Tellza Announces 2016 Q2 Financial Results

TORONTO, ONTARIO--(Marketwired - Aug. 5, 2016) - Tellza Communications Inc. (TSX:TEL) announced its unaudited financial results for the six months ended June 30, 2016.

2016 Highlights

Communications Business

• Revenue for Q2 - 2016 is up 61% from Q2-2015 to USD $110 million (2015 - $68 million)
• Revenue on a YTD basis is up 58% from the comparable period in 2015 to USD $202 million (2015 - $128 million)
• YTD EBITDA* was USD $1.5 million or $0.13/share (2015 - $1.3 million or $0.11/share)
• YTD Net Income was USD $0.6 million or $0.05/share (2015 - $0.1 million or $0.01/share)

Technology Business

• Signed a licensing agreement with Canadian Telco customer

Investment Business

• Acquired a 33% interest in Rightway Funding Group LLC
• Acquired a 9.9% interest in Merkez Faktoring A.S.

Corporate

• Consolidated common stock on a 15:1 basis reducing the number of shares outstanding from 168.6 million to 11.2 million.
• Acquired restricted marketable securities in exchange for net assets of Tel3.

While we conduct our business primarily in USD and report our financial results in USD, our common shares are listed and trade on the Toronto Stock Exchange in CDN dollars. Expressed in CDN dollars, YTD EBITDA* was $2.0 million or $0.16/share and Net Income was $0.7 million or $0.06/share.

Tellza's communications business operates in the "nearly free" market for international communications. Our investment in systems and processes over the last few years has allowed us to remain profitable, while many of our competitors have commenced exiting the business. We believe that the "nearly free" communications market will remain strong and sizeable into the future.

"Tellza's strategy is to invest excess cash flows from its core business into new business activities and adjacent markets aimed at improving our cash flows and profitability, while continuing to acquire up to 5% annually of its outstanding common stock for cancellation when market conditions permit," said Gary Clifford, Executive Chairman, Tellza Communications Inc.

The Company's financial statements and other disclosures are available on SEDAR.

The Company's corporate profile is located at www.tellza.com/investors.html.

About Tellza

Tellza is a technology company operating primarily in the communication market. The business is organized into three business units: Tellza Communications, Tellza Technologies and Tellza Investments. Tellza Communications is a global communications company operating under several brands including Phonetime, and MatchCom. Tellza Technologies provides real-time big data management tools for the telecommunications market. Tellza Investments is focused on the financial products support business through our portfolio investments in Merkez and Rightway. Tellza is a public company listed on the Toronto Stock Exchange (TEL).

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. Tellza'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 files.

*We define EBITDA and Cash Profits as earnings before taxes, depreciation and amortization, stock based compensation, and interest. EBITDA, which is a non-GAAP financial measure, it is a standard measure used in the telecommunications industry to assist in understanding and comparing operating results. EBITDA is reviewed regularly by management and our Board of Directors in assessing performance and in making decisions regarding the ongoing operations of the business and the ability to generate cash flows. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with IFRS. EBITDA is not a measure of financial performance nor does it have a standardized meaning under IFRS. In evaluating these measures, investors should consider that the methodology applied in calculating as such measures may differ among companies and analysts. Below is a reconciliation of "EBITDA" to net income for the periods presented:

Six months ended June 30,	2016			2015
Net income and comprehensive income for the period	$	516		$	127
Provision for income taxes	$	273		$	50
Depreciation of property and equipment	$	251		$	246
Amortization of intangible assets	$	330		$	810
Equity Pick-up from non-controlled investment	$	(37	)	$	-
Interest and debt costs	$	69		$	59
EBITDA	$	1,402		$	1,292

Financial summary:

Tellza Communications Inc.		Three months						Six months
For the three and six months ended June 30, ($000s USD)		2016 $			2015 $			2016 $			2015 $
Revenue			109,752			68,343			202,495			127,980
Cost of revenue			107,970			65,966			197,893			123,539
Gross margin			1,782			2,377			4,602			4,441
Operating expenses			1,135			1,559			3,200			3,149
Income before undernoted:			647			818			1,402			1,292
Depreciation of property and equipment			127			123			251			246
Amortization of intangible assets			130			405			330			810
Equity Pick-up of non-controlling interests			(37	)		-			(37	)		-
Interest and debt costs			42			42			69			59
			262			570			613			1,115
Income before income taxes			385			248			789			177
Provision for income taxes
	Current		-			-			-			-
	Deferred		168			80			273			50
			168			80			273			50
Net income and comprehensive income			217			168			516			127
Net income and comprehensive income attributable to
	Shareholders		191			140			442			99
	Non-controlling interests		26			28			74			28
			217			168			516			127
Earnings per share attributable to shareholders
	- basic and diluted continuing and discontinued operations	$	0.02		$	0.01		$	0.05		$	0.01
Weighted average number of common shares outstanding
	- basic and diluted	11,240,707			11,827,641			11,240,707			11,827,641

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

[amounts in thousands of U.S. dollars]

As at	June 30, 2016 $		December 31, 2015 $
ASSETS
Current
Cash and cash equivalents	1,613		1,425
Marketable Securities	728		-
Accounts receivable, net	42,328		36,792
Prepaid expenses and deposits	2,093		2,239
Total current assets	46,762		40,456
Deferred tax assets	403		403
Property and equipment, net	1,666		1,856
Intangible assets, net	2,763		4,137
Investment in Portfolio Companies	5,471		-
Goodwill	10,569		10,569
	67,634		57,421
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Line of credit	1,045		-
Accounts payable	17,286		12,854
Accrued liabilities	26,070		24,457
Customer deposits	273		1,198
Income taxes payable	714		755
Current portion of non recourse loan payable	1,000		-
Total current liabilities	46,388		39,264
Deferred tax liabilities	889		616
Non-recourse loan payable	2,363		-
Total liabilities	49,640		39,880
Commitments and contingencies
Shareholders' equity
Common shares	15,393		15,393
Contributed surplus	2,690		2,690
Deficit	(294	)	(736	)
Equity attributable to shareholders	17,789		17,347
Non-controlling interest	205		194
Total shareholders' equity	17,994		17,541
	67,634		57,421