NEW YORK, March 31 - Fusion (Amex: FSN), a provider of VoIP (Voice over Internet Protocol) services, today announced financial results for the year and fourth quarter ended December 31, 2005.
Recent highlights:
* Revenues for VoIP services to consumers and corporations increased 20.7%
over 2004 driven by growth of the efonica brand of VoIP services.
* Acquired Proprietary Directed SIP Peer-to-Peer Technology That Will
Enable Fusion to Enter the Free Service VoIP Market Segment.
* Completed Initial Infrastructure Build Out of Major Network Elements
and Have Beta Customers Using VoIP Service.
* Announced Partnership With AnchorFree To Market VoIP Services To Users
Of Large Wireless Internet Access Network.
For the year ended December 31, 2005, Fusion reported revenues of $49.4 million, which are consistent with revenues during the year ended December 31, 2004 of $49.6 million. For the year 2005, Fusion reported a net loss applicable to common stockholders of ($9.4) million or ($0.38) per share compared to a net loss applicable to common stockholders of ($5.4) million or ($0.32) per share for 2004. Operating loss for 2005 was ($9.1) million as compared to ($5.0) million in 2004.
For the year ended December 31, 2005, EBITDA (earnings before interest, taxes, depreciation and amortization) was ($8.3) million compared to EBITDA of ($1.5) million for the year 2004. Adjusted EBITDA, which excludes certain non-recurring items, specifically gain or loss on settlements of debt during 2005 and 2004, was ($8.2) million during 2005 compared to ($3.7) million during 2004.
For the fourth quarter of 2005, revenues were $9.1 million, representing a decrease of 11.5% over revenues of $10.2 million for the fourth quarter of 2004. The decrease was the result of continued pricing pressures in key markets for Carrier services, and a management decision to postpone the addition of new retail VoIP customers until the completion of our retail infrastructure and the launch of our new suite of products and services.
Selling, general and administrative costs increased from the fourth quarter of 2004 to the fourth quarter of 2005 by $0.4 million and by $2.1 million from the year ended 2004 to the year ended 2005. The increase in these expenses is primarily the result of costs incurred due to our status as a public company since February of 2005, and additional expenses associated with the development of new strategically significant infrastructure, new products and services, and the development of new operations in Turkey and Jamaica.
The Company reported a net loss for the fourth quarter of 2005 of ($2.7) million, or ($0.10) per share, compared with a net loss applicable to common stockholders of ($2.8) million, or ($0.16) per share, for the fourth quarter of 2004.
For the fourth quarter of 2005, EBITDA (earnings before interest, taxes, depreciation and amortization) was ($2.7) million compared to EBITDA of ($2.0) million in the fourth quarter of 2004. Adjusted EBITDA, which excludes certain non-recurring items, specifically gain or loss on settlements of debt during 2005 and 2004, was ($2.5) million during the fourth quarter of 2005, compared to Adjusted EBITDA of ($2.0) million during the fourth quarter of 2004.
Commenting on the results, Matthew Rosen, President and Chief Executive Officer of Fusion, said, "2005 was a year of building for Fusion, as we concentrated our efforts on designing and developing our VoIP infrastructure, expanding our business development pipeline and preparing for a global launch of our new VoIP services. Fusion's VoIP infrastructure improvements include major back office billing, reporting, monitoring and management and information systems enhancements. We have completed the infrastructure build out of the major network elements and have live beta customers using the service. We are currently in the process of finalizing the development, integration and testing of our new services. We believe that this represents a major milestone for Fusion and positions Fusion for future growth."
As of December 31, 2005, the Company had cash and cash equivalents of $14.8 million compared to $4.4 million as of December 31, 2004. The significant increase in Fusion's cash balance as of December 31, 2005 is a result of the approximately $23.3 million in net proceeds from the Company's public offering during February 2005. Of these proceeds, approximately $7.8 million has been used to repay debt and accrued interest, to purchase property and equipment, for the acquisition of international joint ventures, and to fund operations.
The Company's goodwill and intangibles of approximately $10.0 million as of December 31, 2005, primarily relates to Fusion's acquisition of the remaining 49.8% minority interest in its Efonica joint venture.
As of December 31, 2005, the Company's debt balance decreased to approximately $1.6 million (consisting primarily of $1.4 million in capital and equipment financing lease obligations) from approximately $5.7 million as of December 31, 2004. This reduction in debt and the conversion of our Series C Preferred Stock to common stock in February 2005, resulted in a decrease in interest expense from $2.2 million during 2004 to $0.4 million during 2005.
