AirNet Announces Third Quarter 2004 Financial Results.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. -- AirNet Communications Corporation (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :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 Highlights and Recent Events --Net 3Q Revenue was $5.0M representing a 12.5% increase from 3Q 2003 levels --Gross Profit and Margins for 3Q were $1.6M or 31.5% compared to $1.4M or 30.9% in 3Q 2003 --Loss from Operations was $4.9M which included $2.3M of non-cash stock option charges compared with our 3Q 2003 loss of $3.2M which included $1.2M of non-cash stock option charges --Net Loss Attributable to Common Stockholders in 3Q was $7.2M or ($0.11) per share and included $2.4M (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 $0.04) of non-cash interest charges associated with the $16M Senior Secured Convertible 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 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 August 2003 and the $2.3M (EPS impact of $0.03) of non-cash stock option charges --Net 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 for the nine months ended September September: see month. 30, 2004 was ($4.9M) vs. ($6.7M) during the same period in 2003 --Received more than $1.7M in new purchase orders for RapidCell(TM) and AirSite(R) Backhaul (1) The original definition of backhaul was to transmit a telephone call or data beyond its normal destination point and then back again in order to utilize available personnel (operators, agents, etc.) or network equipment that is not located at the destination location. Free(TM) base stations for deployment with the National Guard and other customers --SuperCapacity(TM) base stations are now in commercial service with MBO MBO See: Management buyout Wireless improving the customer's capacity and throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. --Recently established relationship with fourth major system integrator See systems integrator. to evaluate AirNet's RapidCell product solutions, and announced approximately $2.7 million in RapidCell purchase orders for the year to date. AirNet Communications Corporation (NASDAQ:ANCC) today reported financial results for its third quarter ending September 30, 2004. Financial Results for the Third Quarter The Company reported net revenue of $5.0 million in the third quarter, compared to $4.5 million in the third quarter of 2003. Gross profit and margin for the third quarter of 2004 was $1.6 million and 31.5%, respectively, compared to year ago amounts of $1.4 million and 30.9%, respectively. 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. for the third quarter were $6.4 million compared to $4.5 million in the third quarter of 2003. The increase was driven primarily by increased non-cash stock option charges and increased Research and Development expenses. The loss from operations was $4.9 million, which included a $2.3 million non-cash stock option charge that resulted from the granting of options to employees following the Senior Secured Convertible Debt transaction, compared to a loss of $3.2 million, which included $1.2 million of non-cash stock option charges in the third quarter 2003. The third quarter 2004 net loss attributable to common stockholders was $7.2 million or ($0.11) per share vs. a $20.2 million loss or ($0.56) per share in 3Q 2003. Net cash used in operating activities for the first nine months of 2004 was $4.9 million, compared to $6.7 million in the first three quarters of 2003. Financing activity for the first nine months of 2004 generated $9.1 million of cash, including $4.0 million received during the period from the $16.0 million Senior Secured Convertible Debt financing completed in August 2003, and $5.1 million of net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). from the $5.5 million sale of common stock to certain institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. in April 2004. The Company has received $14.0 million in installment payments Installment payments Distribution of plan assets to beneficiaries based upon a regular schedule. pursuant to the Convertible Debt financing through November November: see month. 