Broadcast International Reports Second Quarter 2012 Results

Marketwired

SALT LAKE CITY, UT--(Marketwire -08/14/12)- Broadcast International (BCST) (BCST), a leading provider of video-powered broadcast solutions, reported financial results for the second quarter ended June 30, 2012.

Q2 2012 Highlights

  • CodecSys deployments with WestStar TV, Digital Direct Networks, HSM Americas, aioTV, Axio TV and Beehive Networks

  • Partnered with Beenius to offer a processing platform for its new 'Beesmart' interactive TV service

  • Debuted new CodecSys Media Server capable of streaming content from a unified source to multiple clients and devices for a complete "TV Anywhere" solution

  • Completed strategic funding to accelerate market expansion of CodecSys and improve capital structure

  • Honored by Digital Screenmedia Association for BI Network's "first-of-its-kind" digital signage solution

Q2 2012 Financial Results
Revenue in the second quarter 2012 increased 14% sequentially to $2.0 million from $1.8 million in the prior quarter, and decreased 16% from $2.4 million the same year-ago period. The year-over-year decrease was primarily due to fewer expansion sites installed for the company's largest digital signage customer.

Gross profit in the second quarter 2012 was $654,000 or 33% of total revenue, an improvement from $499,600 or 29% of total revenue in the previous quarter, and compared to $736,600 or 31% of total revenue in the same year-ago period.

Operating loss in the second quarter 2012 was $1.8 million, an improvement from an operating loss of $2.1 million in the previous quarter, and versus an operating loss of $1.6 million in the same year-ago period.

Net profit in the second quarter 2012 totaled $847,200 or $0.01 per basic and diluted share, compared to a net loss of $185,000 or $(0.00) per basic and diluted share in the prior quarter, and an improvement from a net profit of $442,300 or $0.01 per basic and diluted share in the same year-ago period. The year-over-year improvement was primarily due to an increase in the company's derivative valuation of $772,300, offset by the increased loss from operations and interest expense.

Management Commentary
"Our Q2 and first half 2012 results reflect our continued focus on driving margin expansion and expense optimization," said Jim Solomon, CFO of Broadcast International. "Our progress is illustrated by the several milestones we achieved for the first half of the year, including the highest gross profit and gross margin in the company's history.

"We are encouraged by these results and will continue to focus on driving revenue growth, while balancing operating expenses and customer commitments. Along those lines, we recently implemented cost-cutting initiatives to further optimize our organization. Specifically, we made significant reductions in headcount, operating and administrative expenses. We anticipate these initiatives will decrease our quarterly operating expenses by more than $600,000 when the program is fully implemented."

William Boyd, chairman of Broadcast International, commented: "From an operational perspective, Broadcast continues to win new customers by harnessing the increasing demand for enterprise IP video and OTT solutions across all global markets. In fact, our sales pipeline continues to expand, as we leverage our disruptive and patented CodecSys technology to capitalize on the rapid industry transition.

"We expect these opportunities to drive significant revenue growth in the second half of the year. With our strong revenue outlook, coupled with our recent and ongoing expense reductions, we expect to reach cash flow breakeven in the fourth quarter. The executive committee will continue to work closely with the management team to achieve these objectives that ultimately, will benefit Broadcast shareholders, customers and employees."

Earnings Podcast
Broadcast International will stream its second quarter 2012 results podcast tomorrow (Wednesday, August 15) at 9:00 a.m. Eastern time. The video podcast will be available via the Investor Relations section of the company's Web site at www.brin.com.

Broadcast International management will discuss the company's financial results, and provide an operational update and outlook for 2012.

Date: Wednesday, August 15, 2012
Time: 9:00 a.m. Eastern time (7:00 a.m. Mountain time)
Podcast: www.brin.com/news/podcast-new

If you have any difficulty connecting with the podcast, please contact Liolios Group at 1-949-574-3860.

About Broadcast International
Broadcast International is a leading provider of video-powered broadcast solutions, including IP, digital satellite, Internet streaming and other types of wired/wireless network distribution. BI's patented CodecSys software is a breakthrough, multi-codec video compression technology that cuts video bandwidth requirements over satellite, cable, IP and wireless networks. By slashing bandwidth needs, CodecSys enables a new generation of rich-media applications and offers unprecedented price/ performance benefits for existing applications. Broadcast International is a public company (BCST) headquartered in Salt Lake City, UT.

For more information visit: www.brin.com and www.codecsys.com.

Forward Looking Statements
All statements in this news release that are not based on historical fact are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (which Sections were adopted as part of the Private Securities Litigation Reform Act of 1995). While management has based any forward-looking statements contained herein on its current expectations, the information on which such expectations were based may change. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of risks, uncertainties, and other factors, many of which are outside of our control, that could cause actual results to materially differ from such statements. Such risks, uncertainties, and other factors include, but are not necessarily limited to, those set forth under the caption "Additional Factors That May Affect Our Business" in the Company's most recent Form 10-K and 10-Q filings, and amendments thereto. In addition, we operate in a highly competitive and rapidly changing environment, and new risks may arise. Accordingly, investors should not place any reliance on forward-looking statements as a prediction of actual results. We disclaim any intention to, and undertake no obligation to, update or revise any forward-looking statement.

