SOURCE: Proxim Wireless

Proxim Wireless

March 04, 2010 16:00 ET

Proxim Wireless Reports Fourth Quarter and Full Year 2009 Financial Results

New Tsunami™ 8100 Product Line Drives Sequential Quarterly Revenue Growth; New Products in Pipeline to Increase 2010 Revenue

SILICON VALLEY, CA--(Marketwire - March 4, 2010) - Proxim Wireless Corporation (OTCQX: PRXM) (PINKSHEETS: PRXM), a leading provider of end-to-end broadband wireless systems, today released financial results for the fourth quarter and full fiscal year ended December 31, 2009.

Financial Highlights

On a GAAP basis, revenues for the quarter ended December 31, 2009 were $7.6 million compared to $7.0 million for the quarter ended September 30, 2009 and $11.6 million for the quarter ended December 31, 2008. Revenue was 9% higher than the third quarter of 2009 driven primarily by strong demand for the new Tsunami™ 8100 product line.

In fact, the market acceptance of Proxim's 8100 wireless backhaul and point-to-multipoint (PtMP) products was so dramatic that sales of these products exceeded $1 million in the fourth quarter -- the first full quarter of the products' availability. Proxim believes this adoption by the marketplace is the result of several key benefits of the Tsunami 8100 products:

-- The only PtMP platform capable of delivering greater than 100 Mbps
   connectivity
-- Proxim's use of MIMO and OFDM technology to provide NLOS capabilities
   while maintaining higher performance
-- Better price/performance than competitive products
-- Greater ease of use and deployment for quicker deployment times

In 2010, Proxim plans to introduce additional products that not only expand upon the 8100 platform, but also target high-growth markets including wireless video surveillance, rural broadband, and military applications.

In the fourth quarter ended December 31, 2009, gross margins were 37% compared to 30% for the quarter ended September 30, 2009 and 38% in the quarter ended December 31, 2008.

On a GAAP basis, the net loss from continuing operations was $3.2 million, or $0.13 per diluted share, compared to a net loss of $3.5 million, or $0.15 per diluted share, for the quarter ended September 30, 2009 and a net loss of $1.7 million, or $0.07 per diluted share, for the quarter ended December 31, 2008.

The net loss on a non-GAAP basis for the quarter ended December 31, 2009, which excludes depreciation of fixed assets, amortization of intangible assets, and stock compensation, was $2.3 million, or $0.09 per diluted share, compared to a non-GAAP net loss of $2.4 million, or $0.10 per diluted share, for the quarter ended September 30, 2009.

For fiscal year 2009, Proxim reported revenue of $29.7 million, net loss on a GAAP basis of $7.6 million, or $0.32 per diluted share, and a non-GAAP net loss of $4.4 million, or $0.18 per diluted share. For fiscal year 2008, Proxim reported revenue of $49.0 million, net loss on a GAAP basis of $10.0 million, or $0.43 per diluted share, and a non-GAAP net loss of $6.0 million, or $0.26 per diluted share.

The financial results above reflect discontinued operations accounting treatment for a portion of Proxim's consolidated operations, specifically the Harmonix Division discontinued during the second quarter of 2008.

"With the launch and immediate market acceptance of our Tsunami 8100 products, we saw promising growth at the end of 2009 that we believe will drive revenue growth in 2010," said Pankaj Manglik, President and CEO of Proxim Wireless. "In addition to these strong products, we also have an exciting pipeline of products that we will bring to market in 2010 that leverage the success of the 8100 platform and address some of the fastest growing markets in wireless. These products will help us expand upon our commitment to the video surveillance, rural broadband, and military markets -- all of which have significant growth capabilities in 2010."

Highlights of Recent Press Announcements Include:

