ex991aug42009.htm

Subscriptions (recurring M2M network and application service connections) to our network and application platforms continue to increase at a robust pace with total subscriptions, excluding analog, reaching 799,000 at the end of the second quarter. This compares with 534,000 recorded at the end of the second quarter last year, reflecting a 50% growth rate. We added 41,000 net incremental subscriptions during the quarter and we believe that this number will increase during the remainder of the year. We re-affirm our guidance of achieving between 30% and 40% growth in our full year-over-year digital subscription base.

During the second quarter of 2009, adjusted EBITDA, excluding stock-based compensation expense and litigation costs, which were a combined $771,000, was $1.2 million compared to $0.8 million during the first quarter of 2009 and $1.0 million during the same period last year. The improvement in adjusted EBITDA was primarily due to lower operating expenses. A reconciliation of GAAP to non-GAAP results have been provided in the financial statement tables included in this press release.

“The growth in our M2M subscription base is a direct result of our focus on enabling our customers’ solutions with an array of M2M products and services,” stated Stratton Nicolaides, Numerex chairman and CEO. “Our single-source approach to the market, combined with our products, services and enhanced capabilities that coalesce to simplify and streamline the M2M deployment process, is working well. Currently, we support M2M solutions for customers in a variety of industries such as security, financial services, government, and emergency services, amongst others. The Company’s investment in customer acquisition, as well as product and infrastructure development, continues at record levels. As a direct result of these expenditures, we expect a continuation of the robust levels of activity experienced so far this year resulting in higher future subscriptions and continued growth in our recurring service revenues.”

Continued to expand the range of applications supported by our versatile network management platforms serving a variety of markets such as marine asset tracking in Europe and remote tank monitoring in the United States. In addition, we delivered diverse “plug-and-play” automotive and personal tracking solutions built on our increasingly adopted Open Platform as a Service (OPaaS) system architecture;

For the quarter ended June 30, 2009, Numerex reported consolidated revenue of $12.6 million compared to $17.4 million in the second quarter of 2008. During the quarter, the company reported service revenues of $7.7 million and hardware revenues of $4.9 million compared to $6.9 million in service revenues and $10.5 million in hardware revenues, respectively, during the same period last year. The year-over-year decrease in hardware revenues was due primarily to the completion of the analog to digital transition and the execution of the Company’s strategy to de-emphasize hardware-only sales.

For the quarter ended June 30, 2009, adjusted EBITDA, which excludes stock-based compensation expense and litigation costs, which were a combined $771,000, was $1.2 million compared to $1.0 million in the same period last year. The Company was break-even on a non-GAAP basis for the quarter ended June 30, 2009 compared to $130,000 net loss in the same period last year. Non-GAAP basic/diluted loss per share was $0.00 for the quarter ended June 30, 2009 compared to a loss per share of $0.01 in the same period last year. A reconciliation of GAAP to non-GAAP results has been provided in the financial statement tables included in this press release.

Mr. Nicolaides concluded, “We are starting to see the impact of the Company’s organizational re-alignment designed to more effectively focus on enabling M2M solutions in specific vertical markets conducive to generating longer-term recurring revenue streams. We expect that revenues derived from subscription-based services will continue to increase relative to historic levels of hardware revenues causing contribution margins to trend higher over time.”

Numerex will discuss its quarterly results via teleconference today at 9:00 a.m. Eastern Daylight Time (EDT). Please dial (866) 792-1873 or if outside the U.S., (904) 520-5760, to access the conference call at least five minutes prior to the 9:00 a.m. EDT start time. A live webcast and replay of the call will be available at http://www.numerex.com under the Investor Relations section. An audio replay will be available via the Numerex web-site beginning two hours after the call end.

