Message #14 From:
NewsBot Date: November 14, 2006 06:00:00 AM
ARCS News ARC Wireless Solutions Reports Third Quarter Results
WHEAT RIDGE, Colo.--(BUSINESS WIRE)--ARC Wireless Solutions, Inc. ("ARC") (OTCBB:ARCS) today announced
operating results for the third quarter ended September 30, 2006 that
includes results for both continuing and discontinued operations. As a
result of the sale of Winncom Technologies Corp. ("Winncom"), a wholly
owned subsidiary, to an Irish company for $17 million in cash, the
operations of Winncom are classified as discontinued operations for
accounting purposes. Revenues, including both continuing and
discontinued operations for the three months ended September 30, 2006,
were $18,866,000 compared to $12,490,000 for the three months ended
September 30, 2005. Revenues, including both continuing and discontinued
operations for the nine months ended September 30, 2006, were
$48,402,000 compared to $28,674,000 for the same period last year. The
69% increase in revenues for the nine months ended September 30, 2006
compared to nine months ended September 30, 2005 was primarily due to
Winncom’s international sales pursuant to its
contract with JSC Kazakhtelecom, which accounted for 89% of the increase.
Net loss for the three months ended September 30, 2006, including both
continuing and discontinued operations, was $190,000 compared to net
income of $240,000 for the three months ended September 30, 2005. Net
loss for the nine months ended September 30, 2006, including both
continuing and discontinued operations, was $110,000 compared to net
income of $347,000 for the nine months ended September 30, 2005.
Gross profit, including the continuing and discontinued operations, was
10.1% and 18% for the three months ended September 30, 2006 and
September 30, 2005, respectively, and 11.7% and 18.2% for the nine
months ended September 30, 2006 and September 30, 2005, respectively.
The decrease in gross profit percentage is primarily due to Winncom’s
lower margin on its international business and a decrease in margin at
the Wireless Communications Solutions Division due to significant
increases in component costs.
Total revenues for discontinued operations for the three months ended
September 30, 2006 were $17,029,000 as compared to $10,449,000 for the
three months ended September 30, 2005. Total revenues for discontinued
operations for the nine months ended September 30, 2006 were $43,192,000
as compared to $23,856,000 for the nine months ended September 30, 2005.
The 81% increase in revenues for the nine months ended September 30,
2006 as compared to the nine months ended September 30, 2005 is
primarily due to Winncom’s international sales
pursuant to its contract with JSC Kazakhtelecom.
Net income for discontinued operations for the three months ended
September 30, 2006 was $141,000 as compared to $101,000 for the three
months ended September 30, 2005. Net income for discontinued operations
for the nine months ended September 30, 2006 was $818,000 as compared to
$423,000 for the nine months ended September 30, 2005. The increase in
net income is primarily due to the increase in Winncom’s
international sales pursuant to its contract with JSC Kazakhtelecom.
Gross profit for discontinued operations was 8.5% and 10.7% for the
three months ended September 30, 2006 and September 30, 2005,
respectively as compared to 10.1% and 13.6% for the nine months ended
September 30, 2006 and September 30, 2005, respectively. The decrease in
gross profit percentage is primarily due to Winncom’s
lower margin on the JSC Kazakhtelecom contract.
Net sales from continuing operations for the three months ended
September 30, 2006 was $1,837,000 as compared to $2,041,000 for the
three months ended September 30, 2005. The decrease was primarily due to
decreased sales of one product to a single customer. Net sales from
continuing operations for the nine months ended September 30, 2006 was
$5,210,000 as compared to $4,818,000 for the nine months ended September
30, 2005. The increase in sales is primarily due to the introduction of
several new products and new customers of the Wireless Communications
Solutions Division.
The net loss from continuing operations for the three months ended
September 30, 2006 was $331,000 as compared to net income of $138,000
for the three months ended September 30, 2005. The net loss from
continuing operations for the nine months ended September 30, 2006 was
$928,000 as compared to $76,000 for the six months ended September 30,
2005. The increase in the net loss from continuing operations is due
primarily to a decrease in gross profit from 42% to 26% for the three
months ended September 30, 2005 and September 30, 2006, respectively and
41% to 25% for the nine months ended September 30, 2005 and September
30, 2006, respectively. The decrease in gross profit is mainly due to
the significant increase in commodity costs of raw materials used in the
production of the antenna products, the costs associated with
transitioning our manufacturing to China and the domestic overhead costs
associated with the introduction and subsequent manufacturing of several
new products. As previously announced, the Company has formed a
subsidiary in Hong Kong and will begin manufacturing many of its antenna
products in China. This transition commenced in the third quarter of
2006 and is expected to have a significant impact on the Wireless
Communications Solutions Division’s gross
margin.
“We are excited to begin a new era at ARC
Wireless,” stated Randall P. Marx, ARC’s
Chief Executive Officer. “The sale of Winncom
is now complete, thus allowing us to become a more viable pursuer of new
business opportunities. The Company has filed its application to become
listed on a major stock exchange which we believe will provide a better
market for our current and future shareholders. As previously announced
as part of our plan we have selected Catalyst Financial Resources, LLC
to execute a comprehensive investor awareness campaign aimed at
enhancing the visibility of our Company as well as shareholder value.”
“A significant investment is also being made
in our antenna operations both in manufacturing and in products offered,
with most of our production now transitioning through our new Hong Kong
subsidiary’s office. We anticipate by the
beginning of 2007 to have a run rate from our China contract factories
of approximately 18,000 antennas per month including both panel and
mobile antenna products. Our work force in Wheat Ridge has recently been
reduced from approximately 83 in July to 37 as of November 1, 2006,
along with staff additions to both sales and engineering. We are looking
forward to a better year for the antenna and cable business in 2007 with
the expectation that our Hong Kong operations will improve our overall
gross margins,” Mr. Marx added.
ARC Wireless Solutions, Inc. is involved in selective design,
manufacturing and marketing, as well as distributing and servicing, of a
broad range of wireless components and network products and accessories.
The Company develops, manufactures and markets proprietary products,
including base station antennas (for cellphone towers) and other
antennas, through its Wireless Communications Solutions Division; it
designs, manufactures and distributes cable assemblies for cable,
satellite and other markets through its Starworks Wireless Inc.
subsidiary; and, it negotiates and manages its contract manufacturing
relationships through its ARC Wireless Hong Kong, Ltd. subsidiary. The
Company’s products and systems are marketed
through the Company’s internal sales force,
OEMs, numerous reseller distribution channels, retail, and the Internet.
ARC Wireless Solutions, Inc., together with its Wireless Communications
Solutions Division and its Starworks Wireless subsidiary, is
headquartered in Wheat Ridge, Colorado. The Company’s
China subsidiary is located in Kowloon, Hong Kong. For more information
about the Company and its products, please visit our web sites at www.arcwireless.net,
www.antennas.com, www.starworkswireless.com
and www.arcwirelesshk.net.
This is not a solicitation to buy or sell securities and does not
purport to be an analysis of the Company’s
financial position. This Release contains forward-looking statements
within the meaning of the Securities Exchange Act of 1934. Although the
Company believes that the expectations reflected in the forward-looking
statements are based are reasonable, it can give no assurance that such
expectations and assumptions will prove to have been correct. See the
Company’s most recent Quarterly Report on
Form 10-Q and Annual Report on Form 10-K for additional statements
concerning important factors, such as demand for products, manufacturing
costs, and competition, that could cause actual results to differ
materially from the Company’s expectations.
