SOURCE: Proxim Wireless

Proxim Wireless

November 11, 2010 16:00 ET

Proxim Wireless Reports Third Quarter 2010 Financial Results

Proxim Continues Product Line Expansion to Better Address Growth Markets

SILICON VALLEY, CA--(Marketwire - November 11, 2010) - Proxim Wireless Corporation (OTCQX: PRXM) (PINKSHEETS: PRXM), a leading provider of indoor and outdoor wireless broadband systems, today released financial results for the third quarter ended September 30, 2010.

Financial Highlights

--  Revenues for the third quarter of 2010 were $7.6 million compared to
    $8.1 million in the second quarter of 2010 and $7.0 million in the
    third quarter of 2009.

--  GAAP gross margins for the quarter were 44% compared to 52% in the
    second quarter of 2010 and 30% in the third quarter of 2009. GAAP net
    loss for the quarter was $2.0 million, or $(8.53) per share, compared
    to $1.4 million, or $(5.84) per share, in the second quarter of 2010
    and $3.6 million, or $(15.34) per share, in the third quarter of 2009.

--  Non-GAAP gross margins for the second quarter of 2010 were 46% compared
    to 55% in the second quarter of 2010 and 34% in the third quarter of
    2009.  These margins exclude depreciation of fixed assets, amortization
    of intangible assets, and stock based compensation. Non-GAAP net loss
    for the third quarter of 2010 was $1.3 million, or $(5.58) per share,
    compared to $0.6 million, or $(2.54) per share, in the second quarter
    of 2010 and $2.9 million, or $(12.13) per share, in the third quarter
    of 2009.

"While we would have liked to maintain the quarter-over-quarter revenue increases that had occurred for the last four fiscal quarters, the third quarter typically is a softer quarter for the company," said Mike Sophie, Interim CEO of Proxim Wireless. "We are pleased with the orders we have received that we believe position us well for a solid fourth quarter. We are seeing consistent growth in the 8100 series of wireless backhaul and point-to-multipoint products, and we recently expanded the 8100 series product line with the introduction of the Tsunami 8100 Customer Premise Equipment (CPE). In addition, we also introduced our new Tsunami GX800 line of licensed backhaul products that position us for greater growth in the carrier and service provider markets."

Highlights of Recent Press Announcements Include:

--  Proxim introduced the Tsunami® GX800 series of licensed
    point-to-point wireless backhaul products for the carrier, service
    provider, WISP, government and enterprise markets. The GX800 delivers
    622 Mbps aggregate capacity, providing a cost-effective solution for
    the increased capacity demands on today's networks due to
    data-intensive smartphones on mobile networks, HD video streaming over
    wireless networks, and the need for organizations of all sizes to share
    bandwidth amongst buildings.
--  Proxim introduced the Tsunami™ MP-8150-CPE (Customer Premise
    Equipment) series of products, designed to dramatically reduce the cost
    and complexity of deploying wireless broadband service for carriers and
    service providers of all sizes. The 8150-CPE products leverage the same
    high-performance 4G technology utilized in Proxim's Tsunami MP-8150 and
    QB-8150 line of products, and are designed to provide over 100 Mbps of
    performance.
--  The City of Courtenay, BC deployed Proxim's wireless backhaul solutions
    to connect buildings throughout the city. The City of Courtenay
    selected Proxim's Tsunami® QB-8150 and Proxim's 60 GHz wireless
    backhaul solutions to connect two recreational facilities back to the
    City Hall, for a cost-effective way to share bandwidth between the
    buildings while the city's fiber network was being built out.
--  Vidarbha Infotech Pvt.Ltd. (VIPL), a telecom and IT solutions provider,
    selected Proxim's point-to-multipoint (PtMP) solutions to provide a
    city-wide wireless network to enable automated tax collection and
    eGovernment initiatives in the city of Nagpur, India. VIPL utilized
    Proxim's Tsunami™ MP.11 5054 radios and ProximVision ES central
    management system to connect over 34 locations throughout central
    India's largest city.