Numerex Corp. (NASDAQ: NMRX - News) is the machine-to-machine (M2M) provider of choice to some of the world's largest organizations delivers secure, all-around solutions through a single source. The Company's M2M products, services, and expertise enables its customers to efficiently, reliably, and securely monitor and manage assets remotely whenever and wherever needed, while simplifying and speeding up development and deployment. Numerex is the first M2M service provider in North America to carry the ISO 27001 information security certification. Numerex DNA(TM) offerings include hardware Devices, Network services, and software Applications that its customers use in designing M2M solutions. At Numerex, "Machines Trust Us(TM)". For additional information, please visit www.numerex.com.

This press release contains, and other statements may contain, forward-looking statements with respect to Numerex future financial or business performance, conditions or strategies and other financial and business matters, including expectations regarding growth trends and activities in the wireless data business. Forward-looking statements are typically identified by words or phrases such as "believe," "expect," "anticipate," "intend," "estimate," "assume," "strategy," "plan," "outlook," "outcome," "continue," "remain," "trend," and variations of such words and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "may," or similar expressions. Numerex cautions that these forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. These forward-looking statements speak only as of the date of this press release, and Numerex assumes no duty to update forward-looking statements. Actual results could differ materially from those anticipated in these forward-looking statements and future results could differ materially from historical performance.

The following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: our inability to reposition our platform to capture greater recurring service revenues, difficulties associated with integrating Orbit One’s business, the risks that a substantial portion of Orbit One's revenues are derived from government contracts that may be terminated by the government at any time; outcome of litigation; variations in quarterly operating results, delays in the development, introduction, integration and marketing of new wireless services; customer acceptance of services; economic conditions; changes in financial and capital markets; the inability to attain revenue and earnings growth in our wireless data business; changes in interest rates; inflation; the introduction, withdrawal, success and timing of business initiatives and strategies; competitive conditions; the inability to realize revenue enhancements; and extent and timing of technological changes. Numerex SEC reports identify additional factors that can affect forward-looking statements.

Numerex Corp.
Condensed Consolidated Statement of Operations
(In thousands, except per share data)
(Unaudited)
	Three Months Ended												Six Months Ended
	June 30,												June 30,
	2009			2008			Change			% Change			2009			2008			Change			% Change
Net sales:
Hardware	$	4,904		$	10,490		$	(5,586	)		-53	%	$	10,580		$	24,113		$	(13,533	)		-56	%
Service		7,700			6,935			765			11	%		14,686			13,767			919			7	%
Total net sales		12,604			17,425			(4,821	)		-28	%		25,266			37,880			(12,614	)		-33	%
Cost of hardware sales		4,235			9,013			(4,778	)		-53	%		9,162			21,175			(12,013	)		-57	%
Cost of services		2,687			2,143			544			25	%		5,121			3,982			1,139			29	%
Gross Profit		5,682			6,269			(587	)		-9	%		10,983			12,723			(1,740	)		-14	%
Selling, general, and administrative expenses		4,473			5,047			(574	)		-11	%		9,658			10,062			(404	)		-4	%
Research and development expenses		651			485			166			34	%		1,159			1,015			144			14	%
Bad Debt Expense		136			125			11			9	%		291			263			28			11	%
Depreciation and amortization		844			766			78			10	%		1,637			1,516			121			8	%
Operating loss		(422	)		(154	)		(268	)		174	%		(1,762	)		(133	)		(1,629	)		1225	%
Interest expense		(343	)		(407	)		64			-16	%		(690	)		(810	)		120			-15	%
Other income		1			(2	)		3			-150	%		1			(3	)		4			-133	%
Loss before tax		(764	)		(563	)		(201	)		36	%		(2,451	)		(946	)		(1,505	)		159	%
Provision (benefit) for income tax		28			(380	)		408			-107	%		65			(546	)		611			-112	%
Net Loss	$	(792	)	$	(183	)	$	(609	)		333	%	$	(2,516	)	$	(400	)	$	(2,116	)		529	%

