Fusion Reports Third Quarter 2008 Results
NEW YORK, November 14, 2008 - Fusion (Amex: FSN) today announced financial results for the quarter ended September 30,
2008.
Recent Highlights:
Consolidated Revenues increased 8.7% from $13.4 million, to $14.5 million for third quarter 2008;
• Adjusted EBITDA decreased 8.7% over third quarter 2007;
• Raised $2.0 million in debt and equity financing;
• Revenues from Corporate customers increased 48% over prior quarter;
• Over 130,000 visitors to Jinti, the Chinese social networking site, have registered for Fusion's Efonica VoIP services.
Fusion reported Consolidated Revenues of $14.5 million for the quarter ended September 30, 2008. This represented an
increase of 8.7% compared to revenues of $13.4 million for the quarter ended September 30, 2007. The increase over the
prior year was primarily attributable to an increase in the number of minutes as well the revenue per minute in the Carrier
segment in the third quarter of 2008 compared to the third quarter of 2007.
Consolidated Gross Margin decreased slightly to 6.2% in the third quarter of 2008 compared to 7.5% in the third quarter of
2007.
Selling, General and Administrative costs decreased slightly by 0.7% compared to the third quarter of 2007, but decreased
5.7% from the previous quarter. The improvement was primarily attributable to the Company's continuing focus on cost–containment and maximizing infrastructure efficiencies.
For the third quarter ended September 30, 2008, Adjusted EBITDA loss (earnings before interest, taxes, depreciation,
amortization, and specific non-recurring and non-cash adjustments) increased $146 thousand, or (8.7%), to ($1.83) million,
compared to Adjusted EBITDA of ($1.68) million for the third quarter of 2007. Fusion also reported an increase in Net Loss in the third quarter of the current year compared to the third quarter of the prior year. For the third quarter of 2008, Fusion
reported a Net Loss of ($2.57) million or ($0.07) per share compared to a net loss of ($2.37) million or ($0.09) per share during
the quarter ended September 30, 2007.
As of September 30, 2008, the Company had current assets of $4.6 million compared to $6.3 million as of December 31, 2007.
The decrease was primarily a result of a decrease in Accounts Receivable due to early receipt in the first quarter of 2008 of
certain receivables. Total Liabilities and Stockholders' equity at September 30, 2008 was $15.3 million compared to $18.1
million as of December 31, 2007.
In the third quarter of 2008, the Company raised an additional $0.9 million in debt and equity financing.
Commenting on the results, Matthew Rosen, Chief Executive Officer of Fusion, said, "The third quarter of 2008 was a
challenging one for Fusion, as it was for all companies in these difficult economic times. We believe, however, that competitive
telecommunications providers like Fusion will benefit as companies small and large seek to reduce costs and enhance the
basic communications services that support their businesses. Even in such a challenging economic environment, we are
pleased to report that both revenues and EBITDA improved from the second quarter of this year."
Expanding on Mr. Rosen's comments, Don Hutchins, President and Chief Operating Officer of Fusion, said "We are particularly
pleased with the 28% growth in our carrier business over the second quarter, and believe that the 48% growth in higher margin
Corporate revenues will be enhanced by the expansion of our direct sales force in the current quarter. Additionally, Fusion's
strong international distribution initiatives, such as our strategic marketing relationship with Jinti, the well-known Chinese social
networking site, will continue to play a key role in Fusion's future success."
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.
Earnings Conference call
The Company will host a conference call to discuss its financial results at 10:00 A.M. ET today. The conference call can be
accessed by dialing 877-604-9675. A replay of the call will be available through Monday, November 17, 2008. To listen to the
replay, please call 888-203-1112 (Domestic) or 719-457-0820 (International). To access the replay, users will need to enter
the following passcode: 6422186. The call will be available live on the Internet at . The online archive of
the web cast will be available for one year following the call.
About Fusion:
Fusion delivers a full range of advanced IP-based services to corporations, consumers and carriers worldwide. Fusion's
Efonica-branded consumer VoIP products and services focus primarily on serving customers in Asia, the Middle East, Africa,
Latin America and the Caribbean. For more information please go to http://www.fusiontel.com
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 CONTACT: Philip Turits 212-201-2407 pturits@fusiontel.com.
