— Achieves First Profitable Quarter in Company’s Public History —
LOUISVILLE, KY, March 31, 2011 – Lightyear Network Solutions, Inc. (OTCBB:LYNS, news, filings), a provider oftelecommunication services to business and residential customers throughout North America, todayannounced its financial results for the fourth quarter and year ended December 31, 2010. Results for thefourth quarter and full year reflect Lightyear’s acquisition of SouthEast Telephone, which was completedon October 1, 2010.
“2010 was a monumental year for Lightyear in many respects,” said J. Sherman Henderson III, ChiefExecutive Officer of Lightyear. “Since beginning to operate as a public company in February 2010, wehave begun to execute our strategy of expanding our business and services through acquisitions as wellas through organic growth. Of particular significance was our acquisition in October 2010 of SouthEastTelephone, which nearly doubled our customer base, increased our revenues, and became immediatelyaccretive to EBITDA.”
“The company reached profitability for the first time in our public history during the fourth quarter of 2010,reflecting our ability to successfully consolidate the two companies, its people, services and technology,while benefiting from synergies and economies of scale,” Mr. Henderson added. “We expect to continueto benefit from these synergies as we complete the consolidation of our operations and continue to focuson growing our individual product lines.”
Highlights for the quarter ended December 31, 2010 include:
- First profitable quarter since beginning to operate as a public company
- Net income of $5.0 million, inclusive of a non-recurring gain and recognition of a tax benefitresulting from the SouthEast Telephone transaction, compared with a net loss of $1.8 million forthe same period in 2009
- Net income of $80,000 from continuing operations
- Revenues of $11.6 million (pre-acquisition) for the quarter compared with $11.3 million for thesame period in 2009
- Reduced operating costs (pre-acquisition) by 17 percent as compared with the same period in2009
- Completed acquisition of SouthEast Telephone, which nearly doubled our customer base to morethan 60,000
- Expanded of our board of directors with seasoned and experienced telecom and sales veterans
“The fourth quarter was a breakout quarter during which time we had positive EBITDA and positive netincome,” said Stephen Lochmueller, President of Lightyear. “While continuing to focus on our corebusiness, we made significant strides in our growth strategy with the integration of SouthEast Telephone.We believe our growth and profitability will increase in 2011 as we continue to improve our operations andseek new opportunities.”
Highlights for the year ended December 31, 2010 include:
- Raised $5.4 million in new capital
- Net income of $1.6 million, inclusive of a non-recurring gain and recognition of a tax benefit resulting from the SouthEast Telephone transaction, compared with a net loss of $5.8 million in 2009
- Net income attributable to common stockholders was $502,000, or $0.03 per diluted share, compared with a loss of $0.58 per share in 2009
- Full-year revenue of $52.3 million compared with $55.4 million in 2009; this decrease was the result of the decision by management to eliminate services that no longer fit with strategic network plans
- Operating costs decreased to $20.1 million compared with $22.2 million in 2009
- Signed a large number of major accounts in diverse industries, including casino gaming, global plastics manufacturing, supermarket chains and call centers
“We accomplished several major goals in 2010 relating to our growth and acquisition strategy,” Mr. Lochmueller added. “We completed our first acquisition and made significant progress on our integration. We stabilized revenue, and we achieved profitability. We are pleased with our overall performance and accomplishments in 2010, and we look forward to continued growth this year.”
About Lightyear Network Solutions, Inc.
Through its wholly owned subsidiaries, Lightyear Network Solutions provides telecommunication services to large, medium and small businesses and to residential consumers throughout North America. Lightyear’s product offerings include local PRI and digital T1, enhanced Internet services, MPLS, Ethernet, Voice over Internet Protocol (VoIP), local and long distance service, and conferencing. Lightyear also offers wireless services to customers in the U.S. through wholesale contracts with multiple wireless providers. Lightyear built its own VoIP network in 2004 to enhance its product offerings and has partnered with some of the most prominent names in telecom including: Sprint, Verizon, AT&T, Level 3, PAETEC, CenturyLink, XO Communications, Intelliverse, BroadSoft, Cisco and ADTRAN. Lightyear Network Solutions is headquartered in Louisville, Ky. Additional information can be found at: www.lightyear.net.
