Telanetix,Inc - FORM 8-K - EX-99.1 - March 15, 2012

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Exhibit 99.1
 
 
                                                                                   
 
Investor Relations:
Charles Messman or
Todd Kehrli
Company Contact:
Paul C. Bogonis, CFO
(206) 529-6542
  MKR Group
(323) 468-2300
tnix@mkr-group.com
Telanetix, Inc.
(206) 515-9165
 
 
Telanetix Reports Fourth Quarter and Full Year 2011 Financial Results
Fourth Quarter Core Voice Revenue Increased 21% Year-Over-Year;
Record Adjusted EBITDA of $1.2 Million and Positive Operating Income in Fourth Quarter

BELLEVUE, WA – March 15, 2012 - Telanetix, Inc. (OTC BB: TNIX), a leading cloud-based communications provider offering next generation voice services and solutions to the business market, today reported financial results for its 2011 fourth quarter and full year ended December 31, 2011.

Fourth Quarter 2011 Financial Highlights

§  
Core voice revenue increased 21% year-over-year to $6.6 million, compared to $5.5 million in the fourth quarter of 2010.

§  
Total revenue increased 12% year-over-year to $7.5 million, compared to $6.7 million in the fourth quarter of last year, reflecting the expected increase in core product revenues.

§  
Achieved positive operating income of $23,000 for the first time in Company history. Net loss from continuing operations improved to $568,000, or a loss of $0.12 per share, compared to net loss of $1.6 million, or a loss of $0.36 per share, in the fourth quarter last year.

§  
Adjusted EBITDA increased to a record $1.2 million, compared to $536,000 in the fourth quarter last year.

§  
Total cash and cash equivalents were $1.8 million at December 31, 2011 after debt service of $1.4 million during the year.

Full Year 2011 Financial Highlights

§  
Core voice revenue increased 13.4% year-over-year to $24.7 million.

§  
Total revenue increased $187,000 year-over-year to $28.7 million.
 
 
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§  
Net loss from continuing operations was $5.3 million, or a loss of $1.12 per share, compared to net income from continuing operations of $10.3 million, or $4.53 per share, which included a $16.5 million gain on recapitalization and $800,000 credit from change in fair market value of derivative liabilities.
 
§  
Adjusted EBITDA of $2.6 million, representing a second consecutive full year of positive EBITDA and a more than $800,000 increase from adjusted EBITDA of $1.7 million for 2010.

Doug Johnson, Telanetix’ CEO said, “2011 was a pivotal year for Telanetix in which we stabilized the company to create a foundation for growth, and our solid results reported today reflect progress with our shift in strategic focus toward growing our business and further expanding our presence and share in the marketplace.  Core revenue for the fourth quarter grew 21 percent year-over-year to a record $6.6 million and full year total revenue grew 12 percent over 2010. In addition, we achieved our ninth consecutive quarter of positive adjusted EBITDA, posting a record $1.2 million for the fourth quarter, as well as a second consecutive full year of positive EBITDA.

“During the year we made material progress building on our strategic partnerships and expanding our customer reach by adding significant new channel partners, including Mitel Networks, Vertical Communications and Staples, and growing existing relationships including Costco and Office Depot,” Johnson concluded.

FY-2012 Financial Guidance
 
Based on the strong market acceptance Telanetix has seen for its DPS and SIP trunking services, the Company expects to achieve total revenue for 2012 of between $31.5 million to $32.0 million, representing growth of approximately 10% to 12%, and core voice revenue for 2012 of between $28.0 million and $28.5 million, representing growth of between 13% and 15%.  The Company also expects to achieve adjusted EBITDA for 2012 of between $4.50 million and $4.75 million, representing growth of approximately 73% to 83%.  Telanetix expects to fund this growth organically without need to raise additional capital.

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 earnings 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 and severance charges.  A reconciliation of net income to adjusted EBIDTA can be found at the end of this release.
 
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) 270-6057 and to access the call internationally, dial (617) 213-8891 and enter pass code 38318731. 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 22, 2012 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 81462315.

 
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About Telanetix, Inc.
Telanetix, Inc. (OTC BB: TNXI) is a leading cloud based communications solutions provider offering next generation voice 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 2012, 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, 2011
  
