-- Increase in gross margin percentage to 8.0% for the quarter ended
October 31, 2008 vs. 6.8% for the quarter ended October 31, 2007
-- 10th consecutive quarter of positive cash flow from operations
-- 8th consecutive quarter of positive earnings per share
-- 47% Increase in available cash to $1,966,000 as of October 31, 2008
when compared to the year ended July 31, 2008
-- 144% or $613,000 Improvement in working capital as of October 31, 2008
when compared to the year ended July 31, 2008
-- 50% increase in stockholders' equity to $591,000 as of October 31,
2008 when compared to the year ended July 31, 2008
Arthur L. Smith, Chief Executive Officer for ATSI Communications, commented
on the results, "We are pleased with the significant improvements made to
our balance sheet during the quarter. Although our business has
traditionally been seasonably slow during this time of the year, the global
economic conditions have increased that impact. We believe the current
state of the U.S economy has also affected the immigrant community, thus
causing declines in international voice communications from this important
source of global voice traffic."
Mr. Smith added, "Operators in our sector are not immune to global market
forces, but we do believe that our already low cost of operations gives us
a competitive advantage as other companies and carriers seek to reduce
expenses by turning to low cost solutions for their global communication
needs. We are operationally and financially prepared to weather the
current recession and recently took steps to control expenses by reducing
headcount by 25%, and analyzing all fixed costs."
Total revenues were $7.1 million compared to $9.4 million in the first
quarter of FY2008. Gross profit was $570,000 during the quarter ended
October 31, 2008, compared to $642,000 for the same period last year. Net
income to common stockholders for the quarter ended October 31, 2008 was
$7,000 vs. net income to common stockholders of $35,000 for the quarter
ended October 31, 2007. Non-GAAP net income for the quarter ended October
31, 2008 was $32,000 vs. Non-GAAP net income of $185,000 for the quarter
ended October 31, 2007.
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with generally
accepted accounting principals, or GAAP, ATSI uses non-GAAP measures of
operating income (loss), net income (loss) and income (loss) per share,
which are adjustments from results based on GAAP to exclude non-cash
expenses, including non-cash stock-based compensation in accordance with
SFAS 123R. ATSI's management believes the non-GAAP financial information
provided in this release is useful to investors' understanding and
assessment of ATSI's on-going core operations and prospects for the future.
The presentation of this non-GAAP financial information is not intended to
be considered in isolation or as a substitute for results prepared in
accordance with GAAP. Management uses both GAAP and non-GAAP information in
evaluating and operating business internally and as such deemed it
important to provide all this information to investors.
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 loss before non-cash items.
ATSI Communications, Inc. operates through its wholly owned subsidiary,
Digerati Networks, Inc. Digerati Networks 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 NextPoint powered VoIP network, ATSI believes
it has clear advantages over its competition. 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.
The information in this news release includes certain forward-looking
statements that are based upon management's expectations and assumptions
about certain risks and uncertainties that can affect future events.
Although management believes these assumptions and expectations to be
reasonable on the date of this news release, these risks and uncertainties
may cause actual events to differ material from managements those contained
in this news release. The risks and uncertainties include, but are not
limited to, continuing as a going concern, availability and cost of our
present vendors and suppliers, and absence of any change in government
regulations or other costs associated with data transmission over the
Internet or termination of transmissions in foreign countries.
ATSI COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three months ended
October 31,
2008 2007
---------- ----------
OPERATING REVENUES:
VoIP services $ 7,136 $ 9,427
---------- ----------
Total operating revenues 7,136 9,427
---------- ----------
OPERATING EXPENSES:
Cost of services (exclusive of depreciation and
amortization, shown below) 6,566 8,785
Selling, general and administrative expense
(exclusive of legal and professional fees) 533 823
Legal and professional fees 67 89
Bad debt expense (recovery) (20) -
Depreciation and amortization expense 43 40
---------- ----------
Total operating expenses 7,189 9,737
---------- ----------
OPERATING LOSS (53) (310)
---------- ----------
OTHER INCOME (EXPENSE):
Gain on early extinguishment of debt 108 41
Investment loss (14) -
Interest income (expense) (34) (24)
---------- ----------
Total other income (expense), net 60 17
---------- ----------
NET INCOME (LOSS) 7 (293)
---------- ----------
LESS: PREFERRED DIVIDEND - (12)
ADD: REVERSAL OF PREVIOUSLY RECORDED PREFERRED
DIVIDEND - 340
---------- ----------
NET INCOME TO COMMON STOCKHOLDERS $ 7 $ 35
========== ==========
BASIC INCOME PER SHARE TO COMMON STOCKHOLDERS $ 0.00 $ 0.00
========== ==========
DILUTED INCOME PER SHARE TO COMMON STOCKHOLDERS $ 0.00 $ 0.00
========== ==========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 39,677,598 38,792,388
DILUTED COMMON SHARES OUTSTANDING 40,265,098 38,796,275
Unaudited
NET INCOME TO COMMON STOCKHOLDERS, as reported: $ 7 $ 35
---------- ----------
EXCLUDING NON-CASH ITEMS:
ADD:
Non-cash issuance of common stock and warrants
for services - 15
Non-cash stock-based compensation, employees 62 440
Bad debt expense (recovery) (20) -
Depreciation and amortization 43 40
Investment loss 14 -
Interest expense 34 24
MINUS:
Gain on early extinguishment of debt 108 41
Preferred dividend - 328
NET INCOME TO COMMON STOCKHOLDERS
---------- ----------
EXCLUDING NON-CASH ITEMS: $ 32 $ 185
---------- ----------
Contact Information: Contact: Jack Eversull The Eversull Group 972-378-7917 972-378-7981 (fax) E-mail: Web Site: www.atsi.net