Forward-Looking Statements
This press release contains “forward-looking statements” for purposes of the Securities and Exchange Commission’s “safe harbor” provisions under the Private Securities Litigation Reform Act of 1995 and Rule 3b-6 under the Securities Exchange Act of 1934. These forward-looking statements are subject to various risks and uncertainties that could cause Lightyear’s actual results to differ materially from those currently anticipated. These forward-looking statements may include, without limitation, statements about our marketing and acquisition opportunities, business 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, the risks and uncertainties which could cause our actual results to differ materially from those currently anticipated includes changes in market conditions, our ability to integrate acquired operations, the ability to obtain additional financing on satisfactory terms, customer acceptance of products, regulatory issues, competitive factors, or other business circumstances and risk factors described in our filings with the Securities and Exchange Commission. Lightyear 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.
| Lightyear Network Solutions, Inc. and Subsidiaries | |||||||||||||
| Consolidated Balance Sheets | |||||||||||||
| As of December 31, | |||||||||||||
| 2010 | 2009 | ||||||||||||
| Assets | |||||||||||||
| Current Assets: | |||||||||||||
| Cash | $ | 1,009,209 | $ | 440 | |||||||||
| Accounts receivable, net | 6,150,424 | 4,096,884 | |||||||||||
| Vendor deposits | 1,686,911 | 916,211 | |||||||||||
| Inventories, net | 333,555 | 214,257 | |||||||||||
| Deferred financing costs, net | – | 435,520 | |||||||||||
| Deferred tax asset – current portion, net | 56,939 | ||||||||||||
| Prepaid expenses and other current assets | 2,287,875 | 801,952 | |||||||||||
| Total Current Assets | 11,524,913 | 6,465,264 | |||||||||||
| Property and equipment, net | 7,202,904 | 306,080 | |||||||||||
| Deferred financing costs, net | – | 77,235 | |||||||||||
| Intangible assets, net | 2,763,666 | 1,164,583 | |||||||||||
| Other assets | 311,482 | 282,725 | |||||||||||
| Total Assets | $ | 21,802,965 | $ | 8,295,887 | |||||||||
| Liabilities and Stockholders’ Deficiency | |||||||||||||
| Current Liabilities: | |||||||||||||
| Accounts payable | $ | 7,160,116 | $ | 7,441,828 | |||||||||
| Interest payable – related parties | 113,818 | 4,546,766 | |||||||||||
| Accrued agent commissions | 569,833 | 620,834 | |||||||||||
| Accrued agent commissions – related parties | 25,036 | 6,904 | |||||||||||
| Deferred revenue | 2,017,188 | 412,901 | |||||||||||
| Other liabilities | 1,886,224 | 1,332,686 | |||||||||||
| Other liabilities – related parties | 97,383 | 137,707 | |||||||||||
| Short term borrowings | 320,428 | 500,000 | |||||||||||
| Current portion of notes payable | 529,899 | – | |||||||||||
| Current portion of capital lease obligations | 348,178 | 34,028 | |||||||||||
| Current portion of obligations payable – related parties | – | 16,016,262 | |||||||||||
| Total Current Liabilities | 13,068,103 | 31,049,916 | |||||||||||
| Notes payable, non-current portion | 2,227,987 | – | |||||||||||
| Capital lease obligation, non-current portion | 985,871 | – | |||||||||||
| Obligations payable – related parties, non-current portion | 7,250,000 | 3,000,000 | |||||||||||
| Deferred tax liability – non-current portion, net | 507,422 | – | |||||||||||
| Interest payable – related parties, non-current portion | – | 126,233 | |||||||||||
| Total Liabilities | 24,039,383 | 34,176,149 | |||||||||||
| Commitments and contingencies | – | – | |||||||||||
| Stockholders’ Deficiency: | |||||||||||||
