Revenues Up 44%
and Company Maintains Profitability Despite Ongoing Investment
in New International Long Distance Carrier Operations in Israel
May 16, 2005
LONDON, May 16 /PRNewswire-FirstCall/ -- XFONE, Inc. (OTC Bulletin Board: XFNE - News; "XFONE" or "the Company"), a provider of international voice and data communications services, today reported its first quarter financial results for the three months ended March 31, 2005. Financial Highlights for the Three Months Ended March 31, 2005 Compared to the Three Months Ended March 31, 2004 Reflected in British Pounds (convenience translation into U.S. Dollars):
- Revenues increased 43.6% to (pound)3,312,934 (US$6,228,317) from (pound)2,307,215 (US$4,337,564).
- Due largely to expenses associated with the continued build-up of the Company's new 'XFONE 018' international long distance operations in Israel, net income declined to (pound)39,874 (US$76,957) from (pound)103,069 (US$193,770).
- Net Profit, excluding the Israeli "start up" losses, increased to approximately (pound)150,949 ($247,218).
- Diluted earnings per share were (pound)0.004 (US$0.007) compared to (pound)0.010 (US$0.019).
- The Company generated net cash from operations of (pound)25,244 ($47,458), up from net cash used in operations of (pound)192,475 ($361,853).
- Stockholder equity increased to approximately (pound)4.1 Million ($7.8 Million)
- Revenues generated by XFONE's UK-based subsidiary, Swiftnet, were (pound)2,253,639 ($4,236,841) for the three months ended March 31, 2005.
- XFONE USA, XFONE's U.S.-based subsidiary located in Jackson, Mississippi, contributed (pound)861,083 ($1,618,836) in revenues for the three months ended March 31, 2005.
- XFONE 018, the Company's new Israel-based subsidiary, produced (pound)198,210 ($372,635) in revenue during its first three full months in operation from January to March 2005.
- The Company has approximately (pound)3.5 Million ($6.5 Million) in cash and account receivables.
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Guy Nissenson, Company President and Chief Executive Officer, stated, "The first quarter of 2005 represents a major milestone in the exciting growth of our Company, going from a local operator in London to having the first full quarter as a multi-national efficient Telecom Service provider with world class operations in the UK, the United States and Israel. XFONE started the year 2005 on a record pace, and we are very proud of the fact that we have once again set a new historical high in quarterly revenues. Each of our operating subsidiaries performed well in the first quarter. Our operations in the United Kingdom and in the United States each delivered strong results and achieved high and solid revenues and profits. After only three full months in operation, XFONE 018, our new long distance carrier business in Israel, is demonstrating very strong revenue growth and is presently ramping towards achieving positive cash flow ahead of our initial expectations.
"We are determined to continue implementing our business model that is based on aggressive growth that generates considerable profitability. We are confident that the exciting growth XFONE is experiencing will continue through the remainder of the year," concluded Mr. Nissenson.
XFONE, Inc. will also host a teleconference this afternoon beginning at 4:15 PM Eastern and invites all interested parties to join management in a discussion regarding the Company's financials, corporate progression and other meaningful developments. The conference call can be accessed in the U.S. by dialing toll free 1-800-218-0713. International callers can access the call by dialing 303-262-2140.
For those unable to participate at that time, a replay of the
teleconference can be accessed domestically by dialing 1-800-405-2236 and
entering the passcode 11029658# or, for international callers, please dial
303-590-3000 and enter the passcode 11029658#. The replay will be available
for 30 days.
XFONE, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEET |
| |
March 31,
2005
Unaudited
(in Pounds) |
December
31,
2004
Audited
(in Pounds) |
March 31,
2005
Unaudited
(Convenience translation into
U.S.$) |
| Current assets |
|
|
|
| Cash |
643,048 |
797,097 |
$1,208,930 |
Accounts receivable,
net Prepaid expenses and |
2,817,808 |
2,271,448 |
5,297,479 |
| other receivables |
538,167 |
693,524 |
1,011,754 |
| Loan to shareholder |
123,965 |
123,965 |
233,054 |
| |
|
|
|
| Total Current Assets |
4,122,988 |
3,886,034 |
$7,751,217 |
| |
|
|
|
| Loan to shareholder |
123,966 |
123,966 |
233,056 |
| |
|
|
|
| Investments |
53,973 |
20,885 |
101,469 |
| |
|
|
|
| Fixed assets |
|
|
|
| Cost |
2,296,695 |
1,516,854 |
4,317,787 |
Less -
accumulated depreciation |
(436,731) |
(261,561) |
(821,054) |
| |
|
|
|
| Total fixed assets, net |
1,859,964 |
1,255,293 |
3,496,733 |
| |
|
|
|
| Other Assets, net |
2,379,060 |
57,106 |
4,472,633 |
| |
|
|
|
| Total assets |
8,539,951 |
5,343,284 |
$16,055,108 |
| |
|
|
|
| Current liabilities |
|
|
|
Notes payable -
current portion |
578,493 |
