SOURCE: Proxim Wireless

Proxim Wireless

November 13, 2009 16:00 ET

Proxim Wireless Reports Third Quarter 2009 Financial Results

SILICON VALLEY, CA--(Marketwire - November 13, 2009) - Proxim Wireless Corporation (OTCQX: PRXM) (PINKSHEETS: PRXM), a leading provider of end-to-end broadband wireless systems that deliver the quadruple play, today released financial results for the third quarter ended September 30, 2009.

Financial Highlights

On a GAAP basis, revenues for the quarter ended September 30, 2009 were $7.0 million, a decrease of approximately 3% from revenue of $7.2 million for the quarter ended June 30, 2009 and a decrease of approximately 42% from revenue of $12.1 million for the quarter ended September 30, 2008. Revenues in the third quarter 2009 were impacted by continuing worldwide economic difficulties as well as it traditionally being a softer quarter. However, the third quarter 2009 revenue was positively impacted by Proxim's recently-introduced 4G Tsunami™ 8100 product line. In fact, the demand for those products exceeded expectations such that Proxim was not able to ship all the 8100 products that were ordered for delivery in the quarter.

On a GAAP basis, the net loss for the third quarter ended September 30, 2009 was $3.5 million or $0.15 per diluted share, compared to a net loss of $0.7 million, or $0.03 per diluted share, for the quarter ended June 30, 2009 and a net loss of $1.7 million, or $0.07 per diluted share, for the quarter ended September 30, 2008.

The net loss was $2.7 million, or $0.12 per diluted share, on a non-GAAP basis for the quarter ended September 30, 2009, which excludes depreciation of fixed assets, amortization of intangible assets, and stock based compensation, compared to a non-GAAP net income of $0.2 million or $0.01 per diluted share for the quarter ended June 30, 2009 and a non-GAAP net loss of $0.8 million or $0.04 per diluted share for the quarter ended September 30, 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 that was sold during the third quarter of 2008.

"While our third quarter financial results continue to reflect the worldwide economic downturn, we believe that the market reaction to our 4G 8100 product lines is a silver lining on which we intend to capitalize," said Pankaj Manglik, President and CEO of Proxim Wireless. "In our opinion, these products are without peer in the combined unlicensed WiMAX and Point to Point Wireless Backhaul market, which we believe has led to the quick and enthusiastic adoption of these products by the market and our channels. We are pleased that these products are becoming an important contributor to our overall revenue very early in their product life cycle. Also in the third quarter, we strengthened our balance sheet with a significant equity investment, reflecting confidence in our company from both existing and new major investors."

Highlights of Recent Press Announcements Include:

--  Proxim introduced its new 4G Backhaul product lines -- the Tsunami™
    QB-8100 point-to-point (PtP) and the Tsunami™ MP-8100 point-to-
    multipoint (PtMP) -- which combine MIMO and OFDM technologies with Proxim's
    Wireless Outdoor Routing Protocol (WORP) to provide PtP and PtMP backhaul
    for carriers, WISPs and government entities. Both enthusiasm and demand for
    these products has been very strong.
--  The new, enhanced Proxim Partner Program was introduced to more
    aggressively support the company's North American resellers' business needs
    and help drive more business to its valued channel partners. As a result,
    Proxim has recruited over 120 new partners since the launch of the program
    in August.
--  Proxim received an equity investment of $7.5 million, with $5 million
    coming from SRA OSS, Inc., a wholly owned subsidiary of SRA Holdings, Inc.
    of Japan.
--  Proxim and NetLogix partnered to make available a broad suite of
    stimulus grant application services and resources for organizations
    preparing stimulus grant applications in the United States.
--  Khrons, a long time Proxim partner based in Sao Paulo, Brazil,
    deployed networks using several hundreds of Proxim radios in the states of
    Minas Gerais and Sao Paulo, both of which support Digital City initiatives.
--  Property management company Resource Residential selected Proxim's
    indoor and outdoor Wi-Fi® equipment to provide free Wi-Fi to all 50 of
    the apartment communities that they manage throughout the U.S.
--  The Punjab Engineering College (PEC) University of Technology in
    Chandigarh, India, deployed Proxim's Wi-Fi mesh equipment to provide a
    secure wireless Local Area Network (WLAN) for its residential faculty
    areas.
--  Proxim introduced its 802.11n Compatibility Guarantee program for any
    Proxim 802.11n draft 2.0 WLAN products that have been or are purchased from
    our distribution channel worldwide prior to formal IEEE approval of the
    802.11n standard.
    

