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Beacon Enterprise Solutions Reports Fiscal 2010 Financial Results

December 16, 2010

LOUISVILLE, Ky., Dec. 16, 2010 /PRNewswire-FirstCall/Beacon Enterprise Solutions Group, Inc. (OTC Bulletin Board: BEAC) (www.askbeacon.com) an emerging global leader in the design, implementation and management of high performance Information Technology Systems (ITS),reports financial results for the fourth fiscal quarter and year ended September 30, 2010. Fourth quarter and full year results reflect the impact of the discontinued operations of the Company’s Swiss based subsidiary.

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Financial Highlights for the Fiscal 2010 Full Year:

  • Net sales from continuing operations increased 39% to $14.0 million compared with $10.1 million in fiscal 2009;
  • Net sales from discontinued operations totaled an additional $17 million in fiscal 2010 and an additional $1 million in fiscal 2009;
  • Gross profit for fiscal 2010 was $5.9 million, more than double the $2.8 million reported last year;
  • North American gross profit margin was 37% compared with 28% in the fiscal 2009;
  • Blended North American and European gross profit margins were 42%;
  • Adjusted EBITDA for the year was negative $2.1 million compared to negative $3.4 million in 2009; and
  • Loss from continuing operations for the year was $10.4 million, which included a $4.4 million non-cash charge, compared with a loss from continuing operations of $6.8 million in fiscal 2009.

Bruce Widener, Chairman and CEO of Beacon Enterprise Solutions said, “Fiscal 2010 was a year of growth and introspection as we implemented changes to our operations. Toward the end of the fiscal year, we made the strategic decision to focus on our four core segments of higher-margin professional services, eliminating our lower-margin, general contracting business. We have also expanded our a la carte services to our existing major national, multi-national and global clients who have not contracted for infrastructure managed services. We have accomplished this by reorganizing our sales and marketing on the sale of individual infrastructure services and the global managed services offering. The reorganization of the professional services team structure also permits Beacon to accommodate branch level services delivery to potential global clients.”

Mr. Widener concluded, “As we perform against our Project Backlog, which continues to exceed $76 million, and seek new, higher-margin business opportunities, we remain confident that 2011 will be an important, breakthrough year for our company. With continued strong business flow from new and existing Fortune 500 clients, supported by our additional credit facility, we expect to transition to profitability in fiscal 2011. We remain confident, that with our new, strategic focus and strengthened management team, that we are on the right track for solid performance in 2011.”

Conference Call Tomorrow at 10:00 a.m. Eastern Time

Beacon Enterprise Solutions will host a conference call tomorrow at 10:00 a.m. Eastern Time. Participants on the call will include Bruce Widener, Chairman and Chief Executive Officer; Michael Grendi, Chief Financial Officer; and Jerry Bowman, Chief Operating Officer. The teleconference can be accessed by calling 888-495-3916 and entering conference ID # 29088278. Participants outside of the U.S. and Canada can join by calling 706-634-7530 and entering the same conference ID. Please dial in 15 minutes prior to the beginning of the call. The conference call will be simultaneously webcast and available on the company’s website, http://www.askbeacon.com, under the “Investor Relations” tab. A digital recording of the conference call will be available for replay two hours after the end of the call’s completion until 11:59 p.m. EST on Sunday, December 19, 2010 by calling 706-645-9291 and entering conference ID # 29088278.

Non-GAAP Financial Measure:

In addition to presenting financial results in accordance with generally accepted accounting principles, or GAAP, this earnings release also presents adjusted earnings before interest, taxes, depreciation and amortization, share based payments, deemed and contractual dividends, and expenses that management believes will not recur in future periods, including certain investor relations, subcontractor, and acquisition-related expenses (“Adjusted EBITDA”). Adjusted EBITDA is calculated by deducting operating and other expenses from operating income and excluding amounts related to interest expense, income tax expense or benefit, depreciation expense, amortization expense, non-cash share-based payments, deemed and contractual dividends, certain investor relations expenses, certain subcontractor expenses, acquisition-related expenses and any gain or loss on disposal of assets. Although we will continue to expend significant resources on investor relations in the future, management believes that certain investor relations expenses incurred in the current fiscal year are unusually high as we build investor awareness, and that a portion of these expenses will not recur in future years. Certain subcontractor expenses are impacting our current fiscal year as we open markets through Beacon certified subcontractors who will be replaced by Beacon personnel over the coming months as Beacon serves markets of sufficient size to support internal operations. In addition, this earnings release also presents Beacon’s net loss and net loss per share with adjustments to exclude a one-time, non-cash charge relating to the change in fair value of warrants as described above (“Adjusted Net Loss”). Beacon believes these non-GAAP financial measures provide investors with additional insight into our ongoing operating performance. This non-GAAP financial measure should be considered in conjunction with, but not as a substitute for, the financial information presented in accordance with GAAP.

