Revenue doubled from Q1 to Q2:
Tuesday August 15, 7:08 am Eastern Time
Press Release
Floware Announces Record Second Quarter Results
OR YEHUDA, Israel--(BUSINESS WIRE)--Aug. 15, 2000--Floware Wireless Systems Ltd. (NASDAQ: FLRE - news), a leading provider of broadband wireless access (BWA) communication systems, today announced results for the second quarter ended June 30, 2000.
Highlights
Revenues for the quarter reached a record $6,135,000, up 99% from 1Q00
Gross margins for the quarter increased to 11% of revenues from a negative gross margin in 2Q99 and a 1% margin in 1Q00
Selection by new major carriers during the quarter included Novis and Teleweb in Portugal, FirstMark in Spain and Gateway in India
Global distribution agreement signed with NEC
Production doubled during the quarter
Revenues for the second quarter of 2000 increased to $6,135,000, from $388,000 in the second quarter of 1999. Sequentially, revenues rose by 99% in the second quarter from $3,083,000 in the first quarter of 2000. Gross profit for the second quarter was $657,000 or 11% of revenues, compared to a gross loss of $168,000 in the second quarter of 1999. Gross profit in the first quarter of 2000 was $35,000 or 1% of revenues. Net loss for the second quarter of 2000 was $3,918,000, or $1.15 loss per share on a fully diluted basis, compared with $2,226,000, or $0.65 loss per share on a fully diluted basis, for the second quarter of 1999. This compares to a net loss in the first quarter of 2000 of $12,737,000 or $3.75 loss per share on a fully diluted basis.
Revenues for the first six months of the year increased to $9,218,000 from $521,000 in the first six months of 1999. Gross profit for the first six months was $692,000, or 7% of revenues, compared to a gross loss of $291,000 in the first six months of 1999. Net loss for the first six months of 2000 was $16,655,000 or $4.90 per share on a fully diluted basis. Net loss for the first six months of 1999 was $4,058,000 or $1.19 loss per share on a fully diluted basis.
``This quarter marks another period of record revenues as international carriers continue to deploy Floware's WALKair broadband wireless access (BWA) solutions. We are extremely pleased at the extent to which our products have been embraced by both carriers and integrators,'' said Amnon Yacoby, President and CEO of Floware.
Mr. Yacoby continued, ``We are now beginning to reap the benefits of the strategy we put into place several years ago, focusing our products on the most commonly licensed bands in the international markets, according to the needs of new carriers which serve the small and medium enterprises. This has been reinforced by our establishment and strengthening of strategic relationships, and the extension of our technological leadership in the industry.''
Research and development costs totaled $2,439,000 for the quarter, versus $1,273,000 for the second quarter in 1999 and $1,985,000 for the first quarter in 2000. R&D efforts focused on feature enhancements and production cost reductions to the WALKair 1000 product, and the broadening of Floware's product range through the development of the WALKair 3000 system. This new product, which is expected to be introduced in 2001, will support speed up to 34Mbps per single user, and will enable carriers to support additional applications. Carriers will be able to use both WALKair 1000 and 3000 products on an integrated basis in the field.
Sales and marketing expenses were $1,199,000 for the second quarter, compared to $540,000 for the same period in 1999 and $5,162,000 for the first quarter in 2000. Sales and marketing expenses in the first quarter of 2000 included an expense related to stock compensation in the amount of $4,099,000. Excluding this one-time expense, the increase in expenses mainly reflects an increase in sales and marketing personnel, and the expansion of a post-sales customer service organization.
As of June 30th 2000, Floware's systems were deployed in 42 different installations -- in 22 commercial deployments in 17 countries and in 20 additional field trials.
Major wins in the quarter included FirstMark Communications Spain, which selected Floware's WALKair system for the rollout of a broadband wireless access network to provide small and medium enterprises (SMEs) with high capacity data and voice services throughout Spain. This follows the decision by FirstMark-Germany earlier this year to deploy WALKair in a fixed wireless network in regions around Germany, as well as FirstMark deploying WALKair systems in Luxembourg.
In Portugal, Floware was selected as the BWA equipment provider for two carriers, Teleweb and Novis, out of the six that were recently awarded national licenses. Teleweb, partially owned by FirstMark, is Portugal's second largest Internet service provider (ISP), and plans to use WALKair systems to provide SMEs nationwide with Internet connectivity and data and voice services. Novis, a telecommunications service provider partially owned by France Telecom, will deploy Floware's systems in the construction of a national voice and data network to service SMEs in Portugal. In addition, Gateway in India, a carriers' carrier, is deploying WALKair systems in the networks being built in Bombay and Pune.
Additional contract wins for the second quarter included Digitel in the Philippines and Rivizul in Uruguay, the latter to be provided and integrated through Ericsson. During the quarter, Floware shipped systems to four major customers, FirstMark (Germany), Telefonica de Argentina, UPC (Norway) and Novis (Portugal), and to an additional 20 carriers, both for commercial deployment and field trials.
As previously announced, in April 2000, Floware signed a global distribution agreement with NEC Corporation whereby the global manufacturer has non-exclusive rights to market, sell and install the Floware system in 76 countries. Floware is looking to leverage this relationship mainly in Asia and in Latin America. With this new addition, Floware now has four strategic partnerships, including Siemens, Hughes and Sagem.
