EXHIBIT 99.2
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FOR IMMEDIATE RELEASE Contact: Paul H. Riss, CEO
phriss@elec-corp.com
914-682-0214
eLEC Announces Third Quarter Results
and Sale of Essex Subsidiary
White Plains, NY...October 14, 2003--- eLEC Communications Corp. (OTCBB:ELEC), a
provider of local and long distance telephone service, today announced financial
results for the third quarter ended August 31, 2003. eLEC reported net income
for the third fiscal quarter of 2003 of $694,441, or $.04 per share, as compared
to a net loss of ($391,095), or ($0.03) per share, for the third fiscal quarter
of 2002.
eLEC also announced the sale of its wholly-owned subsidiary, Essex
Communications, Inc. The sale will result in a fourth quarter book gain of
approximately $7,000,000, resulting primarily from the elimination of
liabilities from eLEC's consolidated financial statements. The customer base of
Essex was sold, and certain liabilities of Essex were assumed, by a buyer on
December 31, 2002. The remainder of Essex, which has been inactive and has had
no sales since January 1, 2003, has now been sold.
The results of operations for the third fiscal quarter of 2003 as compared to
the third fiscal quarter of 2002 were impacted by the sale in December 2002 of
the customer base of Essex, which had approximately 25,000 lines billed at the
end of the third quarter of 2002, as compared to approximately 11,000 lines
billed at the end of the third quarter of fiscal 2003 by eLEC's two operating
subsidiaries, New Rochelle Telephone and Telecarrier Services, both of which had
no local service revenue in fiscal 2002.
The following are key operational comparisons for the third quarter of fiscal
2003 and fiscal 2002:
Quarterly revenues amounted to $1,275,889 in fiscal 2003, a decrease
of $2,353,628 or 65%, from quarterly revenues of $3,629,517 in fiscal
2002.
The gross margin in fiscal 2003 amounted to 49.1% as compared to a
gross margin of 36.5% in fiscal 2002.
The loss from operations amounted to ($493,562) in fiscal 2003, a
decrease of $517,079, or 51.2%, from a loss from operations of
($1,010,641) in fiscal 2002.
The following are key operational comparisons between the first, second and
third quarters of fiscal 2003:
Billed lines at the end of the third quarter amounted to 10,790
compared to 8,788 at the end of the second quarter and 4,499 at the
end of the first quarter.
The gross margin in the third quarter amounted to 49.1%, compared to
49.8% in the second quarter and 43.8% in the first quarter.
The loss from operations in the third quarter amounted to ($493,562),
compared to ($663,984) in the second quarter and ($974,897) in the
first quarter.
eLEC's CEO, Paul Riss, stated, "We continue to make progress in our operations
by decreasing costs and increasing revenues. Additionally, the sale of certain
assets of Essex has generated profits for us in each of the last three quarters.
With the sale in the fourth quarter of the remainder of Essex, we will see the
equity on our balance sheet improve by approximately $7,000,000 at year-end. We
anticipate that this transaction, coupled with the sale of our corporate
headquarters building last week, will strengthen our financial condition so that
we can grow our customer base more rapidly and generate operating profits in the
future."
eLEC Communications Corp. is a competitive local exchange carrier that is taking
advantage of the convergence of the current and future competitive technological
and regulatory developments in the telecommunications industry. eLEC offers
small businesses and residential customers an integrated set of
telecommunications products and services, including local exchange, local
access, domestic and international long distance telephone, and a full suite of
features including items such as three-way calling, call waiting and voice mail.
*********
eLEC Communications Corp. and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(Unaudited)
For the Nine Months Ended For the Three Months Ended
Aug. 31, 2003 Aug. 31, 2002 Aug. 31, 2003 Aug. 31, 2002
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Revenues $ 3,776,334 $ 11,805,200 $ 1,275,889 $ 3,629,517
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Costs and expenses:
Costs of services 1,986,726 7,789,871 649,597 2,305,277
Selling, general and administrative 3,841,201 7,286,855 1,102,647 2,290,554
Depreciation and amortization 80,850 180,546 17,207 44,327
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Total costs and expenses 5,908,777 15,257,272 1,769,451 4,640,158
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Loss from operations (2,132,443) (3,452,072) (493,562) (1,010,641)
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Other income (expense):
Interest expense (105,509) (386,186) (36,065) (87,283)
Interest and other income (loss) 88,063 (22,237) (34,300) 10,151
Gain on sale of assets 3,511,297 -- 1,254,442 --
Gain on sale of investment securities and
other investments 121,687 1,380,911 37,926 696,678
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3,615,538 972,488 1,222,003 619,546
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Income (loss) before taxes 1,483,095 (2,479,584) 728,441 (391,095)
Provision for taxes 34,000 -- 34,000 --
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Net income (loss) 1,449,095 (2,479,584) 694,441 (391,095)
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Other comprehensive income -- unrealized
income on marketable securities -- 92,258 -- 28,910
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Comprehensive income (loss) $ 1,449,095 $ (2,873,326) $ 694,441 $ (326,185)
============ ============ ============ ============
Basic and diluted earnings (loss) per share $ 0.09 $ (0.16) $ 0.04 $ (0.03)
============ ============ ============ ============
Weighted average number of common shares
outstanding
Basic $ 15,633,829 15,606,818 15,684,369 15,608,282
============ ============ ============ ============
Diluted 15,664,321 15,606,818 15,733,552 15,608,282
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This release contains forward-looking statements that involve risks and
uncertainties. eLEC's actual results may differ materially from the results
discussed in the forward-looking statements. Factors that might cause such a
difference include, among others, certain risks and uncertainties over which the
company may have no control. For further discussion of such risks and
uncertainties, which could cause actual results to differ from those contained
in the forward-looking statements, see the discussions contained in eLEC's
Annual Report on Form 10-KSB for the year ended November 30, 2002 and its
Quarterly Report on Form 10-QSB for the quarters ended February 28, 2003, May
31, 2003 and August 31, 2003, and any subsequent SEC filings.