-- Proxim and Systems Integrated announced the deployment of a large
   Intelligent Transportation System (ITS) deployment in the County of
   Los Angeles, California. The County of LA estimated that utilization of
   Proxim's wireless technology to connect the 1,000 traffic intersections
   saved the County's ITS program $7 million in costs over traditional
   copper or fiber optic installations. Additionally, the County of LA
   estimated that the use of Proxim's radios will save the County $708,000
   annually versus the cost of leased telephone lines.
-- The state of Bolivar, Venezuela has deployed Proxim's point-to-point
   wireless technology as part of a large, integrated public safety
   network in Bolivar City. The network, which connects both state and
   local police, the National Guard, state transportation and public
   safety agencies, utilizes Proxim's Tsunami QuickBridge.11 radios to
   create a wireless video surveillance network.
-- Sunny Corner Enterprises, an engineering and fabrication company in
   Canada, has deployed Proxim's new Tsunami QB-8150 point-to-point
   wireless backhaul products to connect its buildings and increase
   network capacity by nine times over its previous link.
-- Proxim announced a partnership with Quantum Networks, LLC to offer
   a suite of services and products designed to help organizations prepare
   grant applications for the next round of federal stimulus funding. The
   partnership allows rural operators and WISPs to purchase, design and
   deploy rural broadband networks efficiently and economically.
-- Proxim provided a live product demonstration of its 4.9 GHz equipment
   focused on wireless video surveillance and security at the Futurecom
   2009 conference in Sao Paulo, Brazil. Proxim's Tsunami product lines
   are the first point-to-point (PtP) and point-to-multipoint (PtMP) radios
   approved to support the 4.9GHz frequency in Brazil.
-- Proxim showcased its new Tsunami 8100 and QuickBridge 60250 solutions
   for wireless HD video surveillance at the ISC East 2009 conference in
   New York City. Proxim's Tsunami 8100 products provide the ultra high
   capacity and range for point-to-point backhaul and point-to-multipoint
   connectivity required to support today's most demanding HD video
   surveillance deployments.

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; uncertainties whether the market demand for our Tsunami 8100 products will continue; our limited capital resources and history of significant losses; the intense competition in our industries and resulting impacts on our pricing, gross margins, and general financial performance; risks and delays in introducing contemplated products in 2010; uncertainties whether these contemplated new products will increase our revenues in 2010; 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; reactions to and impacts of the financing transaction undertaken by Proxim in August 2009; 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 has been 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)

                                                December 31,  December 31,
                                                    2009          2008
                                                ------------  ------------

ASSETS
Current assets:
  Cash and cash equivalents                     $      5,720  $      5,092

    Accounts receivable, net                           2,983         4,084
  Inventory, net                                       2,948         3,947
  Prepaid expenses                                       388         1,613
                                                ------------  ------------
    Total current assets                              12,039        14,736
Property and equipment, net                            2,615         2,658
Other assets:
Restricted cash                                           77            77
Intangible assets, net                                 4,744         6,479
Deposits and prepaid expenses                            382           387
    Total other assets                                 5,203         6,943
                                                ------------  ------------
    Total assets                                $     19,857  $     24,337
                                                ============  ============
LIABILITIES, REEDEEMABLE PREFERRED STOCK AND
 STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable and accrued expenses         $      5,787  $      8,100
  Line of credit payable                               2,055         1,500
  Deferred revenue                                     1,344         1,649
  License agreement payable - current maturities           -         1,023
                                                ------------  ------------
    Total current liabilities                          9,186        12,272
Deferred revenue, net of current                         397           474
Notes payable, net of discount                         1,512         2,616
Other long term liabilities                              159           305
                                                ------------  ------------
    Total liabilities                                 11,254        15,667
Commitments and contingencies
 Redeemable Preferred Stock:
  Series A convertible, $0.01 par value -
   2,500,000 shares authorized as of Dec. 31,
   2009 and none authorized as of Dec. 31, 2008;
   2,500,000 issued and outstanding as of Dec.
   31, 2009 and none issued and outstanding as of
   Dec. 31, 2008. Aggregate liquidation
   preferences $5,047 as of Dec. 31, 2009 and
   none as of Dec. 31, 2008                            4,598             -

  Series B non-convertible, $0.01 par value -
   1,250,000 shares authorized as of Dec. 31,
   2009 and none authorized as of Dec. 31, 2008;
   1,250,000 issued and outstanding as of Dec.
   31, 2009 and none issued and outstanding as of
   Dec. 31, 2008. Aggregate liquidation
   preferences $2,648 as of Dec. 31, 2009 and
   none as of Dec. 31, 2008                            2,423             -

    Total redeemable preferred stock                   7,021             -

Stockholders' Equity:

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

  Additional paid-in capital                          65,147        64,829

  Accumulated deficit                                (63,800)      (56,394)
                                                ------------  ------------
    Total stockholders' equity                         1,582         8,670
                                                ------------  ------------
    Total liabilities, redeemable preferred
     stock and stockholders' equity             $     19,857  $     24,337
                                                ============  ============



