All FSNN News November 2nd 2012 FUSION NEWS 11/02/12

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Nov 4, 2012 at 6:48 AM

All FSNN News November 2nd 2012

FUSION NEWS 11/02/12

Fusion Closes on $22.5 Million Financings
NEW YORK, NY, Nov 02, 2012 (MARKETWIRE via COMTEX) -- Fusion Telecommunications International, Inc. (OTCQB: FSNN), an emerging leader in the Unified Communications and cloud services market, today announced that it has closed on $22.5 million of financings, composed of $6.03 million in equity, and $16.5 million in term debt.

Fusion raised $6,027,750 through a private placement of investment units consisting of Convertible Preferred Securities and Warrants to accredited investors, including members of Fusion's Board of Directors and members of its Advisory Board. Bradley Woods & Co. served as lead manager, with The Laidlaw Group and Hunter Wise Financial Group participating as co-managers. In addition to the capital raised in the offering, Matthew Rosen, Fusion's Chief Executive Officer and Marvin Rosen, Fusion's Chairman, exchanged $824,000 of Company obligations for the same investment units sold in the private placement.

Fusion also raised $16.5 million through the issuance of 5-year senior notes to Praesidian Capital and Plexus Capital.

Net proceeds from these financings will be used by the Company to fund its contemporaneous acquisition of Network Billing Systems, LLC ("NBS"), advance sales and marketing efforts and for general corporate purposes. NBS is a leading Unified Communications and cloud services provider that generated approximately $26.5 million in revenue in 2011, 95% of which was monthly recurring and contracted, and $4.9 million in adjusted EBITDA.

"The strong support we received in the financing from new and existing shareholders, our management, Directors, Advisory Board members, and from financial partners like Praesidian Capital and Plexus Capital, reaffirms our confidence that we have the right strategy for growth," said Matthew Rosen, Fusion's Chief Executive Officer. "This financing helps us implement our growth strategy, which includes expanding our cloud services portfolio, concentrating on selling solutions into specific vertical markets such as healthcare, and pursuing accretive acquisitions. Together with NBS and their strong management team, extensive network and advanced infrastructure, we expect to generate positive Adjusted EBITDA in the beginning of 2013, and to accelerate the pace of our revenue growth, both organically and through additional targeted acquisitions," continued Mr. Rosen.

Commenting on the transaction, Glenn C. Harrison, Managing Director of Praesidian, said, "We have gotten to know the talented management teams of Fusion and NBS very well and have found them to be both innovative and experienced. We are impressed with their shared culture and vision. We believe that they have developed a winning strategy and plan, and are confident that the combined company is well positioned to become a leader in the Unified Communications and cloud services industry."

Expanding on Mr. Harrison's comments, Mike Becker, co-founder and Partner of Plexus, said, "We believe this financing strongly reflects our mission to build mutually beneficial long term relationships. We are delighted to participate in the newly combined company's plans for profitability and growth."

Further details of the equity financing are contained in Fusion's Current Report on Form 8-K filed with the SEC on October 26, 2012.

Use of Non-GAAP Financial Measurements:

The Company believes that EBITDA (earnings from continuing operations before interest, taxes, depreciation and amortization) is useful to investors because it is commonly used in the communications industry to evaluate 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 non-recurring transactions, if any, such as impairment losses and professional fees associated with pending acquisitions, which vary significantly between periods and are not recurring in nature, as well as certain recurring non-cash charges such as stock-based compensation. 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").

About Fusion

Fusion is a leading edge Unified Communications and cloud services provider delivering a full suite of advanced communications solutions to customers across the United States and in countries around the world. Fusion's advanced, high availability service platform enables the integration of leading edge products and services in the cloud, including voice, data, managed network services, cloud computing, storage, data center services and security. Our solutions are customized to serve the unique needs of specialized vertical markets, which a strong focus on HIPAA-compliant solutions for the healthcare industry. Fusion's innovative yet proven cloud-based solutions lower our customers' cost of ownership, and deliver new levels of security, flexibility, scalability and speed of deployment. For more information, please visit www.fusiontel.com .

About Praesidian

Praesidian Capital partners with small and mid-sized businesses by providing private debt capital. With a focus on its core competency in mezzanine financing, Praesidian invests in established, historically profitable companies often in connection with a management/leveraged buyout, recapitalization or refinancing. Based in New York City, Praesidian manages more than $700 million in committed capital. For more information, visit www.praesidian.com .

About Plexus

With offices in Charlotte and Raleigh, North Carolina, Plexus manages $255 million and invests in middle market, high growth companies located in the United States. Plexus' capital is most often used to fund growth, acquisitions, leveraged buyouts, management buyouts, and stock repurchases. Prospective portfolio companies have strong management teams, positive cash flow, large market opportunities, and need capital to execute their business plans.