FUSION TELECOMMUNICATIONS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended | ||||
(Un–Audited) | (Un–Audited) | |||
Revenues | $ | 14,515,430 | $ | 13,356,679 |
Operating expenses: | ||||
Cost of revenues | 13,608,525 | 12,355,657 | ||
Depreciation and amortization | 470,582 | 437,920 | ||
Selling, general and administrative expenses | 2,874,173 | 2,894,804 | ||
Advertising and Marketing | 35,549 | 36,472 | ||
Total operating expenses | 16,988,829 | 15,724,853 | ||
Operating loss | (2,473,399) | (2,368,174) | ||
Other income (expenses) | ||||
Interest income (expense), net | (126,564) | (10,393) | ||
Gain on settlement of debt | 25,000 | — | ||
Other | 3,230 | 7,579 | ||
Total other income (expense) | (98,334) | (2,814) | ||
Loss from continuing operations | (2,571,733) | (2,370,988) | ||
Net loss | $ | (2,571,733) | $ | (2,370,988) |
Losses applicable to common stockholders | ||||
Loss from continuing operations | $ | (2,571,733) | $ | (2,370,988) |
Preferred stock dividends | (161,214) | $ | (161,214) | |
Net loss applicable to common stockholders | ||||
from continuing operations | (2,732,947) | (2,532,202) | ||
Income from discontinued operations | — | — | ||
Net loss applicable to common stockholders | $ | (2,732,947) | $ | (2,532,202) |
Basic and diluted net loss per common share: | ||||
Loss from continuing operations | $ | (0.07) | $ | (0.09) |
Income (loss) from discontinued operations | — | — | ||
Net loss applicable to common stockholders | $ | (0.07) | (0.09) | |
Weighted average shares outstanding | ||||
Basic and diluted | 37,151,093 | 26,967,117 | ||
FUSION TELECOMMUNICATIONS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
September 30, 2008 | December 31, 2007 | |||
(Un–Audited) | (Audited) | |||
ASSETS | ||||
Current assets | ||||
Cash and cash equivalents | $ | 477,073 | $ | 114,817 |
Accounts receivable, net of allowance | 3,530,394 | 5,545,408 | ||
Prepaid expenses and other current assets | 458,506 | 481,556 | ||
Assets held for sale | 129,231 | 129,231 | ||
Total current assets | 4,595,204 | 6,271,012 | ||
Property and equipment, net | 4,348,190 | 5,425,846 | ||
Other assets | ||||
Security deposits | 58,882 | 66,638 | ||
Restricted cash | 416,566 | 416,566 | ||
Goodwill | 964,557 | 964,557 | ||
Intangible assets, net | 4,868,317 | 4,892,215 | ||
Other assets | 97,890 | 91,455 | ||
Total other assets | 6,406,212 | 6,.431,431 | ||
TOTAL ASSETS | $ | 15,349,606 | $ | 18,128,289 |
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||
Current Liabilities | ||||
Long–term debt, current portion | $ | 1,763,182 | $ | 566,567 |
Capital and equipment financing leasing obligations, current portion | 129,993 | 233,759 | ||
Accounts payable and accrued expenses | 10,976,195 | 9,663,325 | ||
Liabilities of discontinued operations | 13,313 | 15,829 | ||
Total current liabilities | 12,882,683 | 10,479,480 | ||
Long–term liabilities | ||||
Long–term debt net of current portion | 85,147 | 283,433 | ||
Capital lease/equipment obligations, net of current portion | — | 10,922 | ||
Other long–term liabilities | 531,217 | 659,271 | ||
Total long–term liabilities | 616,364 | 953,626 | ||
Stockholders’ equity (deficit) | ||||
Preferred stock, Class a–1, A–2, A–3 & A–4 | 80 | 80 | ||
Common stock | 393,310 | 299,078 | ||
Common stock, Class A | — | — | ||
Capital in excess of par value | 123,292,518 | 120,402,691 | ||
Accumulated deficit | (121,835,349) | (114,006,666) | ||
Total stockholders’ equity (deficit) | 1,850,559 | 6,695,183 | ||
TOTAL LIABILITIES AND STOCKHOLDERS; EQUITY (DEFICIT) | $ | 15,349,606 | $ | 18,128,289 |
FUSION TELECOMMUNICATIONS INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
Three Months Ended | ||||
(Un–Audited) | (Un–Audited) | |||
Net Loss | $ | (2,571,733) | $ | (2,370,988) |
Loss from continuing operations | (2,571,733) | (2,370,988) | ||
Adjustments: | ||||
Interest (income) expense, net | 126,564 | 10,393 | ||
Depreciation and amortization | 470,582 | 437,920 | ||
EBITDA | (1,974,587) | (1,922,675) | ||
Adjustments: | ||||
(Gain) loss on debt settlement/forgiveness | (25,000) | — | ||
(Gain) loss on disposal of fixed assets | — | — | ||
(Gain) loss on sales of investment in Estel | — | — | ||
One time charges | — | — | ||
Other taxes | 36,902 | 102,673 | ||
Non cash compensation | 136,548 | 140,026 | ||
Adjusted EBITDA | $ | (1,826,137) | $ | (1,679,976) |