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Press Release -- March 31st, 2011
Source: Lightyear Network Solutions
Tags: Consolidation, Earnings, Equipment, Ethernet, Exchange, MPLS, VoIP

Lightyear Network Solutions Announces Fourth Quarter and Year End 2010 Financial Results

— 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:

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
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


Lightyear Network Solutions, Inc.
Steve Rush, Marketing Manager, 502-410-1397
Porter, LeVay & Rose, Inc.
Marlon Nurse, V.P. – Investor Relations, 212-564-4700

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