Telanetix,Inc - FORM 8-K - EX-99.1 - March 23, 2011

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Exhibit 99.1
 
 
Investor Relations:
Charles Messman or
Todd Kehrli
MKR Group
At the Company:
Paul Quinn, CFO
(206) 515-9165
 
(323) 468-2300
  
 
tnxi@mkr-group.com
 
 
  
 
 
Telanetix Reports Fourth Quarter and Full Year 2010 Financial Results
Fourth Quarter Core Voice Revenue Increased 10 Percent Year-Over-Year;
Achieves Fifth Consecutive Quarter of Positive Adjusted EBITDA

BELLEVUE, WA – March 23, 2011 - Telanetix, Inc. (OTC BB: TNXI), a leading communications solutions provider offering next generation voice services and solutions to the business market, today reported financial results for its 2010 fourth quarter and full year ended December 31, 2010.

Fourth Quarter 2010 Financial Highlights

§  
Core voice revenue increased 10 percent year-over-year to $6.0 million, compared to $5.4 million in the fourth quarter of 2009.

§  
Total revenue was $6.7 million, a decrease of 6.9 percent compared to $7.2 million in the fourth quarter of 2009. The decline in total revenue was due to the expected decrease in legacy product revenues, which were $733,000, a 59 percent decrease compared to $1.8 million in the fourth quarter of 2009.

§  
Adjusted EBITDA improved to $536,000, compared to $130,000 in the fourth quarter last year.

§  
Net loss from continuing operations was $1.6 million, or $0.00 per share, compared to net income of $1.1 million, or $0.04 per share, in the fourth quarter last year.

§  
Total cash and cash equivalents increased $58,000 to $2.3 million at December 31, 2010.
 
Full Year 2010 Financial Highlights

§  
Core voice revenue increased 15.9 percent year-over-year to $23.7 million.

§  
Total revenue increased $228,000 year-over-year to $28.5 million.

§  
Adjusted EBITDA of $1.7 million, first full year positive EBITDA and a more than $2.1 million improvement compared to an adjusted EBITDA loss of $379,000 for 2009.

§  
Net income from continuing operations was $10.3 million, or $0.06 per share, which included a $16.5 million gain on recapitalization and $800,000 credit from change in fair market value of derivative liabilities, compared to net loss in 2009 of $8.1 million, or a loss of $0.26 per share, which included a $4.1 million expense for interest and a $3.8 million credit for warrant and beneficial conversion feature liabilities.
 
 
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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 earning 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 EBIDTA can be found at the end of this release.

"Our fourth quarter core voice revenue increased 10 percent over the same quarter last year and full-year core revenue grew nearly 16 percent over 2009,” said Doug Johnson, Telanetix’s CEO.  “In addition, we achieved our fifth consecutive quarter of positive adjusted EBITDA and first full year positive EBITDA.  During the quarter, our legacy revenue flattened out from recent declines, and we expect it to stay flat or modestly improve in 2011."
 
"During the year we made progress building on our strategic partnerships and expanding our customer reach by adding new channel partners, including Mitel Networks and Vertical Communications, each of which offers our SIP trunking services to customers ranging from medium-sized businesses to Fortune 1000 enterprises.  We have seen strong initial interest in these services and expect this to be an important growth driver in 2011."

"2010 was a pivotal year for Telanetix and we are pleased with our progress and positive steps that have stabilized the company, including completing a comprehensive recapitalization of the Company. We believe we are well positioned now to build on this stable foundation and further expand our presence and share in the marketplace.  We expect to achieve continued double digit growth in our core revenue for 2011.”
 
 
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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) 314-5232 and to access the call internationally, dial (617) 213-8052 and enter pass code 75412259. 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 March 30, 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 34842285.

About Telanetix, Inc.
Telanetix, Inc. (OTC BB: TNXI) is a leading communications solutions provider offering 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, we've scaled our 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 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 -
 
 
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TELANETIX, INC.
Consolidated Balance Sheets

