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Doug Johnson, Telanetix's CEO, said, "We generated positive cash flow for the first time as a result of completing the final steps of our turnaround plan. We continue to grow revenue, with core voice revenue growing 6.3% sequentially, and 23% year-over-year. After the quarter ended, we transformed our capital structure by restructuring our debt, eliminating interest payments until October of 2011 and lowering overall obligations by $16.8 million. The recent launch of our Digital Phone Service through one of the nation's largest resellers of office products is very promising and we believe it will drive revenue growth in 2009. Overall, our voice products continue to perform well in this economy as our customers look for cost saving alternatives and better ways to communicate."
"Looking forward, we will concentrate our resources on growing our high-margin core voice offering, broadening sales channels, opportunistically pursuing video relationships, and maintaining expense controls. Although uncertainties exist, as more fully described in footnote 1 in our first quarter 10Q, with the addition of our debt restructuring, we believe we will continue to improve our financial position in 2009 and expect to deliver double-digit annual revenue growth and improved gross margins for the year. Additionally, as a result of the completion of our turnaround plan we do not anticipate that we will require additional capital to fund organic growth," concluded Johnson.
Financial Highlights for the First Quarter of 2009
-- Revenue was $8.6 million compared to $8.5 million last quarter and $7.7
million for the first quarter of 2008.
-- Voice and network revenue was $7.0 million, compared to $6.7 million
last quarter.
-- Video revenue was $1.5 million, compared to $1.8 million last
quarter.
-- Gross profit was $4.3 million, or 50.1% of revenue, compared to $4.2
million, or 49.8% of revenue last quarter and $3.4 million, or 44.6% of
revenue for the first quarter of 2008.
-- Voice gross margin was 55.5%, compared to 59.6% last quarter,
reflecting a temporary reduction resulting from a few unprofitable
customers.
-- Video gross margin was 25.7%, compared to 12.4% last quarter,
reflecting a shift in revenue mix.
-- Total operating expense was $6.0 million, including $268,000 for stock
compensation expense, compared to $8.9 million last quarter, which
included $270,000 for stock compensation expense and a $2.4 million
non-cash charge for impairment of intangibles, and $6.6 million for the
same period last year, including $307,000 for stock compensation
expense.
-- Net loss was $2.3 million, including a $1.4 million expense for interest
and a $905,000 non-cash credit for fair market valuation of warrants and
beneficial conversion feature liabilities, compared to a net loss of
$6.9 million last quarter, which included a non-cash charge of $429,000
for fair market valuation of warrants and beneficial conversion feature
liabilities and a $1.7 million expense for interest, and a net loss of
$9.2 million a year ago, which included Series A preferred stock
dividends and accretion of $2.6 million, expense related to fair market
valuation of $2.2 million and interest expense of $1.3 million. Net
loss per share was $0.07, compared to a loss of $0.22 per share last
quarter and a loss of $0.39 per share for the first quarter last year.
-- Adjusted EBITDA loss was $318,000, compared to $959,000 last quarter and
$1.7 million last year.
-- At March 31, 2009, the cash and cash equivalents balance was $1.3
million.
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. 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. A reconciliation can be found at the end of this release.
Recent Corporate Highlights
-- Technology Marketing Corporation's (TMC(R)) INTERNET TELEPHONY
magazine named Digital Phone Service (DPS) as a recipient of its 2008
Product of the Year Award.
-- Launched DPS through one of the world's largest resellers of office
products in March 2009 to extend Telanetix's DPS channel
distribution.
-- Selected as Costco Wholesale's "Service of the Month" for
March 2009 for Telanetix's DPS under the AccessLine brand.
-- Restructured debentures to lower debt cash requirements allowing for
organic growth of the company and reduced total interest due by $16.8
million.
Conference Call Information
Management will conduct a conference call at 10:00 am PT/1:00 pm ET on May 13, 2009 to discuss the company's first quarter 2009 results. To access the call in the United States, dial 866-711-8198; to dial-in internationally, dial 617-597-5327 and enter passcode 78648928. 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 May 16, 2009 by dialing 888-286-8010 for domestic callers and 617-801-6888 for international callers. All parties will need to enter replay passcode 47251761.
About Telanetix, Inc.
