For Further Information Contact:
Dave Renauld
Vice President, Corporate Affairs
Proxim Wireless
(413) 584-1425
ir@proxim.com
PROXIM WIRELESS REPORTS FIRST QUARTER 2009 FINANCIAL RESULTS
First Quarter of Operating Income Since Quarter Ending December 31, 2005
San Jose, CA, May 14, 2009 – Proxim Wireless Corporation (OTCQX: PRXM), a leading provider of end-to end broadband wireless systems that deliver the quadruple play, today released financial results for the first quarter ended March 31, 2009.
Financial Highlights
On a GAAP basis, revenues for the quarter ended March 31, 2009 were $7.9 million, a decrease of approximately 32% from revenue of $11.6 million for the quarter ended December 31, 2008, and a decrease of approximately 23% from revenue of $10.2 million for the quarter ended March 31, 2008. These decreases were attributable to a combination of the continuing impact of the worldwide economic slowdown on broadband wireless sales and the first quarter typically being the weakest quarter of the year for Proxim.
In the first quarter ended March 31, 2009, gross margins were 55.1%, compared to 38.4% for the quarter ended December 31, 2008, and 42.2% for the quarter ended March 31, 2008. The margin improvement for the first quarter consisted primarily of a 14% increase due to one-time benefits, including catch up billings and the release of inventory reserves.
On a GAAP basis, the net loss for the quarter ended March 31, 2009 was $0.2 million or $0.01 per diluted share, compared to a net loss of $1.7 million, or $0.07 per diluted share, for the quarter ended December 31, 2008, and a net loss of $5.4 million, or $0.23 per diluted share, for the quarter ended March 31, 2008.
The net income was $0.6 million, or $0.02 per diluted share, on a non-GAAP basis for the quarter ended March 31, 2009, which excludes depreciation of fixed assets, amortization of intangible assets, and stock based compensation, compared to a non-GAAP net loss of $1 million or $0.04 per diluted share for the quarter ended December 31, 2008, and a non-GAAP net loss of $4.1 million or $0.17 per diluted share for the quarter ended March 31, 2008.
The financial results above reflect discontinued operations accounting treatment for a portion of Proxim’s consolidated operations. The discontinued operations consisted of the Harmonix Division discontinued during the second quarter of 2008.
“While the first quarter of 2009 certainly had its challenges, we are very pleased to report our first operating income since the quarter ended December 31, 2005,” said Pankaj Manglik, President and CEO of Proxim Wireless. “During these difficult economic times, we have focused on watching our expenses carefully while continuing our commitment to new product introductions. Our focus on controlling expenses will continue while we also work to increase our revenues from existing and new products as we move through 2009.”
Highlights of recent press announcements include:
· Proxim’s Tsunami™ MP.16 3500 licensed band WiMAX radios were deployed to provide the wireless backhaul for Turkey's largest video surveillance network in the port city of Bodrum, which currently has over 70 wireless video surveillance cameras deployed.
· The California Department of Transportation (CALTRANS) and California Highway Patrol (CHP) deployed Proxim's Tsunami™ MP.11 5054 base stations and 5012 subscriber units to provide the wireless connectivity for their “Fog Pilot” Intelligent Transportation System (ITS).
· Cybermoor, a UK leader in community broadband, selected Proxim’s Tsunami™ MP.11 license-free WiMAX technology to provide wireless broadband to one of England’s most remote, rural communities.
· Proxim enabled the town of Elk River, Idaho to receive rural broadband connectivity for the first time via a combination of Tsunami MP.11 5054-R point-to-multipoint radios providing the wireless backhaul and ORiNOCO® AP-700 and AP-4000 access points providing Wi-Fi access.
· The New Town at St. Charles, a new community in Missouri, was built using Proxim's wireless technology to provide the entire town the capability of broadband access, wireless VoIP, and video surveillance. The community utilizes Proxim's wireless backhaul, WiMAX and Wi-Fi technologies for a complete end-to-end wireless network that saves the town up to $4,000 per month in leased line costs.
