SOURCE: ERF Wireless Inc.

ERF Wireless Inc.

December 21, 2011 08:00 ET

ERF Wireless Provides Guidance for Calendar 2012

Energy Broadband Subsidiary Expected to Lead Major ERF Wireless Growth in 2012 and Beyond

LEAGUE CITY, TX--(Marketwire - Dec 21, 2011) - ERF Wireless Inc. (OTCBB: ERFB), a leading provider of enterprise-class wireless and broadband products and services, updates today on the Company's calendar 2012 strategic priorities and provides near-term guidance for the 2012 calendar year.

"Our market leadership position as the largest terrestrial wireless provider to the oil and gas industry in North America -- coupled with an expected increase in demand for secure, high-speed, high-capacity, reliable wireless broadband circuits that replace slower, high-latency VSAT circuits at drilling rig sites by operators and producers -- gives us confidence we can continue strong growth in calendar 2012," said Dr. H. Dean Cubley, Chairman and CEO of ERF Wireless.

"For calendar 2012, we are targeting consolidated revenues of $12-14 million with blended gross margins of 65-70%," Cubley went on to say. "If our backlog continues to grow in 2012 as it has in 2011, we are also targeting consolidated revenues in the range of $20-22 million for calendar 2013."

Our primary business objectives and components contributing to our outlook are as follows:

#1. Grow the High Margin Revenue and Improve the Overall Financial Posture

  • The company will continue moving toward profitability by growing its high-margin oil and gas revenue base while simultaneously continuing reduction of corporate expenses and expansion of our WISP, banking, education and other vertical market revenue. With the assumption that the price of oil continues at a strong level, we have a substantial business backlog that exists in our new network coverage which is being built out currently. These expansions are a direct result of our recent funding. This new business will be starting early in 2012 as we complete expansions in our existing markets as well as new markets we are entering such as the Bakken Shale region of North Dakota.
  • The expansion and upgrading of existing bank network customers to add new branches and expand services will continue while we simultaneously add new banks as customers in all of our oil and gas network coverage areas where oil and gas companies and financial institutions share network resources.
  • New public school and hospital networks will be added to the ERF Wireless Enterprise Network Services (ENS) division, primarily in our oil and gas network areas, resulting in both new one-time revenue as well as adding to our recurring revenue stream.
  • The company has secured $3 million in debt financing from Dakota Capital Fund LLC. The funding will be used by the company to quickly expand its Energy Broadband subsidiary's presence in the major oil and gas exploration regions of North America.
  • The company will complete receiving the remainder of its $3 million Dakota Capital Fund financing and the $2.5 million E-Bond offering during the 1st quarter of 2012 and start reducing the debt on its balance sheet from cash flow later in 2012.

#2. Maintain and Strengthen the Title of "Largest Terrestrial Wireless Provider to the Oil and Gas Industry in North America"

  • ERF Wireless currently owns and operates the largest oil and gas based terrestrial wireless broadband network in North America including the Texas, New Mexico, and Oklahoma region covering much of the Permian Basin oil and gas region of West Texas and eastern New Mexico ranging from Odessa, Texas, north through Lubbock and extending almost to the Oklahoma panhandle in far northwest Texas. It also has terrestrial wireless coverage in Arkansas, Colorado, Wyoming, and Alberta, Canada, and is currently building a new network in the Bakken Shale region of North Dakota. During 2012 and 2013 this base of oil and gas terrestrial wireless network coverage will continue to expand as new coverage areas are built out and new oil and gas regions are added. Energy Broadband will also begin to leverage its leadership status in this area by signing on multiple non-exclusive strategic partners and resellers to quickly expand its business base.
  • At least one significant non-dilutive acquisition to support the oil and gas broadband demand is assumed in the 2012 time period.
  • The key to the success and continued growth of Energy Broadband in the oil and gas sector has been its ability to combine the expansive ERF Wireless terrestrial networks with a superior quality nomadic service directly to where the oil and gas customer needs service at the drilling pad and then to move with the customer when he goes to a new pad location. During 2012 and 2013 Energy Broadband will complete its current purchase commitment of 220 mobile broadband trailers (MBTs) and will add additional MBTs if required to support business growth. This will both significantly add to the asset base on our balance sheet as well as continue to fuel our revenue growth.

#3. Enhance the Equity Structure and Grow Shareholder Value.

  • During the period 2012-2013 ERF Wireless will leverage the growth in its oil and gas business by attempting to take Energy Broadband public as a majority owned public subsidiary of ERF Wireless. Our initial plan will be to have ERF Wireless maintain the vast majority of all the equity in Energy Broadband except that which is currently owned by the ERF Wireless shareholders as a result of the dividend or that small amount of equity needed to effect the public offering. This parent/subsidiary dual public company structure will allow both companies to record the vast majority of the revenue being generated by the overall business model and should offer all shareholders a unique value proposition.
  • During 2012-2013 debt will continue to be eliminated from the ERF Wireless balance sheet. ERF Wireless will continue its plans to secure a listing on a national market stock exchange to improve stockholder liquidity and value as well as improve posture for financing and growth.

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 Wireless Bundled Services, ERF Wireless Messaging Services and ERF Network Operations. 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 http://www.erfwireless.com/ and http://www.erfwireless.net/ or call 281-538-2101. (ERFBG)

This press release contains forward-looking information and should be read subject to the following cautionary language:

To the extent any statements made in this report contain information that is not historical, these statements are forward-looking statements and may be forward-looking information within the meaning of applicable securities laws (collectively, "forward-looking statements"). These forward-looking statements related to, among other things, our objectives, goals, strategies, intentions, plans, estimates and outlook, including selling and marketing, deployments, implementations and subscription revenues, operating costs, taxes and fees, and can generally be identified by the use of the words such as "believe," "anticipate," "expect," "intend," "plan," "will," "may" and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. Although ERF believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, including without limitation factors and assumptions regarding selling and marketing, deployments, implementations and subscription revenues, operating costs, taxes and fees and actual results may differ materially from those expressed or implied in such statements. Important factors that could cause actual results to differ materially from these expectations include, among other things: our ability to attract and retain additional rig count through increased market share and additional operators; our ability to compete in any of the industries in which we do business; the opportunities (or lack thereof) that may be presented to and pursued by us; conditions in the wireless broadband, oil and gas and communications industries and technological developments therein; changes in laws or regulations or the interpretation or application of those laws and regulations; our ability to integrate and realize anticipated benefits from our acquisitions and to effectively manage our growth; our ability to successfully defend ourselves against litigation matters arising out of the ordinary course of business; and changes in accounting standards. Additional information about these factors and about the material assumptions underlying such forward-looking statements may be found in our SEC filings. ERF cautions that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements to make decisions with respect to ERF, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Unless otherwise required by applicable securities laws, we disclaim any intention or obligation to publicly update or revise any forward-looking statements whether as a result of new information, events or circumstances that arises after the date thereof or otherwise.

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