Telanetix is a leading communications solutions provider offering next generation voice services and video telepresence solutions to the business market. Telanetix solutions meet the real-world communications demands of its customers with powerful, cost effective industry-leading communication solutions. The company's voice offerings, marketed under the "AccessLine" brand, give business customers a flexible, easy to use, cost effective alternative to today's traditional phone service, offering flexible calling solutions, a simpler installation experience, and a greater range of support options than traditional telecom providers. The company's video telepresence offering, marketed under the Telanetix Digital Presence(TM) brand, creates fully immersive and interactive meeting environments that incorporate voice, video and data from multiple locations into a single environment. Additional information may be found at the Telanetix corporate website, www.telanetix.com.
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, anything relating or referring to future financial results and plans for future business development activities, 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 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.
-Tables to Follow -
TELANETIX, INC.
Consolidated Balance Sheets
March 31, 2009 December 31, 2008
(Unaudited)
ASSETS
Current assets
Cash $1,266,912 $975,137
Accounts receivable, net 2,653,081 3,591,859
Inventory 508,407 556,321
Prepaid expenses and
other current assets 613,036 568,242
Total current assets 5,041,436 5,691,559
Property and equipment, net 5,051,265 5,178,194
Goodwill 7,868,134 7,821,728
Purchased intangibles, net 15,648,337 16,233,337
Other assets 995,850 983,098
Total assets $34,605,022 $35,907,916
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $2,431,316 $2,456,706
Accrued liabilities 3,270,264 2,954,312
Accrued interest 1,813,232 888,242
Deferred revenue 986,342 1,021,389
Current portion of
capital lease obligations 874,670 939,603
Warrant and beneficial
conversion feature liabilities 4,493,352 5,398,724
Total current liabilities 13,869,176 13,658,976
Non-current liabilities
Capital lease obligations, net of
current portion 782,201 814,052
Deferred revenue 212,586 188,134
Convertible debentures,
less current portion 20,727,288 20,302,430
Total non-current liabilities 21,722,075 21,304,616
Total liabilities 35,591,251 34,963,592
Stockholders' equity (deficit)
Common stock, $.0001 par
value; Authorized:
200,000,000 shares;
Issued and outstanding:
31,366,662 at March 31, 2009
and 31,384,374 3,137 3,139
at December 31, 2008
Additional paid in capital 33,538,023 33,211,274
Warrants 10,000 10,000
Accumulated deficit (34,537,389) (32,280,089)
Total stockholders'
equity (deficit) (986,229) 944,324
Total liabilities and
stockholders' equity $34,605,022 $35,907,916
TELANETIX, INC.
Consolidated Statements of Operations
Three months ended March 31,
2009 2008
Revenues $8,559,564 $7,656,761
Cost of revenues 4,267,593 4,242,999
Gross profit 4,291,971 3,413,762
Operating expenses
Selling & Marketing 1,669,901 1,647,813
General & Admin 2,287,389 2,868,329
Research, development and
engineering 1,191,525 1,262,805
Depreciation 282,238 193,419
Amortization of purchased
intangibles 585,000 585,000
Total operating expenses 6,016,054 6,557,366
Operating loss (1,724,083) (3,143,604)
Other income (expense)
Interest income 153 7,540
Interest expense (1,438,743) (1,265,595)
Change in fair market
value of warrant and
beneficial conversion
feature liabilities 905,373 (2,208,492)
Total other income
(expense) (533,218) (3,466,547)
Net loss (2,257,300) (6,610,151)
Series A preferred stock
dividends, accretion - (2,554,242)
and increase in stated
value
Net loss applicable to
common stockholders $(2,257,300) $(9,164,393)
Net loss per share - basic $(0.07) $(0.39)
Weighted average shares
outstanding - basic 31,162,972 23,237,715
TELANETIX, INC.
Supplemental Table of Revenue Breakdown
Three months ended March 31,
2009 2008
Voice and Network Solutions $7,024,192 $6,248,858
Video Solutions 1,535,372 1,407,903
Total $8,559,564 $7,656,761
TELANETIX, INC.
Net Loss to EBITDA Reconciliation
Three months ended March 31,
2009 2008
Adjusted EBITDA (earnings release
purposes only)
Net Loss $(2,257,300) $(6,610,151)
Depreciation and amortization of
purchased intangibles 1,125,572 1,011,824
Interest expense 1,438,590 1,258,055
EBITDA 306,862 (4,340,272)
Adjustments for certain non-cash
expenses:
Impairment of Intangibles
Change in fair market value of
warrant and beneficial
conversion feature liabilities (905,373) 2,208,492
Stock and warrant compensation 280,341 442,393
Adjusted EBITDA $(318,170) $(1,689,387)
SOURCE Telanetix, Inc.
http://www.telanetix.com
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