American Telecom Services Reports 119% Sequential Increase in Gross
Revenues to $9.9 Million for Second Quarter of Fiscal 2007

Company reports significant expansion in DECT 6.0 product assortment
Retail distribution reaches more than 12,000 locations

Contact: Company
Bruce Hahn, CEO
Brett Maas
Danielle Ross
(310) 871-9904
Hayden Communications
Comunicano, Inc.
(404) 261-7466
(646) 536-7331
(858) 314-2958
City of Industry, California, February 15, 2007
- American Telecom Services Inc. (AMEX: TES), a provider of converged communications solutions today announced financial results for the second fiscal quarter ended December 31, 2006.
The Company announced gross revenues for the second quarter of $9.9 million, up 119% sequentially versus $4.5 million in the first quarter of fiscal year 2007. Net revenues, which include certain reductions for returns and promotional expenses were $7.4 million, up 95% compared to the first fiscal quarter net revenue of $3.8 million. The Company is continuing its high revenue growth trend, fueled by new product introductions including several new “Interference Free” DECT 6.0 models at its existing retail partners and heavy holiday season promotion. The Company anticipates that the increased second quarter hardware sell-through will begin to serve as the catalyst for long-term recurring service revenues.
The cost of sales for the quarter was $6.8 million. On a GAAP basis, gross profit was $0.5 million or 7.3%, down from 20.9% in the prior quarter. On a non GAAP basis, removing the effect of promotional rebates of $1.9 million from sales, gross profit margin was 26.6%, down sequentially from 29.9% in the prior quarter. The reduction of gross margin on gross sales compared to the previous period was primarily due to the Company’s decision to continue to accelerate the production of its phones and to expand its distribution through offering rebates. In addition, there is approximately a (2.2) percentage point impact on gross profit margin as the Company again elected to use off-the-shelf chipsets and air freight to meet the increased demand. The Company reduced product costs for cooperative advertising for a retail partner, resulting in an additional two percent impact on total gross profit margin. These decisions enabled the Company to ship and sell through at retailers hundreds of thousands of handsets in this period, increasing the potential for recurring service revenues throughout calendar 2007 and securing long-term retail shelf space and product placement.
The Company evaluates performance based on, among many other things, margins on gross sales removing the effects of expenses related to rebates and promotional expenses from revenues, which is a non GAAP measurement. The Company believes that gross sales and the margins on gross sales is an important measure in communicating the growth of its core business.

The following information was filed by American Telecom Services Inc (ATEL) on Thursday, February 15, 2007 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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