EX-99.1 2 ex99-1.htm EXHIBIT 99.1 ex99-1.htm
For Further Information Contact:
Bert Williams
VP, Marketing and Investor Relations
(408) 731-2610
bwilliams@proxim.com


FOR IMMEDIATE RELEASE


PROXIM WIRELESS ANNOUNCES THIRD QUARTER 2007 FINANCIAL RESULTS

Improved Operating Performance Demonstrates Progress Toward Stated Objectives

San Jose, CA, November 6, 2007– Proxim Wireless (NASDAQ: PRXM), a leader in core-to-client solutions for broadband municipal wireless networks, today announced its financial results for the third quarter ended September 30, 2007.

Achievements during the third quarter of 2007 include:

 
·
Achieved stated goal of reducing operating expenses by over $1 million sequentially including the effects of discontinued operations.
 
·
Re-branded under the Proxim Wireless name and PRXM stock ticker.
 
·
Reported gross margins of approximately 49.0% - a sequential improvement of 4.6%.
 
·
Divested Ricochet Networks to focus on core-to-client broadband wireless equipment business.
 
·
Reached 10,000 unit milestone with a major customer.

Revenue for the third fiscal quarter ended September 30, 2007 was $16.9 million, net of Ricochet discontinued operations, a decrease of approximately 7% from $18.1 million, also net of the Ricochet discontinued operations, for the prior quarter ended June 30, 2007 and a decrease on a like basis of approximately 2% from the revenue of $17.3 million for the third quarter of fiscal 2006.

Gross margins for the quarter ended September 30, 2007 were 49.0%, an improvement of 3.5% from 45.5% in the quarter ended June 30, 2007 (calculated on a GAAP basis).  The gross margin on a like basis was 37.5% in the quarter ended September 30, 2006 and was impacted by an inventory impairment charge.

On a GAAP basis, net loss for the quarter ended September 30, 2007 was $2.7 million, or $0.11 per share, compared with a loss of $339,000, or $0.02 per share, in the prior quarter ended June 30, 2007, and a net loss of $13.7 million, or $0.63 per share, in the third quarter of 2006.  The GAAP net loss for the quarter ended September 30, 2007 includes the impact of a $1.1 million net loss from discontinued operations.  The third quarter 2006 net loss included non-cash charges totaling approximately $10.4 million (approximately $0.48 per share-diluted), consisting of an inventory reserve of approximately $1.5 million and an impairment charge related to intangible assets of approximately $8.9 million.

Net loss from continuing operations on a non-GAAP basis, which excludes discontinued operations, depreciation of fixed assets, amortization of intangible assets, and stock based compensation, was $276,000, or $0.01 per share.
 

 
 
Proxim Wireless Corporation Announces Third Quarter 2007 Financial Results
November 6, 2007
Page  2
 
“We made substantial progress towards our stated objectives during the quarter and continue to demonstrate improved operating results,” said Robert Fitzgerald, Proxim’s Chief Executive Officer. “These results — more than $1 million in operating expense reductions compared with the prior quarter and the improvement in gross margins — were driven by our ability to execute on our goals. In addition, we increased our focus on our core-to-client wireless broadband business by divesting Ricochet Networks and re-branding the company with a strong, respected name in wireless networking. With these improvements and our increased focus on the expanding municipal wireless networks market, we believe we are on the right track towards continued operating results improvement and reaching profitability.”

Conference Call Information

Proxim Wireless will host a conference call to discuss this release, financial results, developments at the company, and other matters of interest to investors and others today, November 6, 2007 starting at 5:00 p.m. Eastern Time.  The discussion may include forward-looking information.

To participate in this conference call, please dial 877-856-1961 (or +1-719-325-4765 for international callers), confirmation code 1725943 for all callers, 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://www.proxim.com/about/investor.html 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 1725943 for all callers, and over the Internet for approximately 90 days at Proxim's website at http://www.proxim.com/about/investor.html.

About Proxim Wireless
Proxim Wireless Corporation (NASDAQ: PRXM) is a leader in core-to-client solutions for broadband municipal wireless networks. Our systems enable a variety of wireless applications including security and surveillance systems, mobile workforce automation and machine-to-machine communications. We have shipped more than 1.5 million wireless devices to more than 200,000 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 408-731-2610.

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’s 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; the intense competition in our industries and resulting impacts on our pricing, gross margins, and general financial performance; 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.