Other developments in the quarter include:
Version 4 software was successfully rolled out during the second quarter. The new version's main features are base station redundancy and dynamic bandwidth allocation for data.
Production doubled in the quarter, achieved by both external subcontractors and by Floware's internal integration, calibration and testing capacity.
New management appointments included Avi Ravina who joined as Vice President Customer Service, and Dr. Michael Genossar who was promoted to the position of CTO, while retaining his position as Head of the Modem Group.
``We believe our technology provides an excellent end-to-end solution for carriers who are entering the new fixed wireless market. WALKair systems are quickly deployed, flexible, efficient and scalable, and minimize the carrier's initial infrastructure investment,'' said Yacoby. ``We are confident Floware will continue to enjoy success in the rapidly growing market for broadband wireless access and are investing significant resources to build out the company.''
Floware Wireless Systems Ltd. is a provider of broadband point-to-multipoint fixed wireless local access communication systems. These systems are used by telecommunications service providers, mainly competitive local exchange carriers or new operators that serve primarily small and medium-sized businesses. Floware's WALKair system enables these carriers to provide high-speed Internet access, other data services and voice services on the 3.5, 10.5 and 26 GHz radio frequency bands. Floware, headquartered in Israel, had its initial public offering of shares on August 2, 2000 and trades on the NASDAQ National Market under the ticker ``FLRE.''
President and CEO Amnon Yacoby and CFO Tali Idan will host a conference call today, August 15, at 8:30 a.m. (Eastern) to review and discuss the results. To participate in the call, please dial (719) 457-2629 ten minutes prior to the start of the call. A replay of the call will be available beginning today at 11:30 a.m. (Eastern) through midnight Tuesday, August 22, by dialing (719) 457-0820, confirmation number 438484.
This press release and statements by Floware in shareholder reports and public filings, as well as in oral public statements by Floware's representatives may contain forward looking statements. Such statements are subjected to certain facts, risks and uncertainties that may cause actual results, events and performance to differ materially from those referred to in such statements. The risks are identified in Floware's registration statement on Form F-1 (Registration Statement No. 333-12290) filed with the Securities and Exchange Commission.
CONDENSED STATEMENTS OF OPERATIONS
U.S. dollars in thousands
Three months ended Six months ended
June 30, June 30,
2000 1999 2000 1999
Revenues............... $ 6,135 $ 388 $9,218 $521
Cost of revenues....... 5,478 556 8,526 812
--------- --------- --------- ---------
Gross profit (loss).... 657 (168) 692 (291)
--------- --------- --------- ---------
Operating expenses:
Research and development 2,439 1,273 4,424 2,465
Sales and marketing, net 1,199 540 6,361 988
General and
administrative........ 356 191 623 360
Amortization of deferred
stock compensation.... 991 168 1,898 204
--------- --------- --------- ---------
Total operating expenses 4,985 2,172 13,306 4,017
--------- --------- --------- ---------
Operating income (loss) (4,328) (2,340) (12,614) (4,308)
--------- --------- --------- ---------
Financial income
(expenses), net....... 410 114 630 250
--------- --------- --------- ---------
Net income (loss)...... $ (3,918) $ (2,226) $ (11,984) $ (4,058)
--------- --------- --------- ---------
Preferred shares deemed
dividend.............. - - 4,671 -
--------- --------- --------- ---------
Net loss to shareholders
of ordinary shares.... (3,918) (2,226) (16,655) (4,058)
========= ========= ========= =========
Basic and diluted net
loss per share........ $ (1.15) $ (0.65) $ (4.90) $ (1.19)
========= ========= ========= =========
Shares used to compute
basic and diluted net
loss per share........ 3,400,000 3,400,000 3,400,000 3,400,000
========= ========= ========= =========
CONDENSED BALANCE SHEET
U.S. dollars in thousands
June 30, December 31,
2000 1999
-------- --------
ASSETS
CURRENT ASSETS:
Cash, cash equivalents and short- term
investments................................. $ 25,144 $ 25,947
Trade receivables............................ 4,755 1,755
Other accounts receivables and prepaid
expenses.................................... 1,493 589
Inventories.................................. 11,876 2,861
-------- --------
Total current assets......................... 43,268 31,152
SEVERANCE PAY FUND........................... 824 571
PROPERTY AND EQUIPMENT, NET.................. 3,011 1,919
-------- --------
Total assets................................. $ 47,103 $ 33,642
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LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Trade payable................................ $ 8,540 $ 3,791
Employees and payroll accruals............... 1,793 767
Accrued expenses and other accounts payables. 1,078 452
-------- --------
Total current liabilities.................... 11,411 5,010
ACCRUED SEVERANCE PAY........................ 1,085 696
-------- --------
Total liabilities............................ 12,496 5,706
SHAREHOLDERS' EQUITY......................... 34,607 27,936
-------- --------
Total liabilities and shareholders' equity... $ 47,103 $ 33,642
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Contact:
Floware Wireless Systems
Tali Idan, +972 3 538 2320
tidan@floware.com
or
Citigate Dewe Rogerson
Mikhal Stein, (305) 381-6500
mikhal.stein@citigatedr-mi.com
or Kevin Mannix, (212) 419-4261
kevin.mannix@citigatedr-ny.com |
