NEW YORK, Aug. 16 /PRNewswire-FirstCall/ -- Fusion (OTC Bulletin Board: FSNN) today announced financial results for the quarter ended June 30, 2010.

The Company reported consolidated revenues of $9.7 million for the quarter ended June 30, 2010, an increase of 12.8% when compared to revenues of $8.6 million for the second quarter of 2009. Second quarter 2010 revenues for the Carrier Services segment increased 10.7% when compared to the second quarter of 2009, and second quarter 2010 revenues for the Corporate Services segment increased 78.5% when compared to the second quarter of 2009. This quarter was the tenth consecutive quarter of consistent revenue growth for the Corporate Services segment.

Consolidated gross margin increased to 10.0% for the second quarter of 2010, compared to 8.0% for the second quarter of 2009. This margin increase resulted from stronger margins in the Carrier Services segment, where the gross margin increased from 7.1% to 8.5%, and from increased business volume in the Corporate Services segment, which achieved a gross margin of 42%.

Selling, general, and administrative costs for the second quarter of 2010 were reduced by $46,000 or 2.1%, when compared to the second quarter of 2009. This improvement was primarily attributable to the Company's continuing focus on cost-containment.

As a result of the Company's increased revenues, improved gross margin, and reduced SG&A expenses, its adjusted EBITDA loss (earnings before interest, taxes, depreciation, amortization, and specific non-recurring and non-cash adjustments) of ($1.1) million for the second quarter of 2010 was a 21.4% improvement from its second quarter 2009 adjusted EBITDA loss of ($1.4) million. These figures, which are adjusted for discontinued operations, do not reflect the full benefit of the Company's exiting the consumer business.

For the quarter ended June 30, 2010, Fusion reported a net loss applicable to common stockholders of ($1.7) million or ($0.02) per share, a $1.5 million decrease when compared to a net loss applicable to common stockholders of ($3.2) million or ($0.06) per share for the quarter ended June 30, 2009. This 67% decrease in net loss per share compared to the prior year period resulted from continued improvement in the financial results of the Company's continuing operations, the impact of its exit from the consumer business, and an increase in the total number of shares outstanding.

As of June 30, 2010, the Company had current assets of $4.2 million, compared to current assets of $2.9 million as of December 31, 2009, and total assets of $6.3 million, compared to total assets of $5.4 million as of December 31, 2009. These increases were primarily due to increased cash and cash equivalents, as well as increased accounts receivable.

Total stockholders' equity/(deficit) at June 30, 2010 was ($6.7) million, compared to ($7.3) million as of December 31, 2009. The change resulted from an increase in the accumulated deficit of $(3.1) million, offset by additional equity investments of $3.7 million. During the second quarter of 2010, Fusion raised approximately $2.6 million in total new capital, including $2.1 million in new equity, and successfully converted approximately $0.5 million of existing debt to equity. The Company continues to seek additional equity and debt financing to fund its operations.

Commenting on the results, Matthew Rosen, Chief Executive Officer of Fusion, said, "I am very pleased that the second quarter of 2010 showed further progress in achieving the financial objectives we have set for reaching profitability. Our gross margin, SG&A expenses, and adjusted EBITDA performance all continued to improve. We believe that future revenue and margin growth in both business segments, coupled with ongoing expense management, will position us well for continued improvement in financial results."

Expanding on Mr. Rosen's comments, Don Hutchins, President, Chief Operating Officer, and Acting Chief Financial Officer, said, "We are particularly pleased with the nearly 80% revenue growth in our Corporate Services segment compared to the prior year period - our tenth consecutive quarter of revenue growth in this segment - and with our continuing improvement in gross margin in both business segments. I am also pleased to see another quarterly increase in the percentage of Corporate Services orders coming from our existing customers, which further proves the continued loyalty of our business customers and the attractiveness of our services."

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 (Loss) to Adjusted EBITDA", immediately following the Consolidated Statements of Operations included in this press release.