Basic loss per common share	$	(0.06	)	$	(0.01	)							$	(0.18	)	$	(0.03	)
Diluted loss per common share	$	(0.06	)	$	(0.01	)							$	(0.18	)	$	(0.03	)
Number of shares used in per share calculation
Basic		14,152			13,736									14,160			13,731
Diluted		14,152			13,736									14,160			13,731

Numerex Corp.
Supplemental Sales Information
(in thousands)

	Three Months Ended							Six Months Ended
	June 30,							June 30,
Net Sales:	2009		2008		Change			2009		2008		Change
Wireless Data Communications
Hardware	$	4,711	$	9,442	$	(4,731	)	$	10,283	$	22,862	$	(12,579	)
Service		6,907		6,212		695			13,141		12,345		796
Sub-total		11,618		15,654		(4,036	)		23,424		35,207		(11,783	)
Digital Multimedia, Networking and Wireline Security
Hardware		193		1,048		(855	)		297		1,251		(954	)
Service		793		723		70			1,545		1,422		123
Sub-total		986		1,771		(785	)		1,842		2,673		(831	)
Total
Hardware		4,904		10,490		(5,586	)		10,580		24,113		(13,533	)
Service		7,700		6,935		765			14,686		13,767		919
Total net sales		12,604		17,425		(4,821	)		25,266		37,880		(12,614	)

Numerex Corp.
Condensed Consolidated Statement of Operations
(In thousands, except per share data)
(Unaudited)
	Three Months Ended									Six Months Ended
	June 30, 2009									June 30, 2009
	GAAP						Non-GAAP			GAAP						Non-GAAP
	Results			Adjustments			Results			Results			Adjustments			Results
Net sales:
Hardware	$	4,904					$	4,904		$	10,580					$	10,580
Service		7,700						7,700			14,686						14,686
Total net sales		12,604						12,604			25,266						25,266
Cost of hardware sales		4,235						4,235			9,162						9,162
Cost of services		2,687						2,687			5,121						5,121
Gross Profit		5,682			-			5,682			10,983			-			10,983
		45.1	%					45.1	%		43.5	%					43.5	%
Selling, general, and administrative expenses		4,473			(771	)		3,702			9,658			(2,278	)		7,380
Research and development expenses		651						651			1,159						1,159
Bad debt expense		136						136			291						291
Earnings before interest, depreciation and amortization		422			771			1,193			(125	)		2,278			2,153
Depreciation and amortization		844			-			844			1,637			-			1,637
Operating earnings (loss)		(422	)		771			349			(1,762	)		2,278			516
Interest expense		(343	)					(343	)		(690	)					(690	)
Other income		1						1			1						1
Earnings (loss) before tax		(764	)		771			7			(2,451	)		2,278			(173	)
Provision for income tax		28			-			28			65			-			65
Net loss	$	(792	)	$	771		$	(21	)	$	(2,516	)	$	2,278		$	(238	)

Basic earnings (loss) per common share	$	(0.06	)				$	0.00		$	(0.18	)				$	(0.02	)
Diluted earnings (loss) per common share	$	(0.06	)				$	0.00		$	(0.18	)				$	(0.02	)
Number of shares used in per share calculation
Basic		14,152						14,152			14,160						14,160
Diluted		14,152						14,152			14,160						14,160

(a) These Unaudited non-GAAP Consolidated Statements of Operations are for informational purposes only and are not presented in
accordance with GAAP. The adjustments necessary to provide a direct reconciliation of the non-GAAP to the GAAP basis consolidated
Statement of Operations exclude stock option expense and legal fees associated with litigation.

