-- 46% year-over-year revenue growth from $7.0 million to $10.3 million
driven by a 41% increase in VoIP carrier services traffic from
approximately 99 million minutes of voice traffic during the quarter ended
January 31, 2007 to approximately 139 million minutes of voice traffic
during the quarter ended January 31, 2008.
-- Record gross profit of $765,000
-- 7th consecutive quarter of positive cash flow from operations
-- 5th consecutive quarter of net positive earnings per share on total
net income to common stockholders of $79,000
-- Record Non-GAAP net income of $257,000
"We are in the midst of another strong year with great momentum heading
into the second half of 2008," said Arthur L. Smith, Chief Executive
Officer at ATSI Communications. "In addition, our business economics
continue to improve. During the quarter we secured a $3 million financing
agreement with Wells Fargo Business Credit, a division of Wells Fargo Bank,
N.A. The accounts receivable financing arrangement with Wells Fargo
provides ATSI with a consistent source of flexible, low-cost financing to
fund the Company's growth initiatives in its global VoIP business."
Financial Results
Total revenues were $10.3 million compared to $7.0 million in the first
quarter of 2006. This 46% year-over-year increase in revenues is primarily
attributable to a 41% year-over-year increase in voice traffic. Gross
profit was $765,000 during the quarter ended January 31, 2008, compared to
$564,000 during the second quarter last year. Non-GAAP net income to common
stockholders for the second fiscal quarter of 2008 was $257,000 compared to
a non-GAAP net income to common stockholders of $194,000 in last year's
second fiscal quarter. The Company incurred $178,000 in net non-cash
expenses during the quarter ended January 31, 2008 vs. $36,000 (net of a
$192,000 non-cash preferred dividend benefit) during the quarter ended
January 31, 2007. Non-cash expenses incurred during the period include
depreciation, amortization, interest, stock compensation and preferred
dividends.
Arthur L. Smith, CEO of ATSI, further stated, "Our second fiscal quarter
was a record quarter for ATSI in almost every metric we utilize to measure
the performance of our business. We continued expansion of our sales team
during the 2nd quarter to drive future growth while developing a
proprietary billing and operational support system to further facilitate a
scalable business model." Mr. Smith added, "I commend our team for
delivering on the objective of improving gross profit while controlling
expenses that to date has resulted in exceeding the Company's business plan
for fiscal year 2008."
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.
About ATSI Communications, Inc.
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 include 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.
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 share and per share amounts)
(Unaudited)
Three months ended
January 31,
2008 2007
----------- -----------
OPERATING REVENUES:
Carrier services $ 10,285 $ 7,046
Communication services 24 27
----------- -----------
Total operating revenues 10,309 7,073
----------- -----------
OPERATING EXPENSES:
Cost of services (exclusive of depreciation
and amortization, shown below) 9,544 6,509
Selling, general and administrative expense
(exclusive of legal and professional fees) 538 380
Legal and professional fees 65 59
Bad debt expense 21 25
Depreciation and amortization expense 38 21
----------- -----------
Total operating expenses 10,206 6,994
----------- -----------
OPERATING INCOME 103 79
----------- -----------
OTHER INCOME (EXPENSE):
Debt forgiveness income - -
Interest income (expense) (24) (41)
----------- -----------
Total other income (expense), net (24) (41)
----------- -----------
NET INCOME 79 38
----------- -----------
LESS: PREFERRED DIVIDEND - (19)
ADD: REVERSAL OF PREVIOUSLY RECORDED PREFERRED
DIVIDEND - 211
----------- -----------
NET INCOME TO COMMON STOCKHOLDERS $ 79 $ 230
=========== ===========
BASIC INCOME PER SHARE: $ 0.00 $ 0.01
=========== ===========
DILUTED INCOME PER SHARE $ 0.00 $ 0.01
=========== ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 39,134,394 19,962,710
DILUTED COMMON SHARES OUTSTANDING 39,522,972 32,420,096
----------- -----------
NET INCOME TO COMMON STOCKHOLDERS, as reported: $ 79 $ 230
----------- -----------
EXCLUDING NON-CASH ITEMS:
ADD:
Non-cash issuance of common stock and
warrants for services 10 14
Non-cash stock-based compensation,
employees 85 55
Bad debt expense 21 25
Depreciation and amortization 38 21
Interest expense 24 41
MINUS:
Debt forgiveness income - -
Preferred dividend - 192
NET INCOME TO COMMON STOCKHOLDERS
----------- -----------
EXCLUDING NON-CASH ITEMS: $ 257 $ 194
----------- -----------
Contact Information: Contact: Jack Eversull The Eversull Group 972-378-7917 972-378-7981 (fax) E-mail: Web Site: www.atsi.net