-- 526% improvement in gross profit for the three months ended October
31, 2006 vs. the three months ended October 31, 2005 ($513,000 vs. $82,000
respectively).
-- Second consecutive quarter of positive cash flow from operations.
-- The Company processed a record volume of 105 million VoIP minutes of
use ("MOU") during the quarter through its NexTone powered VoIP network.
-- ATSI secures $1.2 million financing with CCA Financial Services, Inc.
to fund its growth initiatives.
Arthur L. Smith, CEO of ATSI, stated, "We are pleased to report that we
delivered on our plan to increase gross profit while controlling SG&A
expenses. The results are evident with the key improvement in cash flow
from operations and an increase in cash reserves during the quarter.
Although we do expect our positive revenue growth trend to continue, we
remain committed to emphasizing increases in gross profit while maintaining
a strict control on expenses." Mr. Smith added, "Increasing our cash
reserve and strengthening our balance sheet will assist us with internally
financing our growth and allow us to capitalize on strategic opportunities
we could not have considered in the past."
Including non-cash items, net loss applicable to common stockholders for
the three months ended October 31, 2006 was $186,000 vs. net income
applicable to common stockholders of $1,217,000 for the three months ended
October 31, 2005 that included a gain of $1,652,00 from discontinued
operations. The Company incurred $419,000 in non-cash expense for the
quarter ended October 31, 2006 that includes $315,000 in non-cash
stock-based compensation. Additional non-cash expenses incurred during the
quarter include interest, bad debt, depreciation, amortization, and
preferred dividend expense.
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 income before non-cash items.
ATSI Communications, Inc. operates through its two wholly owned
subsidiaries, Digerati Networks, Inc. and Telefamilia Communications, Inc.
Digerati Networks, Inc. is a premier global VoIP carrier serving rapidly
expanding markets in Asia, Europe, the Middle East, and Latin America, with
an emphasis on Mexico. Through Digerati's partnerships with established
foreign carriers and network operators, interconnection and service
agreements, and a NexTone powered VoIP network, ATSI believes it has clear
advantages over its competition. Telefamilia Communications provides
specialized retail communication services that includes VoIP services to
the high-growth Hispanic market in the United States. ATSI also owns a
minority interest of a subsidiary in Mexico, ATSI Comunicaciones, S.A. de
C.V., which operates under a 30-year government issued telecommunications
license.
Except for the historical information contained herein, the matters
discussed in this release include certain forward-looking statements, which
are intended to be covered by the safe harbor provided by Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. We have identified forward-looking statements by using words
such as "expect," "believe," "should," "may," "intend," and "anticipate" or
words of similar import. Those statements include, but may not be limited
to, all statements regarding our management's intent, belief and
expectations, such as statements concerning our future and our operating
and growth strategy. Although we believe our expectations are reasonable,
our operations involve a number of risks and uncertainties, and these
statements may turn out not to be true. These risks and uncertainties
include the assumption that we will continue as a going business; our
inability to predict or anticipate changes in regulations or the actions of
domestic and foreign governments; and the continued availability of funds
in amounts and on acceptable terms. More detailed information about ATSI
Communications, Inc. is available in the Company's public filings with the
Securities and Exchange Commission. We believe that the assumptions
underlying the forward-looking statements included in this release will
prove to be accurate. In light of the significant uncertainties inherent
in the forward-looking statements included herein, the inclusion of such
information should not be regarded as a representation by us or any other
person that our objectives and plans will be achieved. All forward-looking
statements made in this release are based on information presently
available to our management. We assume no obligation to update any
forward-looking statements, except as required by law.
ATSI COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)
Three months ended
October 31,
2006 2005
---------- ----------
OPERATING REVENUES:
VoIP Carrier services $ 6,495 $ 2,291
Communication services 33 22
Network services 4 9
---------- ----------
Total operating revenues 6,532 2,322
---------- ----------
OPERATING EXPENSES:
Cost of services (exclusive of depreciation
and amortization, shown below) 6,019 2,240
Selling, general and administrative expense
(exclusive of legal and professional fees,
non-cash stock compensation, and
stock/warrants for services as shown below) 210 149
Legal and professional fees 58 27
Non-cash issuance of common stock and
warrants for services 46 64
Non-cash stock-based compensation for
employees and directors 315 180
Bad debt expense 23 -
Depreciation and amortization expense 17 22
---------- ----------
Total operating expenses 6,688 2,682
---------- ----------
OPERATING (LOSS) (156) (360)
---------- ----------
OTHER INCOME (EXPENSE):
Loss on derivative instrument liabilities - (26)
Interest expense (28) (26)
---------- ----------
Total other income (expense), net (28) (52)
---------- ----------
(LOSS) FROM CONTINUING OPERATIONS (184) (412)
---------- ----------
DISCONTINUED OPERATIONS
Gain on disposal of discontinued operations - 1,652
---------- ----------
INCOME FROM DISCONTINUED OPERATIONS - 1,652
---------- ----------
NET INCOME (LOSS) $ (184) $ 1,240
LESS: PREFERRED DIVIDEND (2) (23)
---------- ----------
NET INCOME (LOSS) TO COMMON STOCKHOLDERS $ (186) $ 1,217
========== ==========
BASIC INCOME (LOSS) PER SHARE:
From continuing operations $ (0.01) $ (0.04)
From discontinued operations - 0.15
---------- ----------
Total $ (0.01) $ 0.11
========== ==========
DILUTED INCOME (LOSS) PER SHARE
From continuing operations $ (0.01) $ (0.04)
From discontinued operations - 0.05
---------- ----------
Total $ (0.01) $ 0.01
========== ==========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
BASIC 17,569,410 10,945,338
DILUTED 17,569,410 10,945,338
NET INCOME (LOSS) TO COMMON STOCKHOLDERS: $ (186) $ 1,217
---------- ----------
EXCLUDING NON-CASH ITEMS:
Non-cash issuance of common stock and
warrants for services 46 64
Non-cash stock-based compensation for
employees and directors 315 180
Depreciation and amortization 17 22
Loss on derivative instrument liabilities - (26)
Interest expense (28) (26)
Gain on disposal of discontinued operations - 1,652
Preferred dividend (2) (23)
---------- ----------
NET INCOME (LOSS) TO COMMON STOCKHOLDERS EXCLUDING
NON-CASH ITEMS: $ 222 $ (94)
---------- ----------
Contact Information: Contact: Jack Eversull The Eversull Group 972-991-1672 972-991-7359 (fax) E-mail: Email Contact Web Site: www.atsi.net