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


                                 Three Months Ended   Twelve Months Ended
                                    December 31,          December 31,
                                --------------------  --------------------
                                  2009       2008       2009       2008
                                ---------  ---------  ---------  ---------
Revenues                        $   7,624  $  11,610  $  29,681  $  49,007
Cost of goods sold                  4,812      7,146     16,777     28,582
  Gross profit                      2,812      4,464     12,904     20,425
Operating expenses:
  Selling costs                     2,725      3,022     10,102     17,031
  General and administrative        2,175      2,221      6,477     11,746
  Research and development            866        647      2,689      3,793
                                ---------  ---------  ---------  ---------
    Total operating expenses        5,766      5,890     19,268     32,570
                                ---------  ---------  ---------  ---------
Operating loss                     (2,954)    (1,426)    (6,364)   (12,145)
Other income (expenses):
  Interest income                       -          8          5         37
  Interest expense                   (189)      (193)      (826)      (493)
  Other income (expense)              122        (15)       (84)      (165)
  Gain (loss) on sale of assets         -          -          -        545
                                ---------  ---------  ---------  ---------
    Total other income
     (expenses)                       (67)      (200)      (905)       (76)
                                ---------  ---------  ---------  ---------
Loss from continuing operations
 before income tax                 (3,021)    (1,626)    (7,269)   (12,221)
  Benefit (provision) for income
   taxes                              (38)       (56)      (137)      (208)
                                ---------  ---------  ---------  ---------
Loss from continuing operations $  (3,059) $  (1,682) $  (7,406) $ (12,429)
                                ---------  ---------  ---------  ---------
Income (loss) from discontinued
 operations, net of income
 taxes                          $       -  $       -  $       -  $   2,384
Net income (loss)               $  (3,059) $  (1,682) $  (7,406) $ (10,045)
                                =========  =========  =========  =========
Accretion to redemption value
 of redeemable preferred stock        106          -        210          -
Net income (loss) attributable
  to common stockholders        $  (3,165) $  (1,682) $  (7,616) $ (10,045)

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         $   (0.13) $   (0.07) $   (0.32) $   (0.53)
                                ---------  ---------  ---------  ---------
  Discontinued operations       $       -  $       -  $       -  $    0.10
                                ---------  ---------  ---------  ---------
    Total                       $   (0.13) $   (0.07) $   (0.32) $   (0.43)
                                ---------  ---------  ---------  ---------



             RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS



                     Three Months Ended           Three Months Ended
                      December 31, 2009            December 31, 2008
                ----------------------------  ----------------------------
                         Adjust-      Non-             Adjust-      Non-
                  GAAP    ment        GAAP     GAAP     ment        GAAP
                -------  ------      -------  ------  -------      -------

Revenues        $ 7,624  $    -      $ 7,624 $11,610  $     -      $11,610
Cost of goods
 sold             4,812    (184)(a)    4,521   7,146      (92)(a)    6,952
                           (107)(c)                      (102)(c)
                -------  ------      -------  ------  -------      -------
 Gross profit     2,812     291        3,103   4,464      194        4,658
Operating
 expenses:
  Selling
   costs           2,725    (21)(a)    2,700   3,022      (21)(a)    3,141
                             (4)(c)                       140 (c)
 General and
  administra-
  tive            2,175     (34)(a)    1,723   2,221      (40)(a)    1,672
                           (400)(b)                      (462)(b)
                            (18)(c)                       (47)(c)
 Research and
  development       866    (117)(a)      734     647      (29)(a)      613
                            (15)(c)                        (5)(c)
                -------  ------      -------  ------  -------      -------
  Total
   operating
   expenses       5,766    (609)       5,157   5,890     (464)       5,426
                -------  ------  --- -------  ------  -------  --- -------
Operating
 profit
 (loss)          (2,954)    900       (2,054) (1,426)     658         (768)
Other income
 (expenses):
 Interest
  income              -       -            -       8        -            8
 Interest
  expense          (189)      -         (189)   (193)       -         (193)
 Other income
  (expense)         114       -          114     (15)       -          (15)
 Gain (loss)
  on sale of
  assets              8       -            8       -        -            -
                -------  ------      -------  ------  -------      -------
  Total other
   income
   (expenses)       (67)      -          (67)   (200)       -         (200)
                -------  ------      -------  ------  -------      -------
Loss before
 income taxes    (3,021)    900       (2,121) (1,626)     658         (968)
Benefit
 (provision)
 for income
 taxes              (38)      -          (38)    (56)       -          (56)
                -------  ------      -------  ------  -------      -------
Loss from
 continuing
 operations     $(3,059) $  900      $(2,159)$(1,682) $   658      $(1,024)
                -------  ------      -------  ------  -------      -------
Income (Loss)
 from
 discontinued
 operations,
 net of
 income taxes   $     -  $    -      $     -  $    -  $     -      $     -
                -------  ------      -------  ------  -------      ------- 