Stockholders' Equity at December 31, 2005 was $17.7 million as compared to a deficit of ($13.3) million as of December 31, 2004.
Mr. Rosen continued, "We are now aggressively preparing for the launch of new products and services that we expect to roll-out in the second quarter of 2006, including product and service offerings that, as of today, we are not aware exist in the global VoIP marketplace. We are very excited about these efforts and believe the introduction of this new suite of products and services will greatly enhance Fusion's position in the global VoIP marketplace. We believe that the VoIP market presents a tremendous opportunity, particularly in the emerging markets that Fusion is targeting. With the combination of our VoIP solutions, and proven and experienced management team, we are confident in Fusion's ability to capitalize on the opportunities that lie ahead."
Use of Non-GAAP Financial Measures:
The Company believes that EBITDA (earnings before interest, taxes, depreciation and amortization) is useful to investors because it is commonly used in the communications industry to analyze companies on the basis of operating performance and leverage. The Company also believes that EBITDA provides investors with a measure of the Company's operational and financial progress that corresponds with the measurements used by management as a basis for allocating resources and making other operating decisions. Adjusted EBITDA provides an adjusted view of EBITDA that takes into account certain significant nonrecurring transactions, such as impairment losses associated with divested businesses and forgiveness of debt, which vary significantly between periods and are not recurring in nature. Although the Company uses Adjusted EBITDA as one of several financial measures to assess its operating performance, its use is limited as it excludes certain significant operating expenses. EBITDA and Adjusted EBITDA are not intended to represent cash flows for the period presented, nor have they been presented as an alternative to operating income or as an indicator of operating performance and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with Generally Accepted Accounting Principles (GAAP). Consistent with the Securities Exchange Commission Regulation G, the non-GAAP measures in this press release have been reconciled to the nearest GAAP measure, which can be viewed under the heading "Reconciliation of Net Loss to Adjusted EBITDA" in this press release.
Earnings Conference call
The Company will host a conference call to discuss its financial results at 1:00 p.m. EST on March 31, 2005. The call can be accessed by dialing (800) 289-0494. A replay of the call will be available until April 7, 2005. To listen to the replay, please call (888) 203-1112 (domestic). To access the replay, users will need to enter the following passcode: 8345134. The call will be available live on the Internet at http://www.fusiontel.com. The online archive of the web cast will be available for one year following the call.
About Fusion:
Fusion provides its efonica branded VoIP (Voice over Internet Protocol), Internet access, and other Internet services to, from, in and between emerging markets in Asia, the Middle East, Africa, Latin America and the Caribbean. Fusion currently provides services to consumers, corporations, international carriers, government entities, and Internet service providers in over 45 countries. For more information please go to: http://www.fusiontel.com or http://www.efonica.com.
(Logo: http://www.newscom.com/cgi-bin/prnh/20050705/NYTU073LOGO )
Statements in this Press Release that are not purely historical facts, including statements regarding Fusion's beliefs, expectations, intentions or strategies for the future, may be "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the plans, intentions and expectations reflected in or suggested by the forward-looking statements. Such risks and uncertainties include, among others, introduction of products in a timely fashion, market acceptance of new products, cost increases, fluctuations in and obsolescence of inventory, price and product competition, availability of labor and materials, development of new third-party products and techniques that render Fusion's products obsolete, delays in obtaining regulatory approvals, potential product recalls and litigation. Risk factors, cautionary statements and other conditions which could cause Fusion's actual results to differ from management's current expectations are contained in Fusion's filings with the Securities and Exchange Commission and available through http://www.sec.gov.