5, 2004. Per share amounts for the third quarter of 2004 results were based on weighted average shares of 66 million and excludes approximately 138 million shares issuable upon the conversion of the Senior Secured Convertible Debt and related interest, and shares underlying outstanding options and warrants, because the effect of including those shares would be anti-dilutive. As of September 30, 2004 common stock and common stock equivalents outstanding totaled 226 million shares. Outlook Interest by large operators in AirNet's SuperCapacity adaptive array base station and other leading edge products continued to grow during the quarter. MBO Wireless has successfully deployed the SuperCapacity in two of its Oklahoma Oklahoma (ōkləhō`mə), state in SW United States. It is bordered by Missouri and Arkansas (E); Texas, partially across the Red R. (S, W); New Mexico, across the narrow edge of the Oklahoma Panhandle (W); and Colorado and Kansas (N). markets. The RapidCell solution continued to gain traction Traction Definition Traction is the use of a pulling force to treat muscle and skeleton disorders. Purpose Traction is usually applied to the arms and legs, the neck, the backbone, or the pelvis. in government communications markets. Four major system integrators are evaluating the RapidCell for customized applications including improving situational awareness Situation awareness or situational awareness [1] (SA) is the mental representation and understanding of objects, events, people, system states, interactions, environmental conditions, and other situation-specific factors affecting human performance in and facilitating incident based communications. Commenting on the third quarter, Glenn Ehley, President and 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. of AirNet Communications stated, "Visibility to business and market drivers that may define our success in the coming quarters is improving. We are pleased to see such a strong response for the RapidCell product line from system integrators in the homeland security Noun 1. Homeland Security - the federal department that administers all matters relating to homeland security Department of Homeland Security executive department - a federal department in the executive branch of the government of the United States and government communications arena. We continue to receive positive feedback from the ongoing evaluations and are customizing our RapidCell solution for these customers' voice and data applications. Our adaptive array SuperCapacity base station has definitely improved network capacity at MBO Wireless. In order to penetrate the large operator markets with our SuperCapacity product, we must further develop our indirect 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 sales channel. Continued execution on the new product front is vital for AirNet's growth." Conference Call AirNet's management will host a conference call at 4:30 p.m. ET today to discuss the results and provide an outlook for the fourth quarter. Those interested in listening to the conference call should dial 785-424-1051, Conference ID: AIRNET. For those who cannot participate in the live conference call, a replay will be available beginning at 8:00 p.m. ET on November 8, 2004 through Midnight on November 19, 2004. The replay number for the conference call is 402-220-1548. 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 data 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(R) SuperCapacity(TM) adaptive array base station solution provides a high-capacity base station with a software upgrade path to high-speed data. 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 . The Company's RapidCell(TM) base station provides government and military communications Military communications, or Signals, is a field of military activities, tactics and equipment dealing with communications. First of all, military communications are battlefield (combat) communications, including intercommunication with a higher command or country's users with up to 96 voice and data channels in a compact, rapidly deployable design capable of processing multiple GSM (Global System for Mobile Communications) A digital cellular phone technology based on TDMA that is the predominant system in Europe, but also used worldwide. Developed in the 1980s, GSM was first deployed in seven European countries in 1992. protocols simultaneously. 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 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," "prospects," "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 include the following: there can be no assurance that the Company will be successful in obtaining new business or that any of the Company's OEM resellers will purchase any further products from the Company; that the Company may not successfully execute to its business plan in the absence of improved telecom market conditions or receipt of new purchase orders, internal execution of product development deadlines and improved competitive capabilities in the face of declining sale prices for GSM networking equipment; 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 senior debt financing; that installment payments 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 payment of the remaining installments due to the Company under 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. AirNet(R) AdaptaCell(R), and AirSite(R) are registered trademarks with the U.S. Patent and Trademark Office. 