Fusion Reports First Quarter 2009 Results

NEW YORK, May 15  /PRNewswire-FirstCall/ -- Fusion (AMEX:FSN) today announced financial results for the quarter ended March 31, 2009.

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Fusion reported Consolidated Revenues of $9.0 million for the quarter ended March 31, 2009.  This represented a decrease of 20% compared to revenues of $11.2 million for the quarter ended March 31, 2008, and excluded revenues of $0.3 million from the Consumer segment which has now been reclassified to discontinued operations. Prior to the reclassification, the year over year revenue decrease was 19%.  The change over the prior period was primarily attributable to a decrease in the Carrier segment; however, the Company's Corporate segment increased 252% from the first quarter of 2008.

Consolidated Gross Margin after the reclassification decreased to 5.9% for the first quarter of 2009, compared to 6.5% for the first quarter of 2008.  Prior to the reclassification, the Consolidated Gross Margin was 6.3% for the first quarter of 2009 compared to 7.1% for the first quarter of 2008.

Selling, General and Administrative costs improved $0.5 million, or 16% for the first quarter of 2009 compared to the first quarter of 2008.  The improvement was primarily attributable to the Company's continuing focus on cost-containment and efforts to maximize the infrastructure efficiencies that have been ongoing for the past year.

For the quarter ended March 31, 2009, Adjusted EBITDA loss (earnings before interest, taxes, depreciation, amortization, and specific non-recurring and non-cash adjustments) increased $0.2 million, or 13%, to ($1.9) million, compared to Adjusted EBITDA of ($1.7) million for first quarter ended 2008.

Fusion also reported an increase in Net Loss applicable to Common Stockholders of ($3.2 million) or ($0.07) per share quarter ended March 31, 2009, compared to a Net Loss applicable to Common Stockholders of ($2.5) million or ($0.08) per share for the quarter ended March 31, 2008.  The primary reason for this increase was that in the first quarter of 2008 there was a gain on debt forgiveness of $0.6 million.  Excluding that gain, the Net Loss applicable to Common Shareholders in the first quarter of 2008 would have also been ($3.2 million), representing no significant change in the year over year comparison.

As of March 31, 2009, the Company had current assets of $2.5 million compared to $4.2 million as of December 31, 2008.  The decrease was primarily a result of a decrease in Accounts Receivable due to early receipt in the first quarter of 2008 of certain receivables.  Total Liabilities and Stockholders' equity(deficit) at March 31, 2009 was ($7.2) million deficit, compared to ($9.5) million deficit as of December 31, 2008.  The primary reason for the change was the increase in the accumulated deficit of $(3.0) million, offset by additional equity investments of $0.7 million.

Commenting on the results, Matthew Rosen, Chief Executive Officer of Fusion, said, "Since the beginning of 2009, Fusion has successfully raised an additional $2.4 million, but continued to experience working capital and resource constraints, which, along with current global economic conditions, negatively impacted the Company's first quarter financial results. Additionally, the first quarter of 2009 has been one of change for Fusion, as we finalized our plans to exit the Consumer business and restructure the Company.  With the restructuring largely behind us, our primary focus is continuing to drive the growth of the corporate and carrier business segments and secure the capital necessary to implement our business plan. With this focus, we look forward to improved financial results in the coming quarters."

Use of Non-GAAP Financial Measures:

The Company believes that EBITDA (earnings before interest, taxes, depreciation and amortization) is useful to investors because it is commonly used in the communications industry to analyze companies on the basis of operating performance and leverage. The Company also believes that EBITDA provides investors with a measure of the Company's operational and financial progress that corresponds with the measurements used by management as a basis for allocating resources and making other operating decisions.  Adjusted EBITDA provides an adjusted view of EBITDA that takes into account certain significant nonrecurring transactions, such as impairment losses associated with divested businesses and forgiveness of debt, which vary significantly between periods and are not recurring in nature. Although the Company uses Adjusted EBITDA as one of several financial measures to assess its operating performance, its use is limited as it excludes certain significant operating expenses. EBITDA and Adjusted EBITDA are not intended to represent cash flows for the period presented, nor have they been presented as an alternative to operating income or as an indicator of operating performance and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with Generally Accepted Accounting Principles (GAAP).  Consistent with the SEC Regulation G, the non-GAAP measures in this press release have been reconciled to the nearest GAAP measure, which can be viewed under the heading "Reconciliation of Net Income (Loss) to Adjusted EBITDA", immediately following the Consolidated Statements of Operations included in this press release.

Earnings Conference call

The Company will host a conference call to discuss its financial results at 1:00 P.M. ET today.  The conference call can be accessed by dialing 877-604-9668.  A replay of the call will be available through May 18, 2009. To listen to the replay, please call 888-203-1112 (Domestic) or 719-457-0820 (International).  To access the replay, users will need to enter the following passcode:  8389574. The call will be available live on the Internet at http://www.fusiontel.com/.  The online archive of the web cast will be available for one year following the call.

Statements in this Press Release that are not purely historical facts, including statements regarding Fusion's beliefs, expectations, intentions or strategies for the future, may be "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the plans, intentions and expectations reflected in or suggested by the forward-looking statements. Such risks and uncertainties include, among others, introduction of products in a timely fashion, market acceptance of new products, cost increases, fluctuations in and obsolescence of inventory, price and product competition, availability of labor and materials, development of new third-party products and techniques that render Fusion's products obsolete, delays in obtaining regulatory approvals, potential product recalls, securing necessary funding and litigation. Risk factors, cautionary statements and other conditions which could cause Fusion's actual results to differ from management's current expectations are contained in Fusion's filings with the Securities and Exchange Commission and available through http://www.sec.gov/.

