eLEC Reports Fourth Quarter and Year End Earnings


WHITE PLAINS, N.Y., March 1, 2004 (PRIMEZONE) -- eLEC Communications Corp. (OTCBB:ELEC), a provider of local and long distance telephone service, today announced financial results for the fourth quarter and year ended November 30, 2003. eLEC reported net income for the fourth fiscal quarter of 2003 of $6,874,116, or $0.42 per share, as compared to a net loss of ($839,803), or ($0.05) per share, for the fourth fiscal quarter of 2002. Net income for the year ended November 30, 2003 amounted to $8,323,211, or $0.53 per share, as compared to a net loss of ($3,319,387), or ($0.21) per share, for the year ended November 30, 2002.

Included in the results of operations in the fourth quarter of fiscal 2003 are a gain on the sale of a former operating subsidiary, Essex Communications, Inc., of approximately $7,314,000 and a gain on the sale of a building of approximately $546,000.

Revenues for the fourth quarter of 2003 amounted to $1,791,670, an increase of $515,781, compared to 2003 third quarter revenues of $1,275,889, representing quarter-over-quarter growth of 40%.

Fourth quarter revenues in fiscal 2003 decreased by $645,209, or 26%, in comparison to fourth quarter revenues in fiscal 2002 of $2,436,879. The decrease in quarterly revenues in the year-to-year comparison was due to the sale of approximately 21,000 local access lines in connection with the sale of certain assets of Essex at December 31, 2002, which generated more than 99% of the company's revenues for fiscal 2002. Since the sale, eLEC has acquired new customers representing approximately 12,000 local access lines, which generated the fourth quarter revenues in fiscal 2003 of $1,791,670.

eLEC's CEO, Paul Riss, stated, "On a year-to-year comparison, we have emerged as a significantly stronger company as a result of the sale of Essex and virtually our entire customer base during fiscal 2003. We have reported liabilities of $3,501,656 at November 30, 2003, compared to liabilities of $15,046,973 at November 30, 2002. In addition to the reduction in liabilities, the equity section of our balance sheet has improved by more than $8 million. The lines we sold generated a gross margin of 37.0% in fiscal 2002, and we have replaced those lines with our current customer base, which generated a gross margin of 50.3% in fiscal 2003. Furthermore, we are now achieving this higher gross margin with a much lower overhead structure."

"In looking ahead to the first quarter of fiscal 2004, for the first time in our CLEC operating history, we are now generating approximately enough cash from operations to cover our cost of sales and operating overhead," continued Riss. "We have no current borrowings from a bank facility and we no longer have a mortgage payable. Our cash collections of approximately $650,000 a month in the first quarter of fiscal 2004 are enough to pay for our monthly operating expenses plus a modest amount of acquisition costs for new customers. Our existing sales agents have not yet been able to generate the line growth that we are seeking to achieve in 2004, and we have consequently hired an additional telemarketing agent and implemented a direct marketing program. We also plan to aggressively promote a customer referral program in March to further accelerate our growth rate."

eLEC Communications Corp. is a Competitive Local Exchange Carrier that offers local and long distance calling plans to small business and residential customers. We sell under the names of New Rochelle Telephone and eLEC Communications, and we deliver telephone services at a price savings and with quality customer service. For more information on our products and offerings, visit our web site at www.elec.net.



                  eLEC Communications Corp. and Subsidiaries
                 Condensed Consolidated Statements of Operations

                                                     (Unaudited)
                              For the                  For the 
                             Year Ended           Three Months Ended
                              Nov. 30,                 Nov. 30,
                          2003        2002        2003        2002
                      ----------- ----------- ----------- -----------


 Revenues             $ 5,568,004 $14,242,079 $ 1,791,670 $ 2,436,879
                      ----------- ----------- ----------- -----------

 Costs and expenses:
  Costs of services     2,765,811   8,976,201     779,085   1,186,330
  Selling, general
   and administrative   5,731,843   9,485,592   1,890,642   2,198,737
  Depreciation and
   amortization            88,460     261,436       7,610      80,890
                      ----------- ----------- ----------- -----------
   Total costs and
    expenses            8,586,114  18,723,229   2,677,337   3,465,957
                      ----------- ----------- ----------- -----------