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, Super Capacity(TM), TripCap(TM), Backhaul Free(TM) and RapidCell(TM) are trademarks of AirNet. Other names are registered trademarks or trademarks of their respective holders. Financial Schedules --Condensed Statements 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 STATEMENTS OF OPERATIONS
For the three months For the nine months
ended Sept. 30, ended Sept. 30,
2004 2003 2004 2003
----------- ----------- ----------- -----------
REVENUES
Equipment
Revenues $ 4,199 $ 2,050 $ 10,413 $ 6,671
Services Revenues 819 2,411 4,052 4,025
----------- ----------- ----------- -----------
Total Net
Revenues 5,018 4,461 14,465 10,696
COST OF REVENUES
Equipment Cost of
Revenues 2,961 1,577 7,916 5,208
Services Cost of
Revenues 478 1,495 2,309 2,603
Write-down of
excess and
obsolete
inventory - 11 200 207
----------- ----------- ----------- -----------
Total Cost of
Revenues 3,439 3,083 10,425 8,018
----------- ----------- ----------- -----------
Gross profit 1,579 1,378 4,040 2,678
OPERATING EXPENSES(1):
Research and
development 3,181 2,170 9,031 6,759
Sales and
marketing 829 514 2,286 1,869
General and
administrative 2,437 1,862 7,207 3,670
----------- ----------- ----------- -----------
Total operating
expenses 6,447 4,546 18,524 12,298
----------- ----------- ----------- -----------
LOSS FROM
OPERATIONS (4,868) (3,168) (14,484) (9,620)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE)
Interest Income 29 44 69 99
Non-cash debt
conversion
interest charge (2,000) (9,000) (4,000) (9,000)
Interest charged
on convertible
debt (366) (134) (1,044) (134)
Interest expense - (53) (4) (179)
Other, net 3 2 11 4
----------- ----------- ----------- -----------
TOTAL OTHER EXPENSE (2,334) (9,141) (4,968) (9,210)
----------- ----------- ----------- -----------
NET LOSS (7,202) (12,309) (19,452) (18,830)
CONVERSION CHARGE - (7,895) - (7,895)
----------- ----------- ----------- -----------
NET LOSS
ATTRIBUTABLE
TO COMMON
STOCKHOLDERS $ (7,202) $ (20,204) $ (19,452) $ (26,725)
=========== =========== =========== ===========
NET LOSS PER SHARE
ATTRIBUTABLE
TO COMMON
STOCKHOLDERS -
BASIC AND DILUTED $ (0.11) $ (0.56) $ (0.33) $ (0.93)
=========== =========== =========== ===========
WEIGHTED AVERAGE
SHARES OUTSTANDING
- USED IN
CALCULATING
BASIC AND DILUTED
LOSS PER SHARE 66,048,248 36,087,523 59,783,304 28,745,715
=========== =========== =========== ===========
(1) Operating expenses include non-cash stock compensation expenses of
$2,233 and $1,203 for the three months ended September 30, 2004
and 2003, respectively and $6,864 and $1,277 for the nine months
ended September 30, 2004 and 2003, respectively.
CASH FLOW SUMMARY
For the three months For the nine months
ended Sept. 30, ended Sept. 30,
2004 2003 2004 2003
----------- ----------- ----------- -----------
NET CASH USED IN
OPERATING
ACTIVITIES $ (1,530) $ (3,648) $ (4,938) $ (6,712)
CASH USED IN
INVESTING
ACTIVITIES (123) (88) (206) (186)
CASH PROVIDED BY
FINANCING
ACTIVITIES 1,987 2,228 9,078 8,196
----------- ----------- ----------- -----------
NET CHANGE IN CASH $ 334 $ (1,508) $ 3,934 $ 1,298
=========== =========== =========== ===========
CONDENSED BALANCE SHEETS
Sept. 30, December 31,
2004 2003
----------- -----------
ASSETS
Cash and cash
equivalents $ 8,994 $ 5,060
Accounts
receivable - net 4,786 3,849
Inventories 9,820 11,687
Notes receivable - 257
Other current
assets 536 1,262
----------- -----------
TOTAL CURRENT
ASSETS 24,136 22,115
Property and
Equipment, net 3,834 5,553
Deposits 71 71
Other long-term
assets 2,348 2,318
----------- -----------
TOTAL ASSETS $ 30,389 $ 30,057
=========== ===========
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Accounts payable $ 2,689 $ 2,622
Accrued payroll
and other
expenses 2,930 3,459
Current portion of
capital lease
obligations 6 65
Customer deposits 1,487 2,081
Deferred revenues 374 575
----------- -----------
TOTAL CURRENT
LIABILITIES 7,486 8,802
TOTAL LONG-TERM
LIABILITIES 11,657 10,691
TOTAL STOCKHOLDERS'
EQUITY 11,246 10,564
----------- -----------
TOTAL LIABILITIES
& STOCKHOLDERS'
EQUITY $ 30,389 $ 30,057
=========== ===========
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