/C O R R E C T I O N -- Fusion/
In the news release, Fusion Reports Third Quarter 2010 Results, issued 15-Nov-2010 by Fusion over PR Newswire, we are advised by the company that the tenth paragraph, second sentence, should read "When comparing the third quarter with the second quarter of 2010, we have achieved an improvement of 14.4% in total revenues, 7.0% in gross margin dollars and 22.0% in adjusted EBITDA" rather than "When comparing the third quarter with the second quarter of 2010, we have achieved an improvement of 15% in total revenues, 7% in gross margin dollars and 28% in adjusted EBITDA" as originally issued inadvertently. The complete, corrected release follows:
Fusion Reports Third Quarter 2010 Results
NEW YORK, Nov. 15, 2010 /PRNewswire-FirstCall/ -- Fusion (OTC Bulletin Board: FSNN) today announced financial results for the quarter ended September 30, 2010.
The Company reported consolidated revenues of $11.1 million for the quarter ended September 30, 2010, a decrease of 5.9% when compared to revenues of $11.8 million for the third quarter of 2009. Third quarter 2010 revenues for the Carrier Services segment decreased 7.0% when compared to the third quarter of 2009, and third quarter 2010 revenues for the Corporate Services segment increased 44.6% when compared to the third quarter of 2009. This quarter was the eleventh consecutive quarter of consistent revenue growth for the Corporate Services segment.
Consolidated gross margin increased to 9.3% for the third quarter of 2010, compared to 8.3% for the third quarter of 2009. This margin increase resulted from stronger margins in the Carrier Services segment, where the gross margin increased from 7.5% to 8.1%, and from increased business volume in the Corporate Services segment, which achieved a gross margin of 38.0%.
Selling, general, and administrative costs for the third quarter of 2010 were reduced by $77,000 or 3.4%, when compared to the third quarter of 2009. This improvement was primarily attributable to the Company's continuing focus on cost-containment.
As a result of the Company's 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 ($0.9) million for the third quarter of 2010 was an 18.2% improvement from its third quarter 2009 adjusted EBITDA loss of ($1.1) 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 September 30, 2010, Fusion reported a net loss applicable to common stockholders of ($1.4) million or ($0.01) per share, a $0.6 million decrease when compared to a net loss applicable to common stockholders of ($2.0) million or ($0.03) per share for the quarter ended September 30, 2009. This 30% 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 September 30, 2010, the Company had current assets of $3.2 million, compared to current assets of $2.9 million as of December 31, 2009, and total assets of $5.5 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' deficit at September 30, 2010 was ($6.6) million, compared to ($7.3) million as of December 31, 2009. The change resulted from an increase in the accumulated deficit of $(4.4) million, offset by additional equity investments of $5.0 million. During the third quarter of 2010, Fusion raised approximately $1.2 million in new equity, and successfully converted approximately $0.2 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 particularly pleased with the continuing quarter over quarter growth in our Corporate Services segment and our significant improvement in overall gross margin. The combination of our ongoing focus on cost containment, improved margin performance and an almost 45% growth in corporate services revenue compared with the same period in 2009, demonstrates our continuing progress in meeting our financial objective of achieving profitability."
Expanding on Mr. Rosen's comments, Don Hutchins, President and Chief Operating Officer, said, "In addition to our strong quarter over quarter growth in corporate services and improvement in adjusted EBITDA, we are proud of the financial improvements we have made since our last quarter. When comparing the third quarter with the second quarter of 2010, we have achieved an improvement of 14.4% in total revenues, 7.0% in gross margin dollars and 22.0% in adjusted EBITDA."
