SAN ANTONIO, Texas, June 14, 2006 (PRIMEZONE) -- ATSI Communications, Inc. (OTCBB:ATSX) today announced results for the three months ended April 30, 2006. Revenues for the 3rd quarter totaled $4,091,000, a 128% increase over the previous year's 3rd quarter ended April 30, 2005. The increase in revenue for the quarter resulted in the 7th consecutive quarter of record revenues for the Company since ATSI's reincorporation in May 2004. When adjusted for non-cash expenses and non-recurring legal and professional fees, the net loss for the three months ended April 30, 2006 was $20,000 vs. a net loss before non-cash items of $43,000 for the three months ended April 30, 2005. The non-recurring legal and professional fees include $44,000 in expenses related to the Company's derivative accounting analysis and review of amended financial statements for prior periods impacted by the analysis.
In addition to record revenues for the 3rd quarter, recent achievements and highlights include:
-- The Company processed over 16 million completed calls that resulted in a record volume of 65 million VoIP minutes of use ("MOU") during the quarter through its NexTone-powered VoIP network.
-- Gross profit of $192,000 for the three months ended April 30, 2006 represents a 40% improvement over gross profit of $137,900 for the three months ended April 30, 2005.
-- Record revenue of $1.7 million and gross profit of $102,000 for the month of May 2006.
Arthur L. Smith, CEO of ATSI stated, "The growth in the 3rd quarter demonstrates that we have continued the successful execution of our business plan. This positive trend has been maintained into the 4th quarter as evidenced by record revenues and gross profit for the month of May 2006. The anticipated gross profit improvement combined with an expected decrease in SG&A expenses for the 4th quarter vs. those in the 3rd quarter should result in positive EBITDA for our final quarter of the fiscal year. We do not foresee any significant out of period or non-recurring SG&A expenses for the three months ended July 31, 2006. We look forward to communicating future financial improvements and accomplishments for FY2006."
Including non-cash and non-recurring items, net loss applicable to common stockholders for the three months ended April 30, 2006 was $80,000 vs. a net income applicable to common stockholders of $12.1 million for the three months ended January 31, 2005. For the three months ended April 30, 2005, the Company recorded a $12.1 million non-cash gain on disposal of investment for the elimination of liabilities from its balance sheet related to the disposal of two subsidiaries that ceased operations in January 2003. For the three months ended April 30, 2006, ATSI incurred $115,000 in non-cash expenses that includes stock-based compensation for services, interest, depreciation, amortization, and preferred dividend expense. Additionally, during the three months ended April 30, 2006, ATSI recognized $99,000 in non-cash income that includes a gain on derivative instrument liabilities and debt forgiveness income.
Net loss before non-cash and non-recurring 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 and non-recurring 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 include 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 per share amounts)
(unaudited)
Three months ended
April 30,
-----------------------
2006 2005
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OPERATING REVENUES:
Carrier services $ 4,086 $ 1,727
Network services 5 70
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Total operating revenues 4,091 1,797
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OPERATING EXPENSES:
Cost of services (exclusive of
depreciation and amortization, shown below) 3,899 1,660
Selling, general and administrative
expense (exclusive of legal and
professional fees, non cash stock
compensation to employees and warrants
for services, shown below) 184 139
Legal and professional fees 72 41
Non-cash issuance of common stock and
warrants for services 25 19
Non-cash stock-based compensation,
employees -- --
Bad debt -- --
Depreciation and amortization 23 32
---------- ----------
Total operating expenses 4,203 1,891
---------- ----------
OPERATING (LOSS) (112) (94)
---------- ----------
OTHER INCOME (EXPENSE):
Other income (expense) -- 9
Gain on disposal of investment -- 12,104
Gain (loss) on derivative instrument
liabilities 88 135
Debt forgiveness income 11 --
Interest expense (26) 11
---------- ----------
Total other income (expense), net 73 12,259
---------- ----------
NET (INCOME) LOSS FROM CONTINUING OPERATIONS (39) 12,165
---------- ----------
DISCONTINUED OPERATIONS
Gain on disposal of discontinued operations -- --
---------- ----------
NET INCOME FROM DISCONTINUED OPERATIONS -- --
---------- ----------
NET INCOME (LOSS): $ (39) $ 12,165
========== ==========
LESS: PREFERRED DIVIDENDS (41) (38)
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NET INCOME (LOSS) TO COMMON STOCKHOLDERS $ (80) $ 12,127
========== ==========
BASIC INCOME (LOSS) PER SHARE $ (0.01) $ 1.39
========== ==========
From continuing operations $ (0.01) $ 1.39
From discontinued operations $ 0.00 $ 0.00
DILUTED INCOME (LOSS) PER SHARE $ (0.01) $ 0.44
========== ==========
From continuing operations $ (0.01) $ 0.44
From discontinued operations $ 0.00 $ 0.00
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 14,819,277 8,719,307
========== ==========
See accompanying summary of accounting policies and notes
to financial statements.
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NET INCOME (LOSS) TO COMMON STOCKHOLDERS: $ (80) $ 12,127
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EXCLUDING NON-CASH & NON-RECURRING ITEMS:
Legal and professional fees (non-recurring) 44 --
Non-cash issuance of common stock and warrants
for services 25 19
Non-cash stock-based compensation, employees -- --
Bad debt -- --
Depreciation and amortization 23 32
Other income (expense) -- 9
Gain on disposal of investment -- 12,104
Gain (loss) on derivative instrument liabilities 88 135
Debt forgiveness income 11 --
Interest expense (26) 11
Preferred dividends (41) (38)
NET INCOME (LOSS) TO COMMON STOCKHOLDERS: ------ --------
EXCLUDING NON-CASH & NON-RECURRING ITEMS: $ (20) $ (43)
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