UBS:VSE Unique Broadband Systems Financial Info:
REPORT TO SHAREHOLDERS (Second Quarter 1998 / 1999
MANAGEMENT DISCUSSION
The net income of Unique Broadband Systems, Inc. for the 3 months ended November 30, 1998 was $595,143 as compared to a loss of $375,934 for the same period in the prior year. This favorable change of nearly $1 million in the net operating results can be attributed to the commercialization of some of the Company's research and development efforts, and to stringent cost-control efforts made by the Company. Our 2nd-quarter delivery schedule resulted in sales surpassing $4 million and represents an increase of 293% in sales from the previous 3-month period. This trebling of revenues is predominantly due to strong demand for our line of Digital Audio Broadcast ("DAB") products. We have also managed, at the same time, to keep firm control over our selling and administrative expenses. Even though sales have increased by 72% from the same period last year, our total selling and administrative expenses of $1 million have remained the same as the figure realized one year ago. Similarly, our year-to-date research and development expenditures of $1.2 million are consistent with the prior year's figure.
In addition to our efforts in DAB, the Company has recently entered into a partnership with Lucent Digital Video of New Jersey, USA. Together, Unique and Lucent will work specifically on solutions for digital video in the areas of terrestrial and satellite distribution. There are new challenges for digital video systems that require strong expertise in both design and systems integration. The two companies will develop and market new products and solutions on a global basis, addressing the needs of service providers around the world.
Management remains very optimistic about the many wireless broadband opportunities ahead. We look forward to continuing the strong revenue growth generated in the last 3 months. By building upon our 2nd-quarter sales momentum, 1999 will prove to be the pivotal year for the future success of the Company.
On behalf of the Board,
"Alex Dolgonos"
Chairman, President and CEO
January 28th, 1999
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INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited-prepared internally by management)
Three months ended November 30
Six Months ended Nov 30
1998
1997
1998
1997
Sales
$3,065,175
$1,481,751
$4,110,445
$2,386,742
Cost of sales
989,362
830,458
$1,380,881
$1,514,563
2,075,813
651,292
2,729,564
872,179
Expenses
Research
594,629
619,211
1,201,836
1,303,563
Selling and Administrative
594,870
796,499
1,023,542
1,018,282
Amortization
159,305
131,262
223,732
222,312
1,348,804
1,546,972
2,449,110
2,544,157
Income (loss) from operations
727,009
(895,680)
280,454
(1,671,978)
Other income (expense)
Gain on sales of assets
(131,866)
(371,921)
891,667
224,442
(269,312)
891,667
Income (loss) for the period
$595,143
$(375,934)
$504,896
$(1,049,623)
Earnings (loss) per share, basic
Earnings per share, fully diluted
$0.01
$0.01
$(0.01)
$0.01
$0.01
$(0.03)
Weighted average number
of shares
65,835,168
53,762,231
65,578,272
41,670,236
INTERIM CONSOLIDATED BALANCE SHEETS
(Unaudited-prepared internally by management)
Nov 30
Nov 30
1998
1997
Assets
Current assets
$4,316,283
$3,820,995
Current assets (net)
1,448,486
1,627,443
Other assets
1,633,772
1,227,720
$7,398,541
$6,676,158
Liabilities and Shareholders' Equity
Current Liabilities
$3,394,937
$698,501
Long-term liabilities
2,212,521
3,016,101
Shareholders' equity
1,791,083
2,961,556
$7,398,541
$6,676,158
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited-prepared internally by management)
Three months ended November 30
Six Months ended November 30
1998
1997
1998
1997
Cash flows from operating activities
Income (loss) for the period
Adjustments for amortization
Gain on sales of assets
$595,143
159,305
$(375,934)
131,262
(891,667)
$504,896
223,732
$(1,049,623)
222,312
(891,667)
Funds from (used in) operations
Changes in non-cash working capital
754,448
(1,066,791)
(1,136,339)
(2,792,749)
728,628
(963,615)
(1,718,978)
(2,837,721)
(312,343)
(3,929,088)
(234,987)
(4,556,699)
Cash flows from financing activities
Repayment of (increase in) Shareholders loan
Increase in (repayment of) capital leases
Increase in (repayment of) long-term
borrowings
Proceeds from issuance of share capital (net)
Restructuring costs
Cash held for restricted purposes
33,000
(87,743)
737,670
(32,600)
(59,814)
37,133
(98,163)
3,442,053
(27,042)
(21,135)
69,613
(175,966)
700,339
475,700
(85,370)
136,520
(139,661)
3,442,053
(27,042)
(21,135)
Cash flow from investing activities
Purchase of capital assets
Proceeds on sale of assets
650,327
(5,155)
3,273,032
(160,137)
2,341,492
1,069,686
(237,691)
3,305,365
(229,712)
2,341,492
Increase in cash and cash equivalents
Cash and cash equivalents (bank
indebtedness) at beginning of period
Cash and cash equivalents at end of period
(5,155)
332,829
572,693
$905,522
2,181,355
1,525,299
(326,728)
$1,198,571
(237,691)
597,008
308,514
$905,522
2,111,780
860,446
338,125
$1,198,571
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For further financial information please contact:
Stephen Rosen Vice President, Secretary and Chief Financial Officer
For product information please contact:
Lotha James Director of Sales
Mark La Frenais Manager of Sales
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