Forward Looking Statements:

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 1996. Such statements consist of any statement other than a recitation of historical fact and can be identified by the use of forward-looking terminology such as "may", "expect", "anticipate", "intend", "estimate" or "continue" or the negative thereof or other variations thereof or comparable terminology. The reader is cautioned that all forward-looking statements are speculative, and there are certain risks and uncertainties that could cause actual events or results to differ from those referred to in such forward-looking statements. This disclosure highlights some of the important risks regarding the Company's business. The primary risk of the Company is its ability to raise new and continued capital to execute its comprehensive business strategy. There may be additional risks associated with the integration of businesses following an acquisition, concentration of revenue from one source, competitors with broader product lines and greater resources, emergence into new markets, the termination of any of the Company's significant contracts or partnerships, the Company's ability to comply with its senior debt agreements, the Company's inability to maintain working capital requirements to fund future operations or the Company's ability to attract and retain highly qualified management, technical and sales personnel and the other factors identified by us from time to time in the Company's filings with the Securities and Exchange Commission, which are available through http://www.sec.gov . However, the risks included should not be assumed to be the only things that could affect future performance. We may, among other things, also be subject to service disruptions, delays in collections, or facilities closures caused by potential or actual acts of terrorism or government security concerns.

Fusion

Laura Nadal

212-389-9720

Email Contact

Hayden IR, for Fusion

James Carbonara

646-755-7412

Email Contact

Fusion Acquires Unified Communications and Cloud Services Provider NBS
Combined Company Forecast to Show Strong Positive Adjusted EBITDA - Acquisition Advances Cloud Services Strategy
NEW YORK, NY, Nov 02, 2012 (MARKETWIRE via COMTEX) -- Fusion Telecommunications International, Inc. (OTCQB: FSNN) announced today that, through a wholly-owned subsidiary, it has acquired Network Billing Systems, LLC ("NBS"), a Unified Communications and cloud services provider. Headquartered in New Jersey, NBS generated $26.5 million in revenue in fiscal 2011, more than 95% of which is contracted and monthly recurring, and $4.9 million in adjusted EBITDA. The combined company is expected to generate between $65 and $70 million in annual revenue, and achieve positive adjusted EBITDA in the beginning of 2013. The acquisition adds over 5,000 small, medium and large business customers to Fusion's Corporate Services business segment, which delivers Unified Communications and cloud service solutions to the business market. The transaction also includes the acquisition of certain assets owned by NBS' affiliated company. Upon completion of the integration with NBS, Fusion expects to achieve approximately $2 million in annual cost synergies, and additional revenue growth from the cross-sale of the companies' combined products and services. The expected performance of the combined companies, and the integration of the advanced NBS service and delivery infrastructure with its own, allows Fusion to more rapidly scale its portfolio of cloud solutions, enabling the company to accelerate its organic growth plans while providing a robust platform for additional acquisitions.

The aggregate purchase price of $19.6 million consists of $17.75 million in cash, $600,000 evidenced by subordinated promissory notes payable to the sellers, and $1.25 million in restricted common stock of Fusion.

Matthew Rosen, Fusion's Chief Executive Officer, said, "The management of both companies is excited about the benefits resulting from this transaction. In addition to adding significant contracted monthly recurring revenue, a large and growing customer base and positive adjusted EBITDA, the acquisition adds a very experienced and highly qualified management team and staff to Fusion's own experienced organization. Fusion also gains advanced back office systems that will drive operating and service delivery efficiencies, as well as a complementary voice, data and cloud services platform and network that will allow us to deliver our integrated cloud solutions faster and more cost-effectively."

Expanding on Mr. Rosen's comments, Don Hutchins, President and Chief Operating Officer of Fusion, said, "We are delighted to welcome Jonathan Kaufman, Founder and Chief Executive Officer of NBS, and his team to Fusion. Jon will be joining Fusion to lead the combined Corporate Services segment under the NBS brand. A seasoned communications executive with decades of experience in building successful companies, Jon and his team have earned a strong reputation for service excellence in the Unified Communications and cloud services marketplace and have built a distribution, service and support infrastructure that will allow the combined companies to scale more rapidly as we move to execute on our growing pipeline of opportunities."

Mr. Kaufman said, "The NBS and Fusion teams share the same culture and vision, and are excited about the substantial opportunities for growth that this transaction provides to both companies. We are especially delighted to share the benefits of this acquisition with the company's wide and expanding network of valued partners and shareholders, and believe our winning combination positions us well to emerge as the leading unified communications and cloud services provider in the industry."

Further details of the financings are contained in Fusion's Current Report on Form 8-K filed with the SEC on October 26, 2012.

Use of Non-GAAP Financial Measurements:

About Fusion

Fusion is a global provider of Unified Communications and cloud solutions to businesses and carriers worldwide. Fusion's advanced, high availability service platform enables the integration of leading edge products and services in the cloud, including voice, data, managed network services, cloud computing, storage, information technology, data center services and security. Our solutions are customized to serve the unique needs of specialized vertical markets, with a strong focus on HIPAA-compliant solutions for the healthcare industry. Fusion's innovative yet proven cloud-based solutions lower our customers' cost of ownership, and deliver new levels of security, flexibility, scalability and speed of deployment. For more information, please visit www.fusiontel.com .