About Proxim Wireless

Proxim Wireless Corporation (OTCQX: PRXM) (PINKSHEETS: PRXM) is a leading provider of end-to-end broadband wireless systems that deliver the quadruple play of voice, video, data and 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; 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. 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)



                                                September 30, December 31,
                                                    2009          2008
                                                ------------  ------------
                                                 (unaudited)
ASSETS
Current assets:
  Cash and cash equivalents                     $      6,376  $      5,092
  Accounts receivable, net of allowance for
   doubtful accounts, returns and discounts of
   $1,584 for Sept. 30, 2009 and $2,132 for
   December 31, 2008 respectively                      3,578         4,084
  Inventory                                            3,473         3,947
  Prepaid expenses                                       489         1,613
                                                ------------  ------------
     Total current assets                             13,916        14,736
Property and equipment, net                            2,857         2,658
Other Assets:
Restricted cash                                           77            77
Intangible assets, net                                 5,145         6,479
Deposits and prepaid expenses                            327           387
     Total other assets                                5,549         6,943
                                                ------------  ------------
     Total assets                               $     22,322  $     24,337
                                                ============  ============
LIABILITIES, REEDEEMABLE PREFERRED STOCK AND
 STOCKHOLDER'S EQUITY
Current liabilities:
  Accounts payable and accrued expenses         $      5,157  $      8,100
  Line of credit payable                               2,287         1,500
  Deferred revenue                                     1,300         1,649
  License agreement payable - current maturities           -         1,023
                                                ------------  ------------
     Total current liabilities                         8,744        12,272
Deferred revenue, net of current                         415           474
Notes payable, net of discount                         1,474         2,616
Other long term liabilities                              171           305
                                                ------------  ------------
     Total liabilities                                10,804        15,667
Commitments and contingencies

  Redeemable Preferred Stock:

  Series A convertible, $0.01 par value -
   2,500,000 shares authorized as of Sept 30,
   2009 and none authorized as of Dec. 31, 2008;
   2,500,000 issued and outstanding as of Sept
   30, 2009 and none issued and outstanding as of
   Dec. 31, 2008. Aggregate liquidation
   preferences $5,048 as of Sept. 30, 2009 and
   none as of Dec. 31, 2008                            4,591             -

  Series B non-convertible , $0.01 par value -
   1,250,000 shares authorized as of Sept 30,
   2009 and none authorized as of Dec. 31, 2008;
   1,250,000 issued and outstanding as of Sept
   30, 2009 and none issued and outstanding as of
   Dec. 31, 2008. Aggregate liquidation
   preferences $2,553 as of Sept 30, 2009 and
   none as of Dec. 31, 2008                            2,324             -

     Total redeemable preferred stock                  6,915             -

Stockholders' Equity:

   Common stock, $0.01 par value, 100,000,000
    shares authorized, 23,519,069 issued and
    outstanding as of Sept 30, 2009 and
    Dec. 31, 2008                                        235           235

   Additional paid-in capital                         65,109        64,829

   Accumulated deficit                               (60,741)      (56,394)
                                                ------------  ------------
     Total stockholders' equity                        4,603         8,670
                                                ------------  ------------
     Total liabilities, redeemable preferred
      stock and stockholder's equity            $     22,322  $     24,337
                                                ============  ============


                        PROXIM WIRELESS CORPORATION
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                  (In thousands, except per share data)
                                (Unaudited)


