Telanetix, Inc. (OTC BB: TNIX), a leading communications
solutions provider offering cloud-based, next generation voice
services and solutions to the business market, today reported
financial results for its 2011 second quarter ended June 30,
2011.
Second Quarter Financial Highlights
- Core voice revenue was $6.3 million, up
1.7% from $6.2 million sequentially and up 8.1% from $5.9 in the
second quarter of 2010. The Company's next generation SIP Trunking
and Digital Phone Service (DPS) products achieved combined growth
of 49% year-over-year and 12% sequentially.
- Total revenue was $7.0 million,
compared to $6.9 million sequentially and $7.3 million in the
second quarter of 2010. The year-over-year decline in total revenue
was due to the expected decrease in legacy product revenues, which
were $651,000, a 54% decrease compared to $1.4 million in the
second quarter of 2010. The Company believes its legacy product
revenue has stabilized and further growth in its next generation
products and services should have a positive impact on total
revenue in future quarters.
- Adjusted EBITDA increased to $398,000,
compared to $321,000 in the second quarter last year, and
represents the seventh consecutive quarter of positive adjusted
EBITDA.
- Net loss from continuing operations was
$1.7 million or $0.35 per share, compared to net income of $3.4
million, or $8.11 per share (split-adjusted), in the second quarter
last year which included a one-time $5.0 million credit for the
change in fair market value of derivative liabilities.
- Total cash and cash equivalents were
$2.1 million at June 30, 2011.
- The Company completed a 1-for-75
reverse stock split effective in the second quarter of 2011.
- The Company also announced the
withdrawal of its previously announced rights
offering. As a result, no additional common stock will be
issued in connection with that offering. Similarly, the backstop
obligations and conversion rights contained in outstanding
senior secured notes were cancelled. These actions eliminated
a large overhang on the Company's outstanding common stock.
“While sequential growth in our total revenue was modest, our
legacy revenue has stabilized and further growth in our core voice
products will drive top line revenues in coming quarters,” said
Doug Johnson, Telanetix’s CEO. “Our SIP Trunking and Digital Phone
Service products, when combined together, grew 49% year-over-year
and 12% sequentially, an important benchmark as these two key
products are the growth engines for the company and long-term focus
of our business.
“During the second quarter, we completed key steps that
strengthen our ability to capitalize on our target market going
forward. We launched a sales and distribution trial with a
significant new channel partner, expanded our product line, signed
Polycom as a new DPS equipment partner, and initiated improvements
to the overall efficiencies of our network,” continued Johnson.
“With these accomplishments, we have significantly expanded our
marketing reach and materially increased the customers we can
serve, and we believe they will result in meaningful revenue and
gross margins improvement, beginning in the current third
quarter.
Revenue for the second quarter of 2011 was $7.0 million,
compared to $6.9 million in the preceding quarter and $7.3 million
in the second quarter of 2010. Gross profit was $4.0 million, or
57.2% of revenue, compared to $4.3 million, or 58.6% of revenue, a
year ago. Total operating expenses were $4.7 million, compared to
$5.1 million a year ago.
Adjusted EBITDA increased 24% to $398,000, compared to $321,000
in the second quarter last year, and represents the Company's
seventh consecutive quarter of positive adjusted EBITDA.
Net loss from continuing operations for the second quarter of
2011 was $1.7 million, or $0.35 per share, compared to net income
for the second quarter of 2010 of $3.4 million, or $8.11 per share
(split-adjusted). Second quarter 2010 net income included a $5.0
million credit for the change in fair market value of derivative
liabilities.
Total cash and cash equivalents were $2.1 million on June 30,
2011, compared to $2.3 million at December 31, 2010.
