AirNet Communications Announces Third 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) ): Third Quarter Highlights and Recent Events --Net 3Q revenue was $5.3M compared to 3Q 2004 revenue of $5.0M --Gross margins for 3Q were $2.0M or 37.9% compared to $1.6M or 31.5% in 3Q 2004 --Loss from operations was $3.0M compared with 3Q 2004 loss of $4.9M. 3Q results for 2005 and 2004 reflected $1.0M and $2.3M of non-cash stock compensation charges respectively --Net loss attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to common stockholders in 3Q 2005 was $3.3M or $0.26 per share and included $1.0M (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 $0.08) of non-cash stock compensation charges --Cash Flow from operations for 3Q 2005 was $(3.6)M vs. $(1.5)M in 3Q 2004; for the first nine months, 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 $(1.4)M in 2005 vs. $(4.9)M in 2004. --Received $1M Government subcontract sub·con·tract n. A contract that assigns some of the obligations of a prior contract to another party. intr. & tr.v. sub·con·tract·ed, sub·con·tract·ing, sub·con·tracts to deliver Push-to-Talk A feature of walkie-talkies and certain cellphones and instant messaging services that provides instant voice connectivity to the party on the other end. Push-to-talk is a one-way (half-duplex) communication. capability on RapidCell(TM) base station --Announced Field trial agreement for the deployment of SuperCapacity base station in a major metropolitan market with a large tier 1 operator and completed initial testing --Received $1.4M in expansion orders from Telsom Mobile to increase coverage footprint The amount of geographic space covered by an object. A computer footprint is the desk or floor surface it occupies. A satellite's footprint is the earth area covered by its downlink. See form factor. 1. 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. AirNet Communications Corporation (NASDAQ:ANCC) today reported financial results for its third quarter ended September September: see month. 30, 2005. Financial Results for the Third Quarter The Company reported net revenue of $5.27 million in the third quarter, compared to $5.0 million in the third quarter of 2004. Gross margins for the third quarter were $2.0 million or 37.9% compared to year ago margins of $1.6 million or 31.5%. Equipment margins improved from 29.5% in the third quarter of 2004 to 34.6% in 2005 due to increased direct sales. Services margins were 44.7% in third quarter of 2005 compared to 41.6% 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 third quarter were $5.0 million compared to $6.4 million in the third quarter of 2004 driven primarily by a $1.3 million decrease in non-cash stock compensation expense. The loss from operations was $3.0 million, compared to a loss of $4.9 million in the third quarter of 2004. The quarterly loss from operations for 2005 and 2004 included $1.0 million and $2.3 million of non-cash stock compensation charges, respectively, resulting from the grant of options to employees following the Company's August 2003 senior secured debt transaction. The third quarter 2005 net loss attributable to common stockholders was $3.3 million or $0.26 per share, compared to an $8.2 million loss or $1.24 per share in the third quarter of 2004. The 2004 quarterly net loss attributable to common stockholders reflects $3.0 million of amortized expenses associated with the Company's August 2003 senior secured debt transaction compared to $0.1 million in the third quarter of 2005. Cash flow from operating activities for the third quarter of 2005 was $(3.6) million, compared to $(1.5) million for the same period in 2004. This increase in negative cash flow for the third quarter was the result of unusually high receivable collections in the second quarter which reduced cash available for collection in the third quarter and the investment in inventory to support the major operator trial. Cash flow from operating activities for the first nine months of 2005 was $(1.4) million, compared to use of cash of $(4.9) million for the same period in 2004. This decrease in cash consumption was primarily the result of improved operations and accelerated collections of 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 . Per share amounts for the third quarter of 2005 results were based on 12.5 million weighted average shares outstanding and exclude shares issuable upon the conversion of the outstanding 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 25.2 million as of September 30, 2005. Outlook "Last week's funding provides the time required to complete the urban Adaptive Array technology assessment and analysis," 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 results of this field trial will shape the future of the Company going forward. We have also been conducting additional, paid RapidCell field trials at various locations in the U.S. with an existing 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. for Government Communications end users. We hope to leverage these trials into significant Government Communications and Adaptive Array business opportunities." 