· Proxim’s Tsunami MP.11 HS (High Security) line of base stations and subscriber units were the first point-to-multipoint wireless broadband products to be certified with Federal Information Processing Standards (FIPS) Publications 140-2 Level 2 validation.
· Proxim announced a new bundle of wireless broadband products – the Tsunami™ 5012-CPE license-free WiMAX subscriber units – designed to help global ISPs and carriers deliver broadband connectivity, as well as IPTV and VoIP services, at a fraction of the cost of delivering basic data services with wired technology.
Further Information
Proxim Wireless will no longer be making periodic filings with the Securities and Exchange Commission. Proxim will be providing disclosures in accordance with the guidelines for providing adequate current information of the OTCQX. These disclosures will be available on the OTCQX’s website (www.otcqx.com). Investors are encouraged to visit that site to view disclosures made by Proxim from time to time.
About Proxim Wireless
Proxim Wireless Corporation (OTCQX: PRXM) is a leading provider of end-to-end broadband wireless systems that deliver the quadruple play of voice, video, data an mobility to all organizations today. Our systems enable a variety of wireless applications including security and surveillance, VOIP, last mile access, enterprise LAN connectivity, and Point-to-Point backhaul. We have shipped more than 1.8 million wireless devices to more than 235,000 customers in over 65 countries worldwide. Proxim is ISO-9001 certified. Information about Proxim can be found at www.proxim.com. For investor relations information, email ir@proxim.com or call +1-413-584-1425.
Use of Non-GAAP Financial Information
To supplement Proxim Wireless’ condensed consolidated financial statements presented in accordance with GAAP, Proxim uses certain measures of financial performance that are non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. These non-GAAP measures may include gross margin, net income(loss), and net income(loss) per share data that are adjusted from results based on GAAP to exclude certain expenses, gains, and losses, and to enhance investors’ overall understanding of Proxim’s current financial performance and Proxim’s prospects for the future. Specifically Proxim believes the non-GAAP measures provide useful information to both management and investors by excluding certain expenses that may not be indicative of its core operating results. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. These non-GAAP measures included in this press release have been reconciled to the GAAP results in the attached tables.
Safe Harbor Statement
Statements in this press release that are not statements of historical facts are forward-looking statements that involve risks, uncertainties, and assumptions. Proxim Wireless’ actual results may differ materially from the results anticipated in these forward-looking statements. The forward-looking statements involve risks and uncertainties that could contribute to such differences including those relating to and arising from the ongoing uncertainty in the telecommunications industry and larger economy; our ability to increase our sales in the Americas and elsewhere; our limited capital resources and recent history of significant losses; the intense competition in our industries and resulting impacts on our pricing, gross margins, and general financial performance; time and costs associated with developing and launching new products; uncertainty about market acceptance of products we introduce; potential long sales cycles for new products such that there may be extended periods of time before new products contribute positively to our financial results; decisions we may make to delay or discontinue efforts to develop and introduce certain new products; time, costs, political considerations, typical multitude of constituencies, and other factors involved in evaluating, equipping, installing, and operating municipal networks; difficulties or delays in developing and supplying new products with the contemplated or desired features, performance, compliances, certifications, cost, price, and other characteristics and at the times and in the quantities contemplated or desired; commitments we may make to our suppliers relating to orders that may end up getting cancelled; the difficulties in predicting Proxim’s future financial performance; and the impacts and effects of any other strategic transactions Proxim may evaluate or consummate, including any outcome of the current exploration of strategic options. Further information on these and other factors that could affect Proxim’s actual results is contained in the filings made by Proxim with the Securities and Exchange Commission (available at www.sec.gov), including without limitation in the Annual Report on Form 10-K filed by Proxim on March 31, 2009, and will be included in postings made by Proxim from time to time with the OTCQX (www.otcqx.com) and in its other public statements, which may be available on Proxim’s website (www.proxim.com).
