AirNet Communications Corporation (NASDAQ:ANCC): 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 to common
stockholders in 3Q 2005 was $3.3M or $0.26 per share and included
$1.0M (EPS 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 was
$(1.4)M in 2005 vs. $(4.9)M in 2004. -- Received $1M Government
subcontract to deliver Push-to-Talk 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 in Somalia AirNet Communications Corporation
(NASDAQ:ANCC) today reported financial results for its third
quarter ended September 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 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. 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 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 reseller 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, November 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 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, 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. The Company's RapidCell(TM)
base station provides government and military communications 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 World Award for Best Technical Innovation from
the GSM Association, 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
Statement Under the Private Securities Litigation Reform Act of
1995 and Other Applicable Law Certain statements in this news
release may constitute forward-looking statements within the
meaning of the United States 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 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, 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 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 -0- *T 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 =========== ========== *T
Airnet Communications (NASDAQ:ANCC)
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Airnet Communications (NASDAQ:ANCC)
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