AirNet Communications Announces Fourth Quarter and Year-End 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) ): Fourth Quarter and Year-End year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. Highlights and Recent Events --Net 4Q Revenue was $6.1M which was within the forecasted range representing a 20.5% increase from 4Q 2003 revenue --Gross Margins for 4Q were $1.8M or 28.7% compared to $1.6M or 31.0% in 4Q, 2003 --Loss from Operations was $4.4M compared with our 4Q, 2003 loss of $4.3M. Both 2004 and 2003 results reflected $2.4M of non-cash stock option charges --Net Loss Attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to Common Stock in 4Q 2004 was $6.7M or ($0.69) 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 $0.24) of non-cash interest-related charges associated with the $16M Senior Secured 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 $2.4M (EPS impact of $0.24) of non-cash stock option charges --Cash Flow from Operations for 4Q 2004 was ($3.8M) vs. ($0.5M) in 4Q, 2003 --Shipped our first RapidCell(TM) base station with iBSS(TM) software during 4Q 2004 --Delivered EDGE 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. data software to Alcatel Alcatel Société Alsacienne de Constructions Atomiques, de Télécomunications et d'Electronique for deployment with Dobson dob·son n. See hellgrammite. [Probably from the name Dobson.] Noun 1. dobson - large brown aquatic larva of the dobsonfly; used as fishing bait hellgrammiate Communications --Shipped our first 900 MHz (MegaHertZ) One million cycles per second. It is used to measure the transmission speed of electronic devices, including channels, buses and the computer's internal clock. A one-megahertz clock (1 MHz) means some number of bits (16, 32, 64, etc. AdaptaCell(R) 4000 XE base station to TECORE in 4Q 2004 --Made progress in several field trials currently ongoing with leading 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 who are evaluating RapidCell base station capabilities --Shipped a record number of base stations in the fourth quarter and for the fiscal year --Improved MBO MBO See: Management buyout Wireless overall network performance in 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). with the SuperCapacity(TM) base station by virtually eliminating all blocked calls; $2.3M in purchase orders for the SuperCapacity base station were released by Alcatel for shipment in 1Q 2005 AirNet Communications Corporation (NASDAQ:ANCC) today reported financial results for its fourth quarter and year-ended December December: see month. 31, 2004. Financial Results for the Fourth Quarter and Year-End Fourth Quarter: The Company reported net revenue of $6.1 million in the fourth quarter, compared to $5.1 million in the fourth quarter of 2003. Gross margins for the fourth quarter were $1.8 million or 28.7% compared to year ago margins of $1.6 million or 31.0%. Equipment margins improved from 14.8% in the fourth quarter of 2003 to 24.3% in 2004 due to the improved margins associated with our new products, particularly the RapidCell base station. Services margins were 56.2% in fourth quarter 2004 compared to 61.9% in 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. for the fourth quarter were $6.2 million compared to $5.9 million in the fourth quarter of 2003 driven primarily by an increase in research and development expenses. R&D expenses were $3.3 million versus $2.4 million in 2003 attributable to increased spending on the development of the SuperCapacity base station, RapidCell feature development and EDGE software. The loss from operations was $4.4 million, compared to a loss of $4.3 million in the fourth quarter of 2003. The loss from operations in both quarters included $2.4 million of non-cash stock option charges that resulted from the granting of options to employees following the senior secured debt transaction. The fourth quarter 2004 net loss attributable to common stock was $6.7 million or ($0.69) per share vs. $4.6 million loss or ($0.95) per share in the fourth quarter, 2003. The fourth quarter, 2004 loss included 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. totaling $4.7 million with an EPS impact of ($0.48) per share. The components of that charge include 1) $2.0 million associated with the conversion feature of the debt, 2) $0.3 million of accrued interest Accrued Interest The interest that has accumulated on a bond since the last interest payment up to but not including the settlement date. There are two methods for calculating accrued interest: 1) 360-day year method, used for corporate and municipal bonds. on the convertible debt, which is not payable until the debt matures in August, 2007 or may be converted to stock without cash payment, and 3) $2.4 million of stock option compensation expense. Cash used in operating activities for the fourth quarter was $3.8 million, compared to a use of cash of $0.5 million in the fourth quarter of 2003. This increase in cash consumption was primarily impacted by the quarterly fluctuations in inventory 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 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 fourth quarter of 2004 results were based on 9.7 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 23.1 million as of December 31, 2004. All share and pre share amounts reflect the 1 - for - 10 reverse stock split effected December 9, 2004. The Company reported net revenue of $20.6 million for fiscal year 2004, compared to $15.8 million in fiscal year 2003 representing a 30.5% increase in revenue over 2003. The loss from operations was $18.9 million for the year and included $9.3 million of non-cash stock option charges that resulted from the granting of stock options to employees following the senior secured debt transaction compared to a loss of $13.9 million (including $3.7 million of non-cash stock option charges) in 2003. Gross margins for the year were $5.8 million or 28.2% compared to year ago gross margins of $4.3 million or 27.0%. The 2004 net loss attributable to Common Stock was $26.2 million or ($3.77) per share, compared to a $22.3 million loss or ($6.71) per share in 2003. The 2004 loss included non-cash charges totaling $16.7 million with an EPS impact of ($2.41) per share; in 2003 non-cash charges were $12.0 million with an EPS impact of ($3.59). The components of the 2004 charge include 1) $6.0 million associated with the conversion feature of the debt, 2) $1.3 million of accrued interest on the debt, and 3) $9.3 million of stock option compensation expense. Cash used in operating activities for the year was $8.7 million, compared to a use of cash of $7.2 million in fiscal year 2003. Financing activity for the year generated $10.1 million of net cash primarily from the $16 million Senior Debt Financing completed in August 2003 and the PIPE funding completed in April 2004, compared to financing activity of $9.2 million in 2003. Outlook For fiscal year 2005, the Company intends to focus primarily on the following market opportunities: 1) sales of its adaptive array, SuperCapacity base station to support high capacity voice and high-speed data applications to large operators, and 2) sales of its RapidCell BTS BTS - Bug Tracking System into secure government communications markets. The Company expects to improve revenue and margins in 2005 by increasing sales of the SuperCapacity base station and RapidCell base station through its OEM reseller An organization that sells hardware and software to the general public. Resellers purchase products from software publishers and hardware manufacturers. channel. "With the general availability of our SuperCapacity product line, the introduction of EDGE, and the RapidCell with iBSS software, our current product line is proving to be attractive and well-positioned for 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. 2.5G and government communications markets. We have made great strides in the last 12 months developing an indirect distribution channel and building alliances with OEM resellers and system integrators See systems integrator. ," 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. "These alliances have begun to open up a number of significant opportunities for the Company. We must continue to demonstrate that we have product differentiation Product Differentiation A source of competitive advantage that depends on producing some item that is regarded to have unique and valuable characteristics. with capabilities that are unmatched in order to convert these opportunities into new business." Going Concern The Company also announced Monday Monday: see week. that its independent registered public accounting firm, BDO Seidman BDO Seidman, LLP is the United States arm of BDO International, one of the largest accounting firms outside of the Big Four. History BDO Seidman, LLP was founded as Seidman and Seidman in New York City in 1910 by Maximillian L. Seidman. , LLP LLP - Lower Layer Protocol , had informed the Company that its report issued with the Company's financial statements as of and for the year ended December 31, 2004 will include a paragraph that describes conditions that give rise to substantial doubt about the Company's ability to continue as a going concern. This paragraph is consistent with the going-concern paragraph received by the Company in fiscal years 2001 through 2003. Such conditions and management's plans concerning those matters will be disclosed in the annual financial statements included in Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. . Conference Call AirNet's management will host a conference call at 5:00 p.m. ET today to discuss the financial results, provide an outlook for the first quarter of 2005, review operating trends, and provide an overview of the current business plan. 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 7:00 p.m. ET on Monday, March 28, 2005, until 11:59 p.m. ET on April 8, 2005. The replay number for the conference call is 800-839-5631 or 402-220-2558. 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 (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 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'', "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'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 STATEMENTS OF OPERATIONS
