AirNet Announces Third Quarter 2003 Financial Results.Business Editors/High-Tech Writers MELBOURNE Melbourne, city, Australia Melbourne, city (1991 pop. 2,761,995), capital of Victoria, SE Australia, on Port Phillip Bay at the mouth of the Yarra River. Melbourne, Australia's second largest city, is a rail and air hub and financial and commercial center. , Fla.--(BUSINESS WIRE)--Nov. 12, 2003 AirNet Communications Corporation (Nasdaq:ANCC ANCC American Nurses Credentialing Center ANCC Association Nationale des Cardiaques Congénitaux ANCC Army-Navy Country Club (Arlington, VA) ANCC Area Nine Cable Council (state mandated government body in UK) ): THIRD QUARTER FINANCIAL HIGHLIGHTS: -- Net Revenue was $4.5M, exceeding forecast -- Gross Margins were $1.4M or 31% up from 25% in Q3, 2002 -- Loss from Operations was ($3.2M) which included $1.2M of non-cash stock option charges compared with our Q2, 2003 loss, which was our best performance since going public, of ($2.5M) -- Net Loss Attributable to Common Stock was $20.2M or ($0.56) per share and included $16.9M (EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. impact of $0.47) of non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. associated with the $16M Senior Secured Debt financing consummated con·sum·mate tr.v. con·sum·mat·ed, con·sum·mat·ing, con·sum·mates 1. a. To bring to completion or fruition; conclude: consummate a business transaction. b. in the quarter and $1.2M (EPS impact of $0.03) of non-cash stock option charges -- Cash Flow from Operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses was ($3.6M) vs. ($4.0M) in Q3, 2002 RECENT BUSINESS DEVELOPMENTS: -- Signed OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and Reseller An organization that sells hardware and software to the general public. Resellers purchase products from software publishers and hardware manufacturers. Agreement with a "Top 5" communications equipment company -- Signed a Master Purchase Agreement with a North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. customer for the sale of $4.0M in AdaptaCell SuperCapacity adaptive array base stations and related products over the next two years with $0.5M scheduled for shipment in 1Q04 -- Secured approximately $6.0M of new customer purchase orders, which includes only $0.5M of the above noted adaptive array contract, so far in Q4, 2003 -- Notified of 2004 budget appropriation The designation by the government or an individual of the use to which a fund of money is to be applied. The selection and setting apart of privately owned land by the government for public use, such as a military reservation or public building. earmarked for a governmental entity to purchase approximately $2.0M in AirNet products AirNet Communications Corporation (Nasdaq:ANCC) today reported financial results for its third quarter ended September September: see month. 30, 2003. Financial Results The Company reported net revenue of $4.5 million in the third quarter, compared to $7.3 million in the third quarter of 2002. The Loss from Operations was ($3.2 million) which included $1.2 million of non-cash stock option charges that resulted from the funding transaction compared to a loss of ($2.8 million) including $0.1 million of non-cash stock option charges in the third quarter of 2002. The Q2, 2003 loss from operations of ($2.5 million), which included $0.003 million of non-cash stock options charges, was the lowest loss from operations since going public. Gross margins for the third quarter were $1.4 million or 31% compared to year ago gross margins of $1.8 million or 25%. The Q3, 2003 Net Loss Attributable to Common Stock was ($20.2 million) or ($0.56) per share vs. ($3.8 million) or ($0.16) per share in Q3, 2002. The Q3, 2003 loss included non-cash charges totaling $18.1 million with an EPS impact of ($0.50) per share. The components of that charge include: $9.0 million associated with the conversion feature of the debt; $7.9 million associated with the Series "B" Preferred conversion inducement Inducement Electra incited brother, Orestes, to kill their mother and her lover. [Gk. Myth.: Zimmerman, 92; Gk. Lit.: Electra, Orestes] Hezekiah exhorts Judah to stand fast against Assyrians. [O.T. ; and $1.2 million of stock option compensation expense. Cash Used in Operating Activities for the third quarter was $3.6 million, compared to a use of cash of $4.0 million in the third quarter of 2002. Financing activity for the quarter generated $2.2M of cash primarily from the $16M Senior Debt Financing Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay completed in August 2003. Per share amounts for the third quarter of 2003 results were based on 36.1 million weighted average shares and excludes shares issuable upon the conversion of the Senior Secured Convertible Debt and shares underlying outstanding options because the effect of including those shares would be anti-dilutive. Management's Discussion of Financial Results and Outlook Net revenue for the three months ended September 30, 2003 decreased $2.8 million or 39% to $4.5 million compared to $7.3 million for the three months ended September 30, 2002. This decrease was largely attributed to decreased revenue from our projects in Asia and Africa. Gross profit for the three months ended September 30, 2003 decreased $0.4 million or 25% to $1.4 million as compared to $1.8 million for the three-month period ended September 30, 2002. The gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. percentages increased and were 31% and 25% for the three months ended September 30, 2003 and 2002, respectively. The gross profit percentage increase was attributable to a more favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. revenue mix. Q3, 2003 operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. were $4.5 million, which included $1.2 million of non-cash stock option compensation expense compared to Q3, 2002 operating expenses, which were $4.7 million and included a $0.7 million gain on vendor settlements. The Company also announced that the outlook for fiscal year 2004 was improving. The Company was informed that a governmental entity had received a Congressional appropriation in the approximate amount of $2 million in the 2004 U.S. Budget to purchase AirNet products. The Company also announced today that it had executed an OEM agreement with a "Top 5" Communications Equipment company (based on market equipment market share) for the resale resale n. selling again, particularly at retail. In many states a "resale license" or "resale number" is required so that the state can monitor the collection of sales tax on retail sales. RESALE. of AirNet products in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and this new OEM customer has purchased an AirNet "showcase system" for approximately $500 thousand. This agreement marked the first time in AirNet's history that it had signed such an OEM agreement with a "Top 5" Communications