FUSION TELECOMMUNICATIONS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended Fiscal Year Ended
December 31, December 31,
2005 2004 2005 2004
Revenues $9,051,857 $10,229,173 $49,364,542 $49,557,973
Operating expenses:
Cost of revenues 8,067,425 9,130,426 45,048,917 42,927,994
Depreciation and
amortization 282,092 469,205 1,510,172 1,804,184
Selling, general and
administrative
expenses 3,349,847 2,956,040 11,939,001 9,804,405
Total operating
expenses 11,699,364 12,555,671 58,498,090 54,536,583
Operating loss (2,647,507) (2,326,498) (9,133,548) (4,978,610)
Other income (expense)
Interest income
(expense), net 116,507 (851,801) 39,360 (2,228,060)
Gain (loss) on
settlements of debt (133,806) - (75,927) 2,174,530
Loss from investment
in Estel (49,850) (147,398) (541,876) (519,728)
Other (190,912) (48,271) (195,346) (15,965)
Minority interests 56,196 33,088 175,353 (7,654)
Total other
income (expense) (201,865) (1,014,382) (598,436) (596,877)
Loss from continuing
operations (2,849,372) (3,340,880) (9,731,984) (5,575,487)
Income from
discontinued
operations 161,910 537,423 336,910 545,215
Net loss $(2,687,462) $(2,803,457) $(9,395,074) $(5,030,272)
Losses applicable to
common stockholders
Loss from continuing
operations $(2,849,372) $(3,340,880) $(9,731,984) $(5,575,487)
Preferred stock
dividends - - - (385,918)
Net loss applicable to
common stockholders
from continuing
operations (2,849,372) (3,340,880) (9,731,984) (5,961,405)
Income from
discontinued
operations 161,910 537,423 336,910 545,215
Net loss applicable to
common stockholders $(2,687,462) $(2,803,457) $(9,395,074) $(5,416,190)
Basic and diluted net
loss per common
share:
Loss from continuing
operations $(0.11) $(0.19) $(0.39) $(0.35)
Income from
discontinued
operations 0.01 0.03 0.01 0.03
Net loss applicable to
common stockholders $(0.10) $(0.16) $(0.38) $(0.32)
Weighted average
shares outstanding
Basic and diluted 26,179,344 17,479,993 24,965,080 16,707,114
FUSION TELECOMMUNICATIONS INTERNATIONAL, INC. AND
SUBSIDIARIES
Balance Sheet Data
December 31,
2005 2004
ASSETS
Current assets
Cash and cash equivalents $14,790,504 $4,368,726
Accounts receivable, net of
allowance of approximately $414,000 2,952,760 3,145,535
Restricted cash - 145,000
Prepaid expenses and other current
assets 1,242,266 889,761
Total current assets 18,985,530 8,549,022
Property and equipment, net 4,516,271 3,271,474
Other assets
Security deposits 331,891 902,028
Restricted cash 218,176 235,276
Goodwill 5,118,640 -
Intangible assets, net 4,861,012 -
Other assets 354,259 704,317
Total other assets 10,883,978 1,841,621
TOTAL ASSETS $34,385,779 $13,662,117
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current Liabilities
Long-term debt, related parties,
current portion $- $1,739,025
Long-term debt, current portion 150,000 2,660,281
Capital and equipment financing
lease obligations, current portion 1,419,965 1,131,830
Accounts payable and accrued
expenses 9,269,341 10,274,688
Investment in Estel 771,182 140,821
Liabilities of discontinued
operations 620,809 1,116,090
Total current liabilities 12,231,297 17,062,735
Long-term liabilities
Capital and equipment financing
lease obligations, net of current
portion 7,650 156,495
Other long-term liabilities 4,357,497 -
Preferred Stock, Series C, subject
to mandatory redemption - 9,716,026
Total long-term liabilities 4,365,147 9,872,521
Minority interests 67,694 16,890
Stockholders' equity (deficit)
Common stock 104,394 -
Common stock, Class A 157,400 174,800
Capital in excess of par value 105,447,041 65,127,291
Accumulated deficit (87,987,194) (78,592,120)
Total stockholders' equity
(deficit) 17,721,641 (13,290,029)
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $34,385,779 $13,662,117
FUSION TELECOMMUNICATIONS INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
Three Months Ended Fiscal Year Ended
December 31, December 31,
2005 2004 2005 2004
Net loss $(2,687,462) $(2,803,457) $(9,395,074) $(5,030,272)
Income from
discontinued
operations (161,910) (537,423) (336,910) (545,215)
Loss from continuing
operations (2,849,372) (3,340,880) (9,731,984) (5,575,487)
Adjustments:
Interest (income)
expense, net (116,507) 851,801 (39,360) 2,228,060
Depreciation and
amortization 282,092 469,205 1,510,172 1,804,184
EBITDA (2,683,787) (2,019,874) (8,261,172) (1,543,243)
Adjustments:
(Gain) loss on
settlements of debt 133,806 - 75,927 (2,174,530)
Adjusted EBITDA $(2,549,981) $(2,019,874) $(8,185,245) $(3,717,773)
