Fusion Reports Third Quarter 2012 Results
NEW YORK, NY, Nov 15, 2012 (Menafn - MARKETWIRE via COMTEX) --Fusion Telecommunications International, Inc. (otcqb:FSNN) hasannounced financial results for the third quarter ended September 30,2012.
Fusion reported consolidated revenues of 10.0 million for thequarter ended September 30, 2012; essentially unchanged from revenuesof 9.9 million for the quarter ended September 30, 2011. Revenues inthe Carrier Services business segment were 9.4 million during thequarter, as compared to 9.3 million during the third quarter of2011. Fusion also reported revenues of 0.58 million in the CorporateServices segment for the quarter ended September 30, 2012, a decreaseof 5.8% compared to the same period of a year ago.
The Company's performance in the third quarter of 2012 was impactedby liquidity constraints and limited working capital available duringthe period, as well as a one-time loss in gross profit associatedwith migration activities to a new rating and routing optimizationsystem that is expected to generate improved results throughefficiencies in real-time monitoring and rate administration.Consolidated gross margin decreased to 8% for the third quarter of2012 as compared to 11.2% for the third quarter of 2011.
Selling, general and administrative expenses ("SG&A") increased by 8%in the third quarter of 2012 compared to the same period of a yearago. The increase is largely due to professional fees and otherexpenses incurred in connection with the NBS acquisition transaction.
Fusion reported a net loss of 1.6 million for the quarter endedSeptember 30, 2012, an increase of 0.5 million over the quarterended September 30, 2011. For the third quarter of 2012 and 2011, thenet loss applicable to common stockholders was 1.7 million and 1.2million, respectively, or 0.01 per share.
For the quarter ended September 30, 2012, adjusted EBITDA loss(earnings from continuing operations before interest, taxes,depreciation, amortization, and specific non-recurring and non-cashadjustments) increased 0.4 million, or 45%, to 1.3 million, ascompared to 0.9 million for the quarter ended September 30, 2011.
Fusion's third quarter 2012 results do not include the results ofNBS, a Unified Communications and cloud services provider, which wasacquired on October 29, 2012. For the three months ended September30, 2012, NBS generated preliminary unaudited revenues ofapproximately 6.7 million and adjusted EBITDA of approximately 1.4million, while achieving a gross margin of approximately 50% duringthe quarter. For the nine months ended September 30, 2012, NBSgenerated preliminary unaudited revenues of 20.3 million andadjusted EBITDA of 3.9 million.
As of September 30, 2012 and December 31, 2011, the Company hadcurrent assets of 6.0 million and 2.8 million, respectively. Currentliabilities as of September 30, 2012 were 19.9 million, compared to14.8 million at December 31, 2011. Stockholders' deficit atSeptember 30, 2012 and December 31, 2011 was 12.9 million and 10.6million, respectively.
Matthew Rosen, Chief Executive Officer of Fusion, said, "The lastseveral months have been transformational for the Company andculminated in the completion of our previously announced acquisitionof NBS, a profitable Unified Communications and cloud servicesprovider, and the closing of 22.5 million in financing, from which asubstantial portion of the proceeds were used to pay the purchaseprice of NBS. NBS adds 5,000 business customers to the Company and infiscal 2011 generated 26.5 million in revenue, more than 95% ofwhich was monthly recurring and contracted, and 4.9 million inadjusted EBITDA. We also expect to achieve substantial operatingsynergies and generate positive adjusted EBITDA in the first quarterof 2013. NBS's robust, scalable and flexible proprietary servicesplatform, in combination with a national network that includes on-nethubs and facilities in several major markets, advances our cloudservices strategy and provides a strong foundation for futureacquisitions, all of which we expect to accelerate the pace ofrevenue and margin growth and significantly improve results."
Expanding on Mr. Rosen's comments, Don Hutchins, President and ChiefOperating Officer of Fusion, said, "We are pleased that the dedicatedefforts we exercised over the third quarter to conclude theseexciting transactions have resulted in our beginning the fourthquarter with a significant financing and an acquisition that willhelp position us as a leading provider of Unified Communications andcloud services. The integration of products and services, staff,infrastructure and operations is well underway, and we have alreadybegun to cross-sell our complementary products and services to ourcombined customer base. We were especially delighted to welcome theexperienced NBS professionals to the Fusion team, and look forward toworking together to build on our organic growth and achieve theoperational synergies we expect to drive further improvements in ourfinancial performance."
