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.