SOURCE: ERF Wireless, Inc.

ERF Wireless, Inc.

August 24, 2010 08:55 ET

ERF Wireless Reports 2010 Second Quarter Results

Oil and Gas Subsidiary Posts 1188% Quarterly Improvement in Revenues as Compared to Same Quarter in 2009

LEAGUE CITY, TX--(Marketwire - August 24, 2010) - ERF Wireless (OTCBB: ERFW), a leading provider of enterprise-class wireless and broadband products and services, announced today that the company has filed its Form 10-Q with the Securities and Exchange Commission reporting results for the second quarter ended June 30, 2010.

Dr. H. Dean Cubley, CEO of ERF Wireless, commented, "During the second quarter of 2010 our Oil and Gas subsidiary that provides broadband services to the energy industry, again reported increasing sales results. Specifically, we reported $378,000 of oil and gas revenues in the first six months of 2010. This represented a 1790% increase over the same period for 2009 and actually was more than we reported for this subsidiary for all of calendar 2009. Oil and gas wireless broadband services contributed $206,000 during the second quarter ended June 30, 2010, as compared to $16,000 for the second quarter of 2009 representing a 1188% improvement in revenues. For additional comparison purposes, oil and gas wireless broadband services contributed a total of $72,000 in calendar year 2008 and $308,000 in calendar year 2009." Cubley added, "We expect this trend to continue at an even greater pace for the second half of 2010 based on the substantial increased activity we are experiencing in this sector."

Overall for the second quarter of 2010, the company reported total net sales of $1,576,000 which was an increase of 23% compared with $1,278,000 for the second quarter of 2009. The $298,000 increase in net sales during the second quarter of 2010 as compared to the net sales generated in the second quarter of 2009 is primarily attributable to a $190,000 increase in broadband services from oil and gas deployments of our Mobile Broadband Trailers (MBTs), a $49,000 increase in banking network installation and services revenue, a $32,000 increase in wireless paging service and infrastructure construction revenues and a $27,000 increase in other wireless broadband products and services.

For the quarter ended June 30, 2010, the company reported losses from operations of $1,625,000 compared to losses from operations of $1,893,000 for the quarter ended June 30, 2009 representing a 14% improvement in loss from operations. For the quarters ended June 30, 2010 and 2009, cash used for operating activities was $850,000 and $1,283,000, respectively. Primary and fully-diluted net loss per share for the quarter ended June 30, 2010, was ($0.01) as compared to ($0.02) for the quarter ended June 30, 2009.

RECENT EVENTS

Historically, our revenues have been generated primarily from Internet and construction services. Our Internet revenues result from our offering of broadband and basic communications services to residential and enterprise customers. Our construction revenues result from the construction of bank networks and other services associated with providing wireless products and services to the regional banking industry. During the second quarter of 2010, approximately 91% of our revenue was generated from Internet services and 9% of our revenue was generated from construction services. We expect our Internet services to experience the most growth during the fiscal year 2010 as we devote significant capital resources to developing the sale of wireless products and services in the oil and gas market.

During the second quarter of fiscal 2010, the company advanced its strategic business plan as evidenced by a number of agreements and activities. A summary of milestones during and subsequent to the year ended June 30, 2010, includes:

  • The Company announced that it received Second Round Review letters from the United States Department of Agriculture's Rural Utilities Service (RUS) regarding their broadband stimulus applications. These letters pertained to three separate applications that ERF Wireless had previously submitted to the RUS in response to the Administration's stated objective to award approximately $7 billion in grants and low interest loans to companies, private and public entities, and other parties to enable the creation of jobs and the development of broadband access to all American citizens. These letters allowed for the submittal of supplemental information to address specific and limited adjustments to all three of the company's Round Two Broadband Initiatives Program (BIP) Infrastructure applications. ERF Wireless submitted separate applications for each of these "last-mile" projects that total approximately $31 million in loan and grant funding. These projects include:

    • Eagle Ford Shale Broadband Project: The agricultural area of Texas south of San Antonio has long lagged behind the rest of the state in access to technology. This is a significant barrier to the development in the region. The recent expansion in natural gas exploration in the region has created opportunity for change. The community can only reach the outside world at high speed if they live in close proximity to a telephone company end office, and even then access is not economical.

    • Texas Educational Broadband Network: ERF Wireless has developed an open partnership with several Texas Independent School Districts as anchor customers. A WiMax access network will be implemented for this area west of Houston, Texas, covering some 600 square miles. Wireless access will be provided to schools and other community anchors in this coverage area, and otherwise unavailable broadband Internet access will be provided at competitive rates to businesses and homes.

