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Beacon Enterprise Solutions Reports Results For Fiscal Third Quarter 2012
Aug 14, 2012 (05:08 PM EDT)


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:

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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.