72,041 |
$1,087,567 |
| Trade payables |
2,227,277 |
2,035,368 |
4,187,281 |
Other liabilities and
accrued expenses |
670,435 |
224,032 |
1,260,418 |
| Obligations under capital
leases - current portion |
159,449 |
147,988 |
299,764 |
| |
|
|
|
| Total current liabilities
|
3,635,654 |
2,479,429 |
$6,835,030 |
| |
|
|
|
| Deferred taxes |
311 |
52 |
585 |
| |
|
|
|
| Notes payable |
666,031 |
509,867 |
1,252,139 |
| |
|
|
|
| Obligations under capital
lease |
104,708 |
141,944 |
196,851 |
| |
|
|
|
| Total liabilities |
4,406,704 |
3,131,292 |
$8,284,605 |
| |
|
|
|
Guarantees, Commitments
& Liens Shareholders' equity Preferred stock - 50,000,000
shares authorized, none issued Common stock: 25,000,000
shares authorised, (pound).000532
par value; 6,220,871 issued
and outstanding |
4,290 |
4,290 |
8,064 |
Foreign currency
translation adjustment |
(386) |
1,210 |
(726) |
| Contributions in excess of
shares |
3,252,910 |
1,373,556 |
6,115,471 |
| Retained earnings |
876,433 |
832,936 |
1,647,694 |
| |
|
|
|
| Total shareholders' equity |
4,133,247 |
2,211,992 |
7,770,503 |
| |
|
|
|
Total liabilities and
shareholders' equity |
8,539,951 |
5,343,284 |
$16,055,108 |
XFONE, Inc. and Subsidiaries
STATEMENTS OF OPERATIONS |
| |
Three months Ended
March 31
2005
Unaudited
(in pounds) |
Three months Ended
March 31
2004
Unaudited
(in pounds) |
Three months Ended
March 31
2005
Unaudited
(Convenience translation
into U.S$) |
| Revenues |
3,312,934 |
2,307,215 |
$6,228,317 |
| Cost of revenues |
(2,274,071) |
(1,561,238) |
(4,275,254) |
| Gross profit |
1,038,863 |
745,977 |
1,953,063 |
| |
|
|
|
| Operating expenses: |
|
|
|
| Research and development |
(5,000) |
(10,000) |
(9,400) |
| Marketing and selling |
(384,190) |
(367,207) |
(722,277) |
| General and administrative
|
(638,258) |
(234,168) |
(1,199,925) |
| |
|
|
|
| Total operating expenses |
(1,027,448) |
(611,375) |
(1,931,602) |
| |
|
|
|
| Operating profit |
11,415 |
134,602 |
21,461 |
| |
|
|
|
| Financing expenses - net |
(14,808) |
(10,846) |
(27,839) |
Equity in income of
affiliated company |
33,088 |
-- |
62,205 |
| |
|
|
|
| Other income |
2,332 |
5,313 |
4,384 |
| |
|
|
|
Income before minority
interest and taxes |
32,027 |
129,069 |
60,211 |
| |
|
|
|
| Minority Interest |
30,920 |
-- |
58,129 |
| |
|
|
|
| Income Before taxes |
62,947 |
129,069 |
118,340 |
| |
|
|
|
| Taxes on income |
(19,450) |
(26,000) |
(36,566) |
| |
|
|
|
| Net income |
43,497 |
103,069 |
$81,774 |
| |
|
|
|
Earnings Per Share:
Basic |
0.007 |
0.020 |
$0.012 |
| |
|
|
|
| Diluted |
0.004 |
0.010 |
$0.007 |
About XFONE, Inc.
A U.S.-domiciled corporation, XFONE, Inc. is an international voice, video and data communications services provider with operations in the United Kingdom, the United States and Israel that offers a wide range of services, which include: local, long distance and international telephony services; prepaid and postpaid calling cards; cellular services; Internet services; messaging services (Email/Fax Broadcast, Email2Fax and Cyber-Number); and reselling opportunities. The Company serves customers worldwide. For the Company’s website, please visit: www.xfone.com
This press release contains forward-looking statements. The words or phrases "should," "would be," "will allow," "intends to," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," or similar expressions are intended to identify "forward-looking statements." The Company's financial results reflected above should not be construed by any means as representative of the current or future value of its common stock. All information set forth in this press release, except historical and factual information, represents forward-looking statements. This includes all statements about the Company's plans, beliefs, estimates and expectations. These statements are based on current estimates and projections, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These risks and uncertainties include issues related to rapidly changing technology and evolving standards in the industries in which the Company and its subsidiaries operate; the ability to obtain sufficient funding to continue operations, maintain adequate cash flow, profitably exploit new business, and license and sign new agreements; the unpredictable nature of consumer preferences; and other factors set forth in the Company's most recently filed annual report and registration statement. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the risks and uncertainties described in other documents that the Company files from time to time with the U.S. Securities and Exchange Commission.
| For More Information,
Please Contact: |
| U.S. IR Contact |
Israel IR Contact |
Xfone Contact |
John Nesbett/Jennifer Belodeau
Institutional Marketing Services (IMS)
Phone: 1-203-972-9200
E-mail: jnesbett@institutionalms.com
|
Zvi Rabin
Kwan Communications
Tel: (Israel) +972 50 560 0140
E-mail: zvi@kwan.co.il |
Niv Krikov
Chief Financial Officer
Phone: + 972.39254446 (Israel)
E-mail: niv@xfone.com |
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