Beacon Enterprise Solutions Reports Results For Fiscal Third Quarter 2012

News provided by

Beacon Enterprise Solutions Group, Inc.

Aug 14, 2012, 05:00 ET

LOUISVILLE, Ky., Aug. 14, 2012 /PRNewswire/ -- Beacon Enterprise Solutions Group, Inc. (OTCBB: BEAC) (www.askbeacon.com), an emerging global leader in the design, implementation and management of high performance Information Technology Systems ("ITS") infrastructure solutions, reports fiscal third quarter financial results for the period ended June 30, 2012, which are discussed below:

(Logo: http://photos.prnewswire.com/prnh/20101021/DA85933LOGO)

Financial Highlights for the Fiscal Third Quarter and Nine Months ended June 30, 2012:

  • Net sales increased 4% to $3.4 million, as compared with $3.3 million in the prior quarter.  For the nine months ended, Net Sales were $12.8 million in fiscal 2012, as compared to $13.5 million in fiscal 2011;
  • For the nine months ended, gross profit increased slightly from $4.6 million to $4.7 million in fiscal 2012 compared to fiscal 2011;
  • Gross profit margins increased 3 basis points to 37% from 34% for the nine months ended June 30, 2012, as compared to the same period in fiscal 2011;
  • Total operating expenses for the quarter decreased 4% to $2.4 million, from $2.5 million in the prior quarter, excluding the non-cash intangible impairment charge of $2.1 million recorded in the fiscal third quarter.

"While we continued to experience challenges in the third quarter, we have remained focused on service delivery and continued to develop sales and operational talent," commented Bruce Widener, Chairman and CEO of Beacon.  "Each day our employees provide a unique and valuable service to our clients, which include some of the largest corporations in the world.  Our employees are working on numerous ongoing client projects; we're continuing to pursue new business within and beyond our existing client base; and we're committed to working through our current difficulties and returning to operational profitability."

"Our recent decline in net sales, which began in the fiscal second quarter, occurred as we were in the process of refinancing our Senior Secured Notes and negatively impacted our ability to complete the refinancing as planned," stated S. Scott Fitzpatrick, Vice President, Corporate Controller and Treasurer.  "Principal payments related to our Senior Secured Notes began to come due in June 2012.  We were not able to meet all of the required obligations.  We have been engaged in ongoing discussions regarding our Senior Secured Note holders; and are in the process of negotiating an extended payment schedule related to the payments that have come and are coming due.  In addition, we are in the process of obtaining additional financing to fulfill our obligations and provide future working capital.  As filed on Form 8-K on June 29, 2012, we recently obtained $0.6 million in new debt financing.  However, it will be essential for us to obtain additional financing to meet our obligations in the fourth quarter; and for rest of the calendar year.  Needless to say, these negotiations are complex and sensitive and we will continue to update shareholders, as appropriate, as the process continues and is complete.

"During the third quarter of fiscal 2012," continued Mr. Fitzpatrick,  "we determined that a portion of our intangible assets were impaired.  This determination has resulted in a $2.1 million non-cash charge to earnings in the period.  These assets related to amounts recorded as part of the initial acquisitions made to form Beacon in 2007.  Our balance in Other Intangible Assets has been reduced to $0.7 million as a result of the charge."

About Beacon Enterprise Solutions Group, Inc.

Beacon Enterprise Solutions Group is an emerging global leader in the design, implementation and management of high performance Information Technology Systems ("ITS") infrastructure solutions.  Beacon offers fully integrated, turnkey IT infrastructure solutions capable of fully servicing the largest companies in the world as they increasingly outsource to reduce costs while optimizing critical IT design and infrastructure management.  Beacon is headquartered in Louisville, Kentucky, with regional headquarters in Cincinnati, Ohio, Dublin, Ireland, Prague, Czech Republic and personnel located throughout the United States and Europe.

For additional information, please visit Beacon's corporate website: www.askbeacon.com

This press release may contain "forward-looking statements." Expressions of future goals and similar expressions reflecting something other than historical fact are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements.  These forward-looking statements may include, without limitation, statements about our market opportunity, strategies, competition, expected activities and expenditures as we pursue our business plan.  Although we believe that the expectations reflected in any forward looking statements are reasonable, we cannot predict the effect that market conditions, customer acceptance of products, regulatory issues, competitive factors, or other business circumstances and factors described in our filings with the Securities and Exchange Commission may have on our results.  The company undertakes no obligation to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this press release.

-- Financial Tables Follow --

Beacon Enterprise Solutions Group, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(all amounts in 000's except share data)







June 30,

September 30,


2012

2011

ASSETS

(unaudited)






Current assets:



Cash and cash equivalents

$           75

$          861

Accounts receivable, net

2,030

3,752

Inventory, net

-

-

Prepaid expenses and other current assets

1,535

1,345



Total current assets

3,640

5,958





Property and equipment, net

220

249

Goodwill

2,791

2,792

Other intangible assets, net

650

2,905

Other assets

19

18

Total assets

$      7,320

$      11,922





LIABILITIES AND STOCKHOLDERS' EQUITY 







Current liabilities:



Bridge note - related party

$         100

$          100

Note payable

300

-

Current portion of long-term debt

59

180

Senior secured notes payable

3,550

2,952

Accounts payable

2,536

3,204

Accrued expenses and other current liabilities

2,000

1,691



Total current liabilities

8,545

8,127





Long-term debt, less current portion

-

24

Deferred tax liability

256

212

Total liabilities

8,801

8,363





Commitments and contingencies (Note 6)







Stockholders' equity (deficiency)




Preferred Stock: $0.01 par value, 5,000,000 shares





authorized, 1,598  and 1,491 shares outstanding in the





following classes:




Series A convertible preferred stock, $1,000 stated value, 





4,500 shares authorized, 30 shares issued and outstanding





at June 30, 2012 and September 30, 2011 respectively, 





(liquidation preference $100)

30

30


Series A-1 convertible preferred stock, $1,000 stated value, 





1,000 shares authorized, 311 shares issued and outstanding





at June 30, 2012 and September 30, 2011 respectively, 





(liquidation preference $507)

311

311


Series B convertible preferred stock, $1,000 stated value, 





4,000 shares authorized, 700 shares issued and outstanding 





at June 30, 2012 and September 30, 2011 respectively, 





(liquidation preference $1,070)

700

700


Series C-1 convertible preferred stock, $1,500 stated value, 





400 shares authorized, 350 issued and outstanding 





at June 30, 2012 and September 30, 2011, respectively





(liquidation preference $735)

525

525


Series C-2 convertible preferred stock, $1,500 stated value, 





2,000 shares authorized, 100 issued and outstanding 





at June 30, 2012 and September 30, 2011, respectively





(liquidation preference $207)

150

150


Series C-3 convertible preferred stock, $1,500 stated value, 





110 shares authorized, 107 issued and outstanding 





at June 30, 2012 (liquidation preference $214)

160

-


Common stock, $0.001 par value 70,000,000 shares authorized





37,611,396 and 37,611,396 shares issued and outstanding





at June 30, 2012 and September 30, 2011, respectively.

38

38

Additional paid in capital

39,024

38,342

Accumulated deficit

(42,587)

(36,583)

Accumulated other comprehensive income

168

46


Total stockholders' equity (deficiency)

(1,481)

3,559

Total liabilities and stockholders' equity (deficiency)

$      7,320

$      11,922

Beacon Enterprise Solutions Group, Inc. and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

(all amounts in 000's except share and per share data)















For the Three

For the Three

For the Nine

For the Nine




Months Ended

Months Ended

Months Ended

Months Ended




June 30,

June 30,

June 30,

June 30,




2012

2011

2012

2011

Net sales

$        3,446

$       4,502

$        12,765

$      13,479


Cost of goods sold

176

181

294

806


Cost of services

2,176

2,309

7,818

8,084

Total cost of sales and services

2,352

2,490

8,112

8,890

Gross profit

1,094

2,012

4,653

4,589











Operating expenses









Salaries and benefits

1,229

758

4,126

4,296


Selling, general and administrative

1,135

1,302

2,953

3,172


Impairment of intangible assets

2,062

-

2,062

-


Total operating expenses

4,426

2,060

9,141

7,468

Loss from operations

(3,332)

(48)

(4,488)

(2,879)











Other expenses








Interest expense

(130)

(128)

(421)

(261)

Effect of foreign currency transaction

(109)

(8)

(279)

(3)

Amortization of deferred finance fees

(156)

(83)

(555)

(167)

Other expenses

(62)

(54)

(107)

(392)


Total other expenses

(457)

(273)

(1,362)

(823)











Net loss before income taxes

(3,789)

(321)

(5,850)

(3,702)











Income tax expense

(14)

(75)

(44)

(164)











Loss from continuing operations

(3,803)

(396)

(5,894)

(3,866)

Income from discontinued operations

-

-

-

7,892











Net (loss) income

(3,803)

(396)

(5,894)

4,026











 Preferred Stock:








Contractual dividends

(35)

(26)

(110)

(64)











Net (loss) income available to common stockholders

$       (3,838)

$        (422)

$         (6,004)

$        3,962











Net loss per share to common stockholders - basic and diluted








Net loss per share from continuing operations

$        (0.10)

$       (0.01)

$          (0.16)

$        (0.10)

Net (loss) income per share from discontinued operations

-

-

-

0.21




$        (0.10)

$       (0.01)

$          (0.16)

$         0.11











Weighted average shares outstanding








basic and diluted

37,611,396

37,378,868

37,611,396

37,377,220











Other comprehensive income, net of tax








Net (loss) income 

$       (3,838)

$        (422)

$         (6,004)

$        3,962

Foreign currency translation adjustment

(57)

(8)

(122)

545

Comprehensive (loss) income 

$       (3,895)

$        (430)

$         (6,126)

$        4,507






















Income (loss) from operations

$       (3,332)

$          (48)

$         (4,488)

$       (2,879)

Depreciation and amortization

109

125

332

383

EBITDA

$       (3,223)

$           77

$         (4,156)

$       (2,496)












Other Adjustments








Non-cash investor relations

$          106

$           56

$            238

$          137

Non-cash share based compensation

184

304

683

837

Non-cash impairment expense

2,062

-

2,062

-

Non-recurring costs

250

(453)

361

(83)

Adjusted EBITDA

$         (621)

$          (16)

$           (812)

$       (1,605)

SOURCE Beacon Enterprise Solutions Group, Inc.

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