SOURCE: Proxim Wireless

August 14, 2008 17:02 ET

Reissued Without Change From 8-13-08: Proxim Wireless Reports Second Quarter 2008 Financial Results

Note to Editors: This Release Is Reissued Without Change From 8-13-08

SILICON VALLEY, CA--(Marketwire - August 14, 2008) -


--  Sales Increased by 47% Over Q108
--  Raised $3M and Exploring Strategic Alternative for the Harmonix
    Division to Support Core Business Growth
--  Narrowed Non-GAAP Loss to $0.1M from $4.1M in Q108
    

Proxim Wireless Corporation (NASDAQ: PRXM), a leading provider of end-to-end broadband wireless systems that deliver the quadruple play, today released financial results for the second quarter ended June 30, 2008. GAAP revenues for the quarter ended June 30, 2008 were $15.1, an increase of approximately 47% in total GAAP revenue from $10.2 million for the quarter ended March 31, 2008, and a decrease of approximately 11% from $16.9 million for the quarter ended June 30, 2007.

"The revenue growth we experienced this quarter is the result of actions taken to revamp our sales team and reinvigorate the channel over the last few quarters. In addition, we continue to see growth in broadband wireless access," said Pankaj Manglik, President and CEO of Proxim Wireless.

On a GAAP basis, the net loss for the quarter ended June 30, 2008 was $1.4 million, or $0.06 per diluted share, compared to a net loss of $5.3 million, or $0.22 per diluted share, for the quarter ended March 31, 2008, and a net loss of $0.3 million, or $0.02 per diluted share, for the quarter ended June 30, 2007. The primary reasons for the narrowed loss in the second quarter of 2008 versus the first quarter of 2008 were increased revenue, higher gross margins, and the sale of non-core patents. The financial results for the quarter ending June 30, 2007 also included the sale of patents for $2.5 million.

The net loss on a non-GAAP basis, which excludes depreciation of fixed assets, amortization of intangible assets, and stock based compensation, was $0.1 million, or $0.01 per diluted share, compared to a non-GAAP net loss of $4.1 million, or $0.17 per diluted share, for the quarter ended March 31, 2008, and a net profit of $0.9 million, or $0.04 per diluted share, for the quarter ended June 30, 2007.

The financial results above reflect recent discontinued operations accounting treatment for a portion of Proxim's consolidated operations. Today, Proxim announced its intent to explore strategic alternatives for the Harmonix Division of its Terabeam Corporation subsidiary. As a result, Proxim will be treating the Harmonix Division as discontinued operations held for sale and will break out as appropriate the financial results of the Harmonix Division from the consolidated results of the continuing operations of Proxim Wireless Corporation and its subsidiaries moving forward. Subsequent to the end of the second quarter, the company raised an additional $3 million in debt.

Highlights of recent press announcements include:

--  The introduction of Proxim's Tsunami™ MP.11 HS (High Security) line
    of products, the company's ultra-secure broadband wireless solution for
    wireless video, data connectivity, VoIP and mobility
--  The introduction of Proxim's Lynx®.G5 family of products, providing
    carriers, utilities and enterprises advanced security and flexibility for
    high-performance voice and data backhaul
--  Multi-technology deployment of Proxim's Tsunami MP.16 and Tsunami
    MP.11 products by Televersa to provide WiMAX service to 2.5 million people
    over 12,400 square miles in Germany
--  Multi-technology deployment of Proxim's Tsunami MP.11 and ORiNOCO®
    AP-4000 MR-LR equipment to provide Wi-Fi network coverage for over 80,000
    residents in Taiwan's Kinmen County
--  Multi-technology deployment of Proxim's Tsunami MP.11 and ORiNOCO AP-
    4000 products to provide Wi-Fi and WiMAX service to the city of Portland,
    Oregon as a paid alternative for the now defunct MetroFi network
--  A complete end-to-end (Wi-Fi, WiMAX and Point-to-Point) deployment of
    Proxim's Tsunami MP.16, Tsunami MP.11, Tsunami.GX and ORiNOCO AP-4000 MR-LR
    products to provide IPTV, VoIP and data services to the Taiwanese market
    via CTV Infotech
--  A string of product awards, including receipt of Network Products
    Guide's "2008 Product Innovation Award" for our QuickBridge 60250 point-to-
    point wireless bridge, Internet Telephony's "2008 WiMAX Distinction Award"
    for our MeshMax 11 product, and Network Products Guide's "2008 Best Product
    & Services" award for our Tsunami MP.11 HS product
--  Azlan, the central supply chain operation of Tech Data's enterprise
    networking and mid-range systems business, announced a European-wide
    agreement to distribute Proxim's entire end-to-end wireless portfolio
    throughout 16 European countries
--  Opening of a new technical services and support center in Hyderabad,
    India to provide optional 24/7 technical support for customers across the
    APAC and EMEA regions
    

Conference Call Information

Proxim will host a conference call to discuss the release, financial results, and related developments at the company today, Wednesday, August 13, 2008, starting at 5:00 P.M. Eastern Time. The discussion may include forward-looking information such as the company's Nasdaq listing situation.

