SOURCE: Unity Wireless Corp

November 14, 2005 10:38 ET

Unity Wireless Reports Results for the Third Quarter 2005

BURNABY, BC -- (MARKET WIRE) -- November 14, 2005 -- Unity Wireless Corporation (OTC BB: UTYW), a developer of integrated wireless subsystems, power amplifiers and coverage enhancement solutions, reported today summary financial results for the three and nine-month periods ended September 30, 2005.

Revenue for the third quarter ended September 30, 2005 was $949,700 compared to $1,027,160 in the same period in 2004. The gross margin of $201,865, or 21.26%, for the third quarter of 2005 declined from a gross margin of $223,590, or 21.76%, for the third quarter of 2004. Loss for the third quarter of 2005 was $1,017,538 compared to $605,447 for the same period in 2004. Net of stock based compensation and other non-cash expenses of $390,805 in the 2005 period and $165,099 in the 2004 period, loss for the third quarter of 2005 was $626,733 compared to $440,348 for the same period in 2004.

Revenue for the nine-month period ended September 30, 2005 was $4,634,158, up 20.34%, compared to $3,850,740 in the same period in 2004. The gross margin of $1,039,614, or 22.43% of net sales, for the nine month period ended of 2005 increased from a gross margin of $719,854, or 18.69% of net sales, for the nine month period ended of 2004. Loss for the nine-month period was $3,561,117 compared to $2,026,172 for the same period in 2004. Net of stock based compensation and other non-cash expenses of $1,562,590 in the 2005 period and $706,322 in the 2004 period, loss for the nine-month period was $1,998,527 compared to $1,319,850 for the same period in 2004.

Ilan Kenig, President and CEO of Unity Wireless, stated, "Revenues were lower than anticipated because certain expected orders were postponed. We did, however, increase the scope of our potential growth as we diversified both our product portfolio and customer base. Several products are now qualified for multiple base station configurations with multiple OEM customers and are ready for ramp-up when we receive production orders. Our Operator Solutions Group has several evaluation and field trials underway in North America for our tower mounted amplifier (TMA) products, and the Group is also developing new coverage solutions for specific customer opportunities in North America and Europe. We feel that penetrating the operator market segment with these products in a meaningful way can be accomplished more quickly than it has taken to penetrate the OEM market."

The Company's Form 10Q-SB for the period ended September 30, 2005 contains additional financial information, and can be accessed at the Company's website or through the Securities and Exchange Commissions website at www.sec.gov.

About Unity Wireless www.unitywireless.com

Unity Wireless is an ISO 9001:2000 certified developer of RF (radio frequency) power amplifiers, components, integrated front-ends and coverage enhancement solutions for wireless communications networks. Our products are an integral part of the base station and repeater infrastructure that comprise the backbone of wireless communications networks around the world. From analog cellular to 3G mobile and fixed wireless applications from 450 MHz to 3.5 GHz, Unity Wireless products deliver enhanced efficiency and performance with field-proven quality and reliability in tens of thousands of base stations and repeaters around the world.

Forward Looking Statements

Forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "feel," "plan," "anticipate," "should" and other similar expressions generally identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. These forward-looking statements are subject to a number of risks and uncertainties, including without limitation, inability to raise the funds necessary for the Company's continued operations, changes in external market factors including the economy and other risks and uncertainties indicated in the Company's most recent SEC filing on form SB-2. Actual results could differ materially from the results referred to in the forward-looking statements.

Non-GAAP Financial Information

This press release contains certain non-GAAP financial information as defined by the U.S. Securities Commission Regulation G. Pursuant to the requirements of this regulation, a reconciliation of this financial information to our financial statements as prepared under generally accepted accounting principles in the United States (GAAP) is included in this press release. Unity's management believes that the disclosure of this non-GAAP financial information is useful to our investors and the investment community since certain non-cash charges and expenses may not be reflective of future expenses.

                                          Three months ended
                                          ------------------
                                          September 30, 2005
                               Original       Adjustment        Pro-Forma

Net sales                   $   949,700      $         -      $   949,700
Cost of goods sold              747,835           (6,165)(a)      741,670
                            -----------      -----------      -----------
                                201,865            6,165          208,030

Expenses:
Research and development        393,744           (9,001)(a)      384,743
Government grant                 14,245                -           14,245
Sales and marketing             134,573           (9,091)(a)      125,482
Depreciation and amortization    79,546          (79,546)(b)            -
Exchange (gain) loss             (6,909)               -           (6,909)

Interest expense, excluding
 accretion of interest and
 debt settlement                 72,838          (57,632)(c)       15,206
General and administrative      415,389         (113,393)(a)      301,996
                            -----------      -----------      -----------
                              1,103,426         (268,663)         834,763
                            -----------      -----------      -----------

Operating loss for the
 period                        (901,561)         274,828         (626,733)

Accretion of interest and
 debt settlement               (115,977)         115,977(d)             -

Other income                          -                -                -
                            -----------      -----------      -----------

Loss for the period        ($ 1,017,538)     $   390,805     ($   626,733)

(a) -- This represents stock-based compensation.
(b) -- This represents costs related to the amortization of equipment
        and intangible assets.
(c) -- This represents shares issued in settlement of interest expense.
(d) -- This represents accretion of interest and debt settlement related
        to convertible debentures.



