Fusion Reports Fourth Quarter and Full Year 2007 Results

NEW YORK, March 31 /PRNewswire-FirstCall/ -- Fusion (Amex: FSN) today
announced financial results for the year and fourth quarter ended December 31,
2007.
Recent highlights:
-- Full year 2007 Revenue reaches $55.0 million - an increase of 17% over
prior year;
-- Fourth Quarter Revenue reaches $14.7 million - an increase of 10.2%
over prior quarter and a decrease of 3.8% from prior year;
-- Fourth Quarter Adjusted EBITDA improves for fifth consecutive quarter -
improving by 32.4% or $0.7 million from prior year and 9.7% or $.16
million from prior quarter;
-- Excluding certain one-time items, 2007 Net Loss decreased $2.6 million
from 2006, or 20%;
-- SG&A improves for sixth consecutive quarter - down $0.7 million or 19%
from prior year and $4k from prior quarter;
-- $1.5 million raised in Common Stock equity financing;
-- Don Hutchins promoted to President and Chief Operating Officer; Matthew
Rosen remains Chief Executive Officer.

For the year and quarter ended December 31, 2007, Fusion reported revenues
of $55.0 million, and $14.7 million, respectively. Total year revenues were a
17% increase from revenues of the year ended December 31, 2006 of $47.1
million. Fourth quarter 2007 revenues were 10.2% higher than the prior
quarter, and 3.8% below the prior year. The total year over year increase was
the result of growth in the Company's Carrier Services segment.
For the year and quarter ended December 31, 2007, Adjusted EBITDA, which
excludes certain non-recurring items, was ($7.4) million and ($1.5) million
respectively, compared to ($10.6) million and ($2.2) million for the year and
quarter ended December 31, 2006. The fourth quarter represented the fifth
consecutive quarter that the Company has improved its Adjusted EBITDA
performance.
Selling, general and administrative costs decreased for the sixth
consecutive quarter, declining to $12.5 million for the total year 2007
compared to $14.8 million for the total year of 2006, and $2.9 million for the
fourth quarter compared to $3.6 million in the fourth quarter of 2006. The
decrease over the prior year was primarily the result of continued management
emphasis on spending controls and decreased costs in personnel related
expenses.
For the full year 2007, Fusion reported a 5.1% decrease over the prior
year in the net loss, at ($12.7) million, compared to a net loss of ($13.4)
million in 2006. The net loss applicable to common stockholders was ($13.2)
million or ($0.48) per share in 2007, compared to the net loss applicable to
common stockholders of ($13.4) million or ($0.50) per share for 2006.
Included in the 2007 results was a non-recurring, non-cash loss on impairment
of $4.0 million recorded for a partial impairment of goodwill associated with
the Company's acquisition of Efonica. Excluding the loss on impairment and
one-time items associated with gain on debt forgiveness, and a net gain on
sale/disposal of certain assets in both years, the net loss would have been
($10.3) million in 2007 compared to ($12.9) million in 2006, an improvement of
$2.6 million or 20% year over year.
Commenting on the results, Matthew Rosen, Chief Executive Officer of
Fusion, said, "2007 was a year of continued progress for Fusion, as we
increased revenues by 17% while improving Adjusted EBITDA by 30%. We are now
focusing all our efforts on driving the ongoing improvements in operating
results necessary to continue the positive trends of this past year."
As of December 31, 2007, the Company had Current Assets of $6.3 million
and Total Assets of $18.1 million, compared to $10.6 million and $27.6 million
respectively as of December 31, 2006. The decrease in Current Assets was
primarily the result of a decrease in cash and cash equivalents, as well as a
decrease in Accounts Receivable. However, the Company initiated a round of
planned Common Stock equity financing, and raised $1.5 million during the
fourth quarter. The above-mentioned impairment of $4.0 million in goodwill
associated with the investment in Efonica decreased Other Assets from $10.5
million to $6.4 million.
As of December 31, 2007, the Company's Current Liabilities had decreased
to approximately $10.5 million (consisting primarily of $9.7 million in
Accounts Payable and Accrued Expenses) from approximately $13.3 million as of
December 31, 2006.
Stockholders' Equity at December 31, 2007 was $6.7 million as compared to
$13.4 million as of December 31, 2006.
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 to Adjusted EBITDA" in this
press release.
Earnings Conference call
The Company will host a conference call to discuss its financial results
at 1:00 p.m. EDT on March 31, 2008. The call can be accessed by dialing
1-877-675-4755. The call will be available in a "listen only" mode live on the
Internet at www.fusiontel.com. A replay of the call will be available through
Thursday, April 3, 2008. 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: 1304717. The online archive of the
web cast will be available for one year following the call.
About Fusion:
Fusion provides its Efonica branded VoIP (Voice over Internet Protocol),
Internet access, and other Internet services to, from, in, and between Asia,
the Middle East, Africa, Latin America and the Caribbean. The company
provides services to consumers, corporations, and communications carriers
worldwide. For more information please go to http://www.fusiontel.com or
http://www.efonica.com.
(Logo: http://www.newscom.com/cgi-bin/prnh/20050705/NYTU073LOGO )
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 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 TELECOMMUNICATIONS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET

Dec. 31, 2007 Dec. 31, 2006
ASSETS
Current assets
Cash and cash equivalents $114,817 $2,743,155
Accounts receivable, net of allowance 5,545,408 6,743,753
Restricted cash - 365,000
Prepaid expenses and other current
assets 481,556 622,207
Assets held for sale 129,231 129,231
Total current assets 6,271,012 10,603,346

Property and equipment, net 5,425,846 6,422,016

Other assets
Security deposits 66,638 141,868
Restricted cash 416,566 416,566
Goodwill 964,557 4,971,221
Intangible assets, net 4,892,215 4,913,360
Other assets 91,455 104,923
Total other assets 6,431,431 10,547,938
TOTAL ASSETS $18,128,289 $27,573,300

LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current Liabilities
Long-term debt, current portion $566,567 $150,000
Capital and equipment financing lease
obligations, current portion 233,759 1,066,746
Accounts payable and accrued expenses 9,663,325 11,461,112
Investment in Estel - 554,286
Liabilities of discontinued
operations 15,829 95,085
Total current liabilities 10,479,480 13,327,229

Long-term liabilities
Other long-term liabilities 953,626 800,113
Total long-term liabilities 953,626 800,113

Stockholders' equity (deficit)
Preferred stock, Class A-1, A-2, A-3
& A-4 80 39
Common stock 299,078 269,590
Common stock, Class A - -
Capital in excess of par value 120,402,691 114,514,725
Accumulated deficit (114,006,666) (101,338,396)
Total stockholders' equity
(deficit) 6,695,183 13,445,958

TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $18,128,289 $27,573,300

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

Three Months Ended Fiscal Year Ended
December 31, December 31,
2007 2006 2007 2006

Revenues $14,717,018 $15,293,270 $55,023,860 $47,087,064
Operating expenses:
Cost of revenues 13,604,176 13,840,169 50,797,354 42,463,724
Depreciation and
amortization 460,303 532,550 1,709,040 1,397,094
Loss on Impairment 4,006,664 719,793 4,006,664 867,212
Selling, general
and administrative
expenses 2,891,905 3,557,713 12,484,485 14,803,062
Advertising and
Marketing 5,322 327,603 146,471 1,335,745
Total operating
expenses 20,968,370 18,977,828 69,144,014 60,866,837
Operating loss (6,251,352) (3,684,558) (14,120,154) (13,779,773)

Other income (expense)
Interest income
(expense), net (6,743) 541 (17,043) 204,327
Gain (loss) on debt
forgiveness 618,885 - 618,885 465,854
Gain (loss) on sale
of other assets - - 937,578 -
Loss from investment
in Estel - (66,468) (60,000) (185,234)
Other (48,612) (18,816) (27,536) 44,801
Minority interests - 669 - 67,694
Total other
income (expense) 563,530 (84,074) 1,451,884 597,442
Loss from continuing
operations (5,687,822) (3,768,632) (12,668,270) (13,182,331)

Income (loss) from
discontinued
operations - 99,230 - (168,871)

Net loss $(5,687,822) $(3,669,402) $(12,668,270) $(13,351,202)

Losses applicable to
common stockholders
Loss from
continuing
operations $(5,687,822) $(3,768,632) $(12,668,270) $(13,182,331)
Preferred stock
dividends in
arrears - - (572,087) -
Net loss applicable
to common
stockholders
from continuing
operations (5,687,822) (3,768,632) (13,240,357) (13,182,331)
Income from
discontinued
operations - 99,230 - (168,871)
Net loss applicable
to common
stockholders $(5,687,822) $(3,669,402) $(13,240,357) $(13,351,202)

Basic and diluted
net loss per common
share:
Loss from continuing
operations $(0.20) $(0.14) $(0.48) $(0.49)
Income (loss) from
discontinued
operations - 0.00 - (0.01)
Net loss applicable
to common stockholders $(0.20) $(0.14) $(0.48) $(0.50)

Weighted average
shares outstanding
Basic and diluted 28,360,155 26,953,666 27,314,196 26,737,083

FUSION TELECOMMUNICATIONS INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA

Three Months Ended Fiscal Year Ended
December 31, December 31,
2007 2006 2007 2006

Net loss $(5,687,822) $(3,669,402) $(12,668,270) $(13,351,202)

Income from
discontinued
operations - (99,230) - 168,871
Loss from continuing
operations (5,687,822) (3,768,632) (12,668,270) (13,182,331)
Adjustments:
Interest (income)
expense, net 6,743 (541) 17,043 (204,327)
Depreciation and
amortization 460,303 532,550 1,709,040 1,397,094
EBITDA (5,220,776) (3,236,623) (10,942,187) (11,989,564)
Adjustments:
(Gain) loss on debt
forgiveness (618,885) - (618,885) (465,854)
(Gain)/loss on
disposal of fixed
assets 115,566 18,818 105,807 (22,162)
(Gain) loss on sale
of other assets - - (937,578) -
Loss on impairment 4,006,664 719,793 4,006,664 867,212
Other taxes 112,303 33,343 410,475 135,824
Non cash
compensation 88,650 222,418 544,417 856,392
Adjusted EBITDA $(1,516,478) $(2,242,251) $(7,431,287) $(10,618,152)

CONTACT: Philip Turits
212-201-2407
pturits@fusiontel.com

SOURCE Fusion

Philip Turits of Fusion, +1-212-201-2407, pturits@fusiontel.com