Science & Technology
Science and Technology
Science and Technology
Thu, May 10, 2012 
May 10, 2012 08:22 ET
Phonetime Inc.: Financial Results for the First Quarter of 2012
TORONTO, ONTARIO--(Marketwire - May 10, 2012) - Phonetime Inc. (TSX:PHD) announced today the financial results for the first quarter of 2012. Net income was $0.3 Million compared to $1.3 Million in first quarter of 2011. EBITDA(1) in the first quarter of 2012 was $0.6 Million compared to $49,000 in the first quarter of 2011.
Net Income in the first quarter of 2011 included a $1.7 Million one-time non-recurring non-cash gain on retirement of derivative warrants, while 2012 net income included a $0.3 Million one-time non-recurring gain on the retirement of debt. Improved margins on the sale of minutes in 2012 over 2011, contributed to EBITDA(1) of $0.6 Million in Q1 2012 compared to EBITDA of $49,000 in Q1 2011.
| Phonetime Inc. |
| CONSOLIDATED STATEMENTS OF OPERATIONS |
| AND DEFICIT |
| [amounts in thousands of US dollars, except per share information] |
| For the three months ended March 31, 2012 | Unaudited | Unaudited | |||
| 2012 | 2011 | ||||
| $ | $ | ||||
| Revenue | 23,643 | 29,795 | |||
| Cost of revenue | 21,734 | 28,408 | |||
| Gross margin | 1,909 | 1,387 | |||
| Operating expenses | 1,124 | 1,077 | |||
| Income before the undernoted | 785 | 310 | |||
| Corporate expenses | 148 | 261 | |||
| Depreciation of property and equipment | 187 | 204 | |||
| Amortization of intangible assets | 401 | 250 | |||
| Stock-based compensation | 12 | 35 | |||
| Interest and debt costs | 52 | 101 | |||
| Gain on retirement of debt | (255 | ) | - | ||
| Mark to fair value of common share warrants | - | (1,701 | ) | ||
| 545 | (850 | ) | |||
| Income (loss) before income taxes and discontinued operations | 240 | 1,160 | |||
| Provision for (recovery of) income taxes | |||||
| Current | 5 | - | |||
| Deferred | (100 | ) | (100 | ) | |
| (95 | ) | (100 | ) | ||
| Income (loss) before discontinued operations | 335 | 1,260 | |||
| Discontinued operations, net of tax of nil | - | - | |||
| Net income (loss) and comprehensive income (loss) for the period | 335 | 1,260 | |||
Revenue in Q1 2012 is lower than Q1 2011, primarily as a result of continued price decreases in the markets in which the Company operates; this is part of an ongoing trend in international long distance rates that has existed for a number of years. In 2011, Pakistan, India and Mexico experienced the most significant prices decreases. Lower revenue was offset by improved margins, resulting in Income before undernoted in Q1 2012 of $0.8 million compared to $0.3 million in Q1 2011, an improvement of $0.5 million.
In 2012, the Company retired its subordinated debt resulting in a one-time non-cash gain of $0.3 million. This is recorded below the line, as Gain on retirement of debt. In 2011, the Company retired common stock warrant derivatives resulting in a one-time non-cash gain of $1.7 million. This was recorded below the line.
At March 31, 2012, the Company had a cash balance of $0.7 million and $1.8 million of available borrowings under its senior lending facility. Shareholder's equity was $9.4 million, compared to $9.1 million at December 31, 2011.
Outlook for 2012
"We are executing on our business plan of remaining profitable despite a continued global recession. We continue to seek and explore opportunities to consolidate traffic with competitors and partners." said Gary Clifford, Executive Chairman.
The Company's annual audited consolidated financial statements and related MD&A as at and for its fiscal year ended December 31, 2011, and its unaudited interim financial statements and related MD&A as at and for its fiscal quarter ended March 31, 2012 have been filed on SEDAR.
About Phonetime Inc.
Established in 1994, Phonetime is a leading provider of international and domestic switched voice services to the worlds telecommunication operators and voice service providers. Phonetime's customers and suppliers include, fixed line operators, mobile operators, retail and VoIP service providers, who buy and sell voice and IP telecommunications services. Phonetime has traders in Europe, Asia and the Americas using its proprietary trading platform with embedded intelligence, which includes profitability benchmarking, call routing, credit management, network quality visibility and loss prevention. As voice technology evolves Phonetime has commoditized its trading philosophy and along with its platform is positioned to emerge as a leading clearing house. Phonetime is a public company listed on the Toronto Stock Exchange (TSX).
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 files.
(1) EBITDA is non-GAAP financial measure. It is defined as Income from continuing operations excluding depreciation and amortization expense, stock based compensation, interest expense, gain on retirement of debt and mark to fair value of common stock warrants.