| Convertible preferred stock, $.001 par value; 9,500,000 shares authorized; 9,500,000 shares issued and outstanding at December 31, 2010 and none issued and outstanding at December 31, 2009; aggregate liquidation preference of $20,095,234 at December 31, 2010 | 9,500 | – | |||||||||||
| Common stock, $.001 par value; 70,000,000 shares authorized; 20,306,292 and 10,000,000 shares issued and outstanding at December 31, 2010 and 2009, respectively | 20,306 | 10,000 | |||||||||||
| Notes and interest receivable from affiliate | (13,478,920 | ) | – | ||||||||||
| Additional paid-in capital | 8,898,069 | (10,000 | ) | ||||||||||
| Retained earnings (accumulated deficit) | 2,314,627 | (25,880,262 | ) | ||||||||||
| Total Stockholders’ Deficiency | (2,236,418 | ) | (25,880,262 | ) | |||||||||
| Total Liabilities and Stockholders’ Deficiency | $ | 21,802,965 | $ | 8,295,887 | |||||||||
| Lightyear Network Solutions, Inc. and Subsidiaries | |||||||||||||
| Consolidated Statements of Operations | |||||||||||||
| For The | |||||||||||||
| Years Ended December 31, | |||||||||||||
| 2010 | 2009 | ||||||||||||
| Revenues | $ | 52,301,409 | $ | 55,428,836 | |||||||||
| Cost of revenues | 35,088,629 | 36,854,436 | |||||||||||
| Gross Profit | 17,212,780 | 18,574,400 | |||||||||||
| Operating Expenses | |||||||||||||
| Commission expense | 5,065,814 | 5,116,442 | |||||||||||
| Commission expense – related parties | 313,404 | 154,875 | |||||||||||
| Depreciation and amortization | 575,642 | 464,507 | |||||||||||
| Bad debt expense | 963,926 | 3,769,504 | |||||||||||
| Transaction expenses | 753,898 | – | |||||||||||
| Selling, general and administrative expenses | 12,450,546 | 12,736,744 | |||||||||||
| Selling, general and administrative expenses-related party | 6,912 | – | |||||||||||
| Total Operating Expenses | 20,130,142 | 22,242,072 | |||||||||||
| Loss From Operations | (2,917,362 | ) | (3,667,672 | ) | |||||||||
| Other Income (Expense) | |||||||||||||
| Interest income | 37,507 | 83,151 | |||||||||||
| Interest income – related parties | 578,940 | – | |||||||||||
| Interest expense | (89,055 | ) | (10,591 | ) | |||||||||
| Interest expense – related parties | (531,228 | ) | (1,936,227 | ) | |||||||||
| Amortization of deferred financing costs | (68,423 | ) | (142,100 | ) | |||||||||
| Amortization of deferred financing costs – related parties | (69,345 | ) | (49,064 | ) | |||||||||
| Amortization of debt discount – related parties | (100,860 | ) | (348,087 | ) | |||||||||
| Change in fair value of derivative liabilities – related parties | 83,097 | 259,445 | |||||||||||
| Gain on bargain purchase, net | 3,394,036 | – | |||||||||||
| Other (expense) income | (764 | ) | 13,487 | ||||||||||
| Other expense – related parties | (260,000 | ) | – | ||||||||||
| Total Other Income (Expense) | 2,973,905 | (2,129,986 | ) | ||||||||||
| Income (loss) before income taxes | 56,543 | (5,797,658 | ) | ||||||||||
| Income tax benefit | 1,540,592 | – | |||||||||||
| Net Income (Loss) | 1,597,135 | (5,797,658 | ) | ||||||||||
| Cumulative Preferred Stock Dividends | (1,095,234 | ) | – | ||||||||||
| Income (Loss) Available to Common Stockholders | $ | 501,901 | $ | (5,797,658 | ) | ||||||||
| Basic earnings (loss) per common share | $ | 0.03 | $ | (0.58 | ) | ||||||||
| Diluted earnings per common share | $ | 0.03 | $ | (0.58 | ) | ||||||||
| Weighted average number of common shares outstanding – basic | 18,414,816 | 10,000,000 | |||||||||||
| Weighted average number of diluted common shares outstanding | 19,471,073 | 10,000,000 | |||||||||||
Contacts
Lightyear Network Solutions, Inc.
Steve Rush, Marketing Manager, 502-410-1397
steve.rush@lightyear.net
or
Porter, LeVay & Rose, Inc.
Marlon Nurse, V.P. – Investor Relations, 212-564-4700
marlon@plrinvest.com
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