Record Revenue, Positive EBITDA and Operating Income Achieved in 4th Quarter -- Expects Continued Improvement in Fiscal 2007
-- 4 consecutive quarters of record revenue since the Company's
reincorporation:
+ 176% growth in 1st quarter
+ 94% growth in 2nd quarter
+ 128% growth in 3rd quarter
+ 188% growth in 4th quarter
-- Achieving positive cash flow and operational profitability in the 4th
quarter
-- Net reduction of $2.1 million in liabilities
-- Formation of new subsidiary, Digerati Networks, to showcase ATSI's
growing VoIP business
-- Expansion of Company's VoIP network by 65% with NexTone Communications
to support future products and growth
Arthur L. Smith, CEO of ATSI, stated, "We had an incredible year that ended
with the Company producing record revenues, positive EBITDA, and positive
Operating Income for the 4th quarter ended July 31, 2006. This trend has
continued into the 1st quarter of our current fiscal year with revenues
expected to reach $6.4 million and resulting in the 9th consecutive quarter
of record revenues since our reincorporation. We also anticipate
additional balance sheet improvements over the next 2 quarters." Mr. Smith
added, "I commend our team for successfully executing on every corporate
and operational objective we set at the beginning of FY2006. Our
operations team, led by Ruben Caraveo, did a tremendous job by exceeding
VoIP revenue expectations during every quarter of FY2006. Although we fully
expect FY2007 to be a record year in terms of revenue, we are shifting
efforts towards improving our gross profit while maintaining SG&A at or
near current levels. The anticipated result is increased cash flow from
operations that will subsequently increase our cash reserves, improve our
balance sheet, and enhance our ability to internally finance our growth."
Excluding non-cash items, net loss to common stockholders for the year
ended July 31, 2006 was $63,000 vs. a net loss to common stockholders of
$587,000 for the previous year ended July 31, 2005. For FY2006 the Company
incurred $443,000 in non-cash compensation and warrant expense. Additional
non-cash items incurred during the year include depreciation and
amortization expense, interest expense, and preferred dividend expense.
The Company also realized a non-cash gain of $1.7 million on disposal of
operations that were discontinued.
Net loss 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 loss 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 per share amounts)
Years Ended July 31,
------------ ------------
2006 2005
------------ ------------
OPERATING REVENUES:
Carrier services $14,674 $5,782
Network services 22 229
------------ ------------
Total operating revenues 14,696 6,011
OPERATING EXPENSES:
Cost of services (exclusive of depreciation
and amortization, shown below) 13,869 5,664
Selling, general and administrative expense
(exclusive of legal and professional fees,
non-cash stock compensation to employees
and warrants for services, shown below) 695 517
Legal and professional fees 195 417
Non-cash issuance of common stock and
warrants for services 176 618
Non-cash stock-based compensation,
employees 267 474
Bad debt expense - 4
Depreciation and amortization expense 92 112
------------ ------------
Total operating expenses 15,294 7,806
------------ ------------
OPERATING (LOSS) (598) (1,795)
------------ ------------
OTHER INCOME (EXPENSE):
Other income - 27
Gain on disposal of investment - 12,104
Loss on derivative instrument liabilities (6) (287)
Debt forgiveness income 50 460
Interest expense (151) (102)
------------ ------------
Total other income (expense), net (107) 12,202
------------ ------------
NET LOSS FROM CONTINUING OPERATIONS (705) 10,407
------------ ------------
DISCONTINUED OPERATIONS
Gain on disposal of discontinued operations 1,652 -
------------ ------------
NET INCOME FROM DISCONTINUED OPERATIONS 1,652 -
------------ ------------
NET INCOME (LOSS): $947 $10,407
============ ============
LESS: PREFERRED DIVIDENDS (959) (639)
------------ ------------
NET INCOME (LOSS) TO COMMON STOCKHOLDERS ($12) $9,768
============ ============
BASIC INCOME (LOSS) PER SHARE $0.00 $1.37
============ ============
From continuing operations ($0.12) $1.37
From discontinued operations $0.12 $0.00
DILUTED INCOME (LOSS) PER SHARE $0.00 $0.42
============ ============
From continuing operations ($0.12) $0.42
From discontinued operations $0.12 $0.00
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 13,516,342 7,128,847
--------------------------------------------------------------------------
NET INCOME (LOSS) TO COMMON STOCKHOLDERS: ($12) $9,768
------------ ------------
EXCLUDING NON-CASH ITEMS:
Non-cash issuance of common stock and
warrants for services 176 618
Non-cash stock-based compensation,
employees 267 474
Bad debt - 4
Depreciation and amortization 92 112
Other Income - 27
Gain on disposal of investment - 12,104
Loss on derivative instrument liabilities (6) (287)
Debt forgiveness income 50 460
Interest expense (151) (102)
Gain on disposal of discontinued
operations 1,652 -
Preferred dividends (959) (639)
------------ ------------
NET INCOME (LOSS) TO COMMON STOCKHOLDERS
EXCLUDING NON-CASH ITEMS: ($63) ($587)
------------ ------------
Contact Information: Contact: Jack Eversull The Eversull Group 972-991-1672 972-991-7359 (fax) E-mail: Email Contact Web Site: www.atsi.net