HitCom Reports First Quarter 1998 Results
Pro Forma Revenue Increases 17% Over First Quarter 1997
ST. LOUIS--(BUSINESS WIRE)--May 14, 1998--HitCom Corp. (Nasdaq/OTC:HICO - news), a facilities-based telecommunications company with headquarters in St. Louis, Thursday reported revenues of $797,177 along with a loss of $48,719, or $.01 per share for the quarter ended March 31, 1998.
HitCom also presented pro forma results, which include the effects of HitCom's pending acquisition of Channel Telecom Inc. The pro forma results increase first quarter revenue to $1,130,683 and reduce the loss to $25,446 eliminating the $.01 per share loss.
First quarter revenue, on a pro forma basis, increased 17% over the same period in 1997. The company's gross profit margin improved to 49% for the first quarter of 1998 compared with 37% for the same period in 1997. This growth corresponds to a cost of sales percentage to net revenues decrease from 63% to 51%. Selling, general and administrative expenses increased $250,022 or 143% from $175,349 for the quarter ended March 31, 1997. The primary reason for the increase is attributable to the additional costs of administrative support functions required to enhance the management of the company along with the costs associated with becoming an SEC reporting company.
''We are pleased with our solid first quarter operating results,'' said Rajan Arora, HitCom president and chief executive officer. ''Likewise, we expect solid increases from our operations to continue throughout this fiscal year.'' He added, ''We are in the process of implementing an aggressive growth strategy to become a $50 million telecommunications company by the end of 2000. To do so, we have had to expand our corporate infrastructure which, as expected, will affect the bottom line.''
According to David B. Parks, HitCom chief financial officer, the company had anticipated even higher losses based on additional expenses related to enhancing the company's management and becoming an SEC reporting company. ''We accomplished virtually everything we planned to in the first quarter. With the increased overhead, we expected to report losses in excess of $100,000. Instead, we were able to control expected administrative costs while achieving our principle corporate objectives. Obviously, we are very enthusiastic every time we meet or exceed expectations.''
Parks continued, ''As the year progresses, in addition to our internal growth and acquisition plans, we intend to seek additional financing, both debt and equity, to help fund the company's expansion plans.''
Parks also explained that the April 1997 acquisition of 80% of One Plus Marketing Inc. was treated as a ''reverse merger'' under generally accepted accounting principles. As such, the historical financial data for periods prior to April 1, 1997 are those of One Plus Marketing.
In January 1998, HitCom signed a definitive agreement to acquire 100% of Channel Telecom based in Toronto. Channel is the fourth largest facility-based provider of prepaid phone cards in Canada. The transaction is expected to close in the next few weeks and become effective on Jan. 1, 1998.
Notable events during the first quarter include, Arora, becoming HitCom's president and chief executive; Parks joining the company as chief financial officer; and HitCom becoming an SEC reporting company.
About HitCom
HitCom, with headquarters in St. Louis, is a facilities-based telecommunications company that provides enhanced communication services and technologies to businesses and consumers in the United States and Canada. Specifically, HitCom focuses on designing, developing and marketing Interactive Voice Response/Voice Processing Services, Prepaid/postpaid PhoneCards and PhoneCard Platform Services, Internet Connectivity Services, IP Telephony Services and other Emerging Communications Services. HitCom markets its products and services through its subsidiaries One Plus Marketing and its current acquisition, Channel Telecom.
HitCom can be found on the Worldwide Web at www.hitcom.com .
Statements contained in this news release regarding expected financial results and other planned events are forward looking statements, subject to uncertainties and risks, including, but not limited to, the demand for HitCom's products and services, and the ability of the company to successfully implement its strategies, each of which may be impacted, among other things, by economic, competitive, or regulatory conditions.
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Contact:
HitCom
Anthony W. Hitt, 314/231-1000 x 801
ahitt@hitcom.com |
