SOURCE: TXP Corporation

May 22, 2007 07:30 ET

TXP Corporation Reports 45% Increase in Revenue for the First Quarter

Prototyping and Pre-Production Services Increase 45%; TXP Commences Sales of ONT Units to Carriers and OEMs

RICHARDSON, TX -- (MARKET WIRE) -- May 22, 2007 -- TXP Corporation (OTCBB: TXPO), an Original Design Manufacturer (ODM) for the telecommunications industry, today announced financial results for the three months ended March 31, 2007.

Michael C. Shores, President and Chief Executive Officer of TXP, commented, "Our results for the first quarter reflect a strong increase in our prototyping and pre-production services, coupled with initial sales of ONT units from our ONT Solutions group, which is off to a very strong start after formally launching the division at the end of 2006. Our family of BPON and GPON ONTs are perfectly timed with the accelerating roll-out of new 'fiber-to-the-home' infrastructures needed to deliver 'triple-play' services. We are also on track for our best year ever within our prototyping and pre-production group."

Mr. Shores continued, "During the first quarter, we achieved several important milestones further validating our ONT strategy. First, we signed a new re-seller agreement with a major communications technology and infrastructure provider that has begun distributing TXP's BPON ONT units to its customers. We believe this marks the first of many ODM relationships with PON equipment manufacturers who will use our ONTs to provide PON-based service delivery solutions to carriers worldwide. Second, we commenced shipments of our Broadband Passive Optical Network (BPON) ONT units to an OEM and a Tier 1 carrier, validating our two-pronged strategy of pursuing both carriers and OEMs."

Mr. Shores concluded, "As anticipated, the major systems vendors and carriers are beginning to explore OEM sourcing for more cost-effective, time-sensitive ONT solutions that are interoperable across a wide range of networks. We have now demonstrated interoperability with three leading Optical Line Terminal (OLT) OEMs and are moving to demonstrate interoperability across all major platforms. We believe the launch of our new ONT devices are ideally timed, following a similar model as the DSL market just a few years ago."

ONTs are the customer premise located devices used by a carrier to serve residential and business customers over a PON-based (Passive Optical Networking) system. PON is a maturing point-to-multipoint technology which is being adopted by telephone companies globally because of its cost effectiveness in extending fiber-based service delivery all the way to the customer premise (Fiber-to-the-Home [FTTH] or Fiber-to-the-Premise [FTTP]). TXP's ONTs sit at each customer premise and are connected over fiber to an Optical Line Terminal (OLT) generally located in the carrier's central office. A single OLT can deliver services to hundreds of ONTs.

Total revenue for the first quarter of 2007 increased 45% to $2.2 million, compared with $1.5 million for the same period in 2006. Operating loss for the first quarter was $1.2 million, compared to operating loss of $152,000 for the same period last year. The increase in operating loss primarily reflects additional personnel costs related to the ONT Solutions group formed during the fourth quarter of 2006. Net loss for the first quarter of 2007 was $378,000, or $0.00 per share, compared to net loss of $190,000 or $0.00 per share, for the same period in 2006. Net loss for the first quarter of 2007 included a net non-cash gain of $1.1 million related to a change in the fair value of derivative financial instruments.

About TXP

TXP Corporation is an Original Design Manufacturer (ODM) for the telecommunications industry. Based in Richardson, Texas, TXP has three primary business units: TXP-Texas Prototypes, TXP-Retrofit Solutions, and TXP-ONT Solutions. TXP-Texas Prototypes provides pre-manufacturing services for the electronics industry that help original equipment manufacturers (OEMs) bring products to market both faster and more cost effectively. TXP-Retrofit Solutions provides custom engineering kits to enable ILEC's (Incumbent Local Exchange Carriers) to upgrade their local access service delivery infrastructure at minimum cost and time. TXP's retrofit kits enable a wide range of next generation telecom platforms to easily fit into the variety of remote cabinets that have been broadly deployed by ILEC's over the last 30 years. TXP-ONT Solutions comprises the former Siemens' Optical Network Terminal (ONT) development team hired in late 2006. This group develops and markets via an ODM model the iPhotonics family of ONT products to both OEMs and ILECs to be private-label branded. The ONT technology terminates the passive optical network at the home or business location, and enables integrated voice, video and high-speed internet access. For more information visit: www.txpcorporation.com

                       CONSOLIDATED BALANCE SHEETS
                   March 31, 2007 and December 31, 2006


                                               2007             2006
                                           (unaudited)       (audited)
                                         ---------------- ----------------
ASSETS
Current assets
    Cash                                 $      3,621,000 $        228,000
                                         ---------------- ----------------
    Accounts receivable, net of allowance
     of $0 and $0 as of March 31, 2007
     and December 31, 2006, respectively.         920,000          976,000
                                         ---------------- ----------------
    Inventory                                   1,203,000          673,000
                                         ---------------- ----------------
    Other assets                                  360,000          346,000
                                         ---------------- ----------------
      Total current assets                      6,104,000        2,223,000
                                         ---------------- ----------------

Property and equipment, net                     2,686,000        2,667,000
                                         ---------------- ----------------
Other assets                                       13,000           13,000
                                         ---------------- ----------------

          TOTAL ASSETS                   $      8,803,000 $      4,903,000
                                         ---------------- ----------------