# # #
PROXIM WIRELESS CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
March 31, | December 31, | ||
2009 | 2008 | ||
(unaudited) | |||
Assets | |||
Current assets: | |||
Cash and cash equivalents | $ 3,980 | $ 5,092 | |
Accounts receivable, net of allowance for doubtful accounts, returns and discounts of $1,788 for March 31,2009 and $2,132 for December 31, 2008 respectively | 4,315 | 4,084 | |
Inventory | 3,087 | 3,947 | |
Prepaid expenses | 2,035 | 1,613 | |
Total current assets | 13,417 | 14,736 | |
Property and equipment, net | 2,799 | 2,658 | |
Other Assets: | |||
Restricted cash | 77 | 77 | |
Intangible assets, net | 5,998 | 6,479 | |
Deposits and prepaid expenses | 384 | 387 | |
Total other assets | 6,459 | 6,943 | |
Total assets | $ 22,675 | $ 24,337 | |
Liabilities and Stockholders’ Equity | |||
Current liabilities: | |||
Accounts payable and accrued expenses | $ 6,796 | $ 8,100 | |
Line of Credit payable | 1,500 | 1,500 | |
Deferred revenue | 1,742 | 1,649 | |
License agreement payable - current maturities | 736 | 1,023 | |
Total current liabilities | 10,774 | 12,272 | |
Deferred revenue, net of current | 444 | 474 | |
Notes payable, net of discount | 2,653 | 2,616 | |
Other long term liabilities | 265 | 305 | |
Total liabilities | 14,136 | 15,667 | |
Commitments and contingencies | |||
Stockholders’ Equity | |||
Preferred stock, $0.01 par value; authorized 4,500,000, none issued at March 31, 2009 and December 31, 2008 | - | - | |
Common stock, $0.01 par value, 100,000,000 shares authorized, 23,519,069 issued and outstanding at March 31, 2009 and December 31, 2008 | 235 | 235 | |
Additional paid-in capital | 64,894 | 64,829 | |
Accumulated deficit | (56,590) | (56,394) | |
Total stockholders’ equity | 8,539 | 8,670 | |
Total liabilities and stockholders’ equity | $ 22,675 | $ 24,337 |
PROXIM WIRELESS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
(unaudited) | Three Months Ended March 31, | |||
2009 | 2008 | |||
Revenues | $ 7,891 | $ 10,243 | ||
Cost of goods sold | 3,544 | 5,921 | ||
Gross profit | 4,347 | 4,322 | ||
Operating expenses: | ||||
Selling costs | 2,206 | 5,027 | ||
General and administrative | 1,439 | 3,373 | ||
Research and development | 609 | 1,044 | ||
Total operating expenses | 4,254 | 9,444 | ||
Operating Income (loss) | 93 | (5,122) | ||
Other income (expenses): | ||||
Interest income | 3 | 13 | ||
Interest expense | (207) | (39) | ||
Other income (expense) | (22) | (55) | ||
Gain (loss) on sale of assets | (8) | (84) | ||
Total other income (expenses) | (234) | (165) | ||
Loss from continuing operations before income tax | (141) | (5,287) | ||
Benefit( Provision) for income taxes | (55) | (72) | ||
Loss from continuing operations | $ (196) | $ (5,359) | ||
Income (Loss) from discontinued operations, net of income taxes | $ - | $ 87 | ||
Net income (loss) | $ (196) | $ (5,272) | ||
Weighted average number of shares-basic and diluted used in computing net earnings (loss) per share | 23,519 | 23,519 | ||
Basic and diluted net earnings (loss) per share: | ||||
Continuing operations | $ (0.01) | $ (0.23) | ||
Discontinued Operations | $ - | $ 0.01 | ||