Numerex Corp.
Condensed Consolidated Statement of Operations
(In thousands, except per share data)
(Unaudited)
	Three Months Ended									Six Months Ended
	June 30, 2008									June 30, 2008
	GAAP						Non-GAAP			GAAP						Non-GAAP
	Results			Adjustments			Results			Results			Adjustments			Results
Net sales:
Hardware	$	10,490					$	10,490		$	24,113					$	24,113
Service		6,935						6,935			13,767						13,767
Total net sales		17,425						17,425			37,880						37,880
Cost of hardware sales		9,014						9,014			21,175						21,175
Cost of services		2,143						2,143			3,982						3,982
Gross Profit		6,268			-			6,268			12,723			-			12,723
		36.0	%					36.0	%		33.6	%					33.6	%
Selling, general, and administrative expenses		5,047			(433	)		4,614			10,062			(1,115	)		8,947
Research and development expenses		485						485			1,015						1,015
Bad debt expense		125						125			263						263
Earnings before interest, depreciation and amortization		611			433			1,044			1,383			1,115			2,498
Depreciation and amortization		766						766			1,516						1,516
Operating earnings (loss)		(155	)		433			278			(133	)		1,115			982
Interest expense		(407	)					(407	)		(810	)					(810	)
Other income		(1	)					(1	)		(3	)					(3	)
Earnings (loss) before tax		(563	)		433			(130	)		(946	)		1,115			169
Provision (benefit) for income tax		(380	)		380			-			(546	)		546			-
Net earnings (loss)	$	(183	)	$	53		$	(130	)	$	(400	)	$	569		$	169

Basic earnings (loss) per common share	$	(0.01	)				$	(0.01	)	$	(0.03	)				$	0.01
Diluted earnings (loss) per common share	$	(0.01	)				$	(0.01	)	$	(0.03	)				$	0.01
Number of shares used in per share calculation
Basic		13,736						13,736			13,731						13,731
Diluted		13,736						13,736			13,731						13,731

(a) These Unaudited non-GAAP Consolidated Statements of Operations are for informational purposes only and are not presented
in accordance with GAAP. The adjustments necessary to provide a direct reconciliation of the non-GAAP to the GAAP basis consolidated
Statement of Operations exclude stock option expense and legal fees associated with litigation.

NUMEREX CORP.
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share information)
	June 30,			December 31,
	2009			2008
	(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	10,004		$	8,917
Short-term investments		-			-
Accounts receivable, less allowance for doubtful accounts of $937 at June 30, 2009 and $1,010 at December 31, 2008:		6,415			9,159
Inventory		5,974			8,506
Prepaid expenses and other current assets		1,878			1,508
Deferred tax asset - current		-			-
TOTAL CURRENT ASSETS		24,271			28,090

Property and equipment, net		1,888			1,765
Goodwill, net		23,787			23,771
Other intangibles, net		5,242			5,796
Software, net		2,897			2,796
Other Assets		193			288
Deferred tax asset - long term		-			-
TOTAL ASSETS	$	58,278		$	62,506

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	6,981		$	7,289
Other current liabilities		2,227			2,943
Note payable, current		7,576			2,568
Deferred revenues		1,331			1,134
Obligations under capital leases, current portion		23			29
TOTAL CURRENT LIABILITIES		18,138			13,963

LONG TERM LIABILITIES
Note Payable		1,337			7,629
Obligations under capital leases and other long term liabilities		456			520
TOTAL LONG TERM LIABILITIES		1,793			8,149
COMMITMENTS AND CONTINGENCIES		-			-
SHAREHOLDERS’ EQUITY
Preferred stock - no par value; authorized 3,000,000; none issued		-			-
Class A common stock – no par value; authorized 30,000,000; issued 15,354,525 shares at June 30, 2009 and 15,372,611 shares at December 31, 2008		50,882			50,801
Additional paid-in-capital		5,133			4,587
Treasury stock, at cost, 1,225,809 shares on June 30, 2009 and 1,185,809 on December 31, 2008		(5,213	)		(5,053	)
Class B common stock – no par value; authorized 5,000,000; none issued		-			-
Accumulated other comprehensive income (loss)		(6	)		(8	)
Accumulated earnings		(12,449	)		(9,933	)
TOTAL SHAREHOLDERS' EQUITY		38,347			40,394
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	58,278		$	62,506