Lightyear Network Solutions Announces Year End 2012 Financial Results

Lightyear Network Solutions Announces Year End 2012 Financial Results

LOUISVILLE, Ky.--(BUSINESS WIRE)-- Lightyear Network Solutions, Inc. (the "Company") (OTCQB: LYNS), an established provider of data, voice and wireless telecommunication services to business and residential customers throughout North America, announced today its financial results for the year ended December 31, 2012.

Financial highlights for 2012 include:

  • Overall revenue decreased approximately 6% from fiscal year 2011. Wireless services revenue grew by approximately $1.2 million (or 30%) in 2012 compared with 2011, while local services revenue decreased by approximately $2.7 million (or 9%) for the same period

  • Operating expenses decreased by approximately $2.2 million (or 8.6%) in 2012 compared with the previous year

  • Loss from operations, when adjusted for a one-time impairment charge related to the sale of our Pikeville real estate, was essentially unchanged at $870,310 in 2012 and $871,899 in 2011

  • Cash generated from operations increased to approximately $1.4 million in 2012 compared with approximately $47,000 in 2011

  • Net loss per common share for the year was $.10


"Our team continues to stay focused, manage expenses and work diligently to create opportunities for growth during this tough economy. We are encouraged with several new commercial clients and the increase in the cash generated from operations," said Stephen M. Lochmueller, Lightyear's Chief Executive Officer.

About Lightyear Network Solutions, Inc.

Through its wholly owned subsidiaries, Lightyear Network Solutions, Inc. 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, Windstream, CenturyLink, tw telecom, XO Communication and Cisco. Lightyear Network Solutions, Inc. 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 Form 10-K for the year ended December 31, 2012 and other 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

December 31,

2012

2011

Assets

Current Assets:

Cash

$

48,424

$

108,133

Accounts receivable, net

4,694,100

5,237,404

Vendor deposits

1,894,522

1,771,028

Inventories, net

267,427

335,964

Prepaid expenses and other current assets

1,137,654

2,523,039

Total Current Assets

8,042,127

9,975,568

Property and equipment, net

5,511,426

7,161,057

Intangible assets, net

1,492,083

1,928,749

Total Assets

$

15,045,636

$

19,065,374

Liabilities and Stockholders' Deficiency

Current Liabilities:

Accounts payable

$

6,212,388

$

7,216,117

Interest payable - related parties

114,972

47,282

Accrued agent commissions

459,712

530,268

Accrued agent commissions - related parties

847

1,069

Deferred revenue

473,957

427,715

Other liabilities

1,667,724

1,876,163

Other liabilities - related parties

142,330

81,718

Current portion of notes payable

934,529

895,918

Current portion of capital lease obligations

164,662

239,203

Total Current Liabilities

10,171,121

11,315,453

Notes payable, non-current portion

2,400,441

3,334,992

Note payable - related party, non-current portion

6,250,000

6,250,000

Capital lease obligations, non-current portion

711,255

758,750

Deferred tax liability, non-current portion, net

37,830

326,683

Total Liabilities

19,570,647

21,985,878

Commitments and contingencies

Stockholders' Deficiency:

Common stock, $0.001 par value; 70,000,000 shares authorized; 22,086,641 shares issued and outstanding at December 31, 2012 and December 31, 2011

22,087

22,087

Note receivable from affiliate

(1,223,203

)

(1,223,203

)

Additional paid-in capital

10,148,545

9,490,226

Accumulated deficit

(13,472,440

)

(11,209,614

)

Total Stockholders' Deficiency

(4,525,011

)

(2,920,504

)

Total Liabilities and Stockholders' Deficiency

$

15,045,636

$

19,065,374

Lightyear Network Solutions, Inc. and Subsidiaries

Consolidated Statements of Operations

For The Years Ended

December 31,

2012

2011

Revenues

$

66,440,789

$

70,495,597

Cost of revenues

44,281,234

45,158,389

Gross Profit

22,159,555

25,337,208

Operating Expenses

Commission expense

5,416,415

5,979,886

Commission expense - related parties

72,747

55,647

Depreciation and amortization

1,303,709

1,691,845

Bad debt expense

1,039,270

940,277

Selling, general and administrative expenses

15,100,955

17,104,471

Selling, general and administrative expenses - related party

96,769

199,231

Impairment of intangible assets

-

237,750

Impairment of property and equipment

938,270

-

Total Operating Expenses

23,968,135

26,209,107

Loss From Operations

(1,808,580

)

(871,899

)

Other (Expense) Income

Interest income

25,533

45,731

Interest income - related parties

-

570,967

Interest expense

(236,471

)

(310,581

)

Interest expense - related parties

(278,587

)

(376,734

)

Gain on sale of fixed assets

-

192,284

Loss on abandonment of property

-

(107,540

)

Other income

35,279

140,495

Total Other (Expense) Income

(454,246

)

154,622

Loss before income taxes

(2,262,826

)

(717,277

)

Income tax benefit

-

123,800

Net Loss

(2,262,826

)

(593,477

)

Deemed dividends to convertible preferred stockholders

-

(11,835,530

)

Loss Attributable to Common Stockholders

$

(2,262,826

)

$

(12,429,007

)

Net Loss Per Common Share - Basic and Diluted

$

(0.10

)

$

(0.57

)

Weighted Average Number of Common Shares Outstanding - Basic and Diluted

22,328,205

21,796,111

Lightyear Network Solutions, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

For The Years Ended

December 31,

2012

2011

Cash Flows From Operating Activities

Net loss

$

(2,262,826

)

$

(593,477

)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

1,303,709

1,691,845

Provision for bad debt expense

1,039,270

940,277

Provision for inventory reserve

-

17,205

Stock-based compensation

658,319

593,938

Interest income from affiliate

-

(570,967

)

Deferred taxes

-

(123,800

)

Gain on sale of fixed assets

-

(192,284

)

Loss on abandonment of property

-

107,540

Impairment of intangible assets

-

237,750

Impairment of property and equipment, net

938,270

-

Changes in operating assets and liabilities:

Accounts receivable

(495,966

)

(27,257

)

Other assets

-

(5,254

)

Vendor deposits

(123,494

)

(84,117

)

Inventories

68,537

(19,614

)

Prepaid expenses and other current assets

1,385,385

(235,164

)

Accounts payable

(1,003,729

)

56,001

Interest payable - related parties

67,690

(66,536

)

Accrued agent commissions

(70,556

)

(39,565

)

Accrued agent commissions - related parties

(222

)

(23,967

)

Deferred revenue

46,242

(1,589,473

)

Other liabilities

(208,439

)

(10,061

)

Other liabilities - related parties

60,612

(15,665

)

Total Adjustments

3,665,628

640,832

Net Cash Provided by Operating Activities

1,402,802

47,355

Cash Flows From Investing Activities

Purchases of property and equipment

(318,305

)

(1,145,994

)

Proceeds from sale of fixed assets

-

321,277

Net Cash Used in Investing Activities

(318,305