Non-GAAP Financial Measures
Adjusted EBITDA is a non-GAAP financial measure. Management
believes certain non-GAAP measures provide relevant and meaningful
measures by which investors can evaluate the business. Management
uses adjusted EBITDA to evaluate changes in the company's core
earnings from operations, unaffected by non-cash expenses, expenses
related to the company's capital structure, taxes or extraordinary
events. EBITDA is defined as earnings or loss before interest,
income taxes, depreciation and amortization, and the company
defines Adjusted EBITDA as EBITDA adjusted for non-cash items
including stock-based and warrant compensation, charges related to
changes in fair market value of warrant and beneficial conversion
feature liabilities, as well as the Company’s recent
recapitalization. A reconciliation of net income to adjusted EBITDA
can be found at the end of this release.
Conference Call Information
Management will conduct a conference call at 1:30 p.m. PT (4:30
p.m. ET) today. To access the call in the United States, dial
(866) 543-6408 and to access the call internationally, dial
(617) 213-8899 and enter pass code 96968501. The call
will also be broadcast live over the Internet and will be available
for replay for 90 days at www.telanetix.com. A telephone replay
will be available two hours after the call through August 18, 2011
by dialing (888) 286-8010 in the United States and (617)
801-6888 for international callers. All parties will need the
following replay pass code 40472333.
About Telanetix, Inc.
Telanetix, Inc. (OTC BB: TNIX) is a leading communications
solutions provider offering cloud-based voice over IP (VoIP)
services to all business market segments. Telanetix solutions meet
the real-world communications demands of its customers with an
industry-leading value proposition of cutting edge products and
technology that brings enhanced productivity and industry-leading
savings to our customers. The company's hosted telecom voice
services, marketed under the "AccessLine" brand, give companies
flexible calling solutions, a simpler installation experience, and
a greater range of support options than traditional telecom
providers. With a history of serving over 100,000 business
customers, including Fortune 50 companies, Telanetix has scaled its
award-winning technologies to meet the needs of
entrepreneurial-minded small businesses.
Safe Harbor Statement
Certain statements contained in this press release are
“forward-looking statements” within the meaning of applicable
federal securities laws, including, without limitation, our
expectations regarding growth in our core revenue for 2011,
anything relating or referring to future financial results and
plans for future business development activities, including
anticipated effects of distribution relationships, and are thus
prospective. Forward-looking statements are inherently subject to
risks and uncertainties some of which cannot be predicted or
quantified based on current expectations. Such risks and
uncertainties include, without limitation, the risks and
uncertainties set forth from time to time in reports filed by the
company with the Securities and Exchange Commission that could
materially and adversely affect our business, operating results and
financial condition. Although the company believes that the
expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will
prove to have been correct. Consequently, future events and actual
results could differ materially from those set forth in,
contemplated by, or underlying the forward-looking statements
contained herein. The companies undertake no obligation to publicly
release statements made to reflect events or circumstances after
the date hereof.
TELANETIX, INC. Condensed Consolidated Balance
Sheets June 30, 2011 December
31, 2010 (Unaudited) ASSETS Current assets Cash $
2,078,418 $ 2,330,111 Accounts receivable, net 1,906,380 1,590,022
Inventory 238,565 182,924 Prepaid expenses and other current assets
