SOURCE: CommerceTel Corporation

CommerceTel Corporation

May 22, 2012 07:30 ET

CommerceTel Announces Record First Quarter 2012 Financial Results

SAN DIEGO, CA--(Marketwire - May 22, 2012) - CommerceTel Corporation (OTCBB: MFON), an award-winning provider of proprietary mobile marketing technologies and solutions, announced today record revenue, gross profit and reduced operating losses for the three month period ending March 31, 2012.

  • Q1, 2012 revenue increased to $1,013,206 from $140,638 in Q1, 2011, a 620% increase.
  • Q1, 2012 gross profit increased 962% to $645,437, vs. $60,801 in Q1 2011.
  • Gross margins for Q1, 2012 increased to 63.7% from 43.2% in 2011.

First Quarter 2012 Financial Results

Revenues for the three months ended March 31, 2012 were $1,013,206, an increase of $872,568, or 620.4% compared to the three months ended March 31, 2011.

Cost of goods sold was $367,769 in the first quarter of 2012 compared to $79,837 in the first quarter of 2011, with a gross margin profit of $645,437 in the first quarter of 2012 compared to a gross profit of $60,801 in the same period a year ago. The increase in gross profit as a percentage of revenue is due to the three acquired operating segments which generated higher gross margins and allowed for greater leverage of fixed expenses. Increased volume of SMS traffic also allowed for a reduction of more than 50% in per-message costs beginning in January 2012. These costs are expected to continue to decrease significantly in 2012 as pricing synergies are obtained by consolidating the operations of the acquired companies.

Operating expenses for the first quarter of 2012 were $1,579,663, consisting of approximately $312,873 in selling expenses and approximately $951,986 million in general and administrative expenses. Operating expenses include $250,532 in share-based compensation. Operating loss was $934,226 in the three months ended March 31, 2012 compared to an operating loss of $775,866 in the corresponding period a year ago.

Net Loss for the three months ended March 31, 2012 and March 31, 2011 were $1,692,240 and $1,311,518 respectively. The increase of $380,722 or 29.0% can mostly be attributed to the increased depreciation and amortization of $152,581 and interest expense of $252,770. Excluding non-cash charges, including stock compensation and changes in the fair market value of derivatives, non-GAAP adjusted net loss was $395,748 in the first quarter of 2012 compared to an adjusted net loss of $429,220 in the same period of 2011. The weighted average shares outstanding increased from 17.7 million a year ago to 22.8 million in the first quarter of 2012.

Balance Sheet and Cash Flows

The Company had $240 of cash at March 31, 2012 compared to $396 at year end December 31, 2011. Total accounts receivable increased from $243,846 in 2011 to $227,259 in 2012. Total notes payable outstanding were $2,116,212 at March 31, 2012 compared to $1,825,714 at December 31, 2011.

For period ending March 31, 2012 the Company had $328,347 in cash outflow from operations, up from $325,836 for the same period in 2011.

Financial Summary

Q1 2012 Q1 2011 Chg.
Net Revenues $1,013,206 $ 140,638 620%
Gross Profits $ 645,437 $ 60,801 64%
GAAP Net Income (loss) ($1,692,240) ($1,311,518) -29%
Adjusted Net Income (loss) ($395,748)(1) ($429,062) 8%
GAAP EPS (Diluted) ($0.07) ($0.07) --
Adjusted EPS (Diluted) ($0.017) (1) ($0.024) 28%
Diluted Shares O/S 22,797,641 17,711,048 29%

(1) Please see non-GAAP reconciliation table below

Non-GAAP reconciliations:
Q1 2012 Q1 2011
GAAP Net Income (Loss) ($1,692,240) ($1,311,518)
Depreciation and amortization $154,617 $2,037
Change in FMV of derivatives $460,487 $430,402
Non-cash stock comp expenses $383,861 $344,609
Gain on contingent considerations ($60,650) --
Interest expense, net $358,178 $105,408
Non-GAAP adjusted net income ($395,747) ($429,062)
Weighted avg. diluted shares 22,797,641 17,711,048
Non-GAAP adjusted EPS ($0.017) ($0.024)

About CommerceTel:

CommerceTel is an award-winning provider of proprietary mobile marketing technologies and the inventor of C4, a unique, enterprise-grade platform empowering brands to engage mobile consumers via multiple channels. The only system of its kind, C4 is a cloud-based solution providing broad mobile communications and extensive CRM features. It is integrated with multiple tier-one PSTN/ IP carriers and micropayment processing facilities as well as with carrier premium SMS billing systems. Customers include CNN, Disney, Sony Pictures, AT&T, Verizon, USA Network, numerous professional sports franchises, the Golf Channel, and NBC Universal. For further information visit www.commercetel.com or follow us on Twitter @CommerceTelinc.

About Non-GAAP Financial Measures

To supplement our consolidated financial statements, which statements are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: adjusted net income and adjusted EPS. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. We use these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our "recurring core business operating results." We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. We believe these non-GAAP financial measures are useful to investors because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business.

