Wi-LAN Inc.
TSX : WIN

Wi-LAN Inc.

June 08, 2007 07:00 ET

Wi-LAN Announces 2007 Second Quarter Financial Results

OTTAWA, ONTARIO--(Marketwire - June 8, 2007) - Wi-LAN Inc. (TSX:WIN) ("Wi-LAN" or the "Company") announced today its financial results for the 2007 Fiscal Second Quarter, the period that ends April 30, 2007. All financial amounts are expressed in thousands of Canadian dollars, except per share amounts or unless otherwise noted.

Highlights

Following Wi-LAN's exceptional first quarter, that included a $49.2 million licensing agreement with Nokia, the Company's second quarter was in line with its expectations.

Revenues were $75 thousand, based on a small paid-up royalty agreement. Operating expenses amounted to $2.2 million. Net of $1.1 million of depreciation & amortization expense, the net loss was $2.3 million, or 3 cents per share.

During the fiscal second quarter of 2007, Wi-LAN announced two significant transactions:

- A bought deal financing for net cash proceeds of $37,622 (gross proceeds of approximately $40,000) on March 29, 2007; and

- An intellectual property ("IP") partnership with March Networks Corporation, including Wi-LAN becoming the exclusive licensing agent for March Networks' patents and March Networks licensing Wi-LAN's wireless patents on April 3, 2007. March Networks should begin reporting royalties in Wi-LAN's fiscal third quarter.

Subsequent to the second quarter, Wi-LAN signed a definitive agreement with Tri-Vision International Ltd. (TSX:TVL), whereby Wi-LAN plans to acquire Tri-Vision by way of amalgamation. Tri-Vision's shareholders will vote on the acquisition at a meeting scheduled for June 28, 2007.

In addition to Wi-LAN's already strong patent portfolio in the communications and consumer electronics markets, the combined company will have access to the high-growth V-chip market, the only solution to parental controls mandated by the U.S. Federal Communications Commission for digital receiver products such as TVs and set-top boxes used in the United States.

Also subsequent to the quarter, Wi-LAN announced the acquisition of a key communications patent that it believes would be infringed by any cable modem or cable set-top box used, sold or manufactured in the United States as well as OFDM patents related to Wi-Fi and WiMAX.



Operations

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Three months ended Six months ended
Apr 30/07 Apr 30/06 Apr 30/07 Apr 30/06
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Revenues $75 $- $49,340 $-
Earnings/(loss)
From continuing operations (2,275) 1,236 26,295 10,288
From discontinued operations - (6,412) - (12,074)
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Net earnings $(2,275) $(5,176) $26,295 $(1,786)
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Earnings/(loss) per
share - basic and diluted
Continuing operations
Basic $(0.03) $0.03 $0.39 $0.24
Diluted $(0.03) $0.03 $0.37 $0.24
Discontinued operations
Basic $- $(0.15) $- $(0.28)
Diluted $- $(0.15) $- $(0.28)
Net earnings
Basic $(0.03) $(0.12) $0.39 $(0.04)
Diluted $(0.03) $(0.12) $0.37 $(0.04)

Weighted average
number of shares
Basic 72,346 42,927 68,039 42,578
Diluted 72,346 42,927 70,854 42,578


Q2/07 revenues were $75 (Q2/06 - nil) from paid-up licensing fees. Operating and depreciation & amortization expenses amounted to $3,254 in Q2/07 and $1,705 in Q2/06, with the increase due to growth in the staff hired for licensing and Wi-LAN's growing IP, and the additions to the Company's patent portfolio. Interest income amounted to $904 in Q2/07, up from $34 in Q2/06 due to growth in the Company's cash and short-term investments following equity financing. In Q2/06, there was a one-time $2,919 gain on debt settlement. In Q2/06, the Company discontinued its products and engineering services businesses, resulting in the $6,412 loss for the quarter.

First half 2007 (H1/07) revenues totalled $49,340 (H1/06 - nil) due mostly to a paid-up license with Nokia Corporation. H1/07 operating and depreciation & amortization expenses increased to $7,390 from $3,394 for H1/06, also due to staffing increases and higher amortization expense. In H1/06, there was a total of $13,699 of non-recurring gains, including a $9,635 settlement with Cisco.

