NEW ROCHELLE, N.Y., April 16, 2003 (PRIMEZONE) -- eLEC Communications Corp. (OTCBB:ELEC) today reported earnings of $705,799, or $.05 a share, for the first quarter of fiscal 2003 as compared to a net loss of ($1,164,670), or ($.07) a share, for the first quarter of fiscal 2002.
The results of operations for the first fiscal quarter of 2003 as compared to the first fiscal quarter of 2002 were impacted by the sale of the customer base of the company's competitive local exchange carrier ("CLEC"), Essex Communications, Inc., which closed on December 31, 2002. In addition, eLEC has been operating two CLECs, New Rochelle Telephone and Telecarrier Services, in fiscal 2003, which had no local service revenue in fiscal 2002.
The following are key operational comparisons for the first quarter of fiscal 2003 and fiscal 2002:
-- Quarterly revenues amounted to $1,347,029 in fiscal 2003, a
decrease of $3,128,063, or 70%, from quarterly revenues of
$4,475,092 in fiscal 2002. For fiscal 2003, approximately
$893,000 related to revenues of Essex before its customer base was
sold. Aggregate revenues of New Rochelle Telephone and
Telecarrier Services were approximately $412,000.
-- The gross margin in fiscal 2003 amounted to 44%, an increase of
12%, as compared to a gross margin of 32% in fiscal 2002.
-- The loss from operations amounted to ($974,897) in fiscal 2003, a
decrease of $103,845, or 10%, from a loss from operations of
($1,078,742) in fiscal 2002.
-- A gain on the sale of assets of Essex of $1,596,889 was recognized
in fiscal 2003.
eLEC's CEO, Paul Riss, stated, "The adjustments and accomplishments we have made to our operations are finally beginning to surface in our financial statements. Our sale of the customer base of Essex and our success in operating New Rochelle Telephone and Telecarrier Services at substantially higher margins are starting to be reflected in our operating numbers. Various liabilities of Essex, which have been assumed by a third party, have now been paid by that entity, and we are able to reflect the gain on our income statement and reduce the corresponding payables that we are still carrying on our balance sheet. We hope to eventually recognize a gain of approximately $9 million from the December 31, 2002 sale of certain assets of Essex."
"In March 2003, which is the first month of our second fiscal quarter, we billed 7,453 lines for aggregate revenues of approximately $373,000, almost equaling the revenues that New Rochelle Telephone and Telecarrier Services reported for the first fiscal quarter," continued Riss. "We are working toward continuing this growth, but we are still seeking much needed financing to propel us forward. We believe we may have solved our short term financing needs by accepting an offer to sell our corporate headquarters building. If we can sign a contract and close promptly, we believe that this transaction should generate the funds we require and reduce our operating overhead on a going forward basis. There can be no assurance, however, that we will be able to successfully consummate this proposed transaction."
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 Three Months Ended
Feb. 28, 2003 Feb. 28, 2002
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Revenues $ 1,347,029 $ 4,475,092
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Costs and expenses:
Costs of services 757,695 3,030,327
Selling, general and administrative 1,533,415 2,469,372
Depreciation and amortization 30,816 54,135
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Total costs and expenses 2,321,926 5,553,834
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Loss from operations (974,897) (1,078,742)
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Other income (expense):
Interest expense (35,087) (144,857)
Interest and other income 85,058 4,505
Gain on sale of assets 1,596,889 --
Gain on sale of investment
securities and other investments 33,836 54,424
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1,680,696 (85,928)
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Net income (loss) 705,799 (1,164,670)
Other comprehensive income
(loss) - unrealized income (loss)
on marketable securities (23,430) 105,076
------------ ------------
Comprehensive income (loss) $ 682,369 ($ 1,059,594)
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Basic and diluted income (loss)
per share $ 0.05 ($ 0.07)
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Weighted average number of
common shares outstanding 15,608,282 15,603,826
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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 quarter ended February 28, 2003 and any subsequent SEC filings.