                                 Three Months Ended     Nine Months Ended
                                    September 30          September 30
                                --------------------  --------------------
                                  2009       2008       2009       2008
                                ---------  ---------  ---------  ---------
Revenues                        $   6,952  $  12,067  $  22,056  $  37,397
Cost of goods sold                  4,846      7,685     11,964     21,436
  Gross profit                      2,106      4,382     10,092     15,961
Operating expenses:
  Selling costs                     2,712      3,845      7,377     14,009
  General and administrative        1,861      3,101      4,302      9,525
  Research and development            675      1,019      1,823      3,146
                                ---------  ---------  ---------  ---------
     Total operating expenses       5,248      7,965     13,502     26,680
                                ---------  ---------  ---------  ---------
Operating loss                     (3,142)    (3,583)    (3,410)   (10,719)
Other income (expenses):

  Interest income                       1          9          5         29
  Interest expense                   (213)      (186)      (637)      (300)
  Other income (expense)             (120)       (33)      (198)      (151)
  Gain (loss) on sale of assets         -       (178)        (8)       546
                                ---------  ---------  ---------  ---------
     Total other income
      (expenses)                     (332)      (388)      (838)       124
                                ---------  ---------  ---------  ---------
Loss from continuing operations
 before income tax                 (3,474)    (3,971)    (4,248)   (10,595)
  Benefit (Provision) for income
   taxes                              (27)       (39)       (99)      (152)
                                ---------  ---------  ---------  ---------
Loss from continuing operations $  (3,501) $  (4,010) $  (4,347) $ (10,747)
                                ---------  ---------  ---------  ---------
Income (Loss) from discontinued
 operations, net of income
 taxes                          $       -  $   2,282  $       -  $   2,381
Net income (loss)               $  (3,501) $  (1,728) $  (4,347) $  (8,366)
                                =========  =========  =========  =========
Accretion to redemption value
 of redeemable preferred stock        104          -        104          -
  Net income (loss) attributable
   to common Stockholders       $  (3,605) $  (1,728) $  (4,451) $  (8,366)

Weighted average number of
 shares-basic and diluted used
 in computing net earnings
 (loss) per share                  23,519     23,519     23,519     23,519

Basic and diluted net earnings
 (loss) per share:
     Continuing operations      $   (0.15) $   (0.17) $   (0.19) $   (0.46)
                                ---------  ---------  ---------  ---------
     Discontinued Operations    $       -  $    0.10  $       -  $    0.10
                                ---------  ---------  ---------  ---------
        Total                   $   (0.15) $   (0.07) $   (0.19) $   (0.36)
                                ---------  ---------  ---------  ---------




           RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

                        Three Months Ended          Three Months Ended
                        September 30, 2009             June 30, 2009
                    ---------------------------  -------------------------
                      GAAP  Adjustment  Non-GAAP  GAAP  Adjustment Non-GAAP
                    -------  ---------  -------  ------  ---------  ------
Revenues            $ 6,952  $       -  $ 6,952  $7,213  $       -  $7,213
Cost of goods sold    4,846    (128)(a)   4,611   3,574    (114)(a)  3,355
                               (107)(c)                    (105)(c)
                    -------  ---------  -------  ------  ---------  ------
 Gross profit         2,106        235    2,341   3,639        219   3,858
Operating expenses:
                                (21)(a)                     (20)(a)
 Selling costs        2,712      (5)(c)   2,686   2,459        6(c)  2,445

 General and                    (33)(a)                     (33)(a)
  administrative               (400)(b)                    (454)(b)
                      1,861     (18)(c)   1,410   1,002     (58)(c)    456