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 fourth quarter of 2005. Those interested in listening to the conference call should dial 800-895-1241 or 785-424-1056, Conference ID: AIRNET. For those who cannot participate in the live conference call, a replay will be available beginning at 6:30 p.m. ET on Monday Monday: see week. , November November: see month. 14, 2005, until 11:59 p.m. ET on November 25, 2005. The replay number for the conference call is 800-388-5895 or 402-220-1110. 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 (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, 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 agreements associated with its debt financings 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 additional 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 nine months
ended ended
September 30, September 30,
2005 2004 2005 2004
----------- ---------- ----------- ----------
REVENUES:
Equipment Revenues $3,577 $4,199 $11,379 $10,413
Services Revenues 1,694 819 4,451 4,052
----------- ---------- ----------- ----------
Total Net Revenues 5,271 5,018 15,830 14,465
COST OF REVENUES:
Equipment Cost of
Revenues 2,160 2,961 7,926 7,916
Services Cost of
Revenues 936 478 1,853 2,309
Write-down of excess
and obsolete inventory 180 - 511 200
----------- ---------- ----------- ----------
Total Cost of
Revenues 3,276 3,439 10,290 10,425
----------- ---------- ----------- ----------
GROSS PROFIT 1,995 1,579 5,540 4,040
OPERATING EXPENSES:
Research and
development 2,612 3,181 8,728 9,031
Sales and marketing 654 829 2,347 2,286
General and
administrative 1,716 2,437 6,454 7,207
----------- ---------- ----------- ----------
Total costs and
expenses 4,982 6,447 17,529 18,524
----------- ---------- ----------- ----------
LOSS FROM OPERATIONS (1) (2,987) (4,868) (11,989) (14,484)
----------- ---------- ----------- ----------
OTHER (EXPENSE) INCOME,
NET:
Interest Income 83 29 144 69
Amortization expense on
discount of
convertible debt (65) (3,006) (127) (4,020)
Interest charged on
convertible debt (308) (366) (893) (1,044)
Interest expense (2) 0 (3) (4)
Other, net 1 3 14 11
----------- ---------- ----------- ----------
TOTAL OTHER EXPENSE, NET (291) (3,340) (865) (4,988)
----------- ---------- ----------- ----------
NET LOSS ATTRIBUTABLE TO
COMMON STOCKHOLDERS $(3,278) $(8,208) $(12,854) $(19,472)
=========== ========== =========== ==========
NET LOSS PER SHARE
ATTRIBUTABLE TO
COMMON STOCKHOLDERS-
BASIC AND DILUTED $(0.26) $(1.24) $(1.03) $(3.26)
=========== ========== =========== ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING - USED
IN CALCULATING BASIC
AND DILUTED LOSS
PER SHARE 12,520,961 6,604,825 12,491,688 5,978,330
=========== ========== =========== ==========
(1) Loss from Operations includes non-cash stock compensation
expenses of $993 and $2,265 for the three months ended September 30,
2005, and 2004 respectively, and $5,522 and $6,992 for the nine months
ended September 30, 2005, and 2004 respectively.
CASH FLOW SUMMARY
For the three months For the nine months
ended ended
September 30, September 30,
2005 2004 2005 2004
-------- ---------------------- ----------
CASH (USED)/PROVIDED BY
OPERATING ACTIVITIES $(3,563) $(1530) $(1,381) $(4,938)
CASH (USED)/PROVIDED BY
INVESTING ACTIVITIES (458) (123) (481) (206)
CASH PROVIDED BY FINANCING
ACTIVITIES 10 1987 1,010 9,078
-------- ---------- ----------- ----------
NET CHANGE IN CASH $(4011) $334 $(852) $3,934
======== ========== =========== ==========
CONDENSED BALANCE SHEETS
September December
30, 31,
2005 2004
----------- ----------
ASSETS
Cash and cash
equivalents $5,105 $5,957
Accounts receivable -
net 3,205 3,228
Accounts receivable -
related party 22 2,995
Inventories 9,622 9,960
Prepaid expenses 499 627
Other 57 279
----------- ----------
TOTAL CURRENT ASSETS 18,510 23,046
Property and equipment,
net 3,101 3,665
Deposits 62 71
Software development
and licensing 1,735 2,117
Other long-term assets 50 90
----------- ----------
TOTAL ASSETS $23,458 $28,989
=========== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Accounts payable $2,210 $3,151
Current portion of
capital lease
obligations 0 5
Customer deposits 856 1,438
Deferred revenues 1,105 324
Accrued expenses 2,732 2,219
----------- ----------
TOTAL CURRENT
LIABILITIES 6,903 7,137
TOTAL LONG-TERM
LIABILITIES 2,014 994
TOTAL STOCKHOLDERS'
EQUITY 14,541 20,858
----------- ----------
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $23,458 $28,989
=========== ==========
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