Airnet Communications (NASDAQ:ANCC)
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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
=========== ==========
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