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| 8-K - Digerati Technologies, Inc. | v205842_8k.htm |
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NEWS RELEASE
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Exhibit 99.1
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Contact:
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Jack
Eversull
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The
Eversull Group
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972-571-1624
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214-469-2361
(fax)
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E-mail:
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jack@theeversullgroup.com
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Web Site:
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www.atsi.net
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ATSI
Reports 1st Quarter Financial Results
-
Reports Positive Cash Flow from Operations;
87%
Improvement in Working Capital -
San Antonio, Texas – December 15, 2010 – ATSI
Communications, Inc. (OTCBB: ATSX) (OTCQB: ATSX) today announced financial
results for the first fiscal quarter ended October 31,
2010. The Company reported revenue of $4.25 million and gross
profit of $387,000 for the quarter vs. $4.9 million in revenue and $280,000 in
gross profit for the same period in its previous fiscal year. This
represents a year-over-year improvement of 38% in gross profit. In
addition to increased gross profit, the Company produced positive cash flow from
operations for the first quarter. Adjusted for non-cash items,
non-GAAP net income for the first fiscal quarter was $14,000, a 108% improvement
over a non-GAAP net loss of $172,000 for the first fiscal quarter of its
previous fiscal year. The Company incurred $332,000 in non-cash
expenses during the quarter ended October 31, 2010 that included depreciation,
amortization, interest, and stock-based compensation. The Company also reported
a significant improvement to its working capital ratio. The Company's
working capital position improved by $515,000 or 87% when compared to the
immediately preceding quarter ended July 31, 2010.
Arthur L.
Smith, CEO of ATSI, stated, “We are pleased to report the significant
improvements in gross profit and working capital for the period. We
continued to produce positive cash flow from operations while investing
resources to expand our cloud-based VoIP product line. The greater
margins of our cloud-based services contributed approximately 10% of our gross
profit for the first quarter. We have high expectations for this
product line and anticipate its gross profit contribution to increase
significantly over the next 12 months."
Market
demand for the Company's cloud telephony services continues to be driven by
the migration from traditional telephone service to VoIP phone systems. The
recent growth in cloud-based VoIP services is primarily due to:
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ü
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Demand
for a lower cost alternative to traditional
telephone service;
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ü
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Improved
quality and reliability of VoIP calls due to technological advances,
increased network development and greater bandwidth capacity;
and
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ü
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New
product innovations that can be provided by VoIP services providers,
but not currently offered by traditional
telephone companies.
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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 ongoing 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 (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 income (loss) reported in accordance with GAAP to net
income (loss) before non-cash items.
ATSI
Communications, Inc., through its wholly owned subsidiary, Digerati Networks,
Inc., has emerged as a premier provider of global VoIP services serving rapidly
expanding markets in Asia, Europe, the Middle East, and Latin
America. Over the course of a decade, Digerati has established over
200 global partnerships with foreign carriers and emerging operators in more
than 50 countries. In Mexico, the Company's minority-owned subsidiary
operates under a 30-year government issued telecommunications
license. In addition to global VoIP transport, Digerati
provides cloud-based VoIP applications including a fully hosted IP/PBX service,
SIP trunking, and customized VoIP solutions for specialized applications. The Company's customer
base includes traditional telecommunication carriers, mobile
operators, VoIP service providers, calling card companies, Internet service
providers, and data service integrators.
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 from 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.
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ATSI
COMMUNICATIONS, INC. AND SUBSIDIARIES
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CONSOLIDATED
STATEMENTS OF OPERATIONS
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(In
thousands, except per share amounts)
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Three
months ended October 31,
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2010
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2009
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OPERATING
REVENUES:
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VoIP
services
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$ | 4,252 | $ | 4,985 | ||||
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Total
operating revenues
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4,252 | 4,985 | ||||||
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OPERATING
EXPENSES:
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Cost
of services (exclusive of depreciation and amortization)
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3,865 | 4,705 | ||||||
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Selling,
general and administrative expense (exclusive of legal and professional
fees)
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577 | 368 | ||||||
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Legal
and professional fees
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56 | 98 | ||||||
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Depreciation
and amortization expense
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25 | 44 | ||||||
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Total
operating expenses
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4,523 | 5,215 | ||||||
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OPERATING
LOSS
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(271 | ) | (230 | ) | ||||
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OTHER
INCOME (EXPENSE):
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Interest
expense
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(47 | ) | (43 | ) | ||||
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Total
other expense
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(47 | ) | (43 | ) | ||||
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NET
LOSS
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(318 | ) | (273 | ) | ||||
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NET
LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST
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- | 24 | ||||||
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NET
LOSS ATTRIBUTABLE TO ATSI COMMUNICATIONS, INC.
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$ | (318 | ) | $ | (249 | ) | ||
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LOSS
PER SHARE - BASIC AND DILUTED
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$ | (0.01 | ) | $ | (0.01 | ) | ||
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WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED
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45,990,559 | 45,504,120 | ||||||
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NET
LOSS ATTRIBUTABLE TO ATSI COMMUNICATIONS, INC., as
reported
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$ | (318 | ) | $ | (249 | ) | ||
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EXCLUDING NON-CASH ITEMS:
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ADD:
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Non-cash
stock-based compensation, employees
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260 | 14 | ||||||
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Depreciation
and amortization
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25 | 44 | ||||||
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Interest
expense
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47 | 43 | ||||||
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MINUS:
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Gain
on early extinguishment of debt
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- | - | ||||||
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Net
loss attributable to noncontrolling interest
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- | 24 | ||||||
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NET
LOSS ATTRIBUTABLE TO ATSI COMMUNICATIONS, INC.
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EXCLUDING
NON-CASH ITEMS:
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$ | 14 | $ | (172 | ) | |||