Cautionary Statement Regarding Forward-Looking Information

This press release may contain certain "forward-looking statements" relating to the business of CommerceTel Corporation, and its subsidiary companies. All statements, other than statements of historical fact included herein are "forward-looking statements" including statements regarding the impact of the proceeds from the private placement on the Company's short term business and operations, the general ability of the Company to achieve its commercial objectives, including the ability of the Company to sustain growth; the business strategy, plans and objectives of the Company and its subsidiaries; and any other statements of non-historical information. These forward looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf months are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

CommerceTel Corporation
Consolidated Balance Sheets
March 31, December 31,
2012 2011
(Unaudited) (Audited)
Current assets
Cash $ 240 $ 396
Accounts receivable, net of allowance for doubtful accounts of $54,973 and $18,050, respectively
227,259

243,846
Other current assets 304,889 15,924
Total current assets 532,388 260,166
Equipment, net 24,213 25,316
Goodwill 3,002,070 3,002,070
Intangible assets, net 968,507 1,116,506
Other assets 45,178 197,046
TOTAL ASSETS $ 4,572,356 $ 4,601,104
Current liabilities
Accounts payable $ 1,068,414 $ 842,777
Accrued interest 172,166 130,426
Accrued and deferred personnel compensation 343,768 237,691
Deferred revenue - related party 167,000 200,000
Deferred revenue and customer deposits 136,437 126,525
Convertible notes payable, net of discount 1,476,370 1,002,730
Notes payable, net of discount 614,842 736,270
Cash payment obligation, net of discount 25,000 86,714
Derivative liabilities 2,305,175 1,573,859
Other current liabilities 289,447 245,227
Earn-out payable 2,597,587 -
Total current liabilities 9,196,206 5,182,219
Non-current liabilities
Long term accounts payable - 125,846
Earn-out payable - 2,658,238
Total non-current liabilities - 2,784,084
Total liabilities 9,196,206 7,966,303
Stockholders' equity (deficit)
Common stock, $0.001 par value; 150,000,000 shares authorized; 22,904,308 and 22,754,308 shares issued and outstanding as of March 31, 2012 and December 31, 2011, respectively
22,904


22,754
Common stock liability 87,000 -
Additional paid-in capital 21,445,728 21,099,289
Accumulated deficit (26,179,482 ) (24,487,242 )
Total stockholders' equity (deficit) (4,623,850 ) (3,365,199 )
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT) $ 4,572,356 $ 4,601,104
CommerceTel Corporation
Consolidated Statements of Operations
(Unaudited)
Three months ended March 31,
2012 2011
(Restated)
Revenues
Revenues $ 1,013,206 $ 140,638
Cost of revenues 367,769 79,837
Gross margin 645,437 60,801
Operating expenses
General & administrative 951,987 624,214
Sales & marketing 312,873 63,925
Engineering, research, & development 160,186 146,491
Depreciation & amortization 154,617 2,037
Total operating expenses 1,579,663 836,667
Loss from operations (934,226 ) (775,866 )
Other income/(expense)
Interest income - 158
Interest expense, net (358,178 ) (105,408 )
Change in fair market value of derivative liabilities (460,487 ) (430,402 )
Gain on adjustment in contingent consideration 60,651 -
Total other income/(expense) (758,014 ) (535,652 )
Loss before income taxes (1,692,240 ) (1,311,518 )
Income tax expense - -
Net loss $ (1,692,240 ) $ (1,311,518 )
Net loss per share - basic and diluted $ (0.07 ) $ (0.07 )
Weighted average number of shares during the period - basic and diluted 22,797,641 17,711,048
CommerceTel Corporation
Consolidated Statements of Cash Flows
(Unaudited)
Three months ended March 31,
2012 2011
(restated)
OPERATING ACTIVITIES
Net loss $ (1,692,240 ) $ (1,311,518 )
Adjustments to reconcile net loss to net cash used in operating activities:
Bad debt expense 46,384 -
Common stock for services 270,000 -
Stock-based compensation 113,861 344,609
Depreciation and amortization expense 154,617 2,037
Gain on adjustment in contingent consideration (60,651 ) -
Change in fair market value of derivative liabilities 460,487 430,402
Amortization of deferred financing costs 35,154 -
Amortization of note discounts 277,349 78,810
Increase (decrease) in cash resulting from changes in:
Accounts receivable (29,797 ) (1,011 )
Other current assets (324,119 ) (23,680 )
Other assets 2,939 -
Accounts payable 225,637 81,364
Accrued interest 41,740 26,598
Accrued and deferred personnel compensation 106,077 (6,356 )
Deferred revenue and customer deposits (23,088 ) 53,359
Long term accounts payable 23,083 -
Other liabilities 44,220 (450 )
Net cash used in operating activities (328,347 ) (325,836 )
INVESTING ACTIVITIES
Purchases of equipment (5,515 ) (2,412 )
Acquisition of intangible assets - (60,000 )
Net cash used in investing activities (5,515 ) (62,412 )
FINANCING ACTIVITIES
Proceeds from issuance of notes payable 585,100 10,000
Payments on notes payable (188,894 ) -
Payments on cash payment obligation (62,500 ) -
Proceeds from issuance of common stock and warrants - 210,000
Net cash provided by financing activities 333,706 220,000
Net change in cash (156 ) (168,248 )
Cash at beginning of period 396 373,439
Cash at end of period $ 240 $ 205,191
Supplemental disclosures:
Cash paid during period for :
Interest $ 4,835 $ -
Non cash investing and financing activities:
Debt discount $ 320,557 $ 4,299
Adjustment to derivative liability due to debt repayment $ 49,728 $ -
Common stock issued for patents and trademarks $ - $ 50,000

Contact Information

  • For additional information, contact:

    Investor Contacts:
    MZ Group - North America
    Mark McPartland
    Senior Vice President
    Phone: 646.593.7140
    Email: Email Contact
    Web: www.mz-ir.com

    Company Contact:
    Dennis Becker
    CEO
    CommerceTel Corp.
    Phone: 619-725-0990