                                          Three months ended
                                          ------------------
                                          September 30, 2004
                               Original       Adjustment        Pro-Forma

Net sales                   $ 1,027,160      $         -      $ 1,027,160
Cost of goods sold              803,570           (5,608)(a)      797,962
                            -----------      -----------      -----------
                                223,590            5,608          229,198

Expenses:
Research and development        243,524           (8,043)(a)      235,481
Government grant                 15,407                -           15,407
Sales and marketing              96,207            8,638 (a)      104,845
Depreciation and amortization    15,812          (15,812)(b)            -
Exchange (gain) loss             69,628                -           69,628

Interest expense, excluding
 accretion of interest and
 debt settlement                 26,843                - (c)       26,843
General and administrative      341,651         (124,192)(a)      217,459
                            -----------      -----------      -----------
                                809,072         (139,409)         669,663
                            -----------      -----------      -----------

Operating loss for the period  (585,482)         145,017         (440,465)

Accretion of interest and debt
 settlement                     (20,082)          20,082(d)             -

Other income                        117                -              117
                            -----------      -----------      -----------


Loss for the period        ($   605,447)     $   165,099     ($   440,348)
                            -----------      -----------      -----------

(a) -- This represents stock-based compensation.
(b) -- This represents costs related to the amortization of equipment
        and intangible assets.
(c) -- This represents shares issued in settlement of interest expense.
(d) -- This represents accretion of interest and debt settlement related
       to convertible debentures.


UNITY WIRELESS CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
RECONCILIATION OF PRO FORMA RESULTS

                                          Nine months ended
                                          ------------------
                                          September 30, 2005
                             Original         Adjustment        Pro-Forma

Net sales                   $ 4,634,158      $         -      $ 4,634,158
Cost of goods sold            3,594,544          (18,153)(a)    3,576,391
                            -----------      -----------      -----------
                              1,039,614           18,153        1,057,767

Expenses:
Research and development      1,642,193          (46,285)(a)    1,595,908
Government grant                 69,512                -           69,512
Sales and marketing             396,847           30,368(a)       427,215
Depreciation and
 amortization                   173,458         (173,458)(b)            -
Exchange (gain) loss             35,129                -           35,129
Interest expense, excluding
 accretion of interest and
 debt settlement                203,877         (137,159)(c)       66,718
General and administrative    1,368,517         (506,705)(a)      861,812
                            -----------      -----------      -----------
                              3,889,533         (833,239)       3,056,294
                            -----------      -----------      -----------

Operating loss for the
 period                      (2,849,919)         851,392       (1,998,527)

 Accretion of interest and
 debt settlement               (711,198)         711,198(d)             -

 Other income                         -                -                -
                            -----------      -----------      -----------

Loss for the period        ($ 3,561,117)     $ 1,562,590     ($ 1,998,527)

(a) -- This represents stock-based compensation.
(b) -- This represents costs related to the amortization of equipment and
       intangible assets.
(c) -- This represents shares issued in settlement of interest expense.
(d) -- This represents accretion of interest and debt settlement related
       to convertible debentures.



                                          Nine months ended
                                          ------------------
                                          September 30, 2004
                               Original       Adjustment        Pro-Forma

Net sales                   $ 3,850,740      $         -      $ 3,850,740
Cost of goods sold            3,130,886          (14,728)(a)    3,116,158
                            -----------      -----------      -----------
                                719,854           14,728          734,582

Expenses:
Research and development        891,629          (29,616)(a)      862,013
Government grant                 57,761                -           57,761
Sales and marketing             373,471          (38,808)(a)      334,663
Depreciation and amortization    42,374          (42,374)(b)            -
Exchange (gain) loss             68,279                -           68,279
Interest expense, excluding
 accretion of interest and
 debt settlement                 41,366                - (c)       41,366
General and administrative    1,227,921         (523,321)(a)      704,600
                            -----------      -----------      -----------
                              2,702,801         (634,119)       2,068,682
                            -----------      -----------      -----------
Operating loss for the
 period                      (1,982,947)         648,847       (1,334,100)

Accretion of interest and
 debt settlement                (57,475)          57,475(d)             -

Other income                     14,250                -           14,250
                            -----------      -----------      -----------

Loss for the period        ($ 2,026,172)     $   706,322     ($ 1,319,850)


(a) - This represents stock-based compensation.
(b) - This represents costs related to the amortization of equipment and
      intangible assets.
(c) - This represents shares issued in settlement of interest expense.
(d) - This represents accretion of interest and debt settlement related
      to convertible debentures.

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