AirNet Communications Announces First Quarter 2005 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: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) ): First Quarter Highlights and Recent Events --Net 1Q Revenue was $5.2M up 29.0% from 1Q 2004 Revenue of $4.0M --Gross Margins for 1Q were $1.8M or 35.5% compared to $1.1M or 27.5% in 1Q 2004 --Loss from Operations was $4.4M compared with 1Q 2004 loss of $5.3M. 1Q results for 2005 and 2004 results reflected $2.3M and $2.4M of non-cash stock option charges respectively --Net Loss Attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to Common Stockholders in 1Q 2005 was $4.6M or $0.37 per share and included $2.3M (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 $0.18) of non-cash stock option charges --Cash Flow from Operations for 1Q 2005 was ($1.9M) vs. ($1.5M) in 1Q 2004 --Received $1.6M in new orders for Government Communications products and services --Received and shipped $1M in GSM/GPRS orders from TECORE for deployment in Guinea-Bissau Guinea-Bissau (gĭn`ē-bĭs'sou`), officially Republic of Guinea-Bissau, republic (2005 est. pop. 1,416,000), 13,948 sq mi (36,125 sq km), W Africa. --Shipped approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $2.3M in SuperCapacity base stations and related equipment to Alcatel Alcatel Société Alsacienne de Constructions Atomiques, de Télécomunications et d'Electronique for deployment with MBO MBO See: Management buyout Wireless --Received an order for and shipped a Community Cordless cord·less adj. Having no cord, usually using batteries as a source of power: a cordless telephone. cord validation See validate. validation - The stage in the software life-cycle at the end of the development process where software is evaluated to ensure that it complies with the requirements. system to Electronia AirNet Communications Corporation (Nasdaq:ANCC) today reported financial results for its first quarter ended March 31, 2005. Financial Results for the First Quarter The Company reported net revenue of $5.2 million in the first quarter, compared to $4.0 million in the first quarter of 2004. Gross margins for the first quarter were $1.8 million or 35.5% compared to year ago margins of $1.1 million or 27.5%. Equipment margins improved from 19.4% in the first quarter of 2004 to 30.6% in 2005 due to the improved margins associated with SuperCapacity and RapidCell base station product sales. Services margins were 63.2% in first quarter 2005 compared to 54.5% in 2004. 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 first quarter were $6.2 million compared to $6.4 million in the first quarter of 2004 driven primarily by a decrease in research and development expenses. R&D expenses were $2.9 million versus $3.2 million in 2004 attributable to reduced spending on feature development. The loss from operations was $4.4 million, compared to a loss of $5.3 million in the first quarter of 2004. The loss from operations included $2.3 million and $2.4 million, respectively of non-cash stock option charges that resulted from the granting of options to employees following the company's August 2003 senior secured debt transaction. The first quarter 2005 net loss attributable to common stockholders was $4.6 million or $0.37 per share vs. $5.7 million loss or $1.13 per share in the first quarter of 2004. Cash used in operating activities for the first quarter was $1.9 million, compared to a use of cash of $1.5 million in the first quarter of 2004. This increase in cash consumption was primarily impacted by the quarterly fluctuations in inventory, accounts payable and accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying . Financing activity for the quarter generated $1.0 million of cash from the $16 million 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. As of March 3, 2005, the Company has received the full $16 million in proceeds, including all installment payments Installment payments Distribution of plan assets to beneficiaries based upon a regular schedule. , under this debt financing. Per share amounts for the first quarter of 2005 results were based on 12.5 million weighted average shares and exclude shares issuable upon the conversion of the remaining unconverted Senior Secured Convertible debt and shares underlying outstanding options because the effect of including those shares would be anti-dilutive. The number of shares issued and outstanding and potentially dilutive totaled 25.3 million as of March 31, 2005. All share and per share amounts reflect the 1-for-10 reverse stock split effected December December: see month. 