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| NTTL.PK > SEC Filings for NTTL.PK > Form 10KSB/A on 3-Sep-2008 | All Recent SEC Filings |
3-Sep-2008
Annual Report
Results of Operations
The Year Ended December 31, 2007 Compared to the Year Ended December 31, 2006
The Company's net revenues for the year ended December 31, 2007 were $21,505,122 compared to $7,832,916 for the year ended December 31, 2006. All revenues for 2007 were from telecommunication minutes sales. For the year ended December 31, 2006, telecommunication minute sales were $7,486,296 and used equipment sales were $467,500.
Gross margin was 5.1 percent of revenue for the telecommunication sales for year ended December 31, 2007 compared to 7.1 percent for the same period ended December 31, 2006. The sales in 2007, which were a 287% increase over 2006, were at competitive rates with realistic long-term gross margins. The gross margin on used equipment sales for the year ended December 31, 2006 was 50% related primarily to one high margin sale in 2006 that is not likely to reoccur.
Operating expenses consisting primarily of research and development expense and general and administrative expense increased $3,797,270 to $5,267,460 for the year ended December 31, 2007 compared to $1,470,190 for the same period ended December 31, 2006. Research and development expense was $3,096,675 for the year ended December 31, 2007 compared to $1,090,332 in the same period in 2006. These costs are primarily personnel and consulting costs for engineers upgrading and maintaining software. $2,696,391 of this expense was a non-cash charge for the market value of the Company's common stock issued to engineers for their services during the year ended December 31, 2007 as compared to $710,201 for the year ended December 31, 2006. The $2,006,373 increase in 2007, relates to software upgrades and maintenance to accommodate the 287% increase in sales in 2007. Additionally, approximately $1,000,000 of the non-cash charge for common stock issued to consultants was for a new generation of software that is still in the development stage.
General and administrative expense was $2,103,885 in the period ended December 31, 2007 as compared $369,904 for the same period ended December 31, 2006. The $1,733,988 increase in 2007 resulted primarily from $1,702,000 non-cash charge for the market value of the Company's common stock issued to investor relations consultants and the $25,000 fee paid to cancel the facilities lease which reduced the monthly facilities expense by 65%. The new facilities, which have considerably less square footage, is more appropriate for the needs of the Company.
Liquidity and Capital Resources
The cash flow from operations for the year ended December 31, 2007 is primarily attributable to the net loss of $4,176,773 offset by the $4,444,706 non-cash charge for the common stock issued for services. The negative cash flow from operations in 2006 resulted from the net loss of $783,527 and the $449,827 decrease in customer deposits and deferred revenue which were recognized as revenue, offset by the $710,201 non-cash charges for common stock issued for services.
The Company invested $253,854 in property and equipment during the year ended December 31, 2007 compared to $2,236 for the same period ended December 31, 2006. The equipment increase is for servers and related equipment for which installation is in process to accommodate higher sales volume.
The Company made a $60,000 payment on the outstanding loan balance in 2007. Cash flow was provided by financing activities in 2006 from a $225,000 loan.
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