To participate in this conference call, please dial 877-795-3604 (or +1-719-325-4835 for international callers), confirmation code 5064780, at least ten minutes before the starting time. The conference call will also be broadcast live over the Internet. Investors and others are invited to visit Proxim's website at http://ir.proxim.com/events.cfm to access this broadcast. Replays will be available telephonically for approximately one week by dialing 888-203-1112 for domestic callers and +1-719-457-0820 for international callers, confirmation code 5064780 for all callers, and over the Internet for approximately 90 days at Proxim's website at http://ir.proxim.com/events.cfm.

About Proxim Wireless

Proxim Wireless Corporation (NASDAQ: 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 worldwide. Proxim is ISO-9001 certified. Information about Proxim can be found at www.proxim.com. For investor relations information, e-mail ir@proxim.com or call +1-408-383-7636.

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. These non-GAAP measures are provided 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. To view the financial tables, please see the attached PDF document, or view the release on Proxim's site at: http://ir.proxim.com/releases.cfm

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; the intense competition in our industries and resulting impacts on our pricing, gross margins, and general financial performance; significant uncertainties about the type, form, structure, nature, results, timing, or terms and conditions of any potential strategic transaction relating to the Harmonix Division; significant uncertainties relating to the listing of the company's stock on the Nasdaq Capital Market, including whether our stock will be delisted, whether we will qualify for and receive additional time to cure the current bid price deficiency, whether we will seek and receive sufficient time to perform a reverse split of our stock, and whether the trading of our stock will be transferred to the Over-The-Counter Bulletin Board or Pink Sheets; 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; time, costs, political considerations, typical multitude of constituencies, and other factors involved in evaluating, equipping, installing, and operating municipal networks; 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; 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 and will be included in filings made by Proxim from time to time with the Securities and Exchange Commission and in its other public statements.

                   PROXIM WIRELESS CORPORATION
                   CONSOLIDATED BALANCE SHEETS
                (In thousands, except share data)



                                                   30-Jun     December 31,
                                                    2008          2007
                                                ------------  ------------
Assets                                          (unaudited)
Current assets:
  Cash and cash equivalents                     $      4,884  $      6,329
  Accounts receivable, net                             5,067         9,326
  Inventory                                            4,828         5,753
  Prepaid expenses                                     1,159         1,029
  Assets held for sale                                 2,293         2,085
                                                ------------  ------------
      Total current assets                            18,231        24,522
Property and equipment, net                            2,547         2,538
Other Assets:
  Restricted cash                                         77            76
  Intangible assets, net                               7,439         8,400
  Deposits and prepaid expenses                          489           239
                                                ------------  ------------
      Total other assets                               8,005         8,715
                                                ------------  ------------

Assets held for sale                                     511           635
                                                ------------  ------------
      Total assets                              $     29,294  $     36,410
                                                ============  ============
Liabilities and Stockholders’ Equity
Current liabilities:

  Accounts payable and accrued expenses         $     10,312  $     12,752
  Line of credit payable                               3,000             -
  Deferred revenue                                     2,840         4,001

  License agreement payable - current maturities         851         1,065
                                                ------------  ------------
      Total current liabilities                       17,003        17,818

License agreement payable, net of current
 maturities                                              756         1,023

Long term liabilities of discontinued
 operations held for sale                                153           232
                                                ------------  ------------
      Total liabilities                               17,912        19,073
Commitments and contingencies
Stockholders’ Equity
    Preferred stock, $0.01 par value; 4,500,000
     shares authorized, none issued at June 30,
     2008 and December 31, 2007                            -             -

    Common stock, $0.01 par value, 100,000,000
     shares authorized, 23,519,069 issued and
     outstanding at June 30, 2008 and December
     31, 2007                                            235           235
  Additional paid-in capital                          64,132        63,451
  Retained earnings (accumulated deficit)            (52,985)      (46,349)
                                                ------------  ------------
      Total stockholders’ equity                      11,382        17,337
                                                ------------  ------------
      Total liabilities and stockholders’
       equity                                   $     29,294  $     36,410
                                                ============  ============





                        PROXIM WIRELESS CORPORATION
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                  (in thousands, except per share data)
                                (unaudited)



