Fusion Reports First Quarter 2011 Results
NEW YORK, May 20, 2011 /PRNewswire/ -- Fusion Telecommunications International, Inc. (OTC BB: FSNN) today announced financial results for the quarter ended March 31, 2011.
Fusion reported consolidated revenues of $10.2 million for the quarter ended March 31, 2011, an increase of 6.3% when compared to revenues of $9.6 million for the quarter ended March 31, 2010. The increase over the prior year was primarily attributable to a 5% increase in revenues in the Carrier Services segment resulting from a higher blended rate per minute of traffic terminated. Fusion also reported a 36% revenue increase in the Corporate Services segment due to continued expansion of the customer base in this segment.
Consolidated gross margin increased to 10.4% for the first quarter of 2011 as compared to 9.6% for the first quarter of 2010. The increase in consolidated gross margin for the quarter was due to stronger gross margins in the Carrier Services segment, as well as an increase in relative contribution from the higher margin Corporate Services segment, which achieved a gross margin of 37.0% for the quarter ended March 31, 2011.
Selling, general and administrative ("SG&A") expenses decreased by 2% in the first quarter of 2011 compared to the same period of a year ago. As a percentage of consolidated revenues, SG&A expenses decreased from 22.9% of revenues in 2010 to 21.2% of revenues in 2011.
Fusion reported a net loss of $1.2 million for the quarter ended March 31, 2011, compared to a loss of $1.5 million for the quarter ended March 31, 2010. For 2011, the net loss applicable to common stockholders was $1.4 million, or $0.01 per share, compared to a net loss applicable to common stockholders of $1.7 million, or $0.02 per share, for the quarter ended March 31, 2010.
For the quarter ended March 31, 2011, adjusted EBITDA loss (earnings from continuing operations before interest, taxes, depreciation, amortization, and specific non-recurring and non-cash adjustments) decreased $0.2 million or 17%, to $1.0 million, compared to $1.2 million for the quarter ended March 31, 2010.
As of March 31, 2011 and December 31, 2010, the Company had current assets of $2.4 million and $2.9 million, respectively. Current liabilities as of March 31, 2011, were $13.1 million compared to $12.6 million at December 31, 2010. Stockholders' deficit at March 31, 2011 and December 31, 2010 was $9.1 million and $8.1 million, respectively.
Commenting on the first quarter results, Matthew Rosen, Chief Executive Officer of Fusion, said, "We are pleased to report year over year revenue growth in both the corporate and carrier segments of our business despite the limited availability of working capital, while we continued to narrow our operating and adjusted EBITDA losses. We continue to focus on growing the company organically, securing the capital necessary to fund company operations and looking for strategic partnerships and acquisitions."
Expanding on Mr. Rosen's comments, Don Hutchins, President and Chief Operating Officer of Fusion, said, "The initiatives we put in place during 2010 to better manage our SG&A expenses and improve our overall operational efficiency had a positive impact on our first quarter results, and we remain optimistic about our ability to grow both of our business segments while continuing to improve our bottom line. We were very pleased that our strong commitment to building the Corporate Services segment was rewarded by the record amount of new contracted revenue signed during the first quarter."
Use of Non-GAAP Financial Measurements:
The Company believes that EBITDA (earnings from continuing operations before interest, taxes, depreciation and amortization) is useful to investors because it is commonly used in the communications industry to evaluate 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 non-recurring transactions, if any, such as impairment losses, which vary significantly between periods and are not recurring in nature, as well as certain recurring non-cash charges such as stock-based compensation. 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"). In accordance with SEC Regulation G, the non-GAAP measurements in this press release have been reconciled to the nearest GAAP measurement, which can be viewed under the heading "Reconciliation of Net Loss to EBITDA and Adjusted EBITDA", immediately following the Consolidated Balance Sheets 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 March 31, 2011 2010 Revenues $ 10,204,280 $ 9,588,632 Operating expenses: Cost of revenues 9,145,630 8,663,769 Depreciation and amortization 168,538 231,875 Selling general and administrative expenses 2,160,753 2,196,312 Advertising and marketing 4,563 3,771 Total operating expenses 11,479,484 11,095,727 Operating loss (1,275,204) (1,507,095) Other income (expenses): Interest income 96 124 Interest expense (48,383) (49,591) Gain on settlements of debt - 9,500 Other 88,695 4,867 Total other income (expenses) 40,408 (35,100) Loss from continuing operations (1,234,796) (1,542,195) Discontinued operations: Income (loss) from discontinued operations 8,212 (1,373) Net loss $ (1,226,584) $ (1,543,568) Preferred stock dividends in arrears (143,901) (157,710) Net loss applicable to common stockholders: $ (1,370,485) $ (1,701,278) Basic and diluted loss per common share: Loss from continuing operations $ (0.01) $ (0.02) Loss from discontinued operations 0.00 (0.00) Loss per common share $ (0.01) $ (0.02) Weighted average common shares outstanding: Basic and diluted 132,604,753 97,046,963
Fusion Telecommunications International, Inc. and Subsidiaries Consolidated Balance Sheet March 31, 2011 December 31, 2010 ASSETS Current assets: Cash and cash equivalents $ 10,978 $ 20,370 Accounts receivable, net of allowance 2,258,627 2,721,585 Prepaid expenses and other current assets 121,754 103,009 Assets held for sale 1,042 1,089 Current assets from discontinued operations 11,159 12,449 Total current assets 2,403,560 2,858,502 Property and equipment, net 1,037,295 1,124,398 Other assets: Security deposits 13,330 13,330 Restricted cash, net of current portion 533,437 533,437 Intangible assets, net 388,667 409,000 Other assets 51,366 39,486 Total other assets 986,800 995,253 TOTAL ASSETS $ 4,427,655 $ 4,978,153 LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Promissory notes payable - non-related parties $ 673,372 $ 683,870 Promissory notes payable - related parties 3,382,625 2,420,625 Capital lease/equipment financing obligations, current portion 3,199 4,550 Escrow payable 80,000 155,000 Accounts payable and accrued expenses 8,837,225 9,178,674 Current liabilities from discontinued operations 150,274 165,274 Total current liabilities 13,126,695 12,607,993 Long-term liabilities: Other long-term liabilities 428,361 428,646 Total long-term liabilities 428,361 428,646 Commitments and contingencies Stockholders' deficit: Preferred stock 73 73 Common stock 1,336,315 1,320,105 Capital in excess of par value 135,755,214 135,613,755 Accumulated deficit (146,219,003) (144,992,419) Total stockholders' deficit (9,127,401) (8,058,486) TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 4,427,655 $ 4,978,153
Fusion Telecommunications International, Inc. and Subsidiaries Reconciliation of Net Loss to Adjusted EBITDA Three Months Ended March 31, 2011 2010 Net loss $ (1,226,584) $ (1,543,568) (Income) loss from discontinued operations (8,212) 1,373 Interest expense, net of interest income 48,287 49,467 Depreciation and amortization 168,538 231,875 EBITDA (1,017,971) (1,260,853) Stock-based compensation expense 23,682 68,227 Adjusted EBITDA $ (994,289) $ (1,192,626)
FUSION Philip Turits CONTACT: 212-201-2407 firstname.lastname@example.org
SOURCE Fusion Telecommunications International, Inc.
Released May 20, 2011