- Financial Tables Follow -
 
 
 
 
Proxim Wireless Corporation Announces Third Quarter 2007 Financial Results
November 6, 2007
Page  3
PROXIM WIRELESS CORPORATION
  
CONSOLIDATED BALANCE SHEETS
  
US dollars in thousands (except per share data)
  
(unaudited)
  
   
September 30,
    
December 31,
  
   
2007
    
2006
  
Assets
  
(unaudited)
        
Current assets:
            
Cash and cash equivalents
   $
11,528
     $
10,290
  
Investment securities – available-for-sale
    
-
      
168
  
Accounts receivable, net
    
8,123
      
5,539
  
Inventory
    
8,786
      
10,142
  
Prepaid expenses
    
1,575
      
1,246
  
Total current assets
    
30,012
      
27,385
  
                 
Property and equipment, net
    
2,557
      
2,660
  
Other Assets:
                
Restricted cash
    
76
      
76
  
Goodwill
    
7,923
      
7,922
  
Intangible assets, net
    
9,762
      
11,545
  
Deposits and prepaid expenses
    
255
      
287
  
Total other assets
    
18,016
      
19,830
  
Total assets
   $
50,585
     $
49,875
  
Liabilities and Stockholders’ Equity
                
Current liabilities:
                
Accounts payable and accrued expenses
   $
12,455
     $
13,887
  
Deferred revenue
    
1,920
      
2,198
  
License agreement payable - current maturities
    
1,002
      
868
  
Total current liabilities
    
15,377
      
16,953
  
License agreement payable, net of current maturities
    
1,307
      
2,088
  
Total liabilities
    
16,684
      
19,041
  
Commitments and contingencies
                
Stockholders’ Equity
                
Preferred stock, $0.01 par value; authorized 4,500,000, none issued at September 30, 2007 and December 31, 2006
    
-
      
-
  
Common stock, $0.01 par value, 100,000,000 shares authorized, 25,854,369 issued and outstanding at September 30, 2007, and 21,552,572 issued and outstanding at December 31, 2006
    
258
      
216
  
Additional paid-in capital
    
66,989
      
57,976
  
Retained earnings  (accumulated deficit)
     (33,346 )     (27,285 )
Accumulated other comprehensive income:
                
Net unrealized gain (loss) on available-for-sale securities
    
-
       (73 )
Total stockholders’ equity
    
33,901
      
30,834
  
Total liabilities and stockholders’ equity
   $
50,585
     $
49,875
  

 

Proxim Wireless Corporation Announces Third Quarter 2007 Financial Results
November 6, 2007
Page  4
 
PROXIM WIRELESS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
US dollars in thousands (except per share data)
(unaudited)
 
   
Three Months Ended
    
Nine Months Ended
  
   
September 30,
    
September 30,
  
   
2007
    
2006
    
2007
    
2006
  
Revenues
   $
16,902
     $
17,321
     $
51,693
     $
55,006
  
Cost of goods sold
    
8,616
      
9,317
      
27,524
      
31,079
  
Restructuring provision for E&O inventory
            
1,502
              
1,502
  
Gross profit
    
8,286
      
6,502
      
24,169
      
22,425
  
Operating expenses:
                                
Selling costs
    
5,385
      
5,041
      
15,134
      
13,156
  
Restructuring Charges
            
8,874
      
91
      
8,990
  
General and administrative
    
2,964
      
2,981
      
8,855
      
9,358
  
Research and development
    
1,602
      
2,729
      
6,954
      
11,190
  
Total operating expenses
    
9,951
      
19,625
      
31,034
      
42,694
  
Operating loss
     (1,665 )     (13,123 )     (6,865 )     (20,269 )
Other income (expenses):
                                
Interest income
    
89
      
102
      
161
      
303
  
Interest expense
     (29 )     (50 )     (98 )     (150 )
Other income (loss)
    
4
      
10
      
2,604
      
157
  
Gain (loss) on sale of assets
                    
23
      
155
  
Total other income (expenses)
    
64
      
62
      
2,690
      
465
  
Income (loss) before income taxes
     (1,601 )     (13,061 )     (4,175 )     (19,804 )
Benefit (provision) for income taxes
    
57
      
17
      
125
       (42 )
Net income (loss) from continuing operation
   $ (1,658 )   $ (13,078 )   $ (4,300 )   $ (19,846 )
Income (loss)  from discontinued operations
   $ (1,078 )   $ (585 )   $ (1,760 )   $ (1,286 )
Net Income (loss)
   $ (2,736 )   $ (13,663 )   $ (6,060 )   $ (21,132 )
 
Weighted average number of shares - basic  and diluted used in computing net earnings (loss) per share
    
25,241
      
21,541
      
22,703
      
21,515
  
Basic net earnings (loss) per share: 
                                
