-- Demand for a lower cost alternative to traditional telephone
service;
-- Improved quality and reliability of VoIP calls due to technological
advances, increased network development and greater bandwidth
capacity; and
-- New product innovations that can be provided by VoIP services
providers, but not currently offered by traditional telephone
companies.
Arthur L. Smith, CEO of ATSI, stated, "Our 2010 fiscal year was
transitional for ATSI. Our team executed on our diversification strategy,
while meeting our financial and operational goals for our core
international VoIP transport service. We are very encouraged by the market
acceptance of our new cloud based VoIP applications and anticipate
continued financial improvement as we sell more high-margin services. We
expect our growth trend to continue in fiscal year 2011, while our
management team continues to emphasize improvements in gross margin and
cash flow from operations. Going forward, we will be placing a lot of
emphasis on increasing our market share of the cloud based VoIP application
space, as well as growing and refining our global VoIP transport
offerings."
Excluding non-cash items, net loss to common stockholders for the year
ended July 31, 2010 was $395,000 vs. a net loss to common stockholders of
$1.5 million for the previous year ended July 31, 2009. For FY2010 the
Company incurred $307,000 in non-cash expenses that included non-cash
stock-based compensation, depreciation and amortization, interest expense,
and losses attributable to non-controlling interest.
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with generally
accepted accounting principles, or GAAP, ATSI uses non-GAAP measures of
operating income (loss), net income (loss) and income (loss) per share,
which are adjustments from results based on GAAP to exclude non-cash
expenses, including non-cash stock-based compensation in accordance with
SFAS 123R. ATSI's management believes the non-GAAP financial information
provided in this release is useful to investors' understanding and
assessment of ATSI's on-going core operations and prospects for the future.
The presentation of this non-GAAP financial information is not intended to
be considered in isolation or as a substitute for results prepared in
accordance with GAAP. Management uses both GAAP and non-GAAP information in
evaluating and operating business internally and as such deemed it
important to provide all this information to investors.
Net income before non-cash items is not a term defined by generally
accepted accounting principles (GAAP) and may not be comparable to other
similarly titled measurements used by other companies. Such non-GAAP
measures should be considered in addition to, and not as a substitute for,
performance measures calculated in accordance with GAAP. The accompanying
table includes a detailed reconciliation of net loss reported in accordance
with GAAP to net loss before non-cash items.
ATSI Communications, Inc., through its wholly owned subsidiary, Digerati
Networks, Inc., has emerged as a premier provider of global VoIP services
serving rapidly expanding markets in Asia, Europe, the Middle East, and
Latin America. Over the course of a decade, Digerati has established over
200 global partnerships with foreign carriers and emerging operators in
more than 50 countries. In Mexico, the Company's minority-owned subsidiary
operates under a 30-year government issued telecommunications license. In
addition to global VoIP transport, Digerati provides enhanced VoIP
applications including a fully hosted IP/PBX service, SIP trunking, and
customized VoIP solutions for specialized applications. The Company's
customer base includes traditional telecommunication carriers, mobile
operators, VoIP service providers, calling card companies, Internet service
providers, and data service integrators.
The information in this news release includes certain forward-looking
statements that are based upon management's expectations and assumptions
about certain risks and uncertainties that can affect future events.
Although management believes these assumptions and expectations to be
reasonable on the date of this news release, these risks and uncertainties
may cause actual events to differ material from managements those contained
in this news release. The risks and uncertainties include, but are not
limited to, continuing as a going concern, availability and cost of our
present vendors and suppliers, and absence of any change in government
regulations or other costs associated with data transmission over the
Internet or termination of transmissions in foreign countries.
ATSI COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Years ended July 31,
2010 2009
---------- ----------
OPERATING REVENUES:
VoIP services $ 20,939 $ 19,891
---------- ----------
Total operating revenues 20,939 19,891
---------- ----------
OPERATING EXPENSES:
Cost of services (exclusive of depreciation
and amortization) 19,379 18,533
Selling, general and administrative expense
(exclusive of legal and professional fees) 1,398 2,157
Legal and professional fees 272 353
Bad debt expense - 2
Depreciation and amortization expense 165 152
---------- ----------
Total operating expenses 21,214 21,197
---------- ----------
OPERATING INCOME (LOSS) (275) (1,306)
---------- ----------
OTHER INCOME (EXPENSE):
Gain on early extinguishment of debt - 108
Interest expense (144) (196)
---------- ----------
Total other expense (144) (88)
---------- ----------
---------- ----------
NET LOSS (419) (1,394)
---------- ----------
NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST 24 (114)
---------- ----------
NET LOSS ATTRIBUTABLE TO ATSI COMMUNICATIONS, INC. $ (395) $ (1,508)
========== ==========
LOSS PER SHARE - BASIC AND DILUTED $ (0.01) $ (0.04)
========== ==========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC
AND DILUTED 45,504,120 40,043,303
---------- ----------
NET LOSS ATTRIBUTABLE TO ATSI COMMUNICATIONS, INC.,
as reported $ (395) $ (1,508)
---------- ----------
EXCLUDING NON-CASH ITEMS:
ADD:
Non-cash stock-based compensation, employees 22 388
Bad debt expense - 2
Depreciation and amortization 165 152
Interest expense 144 196
MINUS:
Gain on early extinguishment of debt - 108
Net loss attributable to noncontrolling
interest 24 (114)
NET LOSS ATTRIBUTABLE TO ATSI COMMUNICATIONS, INC.
---------- ----------
EXCLUDING NON-CASH ITEMS: $ (88) $ (764)
========== ==========
Contact Information: Contact: Jack Eversull The Eversull Group 972-571-1624 214-469-2361 (fax) E-mail: Web Site: www.atsi.net