Forward-Looking Statements:

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 1996. Such statements consist of any statement other than a recitation of historical fact and can be identified by the use of forward-looking terminology such as "may", "expect", "anticipate", "intend", "estimate" or "continue" or the negative thereof or other variations thereof or comparable terminology. The reader is cautioned that all forward-looking statements are speculative, and there are certain risks and uncertainties that could cause actual events or results to differ from those referred to in such forward-looking statements. This disclosure highlights some of the important risks regarding the Company's business. The primary risk of the Company is its ability to raise new and continued capital to execute its comprehensive business strategy. There may be additional risks associated with the integration of businesses following an acquisition, concentration of revenue from one source, competitors with broader product lines and greater resources, emergence into new markets, the termination of any of the Company's significant contracts or partnerships, the Company's ability to comply with its senor debt agreements, the Company's inability to maintain working capital requirements to fund future operations or the Company's ability to attract and retain highly qualified management, technical and sales personnel, and the other factors identified by us from time to time in the Company's filings with the Securities and Exchange Commission, which are available through http://www.sec.gov . Statements in this press release relating to the projected revenues, EBITDA, cost-synergy savings and other forecasted benefits of our acquisition of NBS are "forward-looking" statements and are based upon certain assumptions that may or may not prove to be accurate; and if inaccurate could cause our actual results to differ materially from our projections. However, the risks included should not be assumed to be the only things that could affect future performance. We may, among other things, also be subject to service disruptions, delays in collections, or facilities closures caused by potential or actual acts of terrorism or government security concerns.

   Fusion

  Laura Nadal

  212-389-9720

  Email Contact

or

  Hayden IR, for Fusion

  James Carbonara

  646-755-7412

  Email Contact

8K http://www.otcmarkets.com/edgar/GetFilingPdf?...ID=8891379

Acquisition of Network Billing Systems, LLC and Related Transactions

On October 29, 2012, Fusion Telecommunications International, Inc. (“Fusion”) and its wholly owned subsidiary, Fusion NBS Acquisition Corp. (“FNAC”, and collectively, the "Company"), completed the acquisition of all of the issued and outstanding membership interests of Network Billing Systems, LLC (“NBS”) and substantially all of the assets of NBS’ affiliate, Interconnect Services Group II LLC (“ISG”), and thereby acquired the business operated by NBS and ISG (the “Acquired Business”). Definitive agreements to purchase the Acquired Business were entered into on January 30, 2012, and amended on June 6, 2012, August 20, 2012, September 21, 2012 and October 24, 2012 (the “Purchase Agreements”), and execution of the Purchase Agreements was initially reported by Fusion in a Current Report on Form 8-K/A filed on February 6, 2012.

The Acquired Business is a Unified Communications and cloud services provider offering a wide range of hosted voice and data services, Internet and data network solutions to small, medium and large businesses in the United States. For the year ended December 31, 2011, the Acquired Business had revenues of approximately $26.5 million and net income of approximately $3.1 million.

In accordance with the terms of the Purchase Agreements, the Company purchased the Acquired Business, including $500,000 of cash and the assumption of certain related liabilities. The aggregate purchase price for the outstanding membership interests of NBS and the assets of ISG, net of the assumed liabilities, was $19.6 million (the “Purchase Price”), consisting of $17.75 million in cash, $0.6 million to be evidenced by promissory notes payable to the sellers of the NBS membership interests (the “Seller Notes”) and 11,363,636 shares of restricted common stock of Fusion valued at $1.25 million. The Seller Notes bear interest at the rate of 3% per annum and are payable in 14 equal monthly installments commencing January 31, 2013. The Purchase Price will be adjusted on or before November 15, 2012, based on certain working capital measurements described in the Purchase Agreements, and 10% of the cash portion of the Purchase Price is being held in escrow for a period of up to one year as collateral to secure the accuracy of the sellers’ representations, warranties and covenants contained in the Purchase Agreements.

In connection with its acquisition of the Acquired Business, Fusion entered into an Employment and Restrictive Covenant Agreement (the “Kaufman Employment Agreement”) with Jonathan Kaufman, the principal operating officer of the Acquired Business and Manager of NBS, who has become the President of the Company’s combined Corporate Services business segment. Additionally, effective with the consummation of the Acquired Business, FNAC entered into a 5-year lease agreement (the “Lease”) with Manchester Realty, LLC, a company controlled by Jonathan Kaufman, to continue the occupancy of NBS’ principal offices in Wayne, NJ. The lease is for approximately 11,000 square feet of office space, under which FNAC is required to pay annual rent to the landlord of approximately $120,000, with annual increases of approximately 7-8% per year. The Company believes that the terms of the Lease are no less favorable to FNAC than what could have been obtained from an unaffiliated third party. The cash portion of the Purchase Price was largely financed through the issuance by FNAC of $16.5 million of senior notes (see “Sale of Senior Notes and Related Transactions” below). The foregoing summary of the terms and conditions the of the Purchase Agreements, the Seller Notes, the Kaufman Employment Agreement and the Lease are qualified in their entirety by reference to the full text of such documents, which are filed as Exhibits 10.47-10.56 to this Current Report on Form 8-K.