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 firstname.lastname@example.org
FUSION TELECOMMUNICATIONS INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS Three Months Ended Nine Months Ended September 30, September 30, 2010 2009 2010 2009 Revenues $ 11,149,973 $ 11,853,020 $ 30,465,806 $ 29,505,082 Operating expenses: Cost of revenues 10,108,777 10,865,824 27,526,331 27,291,855 Depreciation and amortization 198,106 304,121 637,891 1,020,536 Loss on Impairment - - - 243,000 Selling, general and administrative expenses 2,202,399 2,279,704 6,594,291 6,992,151 Advertising and Marketing 15,358 4,006 36,554 14,518 Total operating expenses 12,524,640 13,453,655 34,795,067 35,562,060 Operating loss (1,374,667) (1,600,635) (4,329,261) (6,056,978) Other income (expense) Interest income (expense), net (42,521) (109,445) (146,585) (324,617) Gain on extinguishment/settlement of debt 150,000 - 159,500 - Other 10,161 1,991 18,890 5,485 Total other income (expense) 117,640 (107,454) 31,805 (319,132) Loss from continuing operations (1,257,027) (1,708,089) (4,297,456) (6,376,110) Income (Loss) from discontinued operations 6,224 (102,900) (82,132) (1,467,843) $ $ $ $ Net loss (1,250,803) (1,810,989) (4,379,588) (7,843,953) Loss applicable to Common Stockholders: Loss from continuing $ $ $ $ operations (1,257,027) (1,708,089) (4,297,456) (6,376,110) Preferred stock dividends in arrears (147,099) (161,214) (436,501) (478,386) Net loss from continuing operations applicable to Common Stockholders: (1,404,126) (1,869,303) (4,733,957) (6,854,496) Income (Loss) from discontinued operations 6,224 (102,900) (82,132) (1,467,843) Net loss applicable to $ $ $ $ common stockholders (1,397,902) (1,972,203) (4,816,089) (8,322,339) Basic and diluted net loss per common share: Loss from continuing operations $ (0.01) $ (0.03) $ (0.04) $ (0.12) Loss from discontinued operations 0.00 (0.00) (0.00) (0.03) Net loss applicable to Common Stockholders $ (0.01) $ (0.03) $ (0.04) $ (0.14) Weighted average common shares outstanding: Basic and diluted 125,861,331 67,663,257 110,401,741 57,568,953
FUSION TELECOMMUNICATIONS INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET September 30, 2010 December 31, 2009 ASSETS Current assets Cash and cash equivalents $ 257,488 $ 99,019 Accounts receivable, net of allowance 2,795,624 2,500,319 Restricted cash, current portion - 168,176 Prepaid expenses and other current assets 172,687 130,647 Assets held for sale 4,554 6,513 Assets of Discontinued Operations 15,447 32,283 Total current assets 3,245,800 2,936,957 Property and equipment, net 1,224,864 1,664,583 Other assets Security deposits 33,106 23,008 Restricted cash, net of current portion 533,437 248,390 Intangible assets, net 438,330 489,294 Other assets 54,009 62,119 Total other assets 1,058,882 822,811 TOTAL ASSETS $ 5,529,546 $ 5,424,351 LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities Long-term debt, current portion $ 2,525,470 $ 2,407,187 Capital and equipment financing lease obligations, current portion 8,045 14,831 Escrow Payable 155,000 321,418 Accounts payable and accrued expenses 8,813,220 9,263,872 Liabilities of discontinued operations 230,274 360,294 Total current liabilities 11,732,009 12,367,602 Long-term liabilities Capital and equipment financing lease obligations, net of current portion - 2587 Other long-term liabilities 444,322 336,815 Total long-term liabilities 444,322 339,402 Stockholders' equity Preferred stock, Class A-1, A-2, A-3 & A-4 73 80 Common stock 1,320,106 925,440 Capital in excess of par value 135,605,562 130,984,766 Accumulated deficit (143,572,526) (139,192,939) Total stockholders' equity (6,646,785) (7,282,653) TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,529,546 $ 5,424,351
FUSION TELECOMMUNICATIONS INTERNATIONAL, INC. AND SUBSIDIARIES RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA Three Months Ended Nine Months Ended September 30, September 30, 2010 2009 2010 2009 Net Loss $ (1,250,803) $ (1,810,989) $ (4,379,588) $ (7,843,953) Loss from discontinued operations (6,224) 102,900 82,132 1,467,843 Loss from continuing operations (1,257,027) (1,708,089) (4,297,456) (6,376,110) Adjustments: Interest (income) expense, net 42,521 109,445 146,585 324,617 Depreciation and amortization 198,106 304,121 637,891 1,020,536 Loss on impairment - - - 243,000 EBITDA (1,016,400) (1,294,523) (3,512,980) (4,787,957) Adjustments: (Gain)/loss on disposal of fixed assets - - - - Communication charges - - - - Other taxes 34,505 40,321 110,097 92,746 Non cash compensation 101,897 145,145 238,942 264,912 Adjusted EBITDA $ (879,998) $ (1,109,057) $ (3,163,941) $ (4,430,299)
Released November 15, 2010