 Research and                   (24)(a)                     (24)(a)
  development           675     (18)(c)     633     539     (10)(c)    505
                    -------  ---------  -------  ------  ---------  ------
  Total operating
   expenses           5,248       (519)   4,729   4,000       (594)  3,406
                    -------  ---------  -------  ------  ---------  ------
Operating profit
 (loss)              (3,142)       754   (2,388)   (361)       813     452
Other income
 (expenses):
 Interest income          1          -        1       1          -       1
 Interest expense      (213)         -     (213)   (217)         -    (217)
 Other income
  (expense)            (120)         -     (120)    (56)         -     (56)
 Gain (loss) on
  sale of assets          -          -        -       -          -       -
                    -------  ---------  -------  ------  ---------  ------
  Total other income
   (expenses)          (332)         -     (332)   (272)         -    (272)
                    -------  ---------  -------  ------  ---------  ------
Loss before income
 taxes               (3,474)       754   (2,720)   (633)       813     180
 Benefit (provision)
  for income taxes      (27)         -      (27)    (17)         -     (17)
                    -------  ---------  -------  ------  ---------  ------
Loss from continuing
 operations         $(3,501) $     754  $(2,747) $ (650) $     813  $  163
                    -------  ---------  -------  ------  ---------  ------
Income (Loss) from
 discontinued
 operations, net of
 income taxes       $     -  $       -  $     -  $    -  $       -  $    -
                    -------  ---------  -------  ------  ---------  ------
Net income (loss)   $(3,501) $     754  $(2,747) $ (650) $     813  $  163
                    -------  ---------  -------  ------  ---------  ------
Accretion to
 redemption value of
 redeemable preferred
 stock                  104          -      104       -          -       -
Net income (loss)
 attributable to
 common
 stockholders       $(3,605)         -  $(2,851) $ (650) $     813  $  163
Weighted average
 number of shares -
 basic and diluted
 used in computing
 net earnings
 (loss) per share    23,519  $       -   23,519  23,519          -  23,519
Basic and diluted
 net earnings
 (loss) per share:
 Continuing
  operations        $ (0.15) $       -  $ (0.12) $(0.03) $       -  $ 0.01
                    =======  =========  =======  ======  =========  ======
 Discontinued
  operations        $     -  $       -  $     -  $    -  $       -  $    -
                    =======  =========  =======  ======  =========  ======
  Total             $ (0.15) $       -  $ (0.12) $(0.03) $       -  $ 0.01
                    =======  =========  =======  ======  =========  ======





                         Three Months Ended
                         September 30, 2008
                    ---------------------------
                      GAAP  Adjustment  Non-GAAP
                    -------  ---------  -------
Revenues            $12,067  $       -  $12,067
Cost of goods sold    7,685     (52)(a)   7,517
                               (116)(c)
                    -------  ---------  -------
 Gross profit         4,382        168    4,550
Operating expenses:
                                 (5)(a)
 Selling costs        3,845     (23)(c)   3,817

 General and                    (46)(a)
  administrative               (435)(b)
                      3,101     (69)(c)   2,551

 Research and                   (58)(a)
  development         1,019     (28)(c)     933
                    -------  ---------  -------
  Total operating
   expenses           7,965       (664)   7,301
                    -------  ---------  -------
Operating profit
 (loss)              (3,583)       832   (2,751)
Other income
 (expenses):
 Interest income          9          -        9
 Interest expense      (186)         -     (186)
 Other income
  (expense)             (33)         -      (33)
 Gain (loss) on
  sale of assets       (178)         -     (178)
                    -------  ---------  -------
  Total other
   income (expenses)   (388)         -     (388)
                    -------  ---------  -------
Loss before income
 taxes               (3,971)       832   (3,139)
 Benefit (provision)
  for income taxes      (39)         -      (39)
                    -------  ---------  -------
Loss from continuing
 operations         $(4,010) $     832  $(3,178)
                    -------  ---------  -------
Income (Loss) from
 discontinued
 operations, net of
 income taxes       $ 2,282     85 (b)  $ 2,367
                    -------  ---------  -------
Net income (loss)   $(1,728) $     917  $  (811)
                    -------  ---------  -------
Accretion to
 redemption value
 of redeemable
 preferred stock          -          -        -
Net income (loss)
 attributable to
 common
 stockholders       $(1,728) $     917  $  (811)
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        $ (0.17) $       -  $ (0.14)
                    =======  =========  =======
 Discontinued
  operations        $  0.10  $       -  $  0.10
                    =======  =========  =======
  Total             $ (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.

Contact Information

  • For Further Information Contact:
    David Renauld
    Vice President, Corporate Affairs
    Proxim Wireless
    (413) 584-1425
    ir@proxim.com