-- 217% improvement in gross profit for the three months ended January
31, 2007 vs. the three months ended January 31, 2006 ($564,000 vs. $178,000
respectively).
-- $168,000 in positive cash flow from operations.
-- The Company processed a record volume of 115 million VoIP minutes of
use ("MOU") during the quarter through its NexTone powered VoIP network.
Arthur L. Smith, CEO of ATSI, stated, "The Company has achieved a key
metric in its development by producing bottom line profits from recurring
operations for the first time. Profitability, combined with its consistent
production of positive cash flow from operations, positions ATSI to finance
its growth and strategic opportunities that meet the Company's future goals
and objectives." Mr. Smith added, "Upon completing a successful 2nd
quarter, management promptly initiated activities in the 3rd quarter to
support continued growth, improve the Company's balance sheet, and increase
cash reserves. We look forward to communicating the result of these
initiatives in the near future."
Adjusted for non-cash items, net income for the three months ended January
31, 2007 was $168,000 vs. a net loss before non-cash items of $35,000 for
the three months ended January 31, 2006. Non-cash items include long-term
incentive compensation for employees and directors that reflects the
Company's adoption of SFAS 123R accounting for the amortization expense of
stock option grants. Additional non-cash items incurred during the quarter
include interest, 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
January 31,
2007 2006
------------ ------------
OPERATING REVENUES:
Carrier services $ 7,041 $ 2,913
Communication services 27 29
Network services 5 5
------------ ------------
Total operating revenues 7,073 2,947
------------ ------------
OPERATING EXPENSES:
Cost of services (exclusive of depreciation and
amortization, shown below) 6,509 2,769
Selling, general and administrative
expense (exclusive of legal and
professional fees) 380 224
Legal and professional fees 59 55
Bad debt expense 25 -
Depreciation and amortization expense 21 26
------------ ------------
Total operating expenses 6,994 3,074
------------ ------------
OPERATING INCOME (LOSS) 79 (127)
------------ ------------
OTHER INCOME (EXPENSE):
Loss on derivative instrument liabilities - (69)
Debt forgiveness income - 38
Interest expense (41) (28)
------------ ------------
Total other income (expense), net (41) (59)
------------ ------------
INCOME (LOSS) FROM CONTINUING OPERATIONS 38 (186)
------------ ------------
DISCONTINUED OPERATIONS
Gain on disposal of discontinued
operations - -
------------ ------------
INCOME FROM DISCONTINUED OPERATIONS - -
------------ ------------
NET INCOME (LOSS) $ 38 $ (186)
LESS: PREFERRED DIVIDEND (19) (36)
ADD: REVERSAL OF PREVIOUSLY RECORDED PREFERRED
DIVIDEND 211 -
------------ ------------
NET INCOME (LOSS) TO COMMON STOCKHOLDERS $ 230 $ (222)
============ ============
BASIC INCOME (LOSS) PER SHARE:
From continuing operations $ 0.01 $ (0.02)
From discontinued operations - -
------------ ------------
Total $ 0.01 $ (0.02)
============ ============
DILUTED INCOME (LOSS) PER SHARE
From continuing operations $ 0.01 $ (0.02)
From discontinued operations - -
------------ ------------
Total $ 0.01 $ (0.02)
============ ============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
BASIC 19,962,710 12,927,793
DILUTED 32,420,096 12,927,793
NET INCOME (LOSS) TO COMMON STOCKHOLDERS: $ 230 $ (222)
------------ ------------
EXCLUDING NON-CASH ITEMS:
ADD:
Non-cash issuance of common stock and
warrants for services 13 66
Non-cash stock-based compensation,
employees 55 -
Depreciation and amortization 21 26
Loss on derivative instrument liabilities - 69
Interest expense 41 28
MINUS:
Debt forgiveness income - 38
Gain on disposal of discontinued
operations - -
Preferred dividend 192 (36)
NET INCOME (LOSS) TO COMMON STOCKHOLDERS:
------------ ------------
EXCLUDING NON-CASH ITEMS: $ 168 $ (35)
------------ ------------
Contact Information: Contact: Jack Eversull The Eversull Group 972-991-1672 972-991-7359 (fax) E-mail: Email Contact Web Site: www.atsi.net