Financial Position



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Fiscal quarter Q2/07 Q1/07 Q4/06
As at Apr 30/07 Jan 31/07 Oct 31/06
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Cash and cash equivalents $94,967 $57,756 $16,680
Future tax asset - - 16,726
Patents 42,295 43,047 9,787
Total assets 140,087 103,396 44,775

Shareholders' equity 137,500 101,606 43,274
Shares outstanding (end of period) 75,167 69,038 61,099
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In Q2/07, Wi-LAN raised approximately $37,622 (gross $40,000) of cash through the sale of 5,714,300 common shares priced at $7.00 per share. In Q1/07, the Company raised approximately $28,292 (gross $30,000) of cash through the sale of 6,666,700 common shares priced at $4.50 per share. The future tax asset of $16,726 recorded in Q4/06 was charged to earnings in Q1/07.

Management's Comments

"Despite modest second quarter revenues, I'm pleased with the progress we've continued to make on a number of fronts to strengthen and grow our position as a patent licensing powerhouse," said Jim Skippen, President & CEO.

"We added new senior staff and board members who are well versed in patent licensing, and raised $40 million to pursue more aggressively the many opportunities ahead of us. We added fundamental patents to our already powerful arsenal of IP and opened up a new, complementary market in the cable modem and set-top box space. We also made solid progress in our licensing discussions."

"Our definitive agreement with Tri-Vision, which we signed on May 11th, adds another dimension. It expands our licensing opportunities to another large and growing market; the V-chip content filtering software mandated by the Federal Communications Commission and directly tied to the future of digital television, set-top boxes and other products throughout North America. Since both companies share many target licensees, it provides further ammunition to sign companies to our patent portfolio."

Operating Expense "Guidance"

It has been Wi-LAN's practice not to provide guidance on the range of expected future revenues and earnings, given the relatively early stage of its development in licensing as well as the difficulty in predicting the timing and value of patent acquisition opportunities and possible future litigation, both of which could require significant investment. In order to assist investors and other interested parties in their understanding of Wi-LAN's performance, management believes that operating expenses for the fiscal year 2007 will likely be in the range of ($9.0-10.5 million), based on current plans and expectations.

Conference Call Information - June 8, 2007 - 10AM ET

Wi-LAN will conduct a conference call to discuss its fiscal year results today at 10:00AM Eastern Time. Wi-LAN CEO, Jim Skippen and CFO, Steve Bower, will be on the call.



- Callers from Canada or the United States: 1.866.585.6398 (Toll Free)
- Callers from other locations: 1.416.849.9626 (International)
- To join by Webcast:
http://www.wi-lan.com or
http://www.vcall.com/IC/CEPage.asp?ID=117444

A replay will be available until 11:59 PM on June 15, 2007:

- Replay Number (Toll Free) 1.866.245.6755
- Replay Number (International) 1.416.915.1035
- Passcode: 392530


About Wi-LAN Inc.

Wi-LAN, which was founded in 1992, licenses intellectual property that drives a full range of products in communications and consumer electronics markets. Some of the fundamental technologies covered by Wi-LAN's patents include: Wi-Fi, WiMAX, CDMA, DSL, DOCSIS, cable modems and set-top boxes. Wi-LAN has already licensed its intellectual property to a number of major companies, including Cisco, Fujitsu, March Networks and Nokia.



Wi-LAN Inc.
Consolidated Statements of Operations and Deficit
(Unaudited)
(in thousands of Canadian dollars, except per share amounts)

Three Months Ended Six Months Ended
April 30, April 30, April 30, April 30,
2007 2006 2007 2006
--------------------------------------------------------------------------

Revenues $75 $- $49,340 $-

Income/(expenses) from
the following:
Operating expenses (2,198) (1,570) (5,588) (3,121)
Depreciation & amortization (1,056) (135) (1,802) (273)
Settlement - - - 9,635
Gain on sale of property - - - 1,145
Gain on debt settlement - 2,919 - 2,919
Other income - 30 - 30
Interest
Interest income 904 34 1,071 50
Interest expense on
long-term debt - (42) - (97)
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Earnings/(loss) from
continuing operations
before income taxes (2,275) 1,236 43,021 10,288

Provision for income taxes - - (16,726) -
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Earnings/(loss) from
continuing operations (2,275) 1,236 26,295 10,288
Loss from discontinued
operations - (6,412) - (12,074)
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Net and comprehensive
earnings/(loss) (2,275) (5,176) 26,295 (1,786)