 



BROADCAST INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

December 31, June 30,
2011 2012
------------- -------------
(Unaudited)
ASSETS:
Current Assets
Cash $ 961,265 $ 403,259
Trade accounts receivable, net 1,239,903 1,219,163
Inventory 60,851 331,572
Prepaid expenses 203,973 149,247
------------- -------------
Total current assets 2,465,992 2,103,241
------------- -------------
Property and equipment, net 1,417,134 839,324
------------- -------------
Other Assets, non current
Debt offering costs 123,278 64,371
Patents, net 131,079 126,004
Deposits and other assets 406,004 265,700
------------- -------------
Total other assets, non current 660,361 456,075
------------- -------------

Total assets $ 4,543,487 $ 3,398,640
============= =============

LIABILITIES AND STOCKHOLDERS DEFICIT:

Current Liabilities
Accounts payable $ 1,252,538 $ 2,443,594
Payroll and related expenses 390,206 476,468
Other accrued expenses 175,008 273,279
Unearned revenue 10,449 1,440
Current portion of notes payable (net of
discount of $103,859 and $101,416,
respectively) 2,068,016 798,584
Other current obligations 1,067,649 276,455
Derivative valuation 3,760,200 4,309,537
------------- -------------
Total current liabilities 8,724,066 8,579,357
Long-term Liabilities
Long-term portion of notes payable (net of
discount of $659,496 and $492,828,
respectively) 6,349,445 507,172
------------- -------------
Total long-term liabilities 6,349,445 507,172
------------- -------------
Total liabilities 15,073,511 9,086,529
------------- -------------
Commitments and contingencies
STOCKHOLDERS' DEFICIT:
Preferred stock, no par value, 20,000,000
shares authorized; none issued -- --
Common stock, $.05 par value, 180,000,000
shares authorized; 75,975,656 and
107,227,820 shares issued as of December
31, 2011 and June 30, 2012, respectively 3,798,783 5,361,391
Additional paid-in capital 96,859,058 99,476,870
Accumulated deficit (111,187,865) (110,526,150)
------------- -------------
Total stockholders' deficit (10,530,024) (5,687,889)
------------- -------------

Total liabilities and stockholders' deficit $ 4,543,487 $ 3,398,640
============= =============



BROADCAST INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)


For the three months For the six months
ended ended
June 30, June 30,
-------------------------- --------------------------
2011 2012 2011 2012
------------ ------------ ------------ ------------

Net sales $ 2,357,157 $ 1,999,988 $ 4,044,421 $ 3,745,085
Cost of sales 1,620,555 1,345,966 2,896,092 2,591,458
------------ ------------ ------------ ------------
Gross profit 736,602 654,022 1,148,329 1,153,627
------------ ------------ ------------ ------------

Operating expenses:
Administrative and
general 1,236,328 1,259,320 3,844,700 2,588,601
Selling and
marketing 263,008 598,841 422,945 1,115,240
Research and
development 625,628 464,847 1,223,399 1,021,414
Depreciation and
amortization 167,366 164,043 348,159 326,675
------------ ------------ ------------ ------------
Total operating
expenses 2,292,330 2,487,051 5,839,203 5,051,930
------------ ------------ ------------ ------------
Total operating loss (1,555,728) (1,833,029) (4,690,874) (3,898,303)
------------ ------------ ------------ ------------

Other income
(expense):
Interest income 1,198 1 1,986 1
Interest expense (188,689) (263,483) (569,878) (606,211)
Gain (loss) on
derivative
valuation 2,186,900 2,959,155 6,406,200 4,588,480
Equity issuance
costs related to
warrants -- (18,836) (476,234) (1,095,309)
Gain (loss) on
extinguishment of
debt -- -- (970,033) 1,672,575
Loss on sale of
securities -- -- -- --
Loss on sale of
assets 240 (1,799) (362) (1,640)
Other income
(expense), net (1,597) 5,183 (5,446) 2,122
------------ ------------ ------------ ------------
Total other income
(expense) 1,998,052 2,680,221 4,386,233 4,560,018
------------ ------------ ------------ ------------

Profit (loss) before
income taxes 442,324 847,192 (304,641) 661,715
Provision for income
taxes -- -- -- --
------------ ------------ ------------ ------------
Net profit (loss) $ 442,324 $ 847,192 $ (304,641) $ 661,715
============ ============ ============ ============

Net profit (loss)
per share - basic $ 0.01 $ 0.01 $ 0 $ 0.01
============ ============ ============ ============
Net profit (loss)
per share - diluted $ 0.01 $ 0.01 $ 0 $ 0.01
============ ============ ============ ============

Weighted average
shares - basic 75,576,100 107,193,974 74,916,500 94,167,466
============ ============ ============ ============
Weighted average
shares - diluted 78,516,174 114,128,974 74,916,500 104,042,079
============ ============ ============ ============
Contact:
Company
Cameron Francis
Vice President Products
Broadcast International
801-562-2252
Email Contact
Investor Relations
Michael Koehler or Matt Glover
Liolios Group, Inc.
949-574-3860
Email Contact

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