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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, securing necessary funding 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        Philip Turits, Treasurer
    CONTACT:      212-201-2407
                  pturits@fusiontel.com

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

                                                Three Months Ended
                                                     June 30,
                                                     --------
                                                  2010               2009
                                                  ----               ----
    Revenues                                $9,727,200         $8,649,762
    Operating expenses:
      Cost of revenues                       8,753,785          7,958,140
      Depreciation and amortization            207,909            226,944
      Loss on Impairment                             -            243,000
      Selling, general and administrative
       expenses                              2,195,581          2,242,168
      Advertising and Marketing                 17,425              3,016
                                                ------              -----
           Total operating expenses         11,174,700         10,673,268
                                            ----------         ----------
    Operating loss                          (1,447,500)        (2,023,506)

    Other income (expense)
      Interest income (expense), net           (54,596)          (119,390)
      Gain on settlements of debt                    -                  -
      Other                                      3,862              1,279
         Total other income (expense)          (50,734)          (118,111)
                                               -------           --------
    Loss from continuing operations         (1,498,234)        (2,141,617)

    Loss from discontinued operations          (86,982)          (885,132)
                                               -------           --------

    Net loss                               $(1,585,216)       $(3,026,749)
                                           ===========        ===========

    Loss applicable to Common
     Stockholders:
      Loss from continuing operations      $(1,498,234)       $(2,141,617)
      Preferred stock dividends in arrears    (159,462)          (159,462)
                                              --------           --------
      Net loss from continuing operations
       applicable to Common Stockholders:   (1,657,696)        (2,301,079)
      Loss from discontinued operations        (86,982)          (885,132)
                                               -------           --------
    Net loss applicable to common
     stockholders                          $(1,744,678)       $(3,186,211)
                                           ===========        ===========
    Basic and diluted net loss per common
     share:
      Loss from continuing operations           $(0.02)            $(0.04)
      Loss from discontinued operations          (0.00)             (0.02)
                                                 -----              -----
    Net loss applicable to Common
     Stockholders                               $(0.02)            $(0.06)
                                                ======             ======
    Weighted average common shares
     outstanding:
      Basic and diluted                    108,396,957         56,822,335
                                           ===========         ==========

                                                     Six Months Ended
                                                         June 30,
                                                         --------
                                                       2010             2009
                                                       ----             ----
    Revenues                                    $19,315,832      $17,652,063
    Operating expenses:
      Cost of revenues                           17,417,554       16,426,031
      Depreciation and amortization                 439,785          716,415
      Loss on Impairment                                  -          243,000
      Selling, general and administrative
       expenses                                   4,391,892        4,712,448
      Advertising and Marketing                      21,196           10,512
                                                     ------           ------
           Total operating expenses              22,270,427       22,108,406
                                                 ----------       ----------
    Operating loss                               (2,954,595)      (4,456,343)

    Other income (expense)
      Interest income (expense), net               (104,064)        (215,171)
      Gain on settlements of debt                     9,500                -
      Other                                           8,729            3,493
         Total other income (expense)               (85,835)        (211,678)
                                                    -------         --------
    Loss from continuing operations              (3,040,430)      (4,668,021)

    Loss from discontinued operations               (88,355)      (1,364,943)
                                                    -------       ----------

    Net loss                                    $(3,128,785)     $(6,032,964)
                                                ===========      ===========

    Loss applicable to Common
     Stockholders:
      Loss from continuing operations           $(3,040,430)     $(4,668,021)
      Preferred stock dividends in arrears         (317,171)        (317,171)
                                                   --------         --------
      Net loss from continuing operations
       applicable to Common Stockholders:        (3,357,601)      (4,985,192)
      Loss from discontinued operations             (88,355)      (1,364,943)
                                                    -------       ----------
    Net loss applicable to common
     stockholders                               $(3,445,956)     $(6,350,135)
                                                ===========      ===========
    Basic and diluted net loss per common
     share:
      Loss from continuing operations                $(0.03)          $(0.10)
      Loss from discontinued operations               (0.00)           (0.03)
                                                      -----            -----
    Net loss applicable to Common
     Stockholders                                    $(0.03)          $(0.12)
                                                     ======           ======
    Weighted average common shares
     outstanding:
      Basic and diluted                         102,960,496       52,438,147
                                                ===========       ==========