Aggregate Future Value of Backlog:

Aggregate Future Value of Backlog reflects the projected revenue impact of existing engagements over a one to four year period and is subject to change as work is completed and/or the scope of various engagements changes over time. Backlog includes the projected value of recently announced, multi-year ITS managed services engagements as well as short-term projects for which the Company has been engaged to provide network design, engineering, implementation and/or project management services.

About Beacon Enterprise Solutions Group

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. Through an integrated team approach, Beacon offers a broad range of products and services including IT infrastructure design, implementation and management, application development and voice/data/security system integration, installation and maintenance. Beacon’s client roster includes state and local agencies, educational institutions, and over 4,000 companies ranging in size from mid-sized companies to the Fortune 500. Beacon is headquartered in Louisville, Kentucky, with a regional headquarters in 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.


    Contact:
    Bruce Widener, CEO
    502-657-3507
    investors@askbeacon.com

    Porter, LeVay & Rose, Inc.
    Marlon Nurse, V.P. - Investor Relations
    212-564-4700

    GeralynDeBusk, President or Hala Elsherbini, COO
    Halliburton Investor Relations
    972-458-8000

                              Financial Tables Follow

              Beacon Enterprise Solutions Group, Inc. and Subsidiaries
                            Consolidated Balance Sheets
                      (all amounts in 000's except share data)
                                                          September September
                                                             30,       30,
                                                               2010      2009
                                                               ----      ----

    ASSETS

    Current assets:
      Cash and cash equivalents                                $246      $227
      Accounts receivable, net                                4,535     3,069
      Inventory, net                                            557       605
      Prepaid expenses and other current assets                 357       388
      Current assets of discontinued operations                 133       958
                                                                ---       ---
        Total current assets                                  5,828     5,247

    Property and equipment, net                                 420       336
    Goodwill                                                  2,792     2,792
    Other intangible assets, net                              3,011     3,342
    Other assets                                                 20       117
    Assets of discontinued operations                             -       980
                                                                ---       ---
      Total assets                                          $12,071   $12,814
                                                            =======   =======

    LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

    Current liabilities:
      Short term credit obligations                              $-      $550
      Convertible notes payable                                   -       298
      Bridge notes (net of $0 and $33 discounts)                100       167
      Current portion of long-term debt                         379       475
      Accounts payable                                        2,971     2,074
      Accrued expenses                                          880     2,626
      Current liabilities of discontinued operations          8,558       525
        Total current liabilities                            12,888     6,715
                                                             ------     -----

    Non-current Line of Credit - related party                  630         -
    Long-term debt, less current portion                        403       802
    Deferred tax liability                                      153       103
                                                                ---       ---
      Total liabilities                                      14,074     7,620
                                                             ------     -----

    Stockholders' equity (deficiency)
      Preferred Stock: $0.01 par value, 5,000,000
       shares
        authorized, 1,041 and 3,436 shares outstanding in
         the
        following classes:
      Series A convertible preferred stock, $1,000
       stated value,
        4,500 shares authorized, 30 and 1,984 shares
         issued and
        outstanding at June 30, 2010 and September 30,
         2009, respectively,
        (liquidation preference $93)                             30     1,984
      Series A-1 convertible preferred stock, $1,000
       stated value,
        1,000 shares authorized, 311 and 752 shares
         issued and
        outstanding, at September 30, 2010 and 2009,
         respectively
        (liquidation preference $432)                           311       752
      Series B convertible preferred stock, $1,000
       stated value, 4,000 shares
        authorized, 700 shares issued and outstanding at
         September 30, 2010
        and 2009, respectively (liquidation preference
         $967)                                                  700       700
      Common stock, $0.001 par value 70,000,000 shares
        authorized, 37,376,396 and 24,655,990 shares
         issued and
        outstanding at September 30, 2010 and 2009,
         respectively.                                           37        25
      Additional paid in capital                             37,137    17,977
      Accumulated deficit                                   (39,711)  (16,254)
      Accumulated other comprehensive (loss) income            (507)       10
                                                               ----       ---
        Total stockholders' equity (deficiency)              (2,003)    5,194
                                                             ------     -----
      Total liabilities and stockholders' equity
       (deficiency)                                         $12,071   $12,814
                                                            =======   =======

     Beacon Enterprise Solutions Group, Inc. and Subsidiaries
              Consolidated Statements of Operations
             (all amounts in 000's except share data)
                                               For the Three   For the Three
                                                months ended    months ended
                                               September 30,   September 30,
                                                         2010            2009
                                                         ----            ----
    Net sales                                          $4,309          $2,995
                                                       ------          ------
        Cost of goods sold                                306           1,501
        Cost of services                                2,798             971