Deficit, beginning of period (137,022) (176,311) (165,592) (179,701)
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Deficit, end of period $(139,297) $(181,487) $(139,297) $(181,487)
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Earnings/(loss) per share -
basic and diluted
Continuing operations
Basic $(0.03) $0.03 $0.39 $0.24
Diluted $(0.03) $0.03 $0.37 $0.24
Discontinued operations
Basic $- $(0.15) $- $(0.28)
Diluted $- $(0.15) $- $(0.28)
Net earnings
Basic $(0.03) $(0.12) $0.39 $(0.04)
Diluted $(0.03) $(0.12) $0.37 $(0.04)

Weighted average
number of shares
Basic 72,346,139 42,927,301 68,038,657 42,578,242
Diluted 72,346,139 42,927,301 70,854,046 42,578,242
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Wi-LAN Inc.
Consolidated Balance Sheets
(Unaudited)
(in thousands of Canadian dollars)

April 30, October 31,
2007 2006
--------------------------------------------------------------------------

Assets
Current assets
Cash and cash equivalents $94,967 $16,680
Accounts receivable 2,111 400
Future tax asset - 16,726
Prepaid expenses and deposits 476 387
Assets of discontinued businesses - 621
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Current assets 97,554 34,814

Furniture and equipment, net 238 174
Patents, net 42,295 9,787
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Assets $140,087 $ 44,775
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Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued liabilities $2,587 $814
Liabilities of discontinued businesses - 687
--------------------------------------------------------------------------
Current liabilities 2,587 1,501

Shareholders' equity
Common shares 270,891 202,396
Contributed surplus 5,906 6,470
Deficit (139,297) (165,592)
--------------------------------------------------------------------------
Shareholders' equity 137,500 43,274
--------------------------------------------------------------------------
Liabilities and Shareholders' Equity $140,087 $44,775
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Wi-LAN Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands of Canadian dollars)

Three Months Ended Six Months Ended
April 30, April 30, April 30, April 30,
2007 2006 2007 2006
--------------------------------------------------------------------------
Cash provided by/(used in)
Operations
Earnings/(loss) from
continuing operations $(2,275) $1,236 $26,295 $10,288
Non-cash items
Stock-based compensation 135 78 278 128
Depreciation & amortization 1,056 135 1,802 273
Settlement - - - (9,635)
Gain on sale of property - - - (1,145)
Gain on sale of patents - - - (429)
Patents acquired - - (34,000) -
Future income tax - - 16,726 -
Other non-cash items - (4,719) - (4,508)
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(1,084) (3,270) 11,101 (5,028)
Change in non-cash working
capital balances
Accounts receivable 2 (43) (1,711) 122
Prepaid expenses and deposits (189) (142) (89) (83)
Accounts payable and
accrued liabilities 797 (11) 1,773 -
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Cash generated from/(used in)
continuing operations (474) (3,466) 11,074 (4,989)
Cash used in discontinued
operations - (2,271) (66) (7,089)
--------------------------------------------------------------------------
Cash generated from/
(used in) operations (474) (5,737) 11,008 (12,078)
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Financing
Proceeds on sale of common shares,
net of share issuance costs
totalling $2,378 and $4,086 37,622 - 65,914 -
Share capital issued for cash
on the exercise of options 51 - 1,114 -
Share capital issued for cash
on the exercise of warrants 361 - 625 -
Cash received from loan payable - - - 2,000
Repayment of loan payable - (2,000) - (2,000)
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Cash generated from/(used in)
continuing operations 38,034 (2,000) 67,653 -
Cash used in discontinued
operations - (19) - (33)
--------------------------------------------------------------------------
Cash generated from/
(used in) financing 38,034 (2,019) 67,653 (33)
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Investing
Purchase of furniture
and equipment (51) (1) (76) (2)
Purchase of patents (298) - (298) (6)
Restricted cash - 2,000 - -
Proceeds from settlement, net - - - 9,635
Proceeds from sale of patents - - - 1,510
--------------------------------------------------------------------------
Cash generated from/(used in)
continuing operations (349) 1,999 (374) 11,137
Cash generated from
discontinued operations - 622 - 523
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Cash generated from/
(used in) investing (349) 2,621 (374) 11,660
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Net cash and cash equivalents
generated/(used) in the period 37,211 (5,135) 78,287 (451)
Cash and cash equivalents,
beginning of period 57,756 8,374 16,680 3,690
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Cash and cash equivalents,
end of period $94,967 $3,239 $94,967 $3,239
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