Net income
 (loss)         $(3,059) $  900      $(2,159)$(1,682) $   658      $(1,024)
                -------  ------      -------  ------  -------      -------
Accretion to
 redemption
 value of
 redeemable
 preferred
 stock              106       -          106       -        -            -
Net income
 (loss)
 attributable
 to common
 stockholders   $(3,165)      -      $(2,265)$(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
Basic and
 diluted net
 earnings
 (loss) per
 share:
 Continuing
  operations    $ (0.13) $    -      $ (0.09) $(0.07) $     -      $ (0.04)
                =======  ======      =======  ======  =======      =======
 Discontinued
  operations    $     -  $    -      $     -  $    -  $     -      $     -
                =======  ======      =======  ======  =======      =======
  Total         $ (0.13) $    -      $ (0.09) $(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.



             RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS



                   Twelve Months Ended            Twelve Months Ended
                    December 31, 2009              December 31, 2008
             -----------------------------  ------------------------------
                      Adjust-                         Adjust-
              GAAP     ment       Non-GAAP    GAAP     ment       Non-GAAP
             -------  -------      -------  --------  -------      -------

Revenues     $29,681  $     -      $29,681  $ 49,007  $     -      $49,007
Cost of
 goods sold   16,777     (547) (a)  15,814    28,582     (431) (a)  27,669
                         (416) (c)                       (482) (c)
             -------  -------      -------  --------  -------      -------
 Gross
  profit      12,904      963       13,867    20,425      913       21,338
Operating
 expenses:
 Selling      10,102      (82) (a)  10,045    17,031      (45) (a)  16,937
  costs                    25  (c)                        (49) (c)
 General and   6,477     (137) (a)   4,519    11,746     (268) (a)   9,213
  admini-              (1,735) (b)                     (1,964) (b)
  strative                (86) (c)                       (301) (c)
 Research
  and          2,689     (191) (a)   2,451     3,793     (322) (a)   3,371
  development             (47) (c)                       (100) (c)
             -------  -------      -------  --------  -------      -------
  Total
   operating
   expenses   19,268   (2,253)      17,015    32,570   (3,049)      29,521
             -------  -------      -------  --------  -------      -------
Operating
 profit
 (loss)       (6,364)   3,216       (3,148)  (12,145)   3,962       (8,183)
Other income
 (expenses):
 Interest
  income           5        -            5        37        -           37
 Interest
  expense       (826)       -         (826)     (493)       -         (493)
 Other
  income
  (expense)      (84)       -          (84)     (165)       -         (165)
 Gain (loss)
  on sale of
  assets           -        -            -       545        -          545
             -------  -------      -------  --------  -------      -------
  Total
   other
   income
   (expenses)   (905)       -         (905)      (76)       -          (76)
             -------  -------      -------  --------  -------      -------
Loss before
 income
 taxes        (7,269)   3,216       (4,053)  (12,221)   3,962       (8,259)
 Benefit
  (provision)
  for income
  taxes         (137)       -         (137)     (208)       -         (208)
             -------  -------      -------  --------  -------      -------
Loss from
 continuing
 operations  $(7,406) $ 3,216      $(4,190) $(12,429) $ 3,962      $(8,467)
             -------  -------      -------  --------  -------      -------
Income (Loss)
 from
 discontinued
 operations,
 net of
 income
 taxes       $     -  $     -      $     -  $  2,384  $ 85(a&b)    $ 2,469
             -------  -------      -------  --------  -------      -------
Net income
 (loss)      $(7,406) $ 3,216      $(4,190) $(10,045) $ 4,047      $(5,998)
             -------  -------      -------  --------  -------      -------
Accretion to
 redemption
 value of
 redeemable
 preferred
 stock           210        -          210         -        -            -
Net income
 (loss)
 attributable
 to common
 stock-
 holders     $(7,616)       -      $(4,400) $(10,045) $ 4,047      $(5,998)
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 $ (0.32) $     -      $ (0.18) $  (0.53) $     -      $ (0.36)
             =======  =======      =======  ========  =======      =======
 Discontinued
  operations $     -  $     -      $     -  $   0.10  $     -      $  0.10
             =======  =======      =======  ========  =======      =======
  Total      $ (0.32) $     -      $ (0.18) $  (0.43) $     -      $ (0.26)
             =======  =======      =======  ========  =======      =======


(d) The effect of depreciation of fixed assets
(e) The effect of amortization of intangible assets
(f) 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