                                    Three Months Ended   Six Months Ended
                                         June 30,            June 30,
                                    ------------------  ------------------
                                      2008      2007      2008      2007
                                    --------  --------  --------  --------
Revenues                            $ 15,088  $ 16,874  $ 25,331  $ 32,273
Cost of goods sold                     7,831     9,296    13,752    17,568
                                    --------  --------  --------  --------
    Gross profit                       7,257     7,578    11,579    14,705
Operating expenses:
    Selling costs                      5,137     5,094    10,164     9,748
    Restructuring Charges                  0        91         0        91
    General and administrative         3,089     2,884     6,500     5,891
    Research and development           1,082     2,009     2,127     4,152
                                    --------  --------  --------  --------
      Total operating expenses         9,308    10,078    18,791    19,882
                                    --------  --------  --------  --------
Operating loss                        (2,051)   (2,500)   (7,212)   (5,177)
Other income (expenses):
    Interest income                        7        28        21        72
    Interest expense                     (75)      (34)     (114)      (68)
    Other income (loss)                  745     2,576       664     2,600
    Realized gain/loss from AFS
     securities                            0         0       (59)       22
                                    --------  --------  --------  --------

      Total other income (expenses)      677     2,570       512     2,626
                                    --------  --------  --------  --------
    Loss before income taxes          (1,374)       70    (6,700)   (2,551)
    Benefit (provision) for income
     taxes                               (41)      (45)     (112)      (68)
                                    --------  --------  --------  --------
    Loss from continuing operations   (1,415)       25    (6,812)   (2,619)
    Loss/income from discontinued
     operations (loss)                    51      (364)      176      (706)
Net income (loss)                     (1,364)     (339)   (6,636)   (3,325)
                                    ========  ========  ========  ========
Weighted average number of shares
 - basic and diluted used in
 computing net earnings (loss) per
 share                                23,519    21,554    23,519    21,554
                                    ========  ========  ========  ========

Basic and diluted net earnings
 (loss) per share:
    Continuing operations           ($  0.06) $   0.00  ($  0.29) ($  0.12)
                                    ========  ========  ========  ========
    Discontinued operations         $   0.00  ($  0.02) $   0.01  ($  0.03)
                                    ========  ========  ========  ========
      Total                         ($  0.06) ($  0.02) ($  0.28) ($  0.15)
                                    ========  ========  ========  ========





           RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS


                    Three Months Ended             Three Months Ended
                        30-Jun-08                      31-Mar-08
              -----------------------------  -----------------------------
                GAAP   Adjustments Non-GAAP    GAAP   Adjustments Non-GAAP
              --------  ---------- --------  --------  ---------- --------
Revenues      $ 15,088             $ 15,088  $ 10,243             $ 10,243

Cost of
 goods sold      7,831    (143)(a)    7,554     5,921    (145)(a)    5,647
                          (134)(c)                       (129)(c)

              --------  ---------- --------  --------  ---------- --------
  Gross
   profit        7,257         277    7,534     4,322         274    4,596

Operating
 expenses:
  Selling
   costs         5,137      (9)(a)    5,040     5,027     (10)(a)    4,939
                           (88)(c)                        (78)(c)
  General and
  administrative 3,089     (87)(a)    2,419     3,441    (100)(a)    2,747
                          (481)(b)                       (481)(b)
                          (102)(c)                        (83)(c)
  Research and
   development   1,082    (117)(a)      927     1,044    (119)(a)      895
                           (38)(c)                        (30)(c)
              --------  ---------- --------  --------  ---------- --------
    Total
     operating
     expenses    9,308         922    8,386     9,482         901    8,581
              --------  ---------- --------  --------  ---------- --------
Operating
 profit
 (loss)         (2,051)      1,199     (852)   (5,160)      1,175   (3,985)
Other income
 (expenses):
  Interest
   income            7                    7        13                   13
  Interest
   expense         (75)                 (75)      (39)                 (39)
  Other
   income
   (loss)          745                  745      (139)                (139)
              --------  ---------- --------  --------  ---------- --------
    Total
     other
     income
     (expenses)    677                  677      (165)                (165)
              --------  ---------- --------  --------  ---------- --------
Loss before
 income taxes   (1,374)      1,199     (175)   (5,325)      1,175   (4,150)
  Benefit
   (provision)
   for
   income
   taxes           (41)                 (41)      (72)                 (72)
              --------  ---------- --------  --------  ---------- --------
  Loss from
   continuing
   operations ($ 1,415) $    1,199 ($   216) ($ 5,397) $    1,175 ($ 4,222)
              --------  ---------- --------  --------  ---------- --------
  Gain (loss)
   from
   discontinued
   operations $     51       47(b) $     98  $    125       47(b) $    172
              --------  ---------- --------  --------  ---------- --------
Net income
 (loss)       ($ 1,364) $    1,246 ($   118) ($ 5,272) $    1,222 ($ 4,050)
              --------  ---------- --------  --------  ---------- --------
  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 ($  0.06)            ($  0.01) ($  0.22)            ($  0.17)
              ========  ========== ========  ========  ========== ========
  Discontinued
   operations $   0.00             $   0.00  ($   0.0)            ($   0.0)
              ========  ========== ========  ========  ========== ========
      Total   ($  0.06)            ($  0.01) ($  0.22)            ($  0.17)
              ========  ========== ========  ========  ========== ========


(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:
    Brian Sereda
    Chief Financial Officer
    Proxim Wireless
    (408) 383-7636
    bsereda@proxim.com