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Lightyear Misses Financial, Strategic Targets

Lightyear Network Solutions, Inc. has failed to meet certain several financial or strategic targets included in warrants issued to investors.

Most recently, Lightyear did not meet Milestone #6″ because it failed to file to list on NASDAQ Global or higher” by April 27, 2011, according to an 8-K filing with the Securities and Exchange Commission. The milestone warrants issued to investors reflect the right to acquire one share of company common stock at an exercise price of $0.01 per share, subject to adjustments, according to the filing. 

If the Company fails to meet a particular Milestone, the Milestone Warrant becomes immediately exercisable with respect to the number of shares associated with that particular Milestone,” Lightyear stated in the filing on April 28, 2011.

As a result of its failure to meet the sixth milestone, Lightyear said it would deliver certificates representing 445,576 shares of common stock to investors no later than May 7, 2011.

The 8-K regulatory filing shows that Lightyear missed the sixth and final target, or milestone, included in warrants issued to investors as part of equity units sold through a private offering between June 28, 2010 and Sept. 29, 2010.

Lightyear announced several key changes in its management about a week before it disclosed missing the milestone, including that J. Sherman Henderson would be stepping down as CEO and assuming the titles of chair emeritus and founder. Stephen M. Lochmueller has taken over Lightyear as chief executive while Randy Ammon has assumed the dual role of president and chief operating officer.

Shares of Lightyear (LYNS) dont trade on the public market, and its common stock is lightly traded over the counter, according to its annual report. The stock was last trading Monday at $1.20, down 35 cents or 22.58 percent.

In a regulatory filing on March 28, 2011, Louisville, Ky.-based Lightyear revealed that it missed the fourth and fifth milestones issued to investors as part of equity units sold through the private offering. Lightyear said it would deliver certificates representing 892,456 shares of common stock to investors no later than April 6, 2011.

One of the milestones required Lightyear, no later than March 28, 2011, to close on an acquisition of one or more telecom companies that generated a certain aggregate minimum amount of gross revenues. In February, Lightyear missed yet another target Milestone #3″ related to executing an agreement no later than Feb. 26, 2011 to acquire one or more telecom companies, according to a regulatory filing.

Lightyear said it would issue 445,564 shares of common stock to investors no later than March 8, 2011. Investors could not have exercised the warrants if Lightyear met its targets, the regulatory filings reveal.

As of March 30, 2011, Lightyear had 298 holders of record of common stock, according to the companys annual filing with the SEC. That same filing notes that some of the companys directors and executive officers are the principal members of LY Holdings, which holds all of Lightyears preferred stock.

Lightyear announced in March reporting its first profit since it became a public company in early 2010 through a reverse merger with Libra Alliance Corp., a shell company that was incorporated 14 years ago in Nevada to provide Internet services to small and medium-sized businesses but ceased operations in 2001.

In the fourth quarter, the company reported net income of $5 million, which included a non-recurring gain and recognition of a tax benefit stemming from the companys 2010 acquisition of SouthEast Telephone, Inc. For the year, the company posted net income of $1.6 million on $52.3 million in revenues.

Lightyear relies heavily on independent sales representatives to market its services, and the company supports about 60,000 customer locations with a significant concentration in Florida, Georgia, Indiana, Kentucky and Ohio.


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