SALT LAKE CITY, April 1, 2011 /PRNewswire/ -- Broadcast International (OTC Bulletin Board: BCST)(“BI”) today announced that fiscal 2010 revenues reached $7,313,218, a 102% increase from the $3,627,571 in revenues reported for fiscal 2009. Gross profit was $2,127,439 in 2010 compared to $447,287 in 2009. The 376% increase is due largely to higher revenues being spread over a relatively fixed operating expense base. The gross profit represented 29% of revenues in 2010 compared to 12% for the previous year. Operating losses in 2010 were $5,744,827, a 45% drop from $10,535,852 reported in 2009. This doubling of sales, and greater than four fold increases in gross profit contribution, is attributable primarily to the recurring license fees and ongoing service revenues generated from the 2,100 digital signage sites installed and operated for our largest customer in 2009 and 2010.
Rod Tiede, President/CEO of Broadcast International stated, "We are pleased to report not only a doubling in revenues for the year, but also the achievement of many of the key strategic goals set forth by management and the board for 2010. These accomplishments included the raising of $15 million in equity capital and the restructuring and substantial reduction of our outstanding debt balances, thereby positioning BI to leverage on the successes that we achieved last year at our business units – BI Networks (digital signage) and CodecSys."
The Company completed an equity funding of $15 million and a debt restructuring of over $18 million in December 2010. The accounting treatment of these transactions within Other Income (Expense) resulted in interest expense of $11,354,858. However, $10,321,210 or 90% of that amount was a non-cash expense, including the accretion of our senior note and the restructure transaction. Other non-cash items included a $3,480,311 loss on derivative valuation, a $1,102,682 cost for issuance of warrants and a $3,062,457 gain on debt restructuring. The net effect of these entries on Other Income (Expense) was an expense of $12,919,290 in 2010 compared to only $2,844,837 in 2009. Combining the Operating Loss with the Other Income (Expense), the Net Loss for 2010 was $18,664,117 or $.43 per share compared to $13,380,689 or $.34 per share in 2009.
Under the debt reduction agreement completed in December, BCST reduced its short-term indebtedness of $17.8 million to Castlerigg Master Investments LTD, our senior note holder. Specifically, BCST paid $5.25 million to Castlerigg who granted a new 3-year note for $5.5 million at 6.25% interest, and forgave approximately $7 million of debt. The senior note holder also surrendered 5,208,333 warrants to purchase BCST common stock.
After deducting the pay down of note, funding commissions and other costs of the equity and debt transactions, BCST received approximately $6.8 million in net cash. During the first quarter of 2011, the Company's short-term debt balance was reduced by an additional $784,292 through the conversion of two short-term notes into BCST common stock, as reported in an 8-K on March 21, 2011. For 2010, the average monthly net cash outflow from operations was approximately $300,000. At the current burn rate, and given the visibility provided by our existing digital signage customer contract licensing and services revenue, the Company will have sufficient cash reserves to sustain operations into late 2012, exclusive of the prospective sales of the new CodecSys software solutions.
Jim Solomon, CFO of Broadcast International stated, "Our equity raise and debt restructure were essential in moving the Company toward profitability. We are pleased and thankful that long-time shareholders, new investors and the note holders have demonstrated their confidence and support in the opportunity to substantially grow our digital signage and CodecSys businesses that address very large markets."
Broadcast's CodecSys Division introduced its patented Intel-version software-based video compression encoder (Version 2.0) in third quarter 2010. CodecSys has established co-marketing partnerships with IBM, HP and Microsoft in which CodecSys may be included in their product bids. While the timing of our future CodecSys sales are difficult to project, we expect that our early efforts toward seeding our partner customers with pilot evaluation units will begin to drive meaningful revenue in fiscal 2011. Presently our partners have helped us to place 14 evaluations systems with their customers who are contemplating the purchase of large amounts of hardware from those partners, largely within the IPTV market. Our orders are dependent upon the purchase orders that our partners receive from those customers, and we may be required to make some customization in CodecSys for a specific customer.
Broadcast International will host a teleconference discussion of the 2010 financial results on Monday, April 4, 2011 at 4:30pm EDT. The teleconference call-in number is 1-800-434-1335 in the U.S. The international call-in number is 1-404-920-6442. The PIN code is 815157#.
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.
SOURCE Broadcast International