7) million, compared to ($7.3) million as of December 31, 2009. The change resulted from an increase in the accumulated deficit of $(3.1) million, offset by additional equity investments of $3.7 million. During the second quarter of 2010, Fusion raised approximately $2.6 million in total new capital, including $2.1 million in new equity, and successfully converted approximately $0.5 million of existing debt to equity. The Company continues to seek additional equity and debt financing to fund its operations.
Commenting on the results, Matthew Rosen, Chief Executive Officer of Fusion, said, "I am very pleased that the second quarter of 2010 showed further progress in achieving the financial objectives we have set for reaching profitability. Our gross margin, SG&A expenses, and adjusted EBITDA performance all continued to improve. We believe that future revenue and margin growth in both business segments, coupled with ongoing expense management, will position us well for continued improvement in financial results."
Expanding on Mr. Rosen's comments, Don Hutchins, President, Chief Operating Officer, and Acting Chief Financial Officer, said, "We are particularly pleased with the nearly 80% revenue growth in our Corporate Services segment compared to the prior year period – our tenth consecutive quarter of revenue growth in this segment – and with our continuing improvement in gross margin in both business segments. I am also pleased to see another quarterly increase in the percentage of Corporate Services orders coming from our existing customers, which further proves the continued loyalty of our business customers and the attractiveness of our services."
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 available through http://www.sec.gov.
FUSION Philip Turits, Treasurer CONTACT: 212-201-2407 email@example.com
FUSION TELECOMMUNICATIONS INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS Three Months Ended Six Months Ended June 30, June 30, 2010 2009 2010 2009 Revenues $ 9,727,200 $ 8,649,762 $ 19,315,832 $ 17,652,063 Operating expenses: Cost of revenues 8,753,785 7,958,140 17,417,554 16,426,031 Depreciation and amortization 207,909 226,944 439,785 716,415 Loss on Impairment - 243,000 - 243,000 Selling, general and administrative expenses 2,195,581 2,242,168 4,391,892 4,712,448 Advertising and Marketing 17,425 3,016 21,196 10,512 Total operating expenses 11,174,700 10,673,268 22,270,427 22,108,406 Operating loss (1,447,500) (2,023,506) (2,954,595) (4,456,343) Other income (expense) Interest income (expense), net (54,596) (119,390) (104,064) (215,171) Gain on settlements of debt - - 9,500 - Other 3,862 1,279 8,729 3,493 Total other income (expense) (50,734) (118,111) (85,835) (211,678) Loss from continuing operations (1,498,234) (2,141,617) (3,040,430) (4,668,021) Loss from discontinued operations (86,982) (885,132) (88,355) (1,364,943) Net loss $ (1,585,216) $ (3,026,749) $ (3,128,785) $ (6,032,964) Loss applicable to Common Stockholders: Loss from continuing operations $ (1,498,234) $ (2,141,617) $ (3,040,430) $ (4,668,021) Preferred stock dividends in arrears (159,462) (159,462) (317,171) (317,171) Net loss from continuing operations applicable to Common Stockholders: (1,657,696) (2,301,079) (3,357,601) (4,985,192) Loss from discontinued operations (86,982) (885,132) (88,355) (1,364,943) Net loss applicable to common stockholders $ (1,744,678) $ (3,186,211) $ (3,445,956) $ (6,350,135) Basic and diluted net loss per common share: Loss from continuing operations $ (0.02) $ (0.04) $ (0.03) $ (0.10) Loss from discontinued operations (0.00) (0.02) (0.00) (0.03) Net loss applicable to Common Stockholders $ (0.02) $ (0.06) $ (0.03) $ (0.12) Weighted average common shares outstanding: Basic and diluted 108,396,957 56,822,335 102,960,496 52,438,147
FUSION TELECOMMUNICATIONS INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET June 30, 2010 December 31, 2009 ASSETS Current assets Cash and cash equivalents $ 907,578 $ 99,019 Accounts receivable, net of allowance 3,053,104 2,500,319 Restricted cash, current portion - 168,176 Prepaid expenses and other current assets 175,078 130,647 Assets held for sale 5,169 6,513 Assets of Discontinued Operations 20,105 32,283 Total current assets 4,161,034 2,936,957 Property and equipment, net 1,314,809 1,664,583 Other assets Security deposits 33,106 23,008 Restricted cash, net of current portion 238,390 248,390 Intangible assets, net 455,318 489,294 Other assets 77,334 62,119 Total other assets 804,148 822,811 TOTAL ASSETS $ 6,279,991 $ 5,424,351 LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities Long-term debt, current portion $ 2,824,425 $ 2,407,187 Capital and equipment financing lease obligations, current portion 12,408 14,831 Escrow Payable 350,000 321,418 Accounts payable and accrued expenses 9,199,529 9,263,872 Liabilities of discontinued operations 285,294 360,294 Total current liabilities 12,671,656 12,367,602.00 Long-term liabilities Capital and equipment financing lease obligations, net of current portion - 2587 Other long-term liabilities 322,067 336,815 Total long-term liabilities 322,067 339,402 Stockholders' equity Preferred stock, Class A-1, A-2, A-3 & A-4 80 80 Common stock 1,211,671 925,440 Capital in excess of par value 134,396,240 130,984,766 Accumulated deficit (142,321,723) (139,192,939) Total stockholders' equity (6,713,732) (7,282,653) TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,279,991 $ 5,424,351
FUSION TELECOMMUNICATIONS INTERNATIONAL, INC. AND SUBSIDIARIES RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA Three Months Ended Six Months Ended June 30, June 30, 2010 2009 2010 2009 Net Loss $ (1,585,216) $ (3,026,749) $ (3,128,785) $ (6,032,964) Loss from discontinued operations 86,982 885,132 88,355 1,364,943 Loss from continuing operations (1,498,234) (2,141,617) (3,040,430) (4,668,021) Adjustments: Interest (income) expense, net 54,596 119,390 104,064 215,171 Depreciation and amortization 207,909 226,944 439,785 716,415 Loss on impairment - 243,000 - 243,000 EBITDA (1,235,729) (1,552,283) (2,496,581) (3,493,435) Adjustments: (Gain)/loss on disposal of fixed assets - - - - Communication charges - - - - Other taxes 38,084 18,580 75,592 52,426 Non cash compensation 68,818 84,822 137,045 119,767 Adjusted EBITDA $ (1,128,827) $ (1,448,881) $ (2,283,944) $ (3,321,242)
Released August 16, 2010