AJAX, ONTARIO--(Marketwire - May 30, 2011) - Phonetime Inc. (TSX:PHD) announced that it earned $1.3 million of Net income or $0.01 per share in the first quarter of 2011.
Revenue for the three months ended March 31, 2011 was $29 million, compared to $42.6 million in 2010. Gross margin was $1.4 million, compared to $2.3 million in 2010. Operating expenses were $1.1 million, compared to 2.0 million in 2010. Income before undernoted was $0.3 million, compared to $0.4 million in 2010. Corporate costs were $0.3 million, compared to $0.7 million in 2010; the reduction was due to consolidation of facilities and personnel which commenced in the second quarter of 2010. In the first quarter of 2011, expiry of 31.6 million common stock warrants together with a revaluation of the remaining common stock warrants resulted in an earning inclusion of $1.7 million in the quarter. Net income was $1.3 million, compared to a net loss of $1.3 million in the three months ended March 31, 2010.
| For the three months ended | March 31, 2011 | March 31, 2010 | ||||
| Continuing Operations | ||||||
| Revenue | $ | 29,795 | $ | 42,611 | ||
| Cost of revenue | $ | 28,408 | $ | 40,293 | ||
| Gross margin | $ | 1,387 | $ | 2,318 | ||
| Operating expenses | $ | 1,077 | $ | 1,957 | ||
| Income before the undernoted | $ | 310 | $ | 361 | ||
| Corporate expenses | $ | 261 | $ | 697 | ||
| Depreciation of property and equipment | $ | 204 | $ | 201 | ||
| Amortization of intangible assets | $ | 250 | $ | 295 | ||
| Stock-based compensation [note 12] | $ | 35 | $ | 60 | ||
| Interest and debt costs [note 9] | $ | 101 | $ | 183 | ||
| Mark to fair value of common stock warrant derivatives [note 11] | $ | (1,701 | ) | $ | (17 | ) |
| $ | (850 | ) | $ | 1,419 | ||
| Income/(loss) before income taxes and discontinued operations | $ | 1,160 | $ | (1,058 | ) | |
| Income tax recovery | $ | (100 | ) | $ | (41 | ) |
| Income (loss) before discontinued operations | $ | 1,260 | $ | (1,016 | ) | |
| Discontinued Operations | ||||||
| Discontinued operations, net of tax of nil | $ | - | $ | (240 | ) | |
| Profit (loss) for the period | $ | 1,260 | $ | (1,256 | ) | |
The Company completed the first quarter with $0.9 million in cash, compared to $1.7 million at December 31, 2010. Assets were $23.6 million, compared to $23.7 million at December 31, 2010. Total liabilities were $15.8 million, compared to $17.3 million at December 31, 2010. Shareholders' equity was $7.8 million at March 31, 2011, compared to $6.4 million at December 31, 2010. Debt, including bank indebtedness, was $4.0 million at March 31, 2011 compared to $3.9 million at December 31, 2010.
During 2010, the Company completed a restructuring and liabilities were reduced by $8.4 million, including a reduction in debt of $4.6 million (bank debt of $2.7 million and $1.9 million in other debt and capital lease obligations). The Company also reduced its work force from 138 to 45 and increased automation to its back office to form a new foundation to allow the Company to resume growth in conjunction with access to capital. In 2010, $3 million in equity was added to ensure that the Company was sufficiently capitalized to complete its turn around. In conjunction with these equity issuances, 70.3 million warrants were issued with exercise prices ranging from $0.07 to $0.09; 1.6 million of these warrants were exercised in the first quarter of 2011 while 31.6 million warrants expired. The balances of these warrants expire at various times throughout 2011.
In 2011, the Company expects to extend or replace its existing debt facility; it is the Company's expectation that the replacement facility will allow the Company to have greater access to debt to allow the Company to resume growth.
"Phonetime continues to make progress toward sustained success and is looking forward to returning to growth in 2011, following the 2010 re-organization of the Company", said Gary Clifford, Chairman and Interim CEO. "The Company expects to extend or replace its existing senior lending facility and to re- engage with the investment community once this facility is in place."
The Company also announced that its disclosure of financial results for the first quarter of 2011 represents the first time it has reported financial results under the International Financial Reporting Standards ("IFRS"). Further information regarding the Company's adoption of IFRS may be found in the Company's MD&A at www.sedar.com.
The Company's annual financial statements together with its Management Discussion and Analysis can be found on www.sedar.com. Investors are reminded to read all public filings of any Company before making an investment decision.
About Phonetime Inc.
Phonetime handles the completion of long distance telecommunications around the world. In 2010, Phonetime completed 720 million phone calls with duration of over 4 billion minutes in 2010. Phonetime is a best in class provider of outsourced telecommunication services. Phonetime's common shares are traded on the Toronto Stock Exchange under the symbol PHD. More information can be found at the Company's website, www.phonetime.com.
Caution Regarding Forward Looking Information:
This press release contains forward-looking statements, which may be identified by words like "expects", "anticipates", "plans", "intends", "indicates" or similar expressions. These statements are not a guarantee of future performance and are inherently subject to risks and uncertainties. Phonetime's actual results could differ materially from those currently anticipated due to a number of factors set forth in reports and other documents filed by the Company with Canadian securities regulatory authorities from time to time. See www.sedar.com which contains all securities filings.
Contact Information:
Gary Clifford
Chairman of the Board and CEO (Interim)
+416-418-9802
gary@phonetime.com
www.phonetime.com