Use of Non-GAAP Financial Measurements:
The Company believes that EBITDA (earnings from continuing operationsbefore interest, taxes, depreciation and amortization) is useful toinvestors because it is commonly used in the communications industryto evaluate companies on the basis of operating performance andleverage. The Company also believes that EBITDA provides investorswith a measure of the Company's operational and financial progressthat corresponds with the measurements used by management as a basisfor allocating resources and making other operating decisions.Adjusted EBITDA provides an adjusted view of EBITDA that takes intoaccount certain significant non-recurring transactions, if any, suchas impairment losses and professional fees associated with pendingacquisitions, which vary significantly between periods and are notrecurring in nature, as well as certain recurring non-cash chargessuch as stock-based compensation. Although the Company uses adjustedEBITDA as one of several financial measures to assess its operatingperformance, its use is limited as it excludes certain significantoperating expenses. EBITDA and adjusted EBITDA are not intended torepresent cash flows for the period presented, nor have they beenpresented as an alternative to operating income or as an indicator ofoperating performance and should not be considered in isolation or asa substitute for measures of performance prepared in accordance withaccounting principles generally accepted in the United States ofAmerica ("U.S. GAAP"). In accordance with SEC Regulation G, thenon-GAAP measurements in this press release have been reconciled tothe 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 inthis press release.
Forward Looking Statements:
Statements in this press release that are not purely historicalfacts, including statements regarding Fusion's beliefs, expectations,intentions or strategies for the future, may be "forward-lookingstatements" under the Private Securities Litigation Reform Act of1996. Such statements consist of any statement other than arecitation of historical fact and can be identified by the use offorward-looking terminology such as "may", "expect", "anticipate","intend", "estimate" or "continue" or the negative thereof or othervariations thereof or comparable terminology. The reader is cautionedthat all forward-looking statements are speculative, and there arecertain risks and uncertainties that could cause actual events orresults to differ from those referred to in such forward-lookingstatements. This disclosure highlights some of the important risksregarding the Company's business. The primary risk of the Company isits ability to raise new and continued capital to execute itscomprehensive business strategy. There may be additional risksassociated with the integration of businesses following anacquisition, the Company's ability to comply with its senior debtagreements, concentration of revenue from one source, competitorswith broader product lines and greater resources, emergence into newmarkets, natural disasters, acts of war, terrorism or other eventsbeyond the Company's control, the termination of any of the Company'ssignificant contracts or partnerships, the Company's inability tomaintain working capital requirements to fund future operations orthe Company's ability to attract and retain highly qualifiedmanagement, technical and sales personnel, and the other factorsidentified by us from time to time in the Company's filings with theSecurities and Exchange Commission, which are available throughhttp://www.sec.gov. However, the risks included should not be assumedto be the only things that could affect future performance.
About Fusion
Fusion is a global provider of Unified Communications and cloudsolutions to businesses and carriers worldwide. Fusion's advanced,high availability service platform enables the integration of leadingedge products and services in the cloud, including voice, data,managed network services, cloud computing, storage, informationtechnology, data center services and security. Our solutions arecustomized to serve the unique needs of specialized vertical markets,with a strong focus on HIPAA-compliant solutions for the healthcareindustry. Fusion's innovative yet proven cloud-based solutions lowerour customers' cost of ownership, and deliver new levels of security,flexibility, scalability and speed of deployment. For moreinformation, please visit www.fusiontel.com.