Continuing operations
   $ (0.07 )   $ (0.60 )   $ (0.19 )   $ (0.92 )
Discontinued operations
   $ (0.04 )   $ (0.03 )   $ (0.08 )   $ (0.06 )
Total
   $ (0.11 )   $ (0.63 )   $ (0.27 )   $ (0.98 )


 
 
Proxim Wireless Corporation Announces Third Quarter 2007 Financial Results
November 6, 2007
Page 5
 

PROXIM WIRELESS CORPORATION
RECONCILIATION BETWEEN GAAP TO NON-GAAP STATEMENT OF INCOME(*)
U.S. Dollars in thousands,  (except per share data)
(unaudited)


   
Three Months Ended
    
Three Months Ended
  
   
September 30, 2007
    
June 30, 2007
  
   
GAAP
    
Adjustments
    
Non GAAP
    
GAAP
    
Adjustments
    
Non GAAP
  
Revenues
   $
16,902
           $
16,902
     $
18,116
           $
18,116
  
              (145 )(a)                     (143 )(a)        
Cost of goods sold
    
8,616
       (170 )(c)    
8,301
      
9,867
       (168 )(c)    
9,556
  
Restructuring provision for E&O inventory
                                                
Gross profit
    
8,286
      
315
      
8,601
      
8,249
      
311
      
8,560
  
Operating expenses:
                                                
              (7 )(a)                     (7 )(a)        
Selling costs
    
5,385
       (149 )(c)    
5,229
      
5,094
       (162 )(c)    
4,925
  
Restructuring Charges
                            
91
       (91 )(d)        
              (97 )(a)                     (108 )(a)        
              (528 )(b)                     (521 )(b)        
General and administrative
    
2,964
       (118 )(c)    
2,221
      
2,884
       (239 )(c)    
2,016
  
              (117 )(a)                     (114 )(a)        
Research and development
    
1,602
       (51 )(c)    
1,434
      
2,622
       (51 )(c)    
2,457
  
Total operating expenses
    
9,951
       (1,067 )    
8,884
      
10,691
       (1,293 )    
9,398
  
Operating profit (loss)
     (1,665 )    
1,382
       (283 )     (2,442 )    
1,604
       (838 )
Other income (expenses):
                                                
Interest income
    
89
              
89
      
28
              
28
  
Interest expense
     (29 )             (29 )     (34 )             (34 )
Other income (loss)
    
4
              
4
      
2,576
              
2,576
  
Gain (loss) on sale of assets
                                                
Total other income (expenses)
    
64
              
64
      
2,570
              
2,570
  
Income (loss) before income taxes
     (1,601 )    
1,382
       (219 )    
128
      
1,604
      
1732
  
Benefit (provision) for income taxes
    
57
              
57
      
45
              
45
  
Net income (loss) from continuing operation
   $ (1,658 )    
1,382
     $ (276 )   $
83
      
1,604
     $
1,687
  
Income (loss)  from discontinued operations
   $ (1,078 )           $ (1,078 )   $ (422 )           $ (422 )
Net Income (loss)
   $ (2,736 )    
1,382
     $ (1,354 )   $ (339 )    
1,604
     $
1,265
  
 
Weighted average number of shares - shares used in computing basic net earnings profit (loss) per share
    
25,241
              
25,241
      
21,554
              
21,554
  
Basic net earnings (loss) per share:
                                                
Continuing operations
   $ (0.07 )           $ (0.01 )   $ (0.00 )           $
0.08
  
Discontinued operations
   $ (0.04 )           $ (0.04 )   $ (0.02 )           $ (0.02 )
Total
   $ (0.11 )           $ (0.05 )   $ (0.02 )           $
0.06
  
 
Weighted average number of shares - shares used in computing diluted net earnings profit (loss) per share
    
25,241
              
25,241
      
21,554
              
24,535
  
Diluted net earnings (loss) per share:
                                                
Continuing operations
   $ (0.07 )           $ (0.01 )   $ (0.00 )           $
0.07
  
Discontinued operations
   $ (0.04 )           $ (0.04 )   $ (0.02 )           $ (0.02 )
Total
   $ (0.11 )           $ (0.05 )   $ (0.02 )           $
0.05
  
                                                 


Proxim Wireless Corporation Announces Third Quarter 2007 Financial Results
November 6, 2007
Page 6

 
(*) Results of the Ricochet Network unit were sold effective August 6, 2007 , are classified as discontinued operations and are not included in the results from continuing operations

 
(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. 123®, “Share-Based Payment” on January 1, 2006 using the modified-prospective transition method.
 
(d)
The effect of restructuring reserve