Equipment company. The Company has now received purchase orders in 4Q03 totaling approximately $6.0 million for delivery commencing in the fourth quarter of this year and continuing through the first nine months of fiscal year 2004. The Company also announced it has signed a Master Purchase Agreement with a North American customer for the sale of approximately $4.0M in AdaptaCell SuperCapacity adaptive array base stations and related products over the next two years. Approximately $0.5 million of the adaptive array sale is scheduled for shipment in the first quarter next year. Only $0.5 million of the $4.0 million adaptive array commitment has been included in the $6.0 million in 4Q03 orders noted above. "We focused our efforts in the third quarter on developing a number of strategic business opportunities, and we are starting to see the benefits," said Glenn Ehley, President & CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. for AirNet Communications. "The Company's product portfolio and business is aligned for growth and capturing new customers. We are cautiously optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op as we approach fiscal year 2004." Conference Call AirNet's management will host a conference call at 4:15 p.m. ET today to discuss the results and provide an outlook for the third quarter. Those interested in listening to the conference call should dial 785/832-1508, Conference ID: AIRNET. For those who cannot participate in the live conference call, a replay will be available beginning at 8 p.m. ET on Wednesday Wednesday: see week. , November November: see month. 12, 2003, until midnight ET on November 21, 2003. The replay number for the conference call is 402/220-1123. About AirNet AirNet Communications Corporation is a leader in wireless base stations and other telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. equipment that allow service operators to cost-effectively and simultaneously offer high-speed wireless Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the and voice services to mobile subscribers. AirNet's patented broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). , software-defined AdaptaCell(TM) base station solution provides a high-capacity base station with a software upgrade path to the wireless Internet. The Company's AirSite(R) Backhaul Free(TM) base station carries wireless voice and data signals back to the wireline network, eliminating the need for a physical backhaul link, thus reducing operating costs operating costs npl → gastos mpl operacionales . AirNet has 69 patents issued or filed and has received the coveted cov·et v. cov·et·ed, cov·et·ing, cov·ets v.tr. 1. To feel blameworthy desire for (that which is another's). See Synonyms at envy. 2. To wish for longingly. See Synonyms at desire. World Award for Best Technical Innovation from the GSM Association (GSM Association, Dublin, Ireland, www.gsmworld.com) A membership association founded in 1987 that promotes the development and evolution of the GSM communications standard worldwide. , representing over 400 operators around the world. More information about AirNet may be obtained by calling 321/984-1990, or by visiting the AirNet Web site at http://www.airnetcom.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement Under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 and Other Applicable Law Certain statements in this news release may constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Private Securities Litigation Reform Act of 1995 (the Reform Act), Section 27A of the United States Securities Act of 1933 and Section 21E of the United States Securities and Exchange Act of 1934. These forward-looking statements may relate to anticipated financial performance, management's plans and objectives for future operations, business prospects, market conditions, financial forecasts and other matters. All statements contained in this news release that do not relate to matters of historical fact should be considered forward-looking statements, and are generally identified by words such as "anticipate," "believe," "estimate," "expect," "intend," "plan" and "objective" and other similar expressions. Readers should not place undue reliance on the forward-looking statements contained in this news release. Such statements are based on management's beliefs and assumptions and on information currently available to management and are subject to risks, uncertainties and changes in condition, significance, value and effect. Such risks or uncertainties are that there can be no assurance that the Company will be successful in obtaining new business or that the "Top 5" communications equipment manufacturer, discussed above, will purchase any products from the Company; that there can be no assurance that the governmental entity and the Company will finalize fi·nal·ize tr.v. fi·nal·ized, fi·nal·iz·ing, fi·nal·iz·es To put into final form; complete or conclude: "They have jointly agreed ... a purchase contract for AirNet products; that the Company's lenders may foreclose fore·close v. fore·closed, fore·clos·ing, fore·clos·es v.tr. 1. a. To deprive (a mortgagor) of the right to redeem mortgaged property, as when payments have not been made. b. on all assets of the Company (including all intellectual property rights) in the event of a default under the security agreement associated with the debt financing, that installment payments Installment payments Distribution of plan assets to beneficiaries based upon a regular schedule. on the notes sold in the financing may not be paid when due, and that the company may not be able to continue to operate as a going concern even after the consummation CONSUMMATION. The completion of a thing; as the consummation of marriage; (q.v.) the consummation of a contract, and the like. 2. A contract is said to be consummated, when everything to be done in relation to it, has been accomplished. of the financing. These and other risks are detailed in reports and documents filed by the Company with the United States Securities and Exchange Commission. Such risks, uncertainties and changes in condition, significance, value and effect, many of which are beyond the Company's control, could cause the Company's actual results and other future events to differ materially from those anticipated. The Company does not, however, assume any obligation to update these forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking statements. The stylized styl·ize tr.v. styl·ized, styl·iz·ing, styl·iz·es 1. To restrict or make conform to a particular style. 2. To represent conventionally; conventionalize. AirNet mark, AirNet(R) and AirSite(R) are registered trademarks with the U.S. Patent and Trademark Office., AdaptaCell(TM), Super Capacity(TM), Backhaul Free(TM), are trademarks of AirNet Communications Corporation. Other names are registered trademarks or trademarks of their respective companies or organizations.
