AirNet Communications Announces Second 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 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) ): Second Quarter Highlights and Recent Events --Net 2Q Revenue was $5.40M compared to 2Q 2004 Revenue of $5.44M --Gross Margins for 2Q were $1.7M or 31.7% compared to $1.4M or 25.0% in 2Q 2004 --Loss from Operations was $4.6M compared with 2Q 2004 loss of $4.3M. 2Q results for 2005 and 2004 reflected $2.3M 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 Stockholders in 2Q 2005 was $4.9M or $0.40 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 2Q 2005 was $4.1M vs. $(1.9)M in 2Q 2004 --Received $9.3M in orders during 2Q including $5M in 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. orders for a new customer in the Asia-Pacific The term Asia-Pacific generally applies to littoral East Asia, Southeast Asia and Australasia near the Pacific Ocean, plus the states in the ocean itself (Oceania). region AirNet Communications Corporation (NASDAQ:ANCC) today reported financial results for its second quarter ended June June: see month. 30, 2005. Financial Results for the Second Quarter The Company reported net revenue of $5.4 million in the second quarter, compared to $5.4 million in the second quarter of 2004. Gross margins for the second quarter were $1.7 million or 31.7% compared to year ago margins of $1.4 million or 25.0%. Equipment margins improved slightly from 20.8% in the second quarter of 2004 to 21.3% in 2005 due to increased direct sales. Services margins were 71.9% in second quarter of 2005 compared to 33.8% 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 second quarter were $6.3 million compared to $5.7 million in the second quarter of 2004 driven primarily by an increase in research and development expenses. R&D expenses were $3.2 million versus $2.6 million in 2004 attributable to increased development spending. The loss from operations was $4.6 million, compared to a loss of $4.3 million in the second quarter of 2004. The quarterly loss from operations for both 2005 and 2004 included $2.3 million 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 second quarter 2005 net loss attributable to common stockholders was $4.9 million or $0.40 per share vs. $5.6 million loss or $0.89 per share in the second quarter of 2004. The 2004 net loss attributable to common stockholders reflects $1.0 million of amortized expenses associated with the Company's August 2003 senior secured debt transaction. Cash flow from operating activities for the second quarter was $4.1 million, compared to use of cash of $(1.9) million in the second quarter of 2004. This decrease in cash consumption was primarily impacted by unusually high customer cash collections which totaled $9.5 million in 2005. The Company does not expect to be cash flow positive in the third quarter of 2005. Per share amounts for the second 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 25.1 million as of June 30, 2005. All share and per share amounts reflect the 1- for - 10 reverse stock split effected December December: see month. 9, 2004. Outlook "The Company had a great second quarter in terms of new orders received and cash collections," 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 continues to be well-positioned with its SuperCapacity, adaptive array base station and RapidCell base station. We continue to see strong interest in these product lines with a Tier 1 large operator and a 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 aerospace and defense contractor Noun 1. defense contractor - a contractor concerned with the development and manufacture of systems of defense armed forces, armed services, military, military machine, war machine - the military forces of a nation; "their military is the largest in the region"; ." During the second quarter, the Company received $9.3M in orders including $5M in GSM orders from a new customer in the Asia-Pacific region and $1.4M in GSM orders from Telsom Mobile for deployment Installing, setting up, testing and running. This military term, which means the placement of troops and equipment in the field, is widely used with computers as an alternate to the word "implementation. in Somalia Somalia (sōmä`leə), country (2005 est. pop. 8,591,000), 246,200 sq mi (637,657 sq km), extreme E Africa. It is directly south of the Arabian peninsula across the Gulf of Aden. . 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 third quarter of 2005. Those interested in listening to the conference call should dial (800) 895-1713 or (785) 424-1058, 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 Wednesday Wednesday: see week. , August 10, 2005, until 11:59 p.m. ET on August 21, 2005. The replay number for the conference call is (800) 839-5131 or (402) 220-1506. 