Fusion Telecommunications International, Inc. and Subsidiaries
Consolidated Statements of Operations
(unaudited)
Three Months EndedNIne Months Ended
September 30,September 30,
----------------------------------------------------
2012201120122011
------------------------------------------------
Revenues9,959,9659,931,247 31,714,105 30,778,563
Cost of revenues9,164,2478,820,45728,172,79627,621,852
------------------------------------------------
Gross profit795,7181,110,7903,541,3093,156,711
Operating expenses:
Depreciation and
amortization94,426101,137286,603418,205
Selling general and
administrative
expenses2,215,7362,051,6476,517,2296,218,391
Advertising and
marketing151,6138,0486,995
------------------------------------------------
Total operating
expenses2,310,1772,154,3976,811,8806,643,591
------------------------------------------------
Operating loss(1,514,459)(1,043,607)(3,270,571)(3,486,880)
------------------------------------------------
Other (expenses)
income:
Interest expense,
net of interest
income(56,861)(37,432)(160,477)(141,444)
Other(63,576)(27,101)(224,419)82,728
------------------------------------------------
Total other
(expenses) income(120,437)(64,533)(384,896)(58,716)
------------------------------------------------
Loss from continuing
operations(1,634,896)(1,108,140)(3,655,467)(3,545,596)
Discontinued
operations:
Income from
discontinued
operations-(2,833)-5,531
------------------------------------------------
Net loss (1,634,896) (1,110,973) (3,655,467) (3,540,065)
Preferred stock
dividends in
arrears(101,451)(101,729)(302,149)(368,446)
------------------------------------------------
Net loss applicable
to common
stockholders: (1,736,347) (1,212,702) (3,957,616) (3,908,511)
================================================
Basic and diluted loss per common
share:
Loss from continuing
operations(0.01) (0.01) (0.02) (0.03)
Loss from
discontinued
operations-(0.00)-0.00
------------------------------------------------
Loss per common
share(0.01) (0.01) (0.02) (0.03)
================================================
Weighted average
common shares
outstanding:
Basic and diluted166,432,351144,588,746164,107,320138,994,794
================================================
Fusion Telecommunications International, Inc. and Subsidiaries
Consolidated Balance Sheets
September 30,December 31,
20122011
--------------------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents3,727,3953,047
Accounts receivable, net of allowance1,695,8632,400,427
Prepaid expenses and other current assets530,545388,343
--------------------------
Total current assets5,953,8032,791,817
--------------------------
Property and equipment, net717,514831,402
--------------------------
Other assets:
Security deposits437,141437,141
Restricted cash162,933299,536
Intangible assets, net78,423165,578
Other assets13,83331,494
--------------------------
Total other assets692,330933,749
--------------------------
TOTAL ASSETS7,363,6474,556,968
==========================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Promissory notes payable - non-related parties 458,966292,039
Promissory notes payable - related parties5,137,3644,922,364
Accounts payable and accrued expenses10,381,9979,448,981
Escrow payable3,875,250-
Current liabilities from discontinued
operations96,34597,835
--------------------------
Total current liabilities19,949,92214,761,219
--------------------------
Long-term liabilities:
Other long-term liabilities298,945380,243
--------------------------
Total long-term liabilities298,945380,243
--------------------------
Commitments and contingencies
Stockholders' deficit:
Preferred stock5050
Common stock1,664,3221,537,113
Capital in excess of par value138,552,999137,325,467
Accumulated deficit(153,102,591)(149,447,124)
--------------------------
Total stockholders' deficit(12,885,220)(10,584,494)
--------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT7,363,6474,556,968
==========================
Fusion Telecommunications International, Inc. and Subsidiaries
Reconciliation of Net Loss to EBITDA and Adjusted EBITDA
(unaudited)
Three Months EndedNine Months Ended
September 30,September 30,
----------------------------------------------------
2012201120122011
------------------------------------------------
Net loss (1,634,896) (1,110,973) (3,655,467) (3,540,065)
Income from
discontinued
operations-2,833-(5,531)
Interest expense and
other financing
costs, net of
interest income123,09045,043395,521149,054
Depreciation and
amortization94,426101,137286,603418,205
------------------------------------------------
EBITDA(1,417,380)(961,960)(2,973,343)(2,978,337)
Acquisition
transaction
expenses82,719-169,981-
Loss on disposal of
property and
equipment-24,615-24,615
Non-cash adjustment
to tax accruals--(98,141)-
Stock-based
compensation
expense31,50338,603100,68571,990
------------------------------------------------
Adjusted EBITDA (1,303,158) (898,742) (2,800,818) (2,881,732)
================================================
Fusion
Laura Nadal
212-389-9720
Email Contact
or
Hayden IR, for Fusion
James Carbonara
646-755-7412
Email Contact
SOURCE: Fusion
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