LIABILITIES AND STOCKHOLDERS' EQUITY
 (DEFICIT)

Current liabilities
                                         ---------------- ----------------
    Current maturities of notes payable  $        260,000 $        272,000
                                         ---------------- ----------------
    Current capital lease obligations              75,000           46,000
                                         ---------------- ----------------
    Line of credit                                400,000          400,000
                                         ---------------- ----------------
    Current derivative financial
     instruments                                       --        1,288,000
                                         ---------------- ----------------
    Current convertible debentures, net
     of unamortized discount of $423,000
     as of December 31, 2006                           --          467,000
                                         ---------------- ----------------
    Accounts payable                            1,139,000          913,000
                                         ---------------- ----------------
    Deferred revenue                                   --          332,000
                                         ---------------- ----------------
    Accrued expenses                              240,000          412,000
                                         ---------------- ----------------
      Total current liabilities                 2,114,000        4,130,000
                                         ---------------- ----------------

Notes payable, net of current maturities          107,000          144,000
                                         ---------------- ----------------

Capital lease obligations, net of current
 obligations                                       94,000           32,000
                                         ---------------- ----------------

Line of credit                                  2,400,000        1,000,000
                                         ---------------- ----------------

                                         ---------------- ----------------
Convertible debentures, net of
 unamortized discount of $3,826,000 as of
 March 31, 2007                                   174,000               --
                                         ---------------- ----------------

Derivative financial instruments, net of
 current obligation                             2,603,000        2,507,000
                                         ---------------- ----------------

Deferred tax liability                             48,000           48,000
                                         ---------------- ----------------

TOTAL LIABILITIES                               7,540,000        7,861,000
                                         ---------------- ----------------

STOCKHOLDERS' EQUITY (DEFICIT):

  Common stock, $.001 par value,
   300,000,000 shares authorized,
   111,005,777 and 104,080,623 shares
   issued and outstanding as of March 31,
   2007 and December 31, 2006,
   respectively.                                  111,000          104,000
                                         ---------------- ----------------


  Additional paid in capital                    6,713,000        2,121,000
                                         ---------------- ----------------
  Accumulated deficit                          (5,568,000)      (5,190,000)
                                         ---------------- ----------------
  Accumulated other comprehensive
   income                                           7,000            7,000
                                         ---------------- ----------------

                                         ---------------- ----------------
     TOTAL STOCKHOLDERS' EQUITY (DEFICIT)       1,263,000       (2,958,000)
                                         ---------------- ----------------

                                         ---------------- ----------------
TOTAL LIABILITIES AND STOCKHOLDERS'
 EQUITY (DEFICIT)                        $      8,803,000 $      4,903,000
                                         ---------------- ----------------



                  CONSOLIDATED STATEMENTS OF OPERATIONS
          Three Months ended March 31, 2007 and 2006 (unaudited)


                                               2007             2006
                                         ---------------- ----------------
Revenues
   Prototyping and assembly              $      1,268,000 $        873,000
                                         ---------------- ----------------
   Material management services                   565,000          630,000
                                         ---------------- ----------------
   Product and accessory sales                     19,000               --
                                         ---------------- ----------------
   Design and development services                332,000               --
                                         ---------------- ----------------
     Total Revenues                             2,184,000        1,503,000
                                         ---------------- ----------------

                                         ---------------- ----------------
Cost of sales                                   1,449,000        1,043,000
                                         ---------------- ----------------

                                         ---------------- ----------------
Gross profit                                      735,000          460,000
                                         ---------------- ----------------
Costs and expenses
                                         ---------------- ----------------
   Selling, general administrative              1,197,000          592,000
                                         ---------------- ----------------
   Research and development                       746,000               --
                                         ---------------- ----------------
   Depreciation                                    33,000           20,000
                                         ---------------- ----------------
     Total costs and expenses                   1,976,000          612,000
                                         ---------------- ----------------

Operating loss                                 (1,241,000)        (152,000)
                                         ---------------- ----------------

Other income and expense
                                         ---------------- ----------------
    Interest expense, net                        (248,000)         (56,000)
                                         ---------------- ----------------
    Change in fair value of derivative
     financial instruments                      1,111,000               --
                                         ---------------- ----------------
    Gain on sale of fixed assets                       --           18,000
                                         ---------------- ----------------
      Total other income and expense              863,000          (38,000)
                                         ---------------- ----------------

Loss before income taxes                         (378,000)        (190,000)
                                         ---------------- ----------------

Income tax expense                                     --               --
                                         ---------------- ----------------

Net loss                                         (378,000)        (190,000)
                                         ---------------- ----------------
Foreign currency translation
 adjustment                                            --               --
                                         ---------------- ----------------
Comprehensive loss                       $       (378,000)$       (190,000)
                                         ================ ================

Basic earnings per share                 $             -- $             --
                                         ================ ================

Diluted earnings per share               $             -- $             --
                                         ================ ================
Basic weighted average shares
 outstanding:                                 104,234,515       89,298,042
                                         ================ ================

Diluted weighted average shares
 outstanding:                                 104,234,515       89,298,042
                                         ================ ================

Contact Information

  • Media:
    Eric Miscoll
    TXP Corporation
    (214) 575-9300

    Investor Relations:
    David K. Waldman / Klea K. Theoharis
    Crescendo Communications
    (212) 671-1020