   
December 31, 2010
  
December 31, 2009
                 
ASSETS
                
Current assets
                
Cash
  
$
2,330,111
    
 $
493,413
  
Accounts receivable, net
    
1,590,022
      
1,888,393
  
Inventory
    
182,924
      
253,563
  
Prepaid expenses and other current assets
    
530,548
      
465,348
  
        Total current assets
    
4,633,605
      
3,100,717
  
Property and equipment, net
    
2,641,731
      
3,733,120
  
Goodwill
    
7,044,864
      
7,044,864
  
Purchased intangibles, net
    
11,178,337
      
13,378,337
  
Other assets
    
583,632
      
870,476
  
        Total assets
  
$
26,082,169
    
 $
28,127,514
  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
                
Current liabilities
                
Accounts payable
  
$
1,609,488
    
 $
1,614,382
  
Accrued liabilities
    
2,326,465
      
3,141,315
  
Deferred revenue
    
1,016,021
      
897,453
  
Income tax payable
    
225,000
      
-
  
Current portion of capital lease obligations
    
404,710
      
683,249
  
Current portion of long-term debt, net
    
1,200,000
      
-
  
Beneficial conversion feature liabilities
    
-
      
4,052,071
  
        Total current liabilities
    
6,781,684
      
10,388,470
  
Non-current liabilities
                
Accrued Interest
    
-
      
2,477,021
  
Deferred revenue, net of current portion
    
253,798
      
264,271
  
Capital lease obligations, net of current portion and debt discount
    
116,251
      
421,782
  
Long-term debt, net of current portion
    
5,291,539
      
-
  
Convertible debentures
    
-
      
18,518,487
  
        Total non-current liabilities
    
5,661,588
      
21,681,561
  
        Total liabilities
    
12,443,272
      
32,070,031
  
Stockholders' equity (deficit)
                
Common stock, $.0001 par value; Authorized: 600,000,000 shares;
                
Issued and outstanding: 344,569,652 and 31,768,320 at December 31, 2010 and December 31, 2009, respectively
34,457
      
3,177
  
Additional paid in capital
    
43,569,588
      
34,848,164
  
Warrants
    
56,953
      
1,551,802
  
Accumulated deficit
    
           (30,022,101)
      
  (40,345,660)
  
        Total stockholders' equity (deficit)
    
13,638,897
      
  (3,942,517)
  
        Total liabilities and stockholders' equity (deficit)
  
$
26,082,169
    
$
28,127,514
  
 
 
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TELANETIX, INC.
Consolidated Statements of Operations
 
    Years ended December 31,  
    2010     2009  
                 
Revenues
  
$
28,520,084
    
$
28,291,925
  
                 
Cost of revenues
    
12,098,727
      
11,815,701
  
                 
Gross profit
    
16,421,357
      
16,476,224
  
                 
Operating expenses
                
Selling and marketing
    
6,817,724
      
6,283,628
  
General and administrative
    
7,402,862
      
8,142,528
  
Research, development and engineering
    
2,566,366
      
2,901,185
  
Depreciation
    
598,940
      
861,779
  
Amortization of purchased intangibles
    
2,200,000
      
2,200,000
  
Total operating expenses
    
19,585,892
      
20,389,120
  
                 
Operating loss
    
(3,164,535
)
    
(3,912,896
)
                 
Other income (expense)
                
Interest income
    
1,079
      
1,391
  
Interest expense
    
(3,306,085
)
    
(4,083,058
)
Gain on debt extinguishment
    
16,497,185
      
-
  
Change in fair market value of derivative liabilities
    
790,648
      
3,782,799
  
Total other income (expense)
    
13,982,827
      
(298,868
)
                 
Income (loss) from continuing operations before taxes
    
10,818,292
      
(4,211,764
)
                 
Income tax expense
    
225,000
      
-
  
                 
Income (loss) from continuing operations
    
10,593,292
      
(4,211,764
)
                 
Loss from discontinued operations
    
(269,733
)
    
(3,853,807
)
                 
Net income (loss)
  
$
10,323,559
    
$
(8,065,571
)
                 
Net income (loss) per share – basic and diluted
                
Continuing operations
  
$
0.06
    
$
(0.14
)
Discontinued operations
    
—
      
(0.12
)
Net income (loss) per share
  
$
0.06
    
$
(0.26
)
                 
Weighted average shares outstanding – basic and diluted
    
175,199,587
      
31,494,707
  
 
 
 
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TELANETIX, INC.
Net Loss to EBITDA Reconciliation
(Unaudited)
 
    Three months ended December 31 ,     Twelve months ended December 31,  
    2010     2009     2010     2009  
Adjusted EBITDA (earnings release purposes only)
                        
Net Profit / (Loss)
   $ (1,556,170 )   $ 1,148,073     $ 10,323,559     $ (8,065,571 )
Depreciation and amortization of purchased intangibles
     998,098       1,022,936       3,976,927       4,424,475  
Interest expense
     833,456       792,310       3,305,006       4,081,440  
Impairment of Intangibles
     -       -       -       1,413,435  
State income tax expense
     187,500       -       225,000       0  
 
EBITDA
     462,884       2,963,319       17,830,492       1,853,779  
Adjustments for certain non-cash expenses:
                                
Gain on restructure
     13,669       -       (16,497,185 )     0  
Change in fair market value of derivative liabilities
     -       (3,557,916 )     (790,648 )     (3,782,799 )
Stock based compensation
     59,571       724,710       1,177,841       1,550,357  
Adjusted EBITDA
   $ 536,124     $ 130,113     $ 1,720,500     $ (378,663 )




 
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Telanetix,Inc Reports