439,426 530,548 Total current assets
4,662,789 4,633,605 Property and equipment, net 2,287,274 2,641,731
Goodwill 7,044,864 7,044,864 Purchased intangibles, net 10,078,337
11,178,337 Other assets 426,402 583,632
Total assets $ 24,499,666 $ 26,082,169
LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities
Accounts payable $ 1,690,772 $ 1,609,488 Accrued liabilities
2,489,076 2,326,465 Deferred revenue 1,046,719 1,016,021 Income tax
payable 33,400 225,000 Current portion of capital lease obligations
314,632 404,710 Current portion of long-term debt 2,400,000
1,200,000 Total current liabilities
7,974,599 6,781,684 Non-current liabilities
Deferred revenue, net of current portion 212,902 253,798 Capital
lease obligations, net of current portion 142,390 116,251 Long-term
debt, net of current portion 5,547,311
5,291,539 Total non-current liabilities 5,902,603
5,661,588 Total liabilities 13,877,202
12,443,272 Stockholders' equity (deficit)
Common stock, $.0001 par value; Authorized: 8,000,000 shares;
Issued and outstanding: 4,820,098 and
4,594,262 at June 30, 2011 and December 31, 2010, respectively
(1)
482 34,457 Additional paid in capital 43,854,008 43,569,588
Warrants 56,953 56,953 Accumulated deficit (33,288,979 )
(30,022,101 ) Total stockholders' equity (deficit)
10,622,464 13,638,897 Total liabilities and
stockholders' equity (deficit) $ 24,499,666 $ 26,082,169
(1) Prior year disclosures adjusted for
the impact of the 1 for 75 reverse stock split
TELANETIX, INC. Condensed Consolidated Statements
of Operations (Unaudited) Three
months ended June 30, Six months ended June 30,
2011 2010 2011 2010
Revenues $ 6,994,902 $ 7,285,612 $ 13,929,303 $ 14,946,308
Cost of revenues 2,991,432 3,014,694 5,861,829
6,195,951 Gross profit 4,003,470 4,270,918 8,067,474
8,750,357 Operating expenses Selling and marketing 1,727,112
1,806,783 3,475,405 3,383,105 General and administrative 1,839,118
1,890,672 3,740,197 3,852,539 Research, development and engineering
464,625 694,395 943,135 1,433,713 Depreciation 159,070 147,011
311,884 290,552 Amortization of purchased intangibles
550,000 550,000 1,100,000 1,100,000 Total
operating expenses 4,739,925 5,088,861
9,570,621 10,059,909 Operating loss (736,455 )
(817,943 ) (1,503,147 ) (1,309,552 ) Other income (expense)
Interest income 64 198 197 262 Interest expense (919,411 ) (787,656
) (1,763,928 ) (1,576,158 ) Change in fair market value of
derivative liabilities — 5,040,381 —
790,648 Total other income (expense) (919,347 )
4,252,923 (1,763,731 ) (785,248 ) Income
(loss) from continuing operations before taxes (1,655,802 )
3,434,980 (3,266,878 ) (2,094,800 ) Income tax expense — — —
— Income (loss) from continuing operations (1,655,802 )
3,434,980 (3,266,878 ) (2,094,800 ) Loss from discontinued
operations — (71,346 ) — (269,733 )
Net income (loss) $ (1,655,802 ) $ 3,363,634 $ (3,266,878) $
(2,364,533 ) Net income (loss) per share – basic and diluted
Continuing operations $ (0.35 ) $ 8.11 $ (0.70 ) $ (4.94 )
Discontinued operations — (0.17 ) —
(0.64 ) Net income (loss) per share(1) $ (0.35 ) $ 7.94 $ (0.70 ) $
(5.58 ) Weighted average shares outstanding – basic and
diluted(1) 4,753,091 423,578 4,674,115
423,578
(1) Prior year disclosures adjusted for
the impact of the 1 for 75 reverse stock split
TELANETIX, INC. Net Loss to EBITDA
Reconciliation (Unaudited) Three months
ended June 30, Six months ended June 30, 2011
2010 2011 2010 Adjusted EBITDA
(earnings release purposes only) Net Profit / (Loss) $ (1,655,802 )
$ 3,363,634 $ (3,266,878 ) $ (2,364.533 ) Depreciation and
amortization of purchased intangibles 1,006,201 993,229 1,993,616
1,982,557 Interest expense 919,347 787,458 1,763,731
1,575,896 EBITDA 269,746 5,144,321 490,469 1,193,920
Adjustments for certain non-cash expenses: Change in fair market
value of derivative liabilities - (5,040,381 ) - (790,648 ) Stock
based compensation 128,603 216,706 250,445
434,660 Adjusted EBITDA $ 398,348 $ 320,646 $
740,913 $ 837,932