For the three months For the year
ended ended
December 31, December 31,
2004 2003 2004 2003
----------- ---------- ---------- ----------
(as (as
restated) restated)
(1) (1)
REVENUES
Equipment Revenues $5,286 $2,959 $15,699 $9,630
Services Revenues 849 2,130 4,901 6,155
----------- ---------- ---------- ----------
Total Net Revenues 6,135 5,089 20,600 15,785
COST OF REVENUES
Equipment Cost of
Revenues 4,004 2,520 11,919 7,729
Services Cost of Revenues 372 812 2,681 3,415
Write-down of excess and
obsolete inventory - 177 200 384
----------- ---------- ---------- ----------
Total Cost of
Revenues 4,376 3,509 14,800 11,528
----------- ---------- ---------- ----------
Gross profit 1,759 1,580 5,800 4,257
OPERATING EXPENSES:
Research and development 3,271 2,449 12,304 9,208
Sales and marketing 769 715 3,056 2,583
General and
administrative 2,164 2,735 9,370 6,406
----------- ---------- ---------- ----------
Total Operating
Expenses 6,204 5,899 24,730 18,197
----------- ---------- ---------- ----------
LOSS FROM OPERATIONS(a) (4,445) (4,319) (18,930) (13,940)
----------- ---------- ---------- ----------
OTHER (EXPENSE) INCOME
Interest Income 40 21 109 120
Non-cash debt conversion
interest charge (2,007) (3) (6,027) (4)
Interest on convertible
debt (301) (295) (1,325) (429)
Interest expense (6) (10) (28) (188)
Other, net 2 - 12 4
----------- ---------- ---------- ----------
TOTAL OTHER EXPENSE (2,272) (287) (7,259) (497)
----------- ---------- ---------- ----------
NET LOSS (6,717) (4,606) (26,189) (14,437)
CONVERSION CHARGE - - - (7,895)
----------- ---------- ---------- ----------
NET LOSS ATTRIBUTABLE TO
COMMON STOCKHOLDERS $(6,717) $(4,606) $(26,189) $(22,332)
=========== ========== ========== ==========
NET LOSS PER SHARE
ATTRIBUTABLE
TO COMMON STOCKHOLDERS -
BASIC AND DILUTED(b) $(0.69) $(0.95) $(3.77) $(6.71)
=========== ========== ========== ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING - USED IN
CALCULATING
BASIC AND DILUTED LOSS
PER SHARE(b) 9,711,444 4,844,892 6,937,749 3,330,457
=========== ========== ========== ==========
(a) Loss from operations include non-cash stock compensation
expenses of $2,350 and $2,399 for the three months ended December 31,
2004 and 2003, respectively; and $9,342 and $3,676 for the years ended
December 31, 2004 and 2003, respectively.
(b) Adjusted retroactively to reflect 1 - for - 10 reverse stock split
effected December 9, 2004.
(1) Refer to Current Report on Form 8-K filed with the Securities and
Exchange Commission on March 11, 2005.
----------------------------------------------------------------------
CASH FLOW SUMMARY
For the three months For the year
ended ended
December 31, December 31,
2004 2003 2004 2003
----------- ---------- ---------- ----------
(as (as
restated) restated)
(1)(2) (1)(2)
CASH USED IN OPERATING
ACTIVITIES $(3,792) $(458) $(8,730) $(7,170)
CASH USED BY INVESTING
ACTIVITIES (247) (32) (453) (218)
CASH PROVIDED BY FINANCING
ACTIVITIES 1,001 1,047 10,079 9,243
----------- ---------- ---------- ----------
NET CHANGE IN CASH $(3,038) $557 $896 $1,855
=========== ========== ========== ==========
(1) Refer to Current Report on Form 8-K filed with the Securities
and Exchange Commission on March 11, 2005.
(2) Restatement has no net cash impact.
----------------------------------------------------------------------
CONDENSED BALANCE SHEETS
As of December 31,
2004 2003
----------- ----------
(as
restated)
(1)
ASSETS
Cash and cash equivalents $5,957 $5,060
Accounts receivable - net 6,223 3,849
Inventories 9,960 11,687
Notes receivable - 257
Other current assets 905 1,262
----------- ----------
TOTAL CURRENT ASSETS 23,045 22,115
PROPERTY AND EQUIPMENT,
NET 3,666 5,553
OTHER LONG-TERM ASSETS 2,278 2,389
----------- ----------
TOTAL ASSETS $28,989 $30,057
=========== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Accounts payable $3,151 $2,622
Accrued expenses 2,219 3,459
Current portion of
capital lease
obligations 4 65
Customer deposits 1,438 2,081
Deferred revenues 325 575
----------- ----------
TOTAL CURRENT LIABILITIES 7,137 8,802
TOTAL LONG-TERM
LIABILITIES 994 695
TOTAL STOCKHOLDERS'
EQUITY 20,858 20,560
----------- ----------
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $28,989 $30,057
=========== ==========
(1) Refer to Current Report on Form 8-K filed with the Securities and
Exchange Commission on March 11, 2005.
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