    • Central Louisiana WiMax Project: This project proposes to blanket 900 square miles of rural and economically distressed communities with the latest in WiMax broadband service. The project will offer a Broadband Lifeline Program that will enable low income families who qualify to receive discounted broadband services. This project will create hundreds of long-term job opportunities and will offer service to all critical community facilities.

Dr. H. Dean Cubley, CEO of ERF Wireless, commented as follows on the stimulus applications, "Over the past five years, the company has demonstrated its ability to successfully design, build and operate wireless broadband networks in rural communities throughout Texas, Louisiana, Oklahoma and New Mexico. We believe that, even though this request for more information from the RUS should not be viewed as an indication that the applications will be approved and that our resubmitting updated applications does not guarantee funding, our past experience has made ERF Wireless a leading candidate to receive the broadband funding under the American Recovery and Reinvestment Act of 2009." Dr. Cubley added, "We would expect to hear the outcome of these applications before the end of September 2010, based on previously disclosed RUS timelines."

  • The Company announced that it has repaid all of its outstanding convertible debt as of close of business August 4, 2010. As reported in its 10-Q for the first quarter of 2010, the company received approximately $600,000 USD in financing through convertible debentures with several institutional investors during the first quarter of 2010. Since that time, the company has worked to repay that debt, while continuing to execute its business plan for overall revenue growth. In particular, ERF Wireless Oil & Gas Services, the company's oil and gas services subsidiary, continues to gain substantial sales momentum and is currently working to finalize contracts with multiple customers, including some high-profile Fortune 500 companies.

  • The Company announced that it has entered into a contract with the world's leading oil and gas services company in support of BP and the U.S. Coast Guard. ERF Wireless was selected to provide its world-class integrated communications systems to provide bandwidth to the U.S. Coast Guard's Incident Command Center recently set up on Galveston Island to search for and respond to all reports of oil affecting the Texas Gulf Coast that may be associated with the BP Deepwater Horizon spill off the coast of Louisiana.

  • The Company announced it continues to sign multiple new contracts to provide communications service, equipment, and infrastructure with a number of oil and gas sector companies for products and services to be provided in the United States as well as several foreign countries. While the size of these recent contracts is typically hundreds of thousands of dollars over multiple-year periods, it further validates that the momentum the company has been realizing in its Oil & Gas subsidiary should continue to grow into the future. In addition, the company is in late-stage negotiations with several very large, global energy companies to provide comprehensive communications services to help support a substantial augmentation in communications capabilities for exploration and production activities. The company expects to complete at least one of these large contracts in the short term and will keep shareholders abreast of any new developments regarding signing of any additional contracts.

  • The Company announced that it continues to grasp significantly more oil and gas business along with expanding its overall recurring revenue base from broadband to drilling operations, oil and gas well rework, frac operation support, SCADA wireless connectivity, pipeline wireless surveillance and connectivity support, customer wireless network design and construction, new bank customer contracts, and NOC support. All of this new business, which has largely materialized since the start of 2010, is mostly as a result of the increased ERF Wireless sales and marketing efforts starting in the latter half of 2009 and has continued to move the company forward toward its goal of cash flow positive operations in the next few quarters. In view of all of this increased business activity by ERF Wireless, the company finds it ironic that its market capitalization has also seen a steady decline over recent months coupled with the receipt of a large number of shareholder inquiries regarding this decline in market capitalization of the company and the related causes. ERF Wireless has assured all of these inquiring shareholders that the company is continuing to effectively execute its business plan and is currently on track to meet its objective of near-term positive cash flow.

About ERF Wireless

ERF Wireless Inc. is a fully reporting public corporation located in League City, Texas, and is the parent company of Energy Broadband, Inc., ERF Enterprise Network Services, ERF Bundled Wireless Services, ERF Wireless Messaging Services and ERF Network Services. The company specializes in providing wireless and broadband product and service solutions to enterprise, commercial and residential clients on a regional, national and international basis. Its principals have been in the wireless broadband, network integration, triple-play FTTH, IPTV and content delivery business for more than 40 years. For more information, please visit our websites at www.erfwireless.com and www.erfwireless.net or call 281-538-2101. (ERFWG)

Forward-looking statements in this release regarding ERF Wireless Inc. are made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties, including, without limitation, continued acceptance of the company's products, increased levels of competition, new products and technological changes, the company's dependence upon third-party suppliers, intellectual property rights, and other risks detailed from time to time in the company's periodic reports filed with the Securities and Exchange Commission.

Contact Information

  • Contact:
    ERF Wireless Inc.
    Clareen O'Quinn
    281-538-2101 ext. 113
    Email Contact: Email Contact