December 31, 2010
                 
ASSETS
                
Current assets
                
  Cash
  
$
1,840,265
    
 $
2,330,111
  
  Accounts receivable, net
    
1,925,955
      
1,590,022
  
  Inventory
    
113,305
      
182,924
  
  Deferred Financing
    
304,456
      
-
  
  Prepaid expenses and other current assets
    
370,589
      
530,548
  
        Total current assets
    
4,554,570
      
4,633,605
  
Property and equipment, net
    
1,683,337
      
2,641,731
  
Goodwill
    
7,044,864
      
7,044,864
  
Purchased intangibles, net
    
8,978,337
      
11,178,337
  
Other assets
    
379,496
      
583,632
  
        Total assets
  
$
22,640,604
    
 $
26,082,169
  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
                
Current liabilities
                
  Accounts payable
  
$
1,524,645
    
 $
1,609,488
  
  Accrued liabilities
    
2,538,829
      
2,326,465
  
  Deferred revenue
    
1,063,548
      
1,016,021
  
  Interest tax payable
    
—
      
225,000
  
  Current portion of capital lease obligations
    
356,227
      
404,710
  
  Current portion of long-term debt
    
3,502,213
      
1,200,000
  
        Total current liabilities
    
8,985,462
      
6,781,684
  
Non-current liabilities
                
  Deferred revenue, net of current portion
    
170,219
      
253,798
  
  Capital lease obligations, net of current portion
    
353,860
      
116,251
  
  Long-term accounts payable
    
39,444
      
—
  
  Long-term debt, net of current portion
    
4,306,218
      
5,291,539
  
        Total non-current liabilities
    
4,869,741
      
5,661,588
  
        Total liabilities
    
13,855,203
      
12,443,272
  
Stockholders' equity (deficit)
                
  Common stock, $.0001 par value; Authorized: 8,000,000 shares;
                
Issued and outstanding: 4,820,098 and 4,594,262 at December 31, 2011
and December 31, 2010, respectively
482
      
34,457
  
  Additional paid in capital
    
44,084,429
      
43,569,588
  
  Warrants
    
56,953
      
56,953
  
  Accumulated deficit
    
           (35,356,463
 )     
  (30,022,101
 ) 
        Total stockholders' equity (deficit)
    
8,785,401
      
  13,638,897
  
        Total liabilities and stockholders' equity (deficit)
  
$
22,640,604
    
$
26,082,169
  
 
 
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TELANETIX, INC.
Consolidated Statements of Operations
 
    Years ended December 31,  
     
2011
      
2010
  
                 
Revenues
  
$
28,706,786
    
$
28,520,084
  
                 
Cost of revenues
    
11,835,530
      
12,098,727
  
                 
Gross profit
    
16,871,256
      
16,421,357
  
                 
Operating expenses
                
Selling and marketing
    
6,694,572
      
6,817,724
  
General and administrative
    
7,711,721
      
7,402,862
  
Research, development and engineering
    
1,884,213
      
2,566,366
  
Depreciation
    
638,410
      
598,940
  
Amortization of purchased intangibles
    
2,200,000
      
2,200,000
  
Total operating expenses
    
19,128,916
      
19,585,892
  
                 
Operating loss
    
(2,257,660
)
    
(3,164,535
)
                 
Other income (expense)
                
Interest income
    
239
      
1,079
  
Interest expense
    
(3,187,449
)
    
(3,306,805
)
Gain/(loss) on debt extinguishment
    
—
      
16,497,185
  
Change in fair market value of derivative liabilities
    
—
      
790,648
  
Total other income (expense)
    
(3,187,210
)
    
13,982,827
  
                 
Income (loss) from continuing operations before taxes
    
(5,444,870
)
    
10,818,292
  
                 
Income tax expense (benefit)
    
(110,508
)
    
225,000
  
                 
Income (loss) from continuing operations
    
(5,334,362
)
    
10,593,292
  
                 
Loss from discontinued operations
    
—
      
(269,733
)
                 
Net income (loss)
  
$
(5,334,362
)
  
$
10,323,5599
  
                 
Net income (loss) per share – basic and diluted
                
Continuing operations
  
$
(1.12
)
  
$
4.53
  
Discontinued operations
    
—
      
(0.11
)
Net income (loss) per share
  
$
(1.12
)
  
$
4.42
  
                 
Weighted average shares outstanding – basic and diluted
    
4,747,706
      
2,335,994
  
 
 
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TELANETIX, INC.
Net Income (Loss) to EBITDA Reconciliation
(Unaudited)
 
    Three months ended December 31,     Twelve months ended December 31,  
   
2011
    
2010
    
2011
    
2010
  
Adjusted EBITDA (earnings release purposes only)
                        
Net Income / (Loss)
   $ (568,440 )   $ (1,556,170 )   $ (5,334,362 )   $ 10,323,559  
Depreciation and amortization of purchased intangibles
     1,073,486       998,098       4,080,398       3,976,927  
Interest Expense
     701,819       833,456       3,187,210       3,305,006  
Income Tax (Expense)/Benefit
     (110,508 )     187,500       (110,508 )     225,000  
EBITDA
     1,095,357       462,884       1,822,738       17,830,492  
Adjustments for certain non-cash expenses:
                                
Severance Costs
     12,948       -       247,740       -  
Gain on Extinguishment of Debt
     -       13,669       -       (16,497,185 )
Change in fair market value of derivative liabilities
     -       -       -       (790,648 )
Stock based compensation
     101,456       59,571       480,866       1,177,841  
Adjusted EBITDA
   $ 1,210,761     $ 536,124     $ 2,551,344     $ 1,720,500  


 
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