SOURCE: Broadcast International, Inc.

Broadcast International, Inc.

August 14, 2012 16:05 ET

Broadcast International Reports Second Quarter 2012 Results

SALT LAKE CITY, UT--(Marketwire - Aug 14, 2012) - Broadcast International (OTCQB: BCST) (OTCBB: 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 (OTCBB: 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, 2011     June 30,
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
ended

June 30,
   
For the six months
ended

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 Information

  • Company Contact:
    Cameron Francis
    Vice President Products
    Broadcast International
    801-562-2252
    Email Contact

    Investor Relations Contact:
    Michael Koehler or Matt Glover
    Liolios Group, Inc.
    949-574-3860
    Email Contact