9, 2004. Outlook "We are pleased to see such a strong interest in our products for government communications applications. We continue to receive positive feedback from the ongoing evaluations and are customizing our RapidCell solution for these customers' voice and data requirements," 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. "With the general availability of our SuperCapacity product line, we are cautiously optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op with regard to a potential market field trial and ultimately winning adaptive array business with a large operator." Conference Call AirNet's management will host a conference call at 4:30 p.m. ET today to discuss the financial results, provide a business update and an outlook for the second quarter of 2005. Those interested in listening to the conference call should dial 800-862-9098 or 785-424-1051, Conference ID: AIRNET. For those who cannot listen to the live conference call, a replay will be available beginning at 6:30 p.m. ET on Thursday Thursday: see week. , May 12, 2005, until 11:59 p.m. ET on May 24, 2005. The replay number for the conference call is 800-934-3941 or 402-220-1157. 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 high-speed adj. 1. Operated or designed for operation at high speed: a high-speed food processor. 2. Taking place at high speed: a high-speed chase. 3. 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 (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 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 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, results of market field trials, management's plans and objectives for future operations, business prospects, field trial possibilities, 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 (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 resellers will purchase any further products from the Company; 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, and that the Company may not be able to continue to operate as a going concern in the absence of new investment capital. 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), AdaptaCell(R) and AirSite(R) are registered trademarks with the U.S. Patent and Trademark Office. Super Capacity(TM), iBSS(TM), RapidCell(TM) and 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 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 STATEMENT OF OPERATIONS
For the three months ended
March 31,
2005 2004
(as restated)
------------- -------------
REVENUES
Equipment Revenues $3,525 $2,520
Services Revenues $1,640 $1,485
----------- ----------
Total Net Revenues 5,165 4,005
COST OF REVENUES
Equipment Cost of Revenues 2,445 2,030
Services Cost of Revenues 603 675
Write-down of excess and
obsolete inventory 284 200
----------- ----------
Total Cost of Revenues 3,332 2,905
----------- ----------
Gross profit 1,833 1,100
OPERATING EXPENSES
Research and development 2,878 3,207
Sales and marketing 897 800
General and administrative 2,423 2,415
----------- ----------
Total Operating Expenses 6,198 6,422
----------- ----------
LOSS FROM OPERATIONS(a) (4,365) (5,322)
----------- ----------
OTHER (EXPENSE) INCOME
Interest Income 29 15
Amortization expense on discount of
convertible debt (23) (5)
Interest on convertible debt (275) (336)
Interest expense (6) (8)
Other, net 2 6
----------- ----------
TOTAL OTHER EXPENSE (273) (328)
----------- ----------
NET LOSS ATTRIBUTABLE TO
COMMON STOCKHOLDERS $(4,638) $(5,650)
=========== ==========
NET LOSS PER SHARE ATTRIBUTABLE
TO COMMON STOCKHOLDERS -
BASIC AND DILUTED $(0.37) $(1.13)
=========== ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING - USED IN CALCULATING
BASIC AND DILUTED LOSS
PER SHARE 12,476,113 4,987,864
=========== ==========
(a) Loss from Operations includes non-cash stock compensation
expenses of $2,259 and $2,386 for the three months ended March 31,
2005 and 2004, respectively.
CASH FLOW SUMMARY
For the three months ended
March 31,
2005 2004
------------- ------------
CASH USED IN OPERATING ACTIVITIES $(1,910) $(1,543)
CASH USED BY INVESTING ACTIVITIES (87) (126)
CASH PROVIDED BY FINANCING ACTIVITIES 999 992
----------- ----------
NET CHANGE IN CASH $(998) $(677)
=========== ==========
CONDENSED BALANCE SHEETS
As of As of
Mar. 31, Dec. 31,
2005 2004
----------- ----------
ASSETS
Cash and cash equivalents $4,959 $5,957
Accounts receivable - net 3,955 3,228
Accounts receivable - related party 2,429 2,995
Inventories 9,134 9,960
Prepaid expenses 568 627
Other current assets 155 279
----------- ----------
TOTAL CURRENT ASSETS 21,200 23,046
----------- ----------
PROPERTY AND EQUIPMENT, NET 3,863 3,665
----------- ----------
OTHER ASSETS 2,137 2,278
----------- ----------
TOTAL ASSETS $27,200 $28,989
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $1,561 $3,151
Current portion of capital lease
obligations 3 5
Customer deposits 1,843 1,438
Deferred revenues 443 324
Other accrued expenses 2,573 2,219
----------- ----------
TOTAL CURRENT LIABILITIES 6,423 7,137
----------- ----------
TOTAL LONG-TERM LIABILITIES 1,297 994
----------- ----------
TOTAL STOCKHOLDERS' EQUITY 19,480 20,858
----------- ----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $27,200 $28,989
=========== ==========
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