  FUSION        Philip Turits, Treasurer
  CONTACT:      212-201-2407
                

                Damon Testaverde, Managing Director
                Network Financial Securities
                732-758-9001
                



         FUSION TELECOMMUNICATIONS INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS

                                                        Three Months Ended
                                                             March 31,
                                                             ---------
                                                         2009         2008
                                                         ----         ----
  Revenues                                         $9,002,300  $11,207,002
  Operating expenses:
    Cost of revenues                                8,467,891   10,481,360
    Depreciation and amortization                     489,471      447,680
    Selling, general and administrative expenses    2,470,280    2,953,464
    Advertising and Marketing                           7,496       11,452
                                                        -----       ------
         Total operating expenses                  11,435,138   13,893,956
                                                   ----------   ----------
  Operating loss                                   (2,432,838)  (2,686,954)

  Other income (expense)
    Interest income (expense), net                    (95,781)     (15,659)
    Gain (loss) on debt forgiveness                         -      634,991
    Gain (loss) on sale of investment in Estel              -            -
    Loss from investment in Estel                           -            -
    Other                                               2,215       (1,237)
                                                        -----       ------
       Total other income (expense)                   (93,566)     618,095
                                                      -------      -------
  Loss from continuing operations                  (2,526,404)  (2,068,859)

  Income (loss) from discontinued operations         (479,811)    (294,130)
                                                     --------     --------

  Net loss                                        $(3,006,215) $(2,362,989)
                                                  ===========  ===========
  Losses applicable to common stockholders
    Loss from continuing operations               $(2,526,404) $(2,068,859)
    Preferred stock dividends in arrears             (157,710)    (159,462)
                                                     --------     --------
  Net loss applicable to common stockholders
    from continuing operations                     (2,684,114)  (2,228,321)
    Income from discontinued operations              (479,811)    (294,130)
                                                     --------     --------
  Net loss applicable to common stockholders      $(3,163,925) $(2,522,451)
                                                  ===========  ===========

  Basic and diluted net loss per common share:
    Loss from continuing operations                    $(0.06)      $(0.07)
    Income (loss) from discontinued operations          (0.01)       (0.01)
                                                        -----        -----
  Net loss applicable to common stockholders           $(0.07)      $(0.08)
                                                       ======       ======

  Weighted average shares outstanding
    Basic and diluted                              47,880,802   32,818,945
                                                   ==========   ==========


        FUSION TELECOMMUNICATIONS INTERNATIONAL, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEET

                                        March 31, 2009  December 31, 2008
                                        --------------  -----------------
  ASSETS
  Current assets
    Cash and cash equivalents                 $241,664           $427,433
    Accounts receivable, net
     of allowance                            1,746,056          3,240,670
    Prepaid expenses and other
     current assets                            311,000            261,863
    Assets held for sale                        72,286                  -
    Assets of Discontinued Operations          135,785            302,533
                                               -------            -------
      Total current assets                   2,506,791          4,232,499
                                             ---------          ---------

  Property and equipment, net                3,325,598          3,829,669
                                             ---------          ---------
  Other assets
    Security deposits                           51,042             50,241
    Restricted cash                            416,566            416,566
    Intangible assets, net                     807,773            810,908
    Other assets                                50,852            127,908
                                                ------            -------
      Total other assets                     1,326,233          1,405,623
                                             ---------          ---------
  TOTAL ASSETS                              $7,158,622         $9,467,791
                                            ==========         ==========

  LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
  Current Liabilities
    Long-term debt, current portion         $3,522,992         $2,362,992
    Capital and equipment financing
     lease obligations, current portion        126,502            122,960
    Accounts payable and accrued expenses    9,438,723         10,039,015
    Liabilities of discontinued operations     226,116            261,972
                                               -------            -------
      Total current liabilities             13,314,333         12,786,939
                                            ----------         ----------
  Long-term liabilities
    Other long-term liabilities                911,190          1,445,431
                                               -------          ---------
      Total long-term liabilities              911,190          1,445,431
                                               -------          ---------
  Stockholders' equity
    Preferred stock,
     Class A-1, A-2, A-3 & A-4                      80                 80
    Common stock                               499,689            457,500
    Capital in excess of par value         125,046,272        124,384,568
    Accumulated deficit                   (132,612,942)      (129,606,727)
                                          ------------       ------------
      Total stockholders' equity            (7,066,901)        (4,764,579)
                                            ----------         ----------
  TOTAL LIABILITIES AND
   STOCKHOLDERS' EQUITY                     $7,158,622         $9,467,791
                                            ==========         ==========


    FUSION TELECOMMUNICATIONS INTERNATIONAL, INC. AND SUBSIDIARIES

            RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA


                                                  Three Months Ended
                                                      March 31,
                                                     ----------
                                                 2009          2008
                                                 ----          ----

  Net loss                                $(3,006,215)  $(2,362,989)

  Income from discontinued operations         479,811       294,130
                                              -------       -------
  Loss from continuing operations          (2,526,404)   (2,068,859)
  Adjustments:
  Interest (income) expense, net               95,781        15,659
  Depreciation and amortization               489,471       447,680
                                              -------      -------
  EBITDA                                   (1,941,152)   (1,605,520)
  Adjustments:
  (Gain) loss on settlements of debt                -      (634,991)
  (Gain)/loss on disposal of fixed assets           -           537
  Communication charges                             -       361,119
  Other taxes                                  33,846       108,131
  Non cash compensation                        34,945       114,347
                                               ------       -------
  Adjusted EBITDA                         $(1,872,361)  $(1,656,377)
                                          ===========   ===========


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DATASOURCE: Fusion



CONTACT:  Philip Turits, Treasurer, Fusion, [phone],

; Damon Testaverde, Managing Director, Network Financial

Securities, [phone], 



Web Site:  http://www.fusiontel.com/ 

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