 Loss from operations  (3,018,110) (4,481,150)   (885,667) (1,029,078)
                      ----------- ----------- ----------- -----------

 Other income
  (expense):
 Interest expense        (174,800)   (437,119)    (69,291)    (50,933)
 Interest and other
  income                  163,528      83,588      75,465     105,825
 Gain on sale of
  assets, net             480,574          --     480,574          --
 Gain on
  extinguishment of
  debt                         --      61,025          --      61,025
 Gain on sale of
  investment
  securities and
  other investments       121,687   1,454,269          --      73,358
 Gain on sale of
  subsidiary           10,825,332          --   7,314,035          -- 
 Total other income   ----------- ----------- ----------- -----------
  (expense)            11,416,321   1,161,763   7,800,783     189,275
                      ----------- ----------- ----------- -----------
 Income (loss) before 
  taxes                 8,398,211  (3,319,387)  6,915,116    (839,803)

 Provision for taxes       75,000          --      41,000          -- 

 Net income (loss)    $ 8,323,211 ($3,319,387) $ 6,874,116 ($ 839,803)
                      =========== ===========  =========== ===========

 Basic earnings (loss)
  per share           $      0.53 ($     0.21) $      0.42 ($    0.05)
                      =========== ===========  =========== ===========
 Diluted earnings
  (loss) per share    $      0.53 ($     0.21) $      0.42 ($    0.05)
                      =========== ===========  =========== ===========

 Weighted average
  number of common
  shares
  outstanding
    Basic              15,771,219  15,607,183   16,179,952  15,608,282
                      =========== ===========  =========== ===========
    Diluted            15,841,941  15,607,183   16,382,999  15,608,282
                      =========== ===========  =========== ===========



                        eLEC Communications Corp. and Subsidiaries
                                 Consolidated Balance Sheets

                              November 30,       November 30,
                                  2003               2002
                                  ----               ----
 Current assets

   Cash & cash equivalents    $    669,022    $    938,528
   Accounts receivable,
    net of allowance of
    $ 170,143 and $14,666
    in 2003 and 2002               704,649         226,324
   Investment securities                --          80,231
   Other investments                    --         137,558
   Prepaid and other
     current assets                182,430         144,829
   Due from related party            7,723          57,909
   Assets assumed in sale               --       1,102,103
                              ------------    ------------
      Total current assets       1,563,824       2,687,482
                              ------------    ------------
 Property, plant and
   equipment, net                   25,391       1,826,835
                              ------------    ------------
 Other assets                       48,000         371,036
                              ------------    ------------
      Total assets            $  1,637,215    $  4,885,353
                              ============    ============

 Current liabilities

   Short-term borrowings      $    150,000    $    150,000
   Current portion of long-
     term debt and capital
     lease obligations              39,360          57,379
   Accounts payable and
     accrued expenses            2,474,270       3,323,593
   Taxes payable                   406,097              --
   Due to related party            310,791         289,614
   Liabilities assumed in
     sale                               --      10,081,382
   Deferred revenue                121,138              --                              ------------    ------------
      Total current
        liabilities              3,501,656      13,901,968
                              ------------    ------------

 Long-term debt and capital
   lease obligations, less
   current maturities                   --       1,145,005
                              ------------    ------------

 Stockholders' equity
   deficiency
   Preferred stock                      --               2
   Common stock 16,265,282
     and 15,619,282
     shares issued in 2003
     and 2002                    1,626,528       1,561,928
   Capital in excess of par     25,650,634      25,671,342
   Deficit                     (29,114,103)    (37,437,314)
   Treasury stock                  (27,500)        (27,500)
   Accumulated other
     comprehensive income,
     unrealized gain on
     securities                         --          69,922
                              ------------    ------------
      Total stockholders'
        equity deficiency       (1,864,441)    (10,161,620)
                              ------------    ------------
 Total liabilities and
   stockholders' equity
   deficiency                 $  1,637,215    $  4,885,353
                              ============    ============

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, 2003, and any subsequent SEC filings.



            

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