About Proxim Wireless

Proxim Wireless Corporation (OTCQX: PRXM) provides Wi-Fi®, WiMAX, Point-to-Multipoint and Point-to-Point Backhaul technologies for a complete indoor and outdoor wireless broadband ecosystem. Our systems enable service providers, governments and enterprises to deploy fixed and mobile security and video surveillance, indoor and outdoor Wi-Fi, business and residential internet access and cell tower backhaul. Proxim has shipped more than 2 million wireless devices to more than 250,000 customers in over 65 countries worldwide. Proxim is ISO 9001-2008 certified. For more information, visit www.proxim.com. For investor relations information, e-mail 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 history of significant losses; our possible need or desire to raise additional funds, the availability of any such funds, and the terms of any such fundraising; 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; uncertainties whether these contemplated new products will increase our revenues; 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 financing or other strategic transactions Proxim may evaluate or consummate. Further information on these and other factors that could affect Proxim's actual results is and will be contained in the filings made by Proxim with the OTCQX (available at www.otcqx.com), including without limitation in the Annual Report filed by Proxim on March 30, 2010, 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,
                                                    2010          2009
                                                ------------  ------------
                                                (unaudited)
ASSETS
Current assets:
  Cash and cash equivalents                     $      3,384  $      5,720
  Accounts receivable, net of allowance for
   doubtful accounts, returns and discounts of
   $2,344 for September 30, 2010 and $2,032 for
   December 31, 2009                                   3,436         2,983
  Inventory, net                                       2,099         2,948
  Prepaid expenses                                       294           388
                                                ------------  ------------
    Total current assets                               9,213        12,039
Property and equipment, net                            2,434         2,615
Other assets:
  Restricted cash                                         77            77
  Intangible assets, net                               3,543         4,744
  Deposits and prepaid expenses                          344           382
                                                ------------  ------------
    Total other assets                                 3,964         5,203
                                                ------------  ------------
    Total assets                                $     15,611  $     19,857
                                                ============  ============
LIABILITIES, REDEEMABLE PREFERRED STOCK AND
 STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
  Accounts payable and accrued expenses          $     4,606  $      5,229
  Line of credit payable                               2,556         2,055
  Deferred revenue                                     1,081         1,344
  Notes payable, net of discount, current              2,539           558
    Total current liabilities                         10,782         9,186
Deferred revenue, net of current                         375           397
Notes payable, net of discount, net of current             -         1,512
Other long term liabilities                              133           159
                                                ------------  ------------
    Total liabilities                                 11,290        11,254
                                                ------------  ------------
Commitments and contingencies
Redeemable preferred stock:
  Series A convertible, $0.01 par value -
   2,500,000 shares authorized as of September
   30, 2010 and December 31, 2009; 2,500,000
   issued and outstanding as of September 30,
   2010 and December 31, 2009.  Aggregate
   liquidation preferences $5,198 as of
   September 30, 2010 and $5,047 as of December
   31, 2009                                            4,811         4,598
  Series B non-convertible, $0.01 par value -
   1,250,000 shares authorized as of September
   30, 2010 and December 31, 2009; 1,250,000
   issued and outstanding as of September 30,
   2010 and December 31, 2009.  Aggregate
   liquidation preferences $2,854 as of
   September 30, 2010 and $2,648 as of
   December 31, 2009                                   2,660         2,423
                                                ------------  ------------
    Total redeemable preferred stock                   7,471         7,021
                                                ------------  ------------
Stockholders' equity (deficit):
  Common stock, $0.01 par value, at amount paid
   in; 100,000,000 shares authorized; 235,088
   shares issued and outstanding as of September
   30, 2010 and 235,191 shares issued and
   outstanding as of December 31, 2009                65,290        65,382
  Accumulated deficit                                (68,440)      (63,800)
                                                ------------  ------------
    Total stockholders' equity (deficit)              (3,150)        1,582
                                                ------------  ------------
      Total liabilities, redeemable preferred
       stock and stockholders' equity (deficit) $     15,611  $     19,857
                                                ============  ============





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

                                    Three Months Ended  Nine Months Ended
                                        Sept. 30,           Sept. 30,
                                    ------------------  ------------------
                                      2010      2009      2010      2009
                                    --------  --------  --------  --------
Revenues                            $  7,636  $  6,952  $ 23,406  $ 22,056
Cost of goods sold                     4,307     4,846    12,456    11,964
                                    --------  --------  --------  --------
  Gross profit                         3,329     2,106    10,950    10,092
                                    --------  --------  --------  --------
Operating expenses:
  Research and development               658       675     1,786     1,823
  Selling costs                        2,795     2,712     7,946     7,377
  General and administrative           1,427     1,861     5,314     4,302
                                    --------  --------  --------  --------
    Total operating expenses           4,880     5,248    15,046    13,502
                                    --------  --------  --------  --------
Operating loss                        (1,551)   (3,142)   (4,096)   (3,410)
Other income (expenses):
  Interest income (expense)             (205)     (212)     (584)     (632)
  Other income (expense)                  (1)     (120)       55      (206)
                                    --------  --------  --------  --------
    Total other income (expenses)       (206)     (332)     (529)     (838)
                                    --------  --------  --------  --------
    Loss before income tax            (1,757)   (3,474)   (4,625)   (4,248)
Benefit (Provision) for income
 taxes                                   (44)      (27)      (15)      (99)
                                    --------  --------  --------  --------
Net income (loss)                   $ (1,801) $ (3,501) $ (4,640) $ (4,347)
                                    ========  ========  ========  ========

Accretion to redemption value of
 redeemable preferred stock              203       104       450       104

Net loss attributable to common
 stockholders                       $ (2,004) $ (3,605) $ (5,090) $ (4,451)
                                    --------  --------  --------  --------
Weighted average number of
 shares-basic and diluted used in
 computing net earnings (loss) per
 share                                   235       235       235       235
                                    --------  --------  --------  --------
Basic and diluted net earnings
 (loss) per share                   $  (8.53) $ (15.34) $ (21.66) $ (18.94)
                                    --------  --------  --------  --------





              UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP
                            FINANCIAL RESULTS
                 (In thousands, except per share data)

                     Three Months Ended            Three Months Ended
                     September 30, 2010               June 30, 2010
                ----------------------------  ----------------------------
                          Adjust-                       Adjust-
                  GAAP    ments     Non-GAAP    GAAP    ments     Non-GAAP
                --------  --------  --------  --------  --------  --------
Revenues        $  7,636         -  $  7,636  $  8,053         -  $  8,053
Cost of goods
 sold              4,307  (212)(a)     4,087     3,887  (182)(a)     3,627
                       -    (8)(c)         -         -   (78)(c)         -
                --------  --------  --------  --------  --------  --------
  Gross profit     3,329       220     3,549     4,166       260     4,426
Operating
 expenses:
  Research and
   development       658   (30)(a)       628       605   (22)(a)       566
                       -    (-)(c)         -         -   (17)(c)         -
  Selling costs    2,795   (21)(a)     2,779     2,707   (30)(a)     2,692
                       -      5(c)         -         -     15(c)         -
  General and
   administr-
   ative           1,427   (25)(a)     1,001     1,895   (48)(a)     1,433
                       -  (400)(b)         -         -  (400)(b)         -
                       -    (1)(c)         -         -   (14)(c)         -
                --------  --------  --------  --------  --------  --------
    Total
     operating
     expenses      4,880      (472)    4,408     5,207      (516)    4,691
                --------  --------  --------  --------  --------  --------
Operating
 profit (loss)    (1,551)      692      (859)   (1,041)      776      (265)
Other income
 (expenses):
  Interest
   income
   (expense)        (205)        -      (205)     (192)        -      (192)
  Other income
   (expense)          (1)        -        (1)      (39)        -       (39)
                --------  --------  --------  --------  --------  --------
    Total other
     income
     (expenses)     (206)        -      (206)     (231)        -      (231)
                --------  --------  --------  --------  --------  --------
Income (loss)
 before income
 taxes            (1,757)      692    (1,065)   (1,272)      776      (496)
  Benefit
   (Provision)
   for income
   taxes             (44)        -       (44)       59         -        59
                --------  --------  --------  --------  --------  --------
Net income
 (loss)         $ (1,801)      692  $ (1,109) $ (1,213)      776  $   (437)
                --------  --------  --------  --------  --------  --------
Accretion to
 redemption
 value of
 redeemable
 preferred
 stock               203         -       203       159         -       159
Net income
 (loss)
 attributable
 to common
 stockholders   $ (2,004)        -  $ (1,312) $ (1,372)        -  $   (596)
                --------  --------  --------  --------  --------  --------
  Weighted
   average
   number of
   shares -
   basic and
   diluted used
   in computing
   net earnings
   (loss) per
   share             235         -       235       235         -       235
Basic and
 diluted net
 earnings
 (loss) per
 share          $  (8.53)        -  $  (5.58) $  (5.84)        -  $  (2.54)
                ========  ========  ========  ========  ========  ========



                     Three Months Ended
                     September 30, 2009
                ----------------------------
                          Adjust-
                  GAAP    ments     Non-GAAP
                --------  --------  --------
Revenues        $  6,952         -  $  6,952
Cost of goods
 sold              4,846  (128)(a)     4,611
                       -  (107)(c)         -
                --------  --------  --------
  Gross profit     2,106       235     2,341
Operating
 expenses:
  Research and
   development       675   (24)(a)       633
                       -   (18)(c)         -
  Selling costs    2,712   (21)(a)     2,686
                       -    (5)(c)         -
  General and
   administr-
   ative           1,861   (33)(a)     1,410
                       -  (400)(b)         -
                       -   (18)(c)         -
                --------  --------  --------
    Total
     operating
     expenses      5,248      (519)    4,729
                --------  --------  --------
Operating
 profit (loss)    (3,142)      754    (2,388)
Other income
 (expenses):
  Interest
   income
   (expense)        (212)        -      (212)
  Other income
   (expense)        (120)        -      (120)
                --------  --------  --------
    Total other
     income
     (expenses)     (332)        -      (332)
                --------  --------  --------
Income (loss)
 before income
 taxes            (3,474)      754    (2,720)
  Benefit
   (Provision)
   for income
   taxes             (27)        -       (27)
                --------  --------  --------
Net income
 (loss)         $ (3,501)      754  $ (2,747)
                --------  --------  --------
Accretion to
 redemption
 value of
 redeemable
 preferred
 stock               104         -       104
Net income
 (loss)
 attributable
 to common
 stockholders   $ (3,605)        -  $ (2,851)
                --------  --------  --------
  Weighted
   average
   number of
   shares -
   basic and
   diluted used
   in computing
   net earnings
   (loss) per
   share             235         -       235
Basic and
 diluted net
 earnings
 (loss) per
 share          $ (15.34)        -  $ (12.13)
                ========  ========  ========


(a) The effect of depreciation of fixed assets
(b) The effect of amortization of intangible assets
(c) The effect of stock based compensation.

Contact Information

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