SOURCE: Nettel Holdings

May 22, 2006 14:29 ET

Nettel Holdings Reports 1st Quarter 2006 Results and Forward Guidance

PORTLAND, OR -- (MARKET WIRE) -- May 22, 2006 -- Nettel Holdings, Inc. (OTCBB: NTTL), Berlin and Frankfurt Stock Exchanges (NT7, WKN 727487) Reports 1st Quarter Results and Forward Guidance

Results of Operations

Three Months Ended March 31, 2006 Compared to Three Months Ended March 31, 2005

The Company's net revenue for the three-month period ended March 31, 2006 was $285,449 compared to $240,215 for the same period ended March 31, 2005. Revenues from telecommunication minutes for the three-month periods ended March 31, 2006 and 2005 were $70,505 and $237,215 respectively. Used equipment sales for the periods ended March 31, 2006 and 2005 were $214,944 and $3,000 respectively.

Operating expenses consisting primarily of research and development expense and general and administrative expense were $346,267 for the three-month period ended March 31, 2006 compared to $173,201 for the same period ended March 31, 2005. Research and development expense was $259,692 for the three-month period ended March 31, 2006 compared to $169,980 in the same period in 2005. These costs are primarily personnel costs for engineers developing and maintaining software. $176,901 of this expense was a non-cash charge for the market value of the Company's common stock issued to engineers for their services upgrading telecommunications software. General and administrative expense was $83,207 in the period ended March 31, 2006 as compared $3,121 for the same period ended March 31, 2005. The $80,000 increase in the three-month period ended March 31, 2006 resulted primarily from a $20,000 increase in investor relations cost related principally to the SB2 which became effective in February 2006, a $38,000 decrease in the provision for doubtful accounts in 2006, an $8,000 increase in administrative fees relating to telecommunications agreements and $6,000 increase in rent expense, as compared to the same period in 2005.

Forward Guidance

Our 1st quarter was a completion quarter. In the 4th quarter, we began to focus many of our resources to diversify and create products and technologies, such as Phonezoo and AVOP, that will bring increased revenues and higher profit margins and in the 1st quarter we intensified our commitment to this strategy. We have now completed the beta in these areas and are now bringing these products and services to the market which will bring us increasing revenues and profits from the 2nd quarter and thereafter. We completed our transition to our 20,000 + sf warehouse/office complex and Nettel Trading continued to ramp up the computer shipments overseas. At Nettel Telecom, we successfully completed our negotiations with our biggest clients, and are once again ramping up our wholesale revenues. It was a very successful quarter as we hit our targets in all areas.


We completed our beta and are now marketing an advanced retail product to the market. We have created a "Pinless Pialing" product for the retail shop market. While there are other "Pinless Dialing" products on the market, the competitors require an online activation and a credit card to purchase and recharge. We have created the only product that can be purchased with cash from a retail outlet and can be recharged through the same process. We feel it will take at least a year for any competitor to develop and bring to market a similar product. Here are our current Phonezoo products:

Prepaid Calling Card
PinLess Prepaid Card

Unlimited Calling to Mexico Card
Unlimited Calling to Asia Card
Unlimited Calling to Europe Card
Unlimited International Card
The other benefits of our products are the lowest rates to the consumer and a clean care with no hidden fees or surcharges. With our rates and ease of use, we feel we will strongly enter the domestic home use market with our "Pinless Dialing" feature and the ability to recharge with cash rather than a credit card. We are also offering high commission rates and discounts to retailers and distributors to increase our speed to enter the different marketplaces. We expect to realize a profit margin on these cards of 25-30%. Currently in the US, we are delivering products to distributors in California and the Pacific Northwest and should be expanding to other markets in the near future. We also have distributors in Canada and Australia that we will begin shipping products to retailers this quarter. For more information on our products visit


We successfully completed the testing of our system that will enable us to process up to $300K in revenues per day. We have fully trained our first staff crew to handle clients and they have been successfully handling 6-8 clients per day. With profit margins of 12-15% per transaction and without the necessity of committing any cash reserves for this service, we are very excited at our opportunity in the marketplace and will be ramping up our revenues as quickly as possible. For more information visit

Nettel Telecom

We had revenues in the 3rd quarter of over $8M and scaled back our commitments of resources beginning in the 4th quarter to this division due to unsatisfactory terms with our largest clients, both buyers and suppliers. We entered negotiations at that time to secure better, workable terms for us and we are now pleased to announce that our negotiations have been successfully completed and we are now implementing these new terms as we begin to ramp up our revenues. We negotiated to receive earlier payment terms, as well as a reduction in discount points, to our buyers, and we negotiated with our largest suppliers more reasonable pricing structures that should allow us to realize our targets of 10-15% profit margins on our transactions. We have already started to ramp up our revenues in this division.

Nettel Trading

We continued to ship computer equipment overseas to Asia in the first quarter. We chose to warehouse some of our equipment in Vietnam as we know we will have better pricing now in the 2nd quarter due to some changes in government regulations there. We expect profit margins on these shipments to be in the 35-40% and greater. We have secured a warehouse in Vietnam that will enable us to increase our margins on any shipments there.

Entec Software

Entec continues to be our technology engine. Our 70 + engineers and technicians have enabled us to develop our technologies and to adapt and quickly improve products that we currently have on the market. We are always developing new technologies to keep us on the cutting edge of products and services in the telecom industry. For more info visit

The 1st quarter was a very successful quarter for us as we completed projects we were working on during the 3rd and 4th quarter of 2005. Our goal has been to develop diverse, profitable revenue sources, and we now have completed this goal and are currently implementing these technologies and marketing our new products and services now in the 2nd quarter. We are confident that from this quarter on, our revenues and profits will be increasing and we should be profitable now and in the future. Our revenues in the 1st quarter were almost entirely from our Trading division, Nettel Trading. We will be showing this as income in the next quarter as we now have to show the expense as a loss in this quarter. We are committed at Nettel Holdings to continue to increase both our value to the industry and marketplace as well as to our shareholders. We are just getting started.

Safe Harbor:

Except for historical information contained herein, the statements in this news release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause a company's actual results in the future to differ materially from forecasted results. These risks and uncertainties include, among other things, the company's ability to attract qualified management, raise sufficient capital, and effectively compete against similar companies.

Contact Information

  • Contact:
    Sam Brewer