      Gross profit                                      1,204             523
                                                        -----             ---
    Operating expense
        Salaries and benefits                           1,472           1,265
        Selling, general and administrative             1,657           1,668
        Total operating expense                         3,129           2,933
                                                        -----           -----
    Loss from operations                               (1,925)         (2,410)
                                                       ------          ------

    Other (expenses) income
      Other expense                                       154            (243)
      Change in fair value of warrants                      -               -
                                                          ---             ---
        Total other expenses                              154            (243)
                                                          ---            ----

    Net (loss) before income taxes                     (1,771)         (2,653)

    Income tax benefit                                   (106)            (58)
                                                         ----             ---

    (Loss) from continuing operations                  (1,877)         (2,711)
    (Loss from discontinued operations                 (1,002)            492
                                                       ------             ---

    Net (loss)                                         (2,878)         (2,219)

    Series A, A-1 and B Preferred Stock:
      Contractual dividends                               (19)           (136)
      Deemed dividends related to beneficial
       conversion feature                                  (6)            (79)

    Net (loss) available to common
     stockholders                                     $(2,904)        $(2,434)
                                                      =======         =======

    Net loss per share to common stockholders
     -basic and diluted
      Net loss per share from continuing
       operations                                       (0.06)          (0.14)
      Net loss per share from discontinued
       operations                                       (0.03)           0.02
                                                        -----            ----
                                                       $(0.09)         $(0.12)
                                                       ======          ======

    Weighted average shares outstanding
      basic and diluted                            30,258,763      20,062,364
                                                   ==========      ==========

    Other Comprehensive income, net of tax
      Net Loss                                        $(2,904)        $(2,435)
      Foreign currency translations adjustment             20               -
      Comprehensive loss                              $(2,884)        $(2,435)
                                                      =======         =======

    Adjusted EBITDA
    ---------------
    Loss from operations                               (1,925)         (2,410)

      Investor relations adjustments                      142             610
      Non-recurring costs                                 113               -
      Share based payments                                250             267
      Depreciation and Amortization                        62             158
                                                          ---             ---
        Adjusted EBITDA                                (1,357)         (1,375)
                                                       ======          ======


                                                   For the         For the
                                                year to date    year to date
                                               September 30,   September 30,
                                                         2010            2009
                                                         ----            ----
    Net sales                                         $13,996         $10,113
                                                      -------         -------
        Cost of goods sold                              1,558           4,393
        Cost of services                                6,522           2,905

      Gross profit                                      5,916           2,815
                                                        -----           -----
    Operating expense
        Salaries and benefits                           6,036           4,373
        Selling, general and administrative             5,559           4,242
        Total operating expense                        11,595           8,615
                                                       ------           -----
    Loss from operations                               (5,679)         (5,800)
                                                       ------          ------

    Other (expenses) income
      Other expense                                      (259)           (904)
      Change in fair value of warrants                 (4,373)              -
                                                       ------             ---
        Total other expenses                           (4,632)           (904)
                                                       ------            ----

    Net (loss) before income taxes                    (10,311)         (6,703)

    Income tax benefit                                    (63)            (58)
                                                          ---             ---

    (Loss) from continuing operations                 (10,374)         (6,762)
    (Loss from discontinued operations                 (8,181)            492
                                                       ------             ---

    Net (loss)                                        (18,555)         (6,270)

    Series A, A-1 and B Preferred Stock:
      Contractual dividends                              (175)           (548)
      Deemed dividends related to beneficial
       conversion feature                                 (99)           (266)

    Net (loss) available to common
     stockholders                                    $(18,829)        $(7,084)
                                                     ========         =======

    Net loss per share to common stockholders
     -basic and diluted
      Net loss per share from continuing
       operations                                       (0.32)          (0.41)
      Net loss per share from discontinued
       operations                                       (0.25)           0.03
                                                        -----            ----
                                                       $(0.57)         $(0.38)
                                                       ======          ======

    Weighted average shares outstanding
      basic and diluted                            32,254,769      16,482,449
                                                   ==========      ==========

    Other Comprehensive income, net of tax
      Net Loss                                       $(18,829)        $(7,084)
      Foreign currency translations adjustment            (28)              -
      Comprehensive loss                             $(18,857)        $(7,084)
                                                     ========         =======

    Adjusted EBITDA
    ---------------
    Loss from operations                               (5,679)         (5,800)

      Investor relations adjustments                      589           1,062
      Non-recurring costs                               1,014               -
      Share based payments                              1,381             722
      Depreciation and Amortization                       589             613
                                                          ---             ---
        Adjusted EBITDA                                (2,106)         (3,403)
                                                       ======          ======

SOURCE Beacon Enterprise Solutions Group, Inc.


Source: newswire



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