[GRAPHIC OMITTED] [GRAPHIC OMITTED]
eLEC communications
- --------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE Contact: Paul H. Riss, CEO
phriss@elec.net
914-682-0214
eLEC Reports Second Quarter Earnings
White Plains, NY...July 1, 2004--- eLEC Communications Corp. (OTCBB:ELEC)
Summary of Accomplishments:
o 2nd Quarter Net Income of $808,464, or $0.05 per fully diluted share
o 2nd Quarter Revenues of $1.9 million, up 64% over Q2 2003
o Roll-out of VoIP services
o Emergence of Telecarrier subsidiary from bankruptcy
eLEC today announced net income for the second fiscal quarter of 2004 of
$808,464, or $0.05 per share, as compared to net income of $48,855, or $0.00 per
share, for the second fiscal quarter of 2003. Revenues for the second quarter of
2004 amounted to $1,895,932, an increase of $742,516, or 64%, over revenues of
$1,153,416 in the second quarter of fiscal 2003.
Net income in the second quarter of fiscal 2004 included a gain on debt
reduction of $852,553, while net income in the second quarter of fiscal 2003
included a gain on sale of assets of $659,966. Net loss from operations for the
quarter ended May 31, 2004 amounted to ($69,002), as compared to a net loss from
operations of ($706,301) for the quarter ended May 31, 2003.
eLEC CEO Paul Riss stated, "We are pleased with our operating developments and
believe we are positioning ourselves for growth. On the regulatory front, we
continue to negotiate in good faith for new commercial contracts with Verizon
for the receipt of wholesale phone service. We have only been operating in
states in which we can obtain gross margins that we consider to be adequate, and
unlike other competitive carriers, we do not see the need to discontinue our
marketing efforts in any of the states in which we operate. We believe we can
afford to pay somewhat higher wholesale prices if it results in a better
relationship with Verizon pursuant to which we can resell Verizon DSL, voice
mail and inside wiring. However, our long-term goal is to not have any voice
traffic on the Verizon network and to use the Internet to carry our voice
services. In our new arrangement with a VoIP wholesaler, we now offer discounted
voice services, including a rich feature bundle, for those of our customers who
want to use their high-speed Internet connection for their voice
communications."
"We are also excited about the future of our CLEC subsidiary, Telecarrier
Services, which we were able to purchase and bring out of Chapter 11
bankruptcy," continued Riss. "This transaction further reduced the liabilities
on our consolidated balance sheet and creates the opportunity for rapid growth.
Just last week, Telecarrier sold more than 1,000 new lines, and this week we
anticipate it will sell another 1,000 new lines. We do not have the cash to
continue new line acquisitions at that pace, but we are negotiating the terms of
a financing arrangement with a lender to enable us to support the growth we are
capable of achieving."
eLEC Communications Corp. is a Competitive Local Exchange Carrier that offers
local and long distance calling plans to small business and residential
customers. We sell under the names of New Rochelle Telephone and eLEC
Communications, delivering telephone services at a price savings and with
quality customer service. For more information on our products and offerings,
visit our web site at www.elec.net.
eLEC Communications Corp. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
For the Six Months Ended For the Three Months Ended
May 31, 2004 May 31, 2003 May 31, 2004 May 31, 2003
------------ ------------ ------------ ------------
Revenues $ 3,769,924 $ 2,500,445 $ 1,895,932 $ 1,153,416
------------ ------------ ------------ ------------
Costs and expenses:
Costs of services 1,796,701 1,337,129 916,626 579,434
Selling, general and administrative 2,101,067 2,780,871 1,044,355 1,247,456
Depreciation and amortization 7,811 63,643 3,953 32,827
------------ ------------ ------------ ------------
Total costs and expenses 3,905,579 4,181,643 1,964,934 1,859,717
Loss from operations (135,655) (1,681,198) (69,002) (706,301)
------------ ------------ ------------ ------------
Other income (expense):
Interest expense (3,544) (69,444) (782) (34,357)
Interest and other income 51,069 164,680 21,988 79,622
Gain on debt reduction in bankruptcy 904,027 -- 852,553 --
Gain on sale of assets -- 2,256,855 -- 659,966
Gain on sale of investment securities and
other investments 770 83,761 770 49,925
------------ ------------ ------------ ------------
952,322 2,435,852 874,529 755,156
------------ ------------ ------------ ------------
Net income before income tax benefit 816,667 754,654 805,527 48,855
Income tax benefit 47,937 -- 2,937 --
------------ ------------ ------------ ------------
Net income $ 864,604 $ 754,654 $ 808,464 $ 48,855
============ ============ ============ ============
Basic and diluted earnings per share $ 0.05 $ 0.05 $ 0.05 $ 0.00
============ ============ ============ ============
Weighted average number of common shares
outstanding
Basic 16,258,730 15,608,282 16,259,782 15,608,282
============ ============ ============ ============
Diluted 16,580,715 15,629,293 16,592,854 15,632,209
============ ============ ============ ============
********
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, 2003, eLEC's
Quarterly Report on Form 10-QSB for the quarter ended February 29, 2004 and any
subsequent SEC filings.
# # #