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 si·mul·ta·ne·ous adj. 1. Happening, existing, or done at the same time. See Synonyms at contemporary. 2. Mathematics 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 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 (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 . 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 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, 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 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 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 , 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 (2004 As Restated) --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 ended For the six months ended
June 30, June 30,
2005 2004 2005 2004
------------- ------------ ----------- ------------
(as restated) (as restated)
REVENUES
Equipment Revenues $4,277 $3,694 $7,802 $6,214
Services Revenues 1,117 1,748 2,757 3,233
------------- ------------ ----------- ------------
Total Net
Revenues 5,394 5,442 10,559 9,447
COST OF REVENUES
Equipment Cost of
Revenues 3,321 2,924 5,766 4,954
Services Cost
of Revenues 314 1,157 917 1,832
Write-down of
excess and
obsolete
inventory 47 - 331 200
------------- ------------ ----------- ------------
Total Cost of
Revenues 3,682 4,081 7,014 6,986
------------- ------------ ----------- ------------
Gross profit 1,712 1,361 3,545 2,461
OPERATING EXPENSES
Research and
development 3,238 2,645 6,116 5,852
Sales and
marketing 796 658 1,693 1,458
General and
administrative 2,315 2,354 4,738 4,769
------------- ------------ ----------- ------------
Total costs
and
expenses 6,349 5,657 12,547 12,079
------------- ------------ ----------- ------------
LOSS FROM
OPERATIONS (1) (4,637) (4,296) (9,002) (9,618)
OTHER INCOME
(EXPENSE) NET
Interest Income 32 24 61 39
Amortization
expense on
discount of
convertible debt (39) (1,008) (62) (1,014)
Interest charged
on convertible
debt (310) (340) (585) (676)
Interest expense 5 5 (1) (3)
Other, net 11 1 13 8
------------- ------------ ----------- ------------
TOTAL OTHER INCOME
(EXPENSE) (301) (1,318) (574) (1,646)
NET LOSS
ATTRIBUTABLE TO
COMMON
STOCKHOLDERS $(4,938) $(5,614) $(9,576) $(11,264)
============= ============ =========== ============
NET LOSS PER SHARE
ATTRIBUTABLE TO
COMMON
STOCKHOLDERS-
BASIC AND
DILUTED $(0.40) $(0.89) $(0.77) $(2.00)
============= ============ =========== ============
WEIGHTED AVERAGE
SHARES OUTSTANDING
- USED IN
CALCULATING
BASIC AND
DILUTED LOSS
PER SHARE 12,483,945 6,330,447 12,480,367 5,646,132
============= ============ =========== ============
(1) The Loss from Operations includes non-cash stock compensation
expenses of $2,270 and $2,341 for the three months ended June 30,
2005 and 2004 respectively, and $4,529 and $4,727 for the six
months ended June 30, 2005 and 2004 respectively.
CASH FLOW SUMMARY
For the three months ended For the six months ended
June 30, June 30,
2005 2004 2005 2004
------------- ------------ ------------ ------------
CASH PROVIDED
BY/(USED IN)
OPERATING
ACTIVITIES $4,092 $(1,865) $2,182 $(3,408)
CASH PROVIDED
BY/(USED IN)
INVESTING
ACTIVITIES 64 43 (23) (83)
CASH PROVIDED BY
FINANCING
ACTIVITIES 1 6,099 1,000 7,091
------------- ------------ ------------ ------------
NET CHANGE IN CASH $4,157 $4,277 $3,159 $3,600
============= ============ ============ ============
CONDENSED BALANCE SHEETS
June 30, December 31,
2005 2004
------------------- ------------------
ASSETS
Cash and cash equivalents $9,116 $5,957
Accounts receivable - net 2,270 3,228
Accounts receivable - related
party 765 2,995
Inventories 8,872 9,960
Prepaid expenses 454 627
Other 84 279
------------------- ------------------
TOTAL CURRENT ASSETS 21,561 23,046
Property and Equipment, net 3,481 3,665
Deposits 65 71
Software development and
licensing 1,862 2,117
Other long-term assets 63 90
------------------- ------------------
TOTAL ASSETS $27,032 $28,989
=================== ==================
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable $2,744 $3,151
Current portion of capital
lease obligations 2 5
Customer deposits 2,426 1,438
Deferred revenues 561 324
Accrued expenses 2,845 2,219
------------------- ------------------
TOTAL CURRENT LIABILITIES 8,578 7,137
TOTAL LONG-TERM LIABILITIES 1,641 994
TOTAL STOCKHOLDERS' EQUITY 16,813 20,858
------------------- ------------------
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $27,032 $28,989
=================== ==================
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