Financial Schedules
-- Condensed Statement of Operations
-- Cash flow Summary
-- Condensed Balance Sheets
FINANCIAL STATEMENTS
(all numbers in $000's except per share data and shares outstanding)
(All financial information included is unaudited.)
CONDENSED STATEMENT OF OPERATIONS
For the three months For the nine months
ended ended
September 30, September 30,
2003 2002 2003 2002
----------- ----------- ----------- -----------
NET REVENUES $4,461 $7,305 $10,696 $21,026
COST OF REVENUES 3,072 5,457 7,811 15,441
WRITE-DOWN OF EXCESS
AND OBSOLETE INVENTORY 11 - 207 -
----------- ----------- ----------- -----------
Gross profit 1,378 1,848 2,678 5,585
OPERATING EXPENSES:
Research and
development 2,170 3,046 6,759 9,688
Sales and marketing 514 1,391 1,869 4,353
General and
administrative 1,862 912 3,670 3,500
Gain on vendor
settlement - (673) - (704)
----------- ----------- ----------- -----------
Total costs and
expenses 4,546 4,676 12,298 16,837
----------- ----------- ----------- -----------
LOSS FROM OPERATIONS (3,168) (2,828) (9,620) (11,252)
----------- ----------- ----------- -----------
TOTAL OTHER (EXPENSE)
INCOME (9,141) 159 (9,210) 352
----------- ----------- ----------- -----------
NET LOSS (12,309) (2,669) (18,830) (10,900)
ACCRETION OF ISSUANCE
COSTS - REDEEMABLE
PREFERRED STOCK - (511) - (1,450)
PREFERRED DIVIDENDS - (600) - (1,800)
CONVERSION CHARGE (7,895) - (7,895) -
----------- ----------- ----------- -----------
NET LOSS ATTRIBUTABLE
TO COMMON STOCK $(20,204) $(3,780) $(26,725) $(14,150)
=========== =========== =========== ===========
NET LOSS PER SHARE
ATTRIBUTABLE TO
COMMON STOCKHOLDERS-
BASIC AND DILUTED $(0.56) $(0.16) $(0.93) $(0.59)
=========== =========== =========== ===========
WEIGHTED AVERAGE SHARES
OUTSTANDING - USED
IN CALCULATING BASIC
AND DILUTED LOSS
PER SHARE 36,087,523 23,833,296 28,745,715 23,815,218
=========== =========== =========== ===========
CASH FLOW SUMMARY
For the three months For the nine months
ended ended
September 30, September 30,
2003 2002 2003 2002
----------- ----------- ----------- -----------
CASH USED IN OPERATING
ACTIVITIES $(3,648) $(4,035) $(6,712) $(185)
CASH PROVIDED BY
(USED BY) INVESTING
ACTIVITIES (88) 70 (186) 43
CASH PROVIDED BY
(USED BY) FINANCING
ACTIVITIES 2,228 (82) 8,196 (217)
----------- ----------- ----------- -----------
NET CHANGE IN CASH $(1,508) $(4,047) $1,298 $(359)
=========== =========== =========== ===========
CONDENSED BALANCE SHEETS
Sept. 30, Dec. 31,
2003 2002
----------- -----------
ASSETS
Cash and cash equivalents $4,503 $3,205
Accounts receivable - net 2,781 569
Inventories 12,494 14,459
Notes receivable 495 923
Other current assets 740 1,063
----------- -----------
TOTAL CURRENT ASSETS 21,013 20,219
PROPERTY AND EQUIPMENT, NET 6,130 8,160
OTHER LONG-TERM ASSETS 2,428 2,451
----------- -----------
TOTAL ASSETS $29,571 $30,830
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $2,326 $2,801
Accrued expenses 3,357 3,597
Current portion of capital lease obligations 92 53
Customer deposits 763 102
Deferred revenues 628 1,403
----------- -----------
TOTAL CURRENT LIABILITIES 7,166 7,956
TOTAL LONG-TERM LIABILITIES 9,714 837
TOTAL STOCKHOLDERS' EQUITY 12,691 22,037
----------- -----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $29,571 $30,830
=========== ===========
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