     FUSION TELECOMMUNICATIONS INTERNATIONAL, INC. AND SUBSIDIARIES
                       CONSOLIDATED BALANCE SHEET

                                         June 30, 2010     December 31, 2009
                                         -------------     -----------------
    ASSETS
    Current assets
      Cash and cash equivalents                  $907,578             $99,019
      Accounts receivable, net of
       allowance                                3,053,104           2,500,319
      Restricted cash, current portion                  -             168,176
      Prepaid expenses and other current
       assets                                     175,078             130,647
      Assets held for sale                          5,169               6,513
      Assets of Discontinued Operations            20,105              32,283
                                                   ------              ------
        Total current assets                    4,161,034           2,936,957
                                                ---------           ---------
    Property and equipment, net                 1,314,809           1,664,583
                                                ---------           ---------
    Other assets
      Security deposits                            33,106              23,008
      Restricted cash, net of current
       portion                                    238,390             248,390
      Intangible assets, net                      455,318             489,294
      Other assets                                 77,334              62,119
                                                   ------              ------
        Total other assets                        804,148             822,811
                                                  -------             -------
    TOTAL ASSETS                               $6,279,991          $5,424,351
                                               ==========          ==========

    LIABILITIES AND STOCKHOLDERS'
     DEFICIT
    Current Liabilities
      Long-term debt, current portion          $2,824,425          $2,407,187
      Capital and equipment financing
       lease obligations, current
       portion                                     12,408              14,831
      Escrow Payable                              350,000             321,418
      Accounts payable and accrued
       expenses                                 9,199,529           9,263,872
      Liabilities of discontinued
       operations                                 285,294             360,294
                                                  -------             -------
        Total current liabilities              12,671,656       12,367,602.00
                                               ----------       -------------
    Long-term liabilities
      Capital and equipment financing
       lease obligations, net of current
       portion                                          -                2587
      Other long-term liabilities                 322,067             336,815
                                                  -------             -------
        Total long-term liabilities               322,067             339,402
                                                  -------             -------

    Stockholders' equity
      Preferred stock, Class A-1, A-2,
       A-3 & A-4                                       80                  80
      Common stock                              1,211,671             925,440
      Capital in excess of par value          134,396,240         130,984,766
      Accumulated deficit                    (142,321,723)       (139,192,939)
                                             ------------        ------------
        Total stockholders' equity             (6,713,732)         (7,282,653)
                                               ----------          ----------
    TOTAL LIABILITIES AND
     STOCKHOLDERS' EQUITY                      $6,279,991          $5,424,351
                                               ==========          ==========

     FUSION TELECOMMUNICATIONS INTERNATIONAL, INC. AND SUBSIDIARIES

              RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA

                                            Three Months Ended
                                                 June 30,
                                                 --------
                                               2010                2009
                                               ----                ----

    Net Loss                            $(1,585,216)        $(3,026,749)

    Loss from discontinued
     operations                              86,982             885,132
                                             ------             -------
    Loss from continuing
     operations                          (1,498,234)         (2,141,617)
    Adjustments:
    Interest (income) expense,
     net                                     54,596             119,390
    Depreciation and
     amortization                           207,909             226,944
    Loss on impairment                            -             243,000
                                                ---             -------
    EBITDA                               (1,235,729)         (1,552,283)
    Adjustments:
    (Gain)/loss on disposal of
     fixed assets                                 -                   -
    Communication charges                         -                   -
    Other taxes                              38,084              18,580
    Non cash compensation                    68,818              84,822
                                             ------              ------
    Adjusted EBITDA                     $(1,128,827)        $(1,448,881)
                                        ===========         ===========

                                            Six Months Ended
                                                June 30,
                                                --------
                                             2010               2009
                                             ----               ----

    Net Loss                          $(3,128,785)       $(6,032,964)

    Loss from discontinued
     operations                            88,355          1,364,943
                                           ------          ---------
    Loss from continuing
     operations                        (3,040,430)        (4,668,021)
    Adjustments:
    Interest (income) expense,
     net                                  104,064            215,171
    Depreciation and
     amortization                         439,785            716,415
    Loss on impairment                          -            243,000
                                              ---            -------
    EBITDA                             (2,496,581)        (3,493,435)
    Adjustments:
    (Gain)/loss on disposal of
     fixed assets                               -                  -
    Communication charges                       -                  -
    Other taxes                            75,592             52,426
    Non cash compensation                 137,045            119,767
                                          -------            -------
    Adjusted EBITDA                   $(2,283,944)       $(3,321,242)
                                      ===========        ===========

SOURCE Fusion