Total | $ (0.01) | $ (0.22) | ||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||
31-Mar-09 | 31-Mar-08 | 31-Dec-08 | ||||||||||
GAAP | Adjust-ments | Non-GAAP | GAAP | Adjust-ments | Non-GAAP | GAAP | Adjust-ments | Non-GAAP | ||||
Revenues | $7,891 | $7,891 | $10,243 | $10,243 | $11,610 | $11,610 | ||||||
Cost of goods sold | 3,544 | (120)(a) | 3,327 | 5,921 | (145)(a) | 5,647 | 7,146 | (92)(a) | 6,952 | |||
(97)(c) | (129)(c) | (102)(c) | ||||||||||
Gross profit | 4,347 | 217 | 4,564 | 4,322 | 274 | 4,596 | 4,464 | 194 | 4,658 | |||
Operating expenses: | ||||||||||||
Selling costs | 2,206 | (21)(a) | 2,212 | 5,027 | (10)(a) | 4,939 | 3,022 | (21)(a) | 3,141 | |||
27(c) | (78)(c) | 140(c) | ||||||||||
General and administrative | 1,439 | (36)(a) | 932 | 3,373 | (91)(a) | 2,708 | 2,221 | (40)(a) | 1,672 | |||
(480)(b) | (491)(b) | (462)(b) | ||||||||||
9(c) | (83)(c) | (47)(c) | ||||||||||
Research and development | 609 | (28)(a) | 577 | 1,044 | (119)(a) | 895 | 647 | (29)(a) | 613 | |||
(4)(c) | (30)(c) | (5)(c) | ||||||||||
Total operating expenses | 4,254 | (533) | 3,721 | 9,444 | (902) | 8,542 | 5,890 | (464) | 5,426 | |||
Operating profit (loss) | 93 | 750 | 843 | (5,122) | 1,176 | (3,946) | (1,426) | 658 | (768) | |||
Other income (expenses): | ||||||||||||
Interest income | 3 | 3 | 13 | 13 | 8 | 8 | ||||||
Interest expense | (207) | (207) | (39) | (39) | (193) | (193) | ||||||
Other income (loss) | (22) | (22) | (55) | (55) | (15) | (15) | ||||||
Gain (loss) on sale of assets | (8) | (8) | (84) | (84) | 0 | 0 | ||||||
Total other income (expenses) | (234) | (234) | (165) | (165) | (200) | (200) | ||||||
Loss before income taxes | (141) | 750 | 609 | (5,287) | 1,176 | (4,111) | (1,626) | 658 | (968) | |||
Benefit (provision) for income taxes | (55) | (55) | (72) | (72) | (56) | (56) | ||||||
Loss from continuing operations | ($196) | $750 | $554 | ($5,359) | $1,176 | ($4,183) | ($1,682) | $658 | ($1,024) | |||
Discontinued Operations | ||||||||||||
Income (Loss) from operations of discontinued component -net of income tax | - | - | - | 87 | 46(a&b) | 133 | - | - | ||||
Gain (loss) on sale of discontinued component-net of income tax | - | - | - | 0 | - | - | ||||||
Income (Loss) from discontinued operations, net of income taxes | - | - | - | $87 | $46 | $133 | - | - | - | |||
Net income (loss) | ($196) | $750 | $554 | ($5,272) | $1,222 | ($4,050) | ($1,682) | $658 | ($1,024) | |||
Weighted average number of shares - basic and diluted used in computing net earnings (loss) per share | 23,519 | 23,519 | 23,519 | 23,519 | 23,519 | 23,519 | ||||||
Basic and diluted net earnings (loss) per share: | ||||||||||||
Continuing operations | ($0.01) | $0.02 | ($0.23) | ($0.18) | ($0.07) | ($0.04) | ||||||
Discontinued operations | $0.0 | $0.0 | $0.01 | $0.01 | $0.0 | $0.0 | ||||||
Total | ($0.01) | $0.02 | ($0.22) | ($0.17) | ($0.07) | ($0.04) | ||||||
(a) The effect of depreciation of fixed assets
(b) The effect of amortization of intangible assets
(c) The effect of stock based compensation. The company adopted the provisions of Statement of Financial Accounting Standards No. 123R, “Share-Based Payment” on January 1, 2006 using the modified-prospective transition method.