Beacon Enterprise Solutions Reports Results For Fiscal Third Quarter 2012

  Beacon Enterprise Solutions Reports Results For Fiscal Third Quarter 2012

PR Newswire

LOUISVILLE, Ky., Aug. 14, 2012

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:

  oNet 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;
  oFor the nine months ended, gross profit increased slightly from $4.6
    million to $4.7 million in fiscal 2012 compared to fiscal 2011;
  oGross 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;
  oTotal 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    160             -
    $214)
   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,    38              38
    respectively.
 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     $   7,320    $   11,922
 (deficiency)

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       For the       For the      For the
                           Three         Three         Nine         Nine
                           Months Ended  Months Ended  Months       Months
                                                       Ended        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  2,352         2,490         8,112        8,890
  services
  Gross profit             1,094         2,012         4,653        4,589
Operating expenses
      Salaries and         1,229         758           4,126        4,296
      benefits
      Selling, general     1,135         1,302         2,953        3,172
      and administrative
      Impairment of        2,062         -             2,062        -
      intangible assets
      Total operating      4,426         2,060         9,141        7,468
      expenses
Loss from operations       (3,332)       (48)          (4,488)      (2,879)
Other expenses
  Interest expense         (130)         (128)         (421)        (261)
  Effect of foreign        (109)         (8)           (279)        (3)
  currency transaction
  Amortization of          (156)         (83)          (555)        (167)
  deferred finance fees
  Other expenses           (62)          (54)          (107)        (392)
      Total other          (457)         (273)         (1,362)      (823)
      expenses
Net loss before income     (3,789)       (321)         (5,850)      (3,702)
taxes
Income tax expense         (14)          (75)          (44)         (164)
Loss from continuing       (3,803)       (396)         (5,894)      (3,866)
operations
Income from discontinued   -             -             -            7,892
operations
Net (loss) income          (3,803)       (396)         (5,894)      4,026
Preferred Stock:
  Contractual dividends    (35)          (26)          (110)        (64)
Net (loss) income          $          $          $        $   
available to common        (3,838)       (422)        (6,004)      3,962
stockholders
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  -             -             -            0.21
  operations
                           $          $          $        $    
                           (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         (57)          (8)           (122)        545
  translation adjustment
  Comprehensive (loss)     $          $          $        $   
  income                  (3,895)       (430)        (6,126)      4,507
Income (loss) from         $          $         $        $   
operations                 (3,332)       (48)         (4,488)      (2,879)
  Depreciation and         109           125           332          383
  amortization
EBITDA                     $          $        $        $   
                           (3,223)       77            (4,156)      (2,496)
  Other Adjustments
  Non-cash investor        $         $        $       $    
  relations                106          56            238         137
  Non-cash share based     184           304           683          837
  compensation
  Non-cash impairment      2,062         -             2,062        -
  expense
  Non-recurring costs      250           (453)         361          (83)
Adjusted EBITDA            $         $         $       $   
                           (621)         (16)         (812)        (1,605)

SOURCE Beacon Enterprise Solutions Group, Inc.

Website: http://www.askbeacon.com
Contact: Bruce Widener, CEO, +1-502-657-3507, investors@askbeacon.com, or
Porter, LeVay & Rose, Inc., Michael Porter, President, +1-212-564-4700, or
Halliburton Investor Relations, Geralyn DeBusk, President, or Hala Elsherbini,
COO, +1-972-458-8000
 
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