SARASOTA, Fla., Nov. 14, 2017 /PRNewswire/ -- xG Technology, Inc.
("xG" or the "Company") (Nasdaq: XGTI, XGTIW), a leading provider
of wireless video solutions to broadcast, law enforcement and
defense markets, and private mobile broadband networks for critical
communications, announced its third quarter 2017 results. All
results are reported in U.S. dollars and are prepared in accordance
with United States generally
accepted accounting principles (GAAP), except as otherwise
indicated below. Management will hold a conference call to discuss
the results on Wednesday, November 15,
2017, at 5:00 p.m. Eastern
Time. (details below).
Key Recent Accomplishments by xG Businesses
- Received an order from a leading Middle East sports broadcast organization for
wireless video systems capable of supporting demanding open
water-based sports competitions.
- Received orders worth approximately $1
million for HCAM HEVC (High Efficiency Video Coding) 4K
Wireless Camera Systems for deployment in China.
- Received orders for specialized microwave communications
equipment to be used in airborne surveillance and law enforcement
operations by a police force in Africa.
- Entered into an agreement with Panasonic System Solutions
Europe to collaborate on projects to bring Vislink's proven video
communications technology to the rail industry.
- Received orders valued at approximately $200,000 for HD airborne video downlink system
(AVDS) equipment from a Northern California county law enforcement
agency.
- Introduced the MicroLite 2 ultra-compact COFDM wireless
video transmitter for capturing live video for Electronic
Newsgathering, sports and entertainment applications.
- Received a $360,000 order from a
prominent U.S. television station for the NewStream comprehensive
mobile broadcast transmission solution.
- Received an order worth $400,000
for 4K UHD HCAM wireless camera systems from Broadcast RF ("BRF"),
a leading hire company for microwave and wireless camera hardware.
The order brings BRF's total investment in Vislink HEVC wireless
camera technology to over $1,000,0000
in the last six months. This additional investment makes BRF the
current largest single holder of HCAM systems in the world with 28
systems.
- The IMT-Vislink Newsnet™ Solution was recognized by the Society
of Broadcast Engineers (SBE) with its 2017 Technology Award.
George Schmitt, CEO and Chairman
of the Board of xG Technology, said, "During the third quarter, our
businesses continued to solidify their positions as leading
providers of wireless video solutions for electronic news
gathering, sports and entertainment, and law enforcement
applications. Our third quarter revenues were negatively impacted
by delays in the receipt of key components for several of our new
products, for which we have received significant pre-orders. While
this resulted in over $2 million in
orders not being shipped in the period, it has upwardly revised our
Q4 2017 revenue forecast to approximately $20 million, which would be a record for the
Company. This puts us in range for achieving our previous revenue
guidance of approximately $55 million
for calendar year 2017, with positive adjusted EBITDA for the
year."
Roger Branton, CFO and co-founder
of xG Technology, said, "We are pleased to report that we had
record third quarter revenue of $10.2
million and a record $33.7
million for the nine months ending September 30, 2017. An adverse movement in the
British Pound to US Dollar exchange rate reduced revenues by
approximately $188,000, otherwise
revenue was $10.4 million for the
quarter. We ended the nine months September
30, 2017 with $4.7 million in
cash, positive adjusted cash flow from operations and a continued
improvement in working capital."
Mr. Branton continued, "Our year to date results include
significant one-time charges related to purchase price
amortization, acquisition related expenses and restructuring
expenses. When these are excluded from our results, we reported
positive net income of $13 million
and earnings before interest, taxes, depreciation and amortization
of $15.1 million."
GAAP RESULTS
- Gross margins were 50.2% of revenue in the third quarter 2017,
compared to 49.3% of revenue in the third quarter of 2016.
(Excluding one-time purchase price amortization charges, gross
margins were 60.0% for the third quarter 2017, which was consistent
with our current product mix. Please see further explanation in
Non-GAAP Results below).
- Revenues for the three months and nine months ended
September 30, 2017 were $10.2 million and $33.7
million, compared to $1.9
million and $4.5 million in
the corresponding periods in 2016.
- For the three and nine months ended September 30, 2017, the Company had a net loss of
$5.5 million and net income of
$1.7 million, respectively. This
compares to net losses of $3.1
million and $11.7 million for
the three and nine months ended September
30, 2016.
- Net loss attributable to common shareholders was $5.5 million, or $(0.43) per share in the third quarter of 2017
compared to a net loss of $3.1
million, or $(1.98) per share
in the third quarter of 2016. Net income attributable to common
shareholders was $1.7 million, or
$0.15 per share for the nine months
ended September 30, 2017 compared to
a net loss of $13.6 million, or
$(16.91) per share for the nine
months ended September 30, 2016.
- xG ended third quarter 2017 with $4.7
million in cash compared to $9.1
million at December 31, 2016
and $4.7 million at the end of the
second quarter of 2017.
- Earnings before interest, taxes, depreciation and amortization
("EBITDA") was a negative $4.3
million and a positive $5.6
million for the three and nine months ended September 30, 2017.
NON-GAAP RESULTS
- Gross margins were 60.0% of revenue in the third quarter 2017,
compared to 49.3% of revenue in the third quarter of 2016.
- Revenues for the three and nine months ended September 30, 2017 were $10.4 million and $35
million compared to $1.9
million and $4.5 million in
the corresponding periods in 2016.
- For the three and nine months ended September 30, 2017, the Company had a net loss of
$2.5 million in the third quarter and
net income of $12.9 million for the
nine months ended September 30, 2017.
This compares to net losses of $3.1
million and $13.6 million for
the three and nine months ended September
30, 2016, respectively.
- Adjusted earnings before interest, taxes, depreciation and
amortization ("Adjusted EBITDA") was a negative $1.9 million and a positive $15.2 million for the three and nine months ended
September 30, 2017,
respectively.
NON-GAAP FINANCIAL MEASURES
We disclose non-GAAP financial measures as we believe they
provide useful information on actual operating
performance. Readers are cautioned that non-GAAP financial
measures do not have any standardized meaning prescribed by U.S.
GAAP and therefore may not be comparable to similar measures
presented by other companies.
Non-GAAP gross margin excludes the impact of purchase price
amortization on the step up of assets as a result of the bargain
purchase gain and the impact of foreign exchange gains or
losses.
Non-GAAP income (loss) from operations excludes the impact of
purchase price amortization related to the Vislink acquisition,
acquisition-related expenses and restructuring expenses.
We use the above-noted non-GAAP financial measures for planning
purposes and to allow us to assess the performance of our business
before including the impacts of the items noted above as they
affect the comparability of our financial results. These non-GAAP
measures are reviewed regularly by management and the Board of
Directors as part of the ongoing internal assessment of our
operating performance. Adjusted EBITDA is defined as net income
(loss) plus purchase price amortization, acquisition-related
expense, restructuring expense, depreciation and amortization,
foreign exchange gains or losses and interest expense.
Adjusted EBITDA is a metric used by investors and analysts for
valuation purposes and we believe that it is an important indicator
of our operating performance.
Financial Results Conference Call
xG management will hold a conference call to discuss xG's Q3
2017 results on Wednesday, November 15,
2017, at 5:00 p.m. Eastern
Time. To participate in the conference call, please call
1-844-825-9789 (toll free) or 1-412-317-5169 (international
call-in) and ask to join the xG Technology call. The call will also
be simultaneously webcast. Listeners can access the webcast live
through the company's website at
http://www.xgtechnology.com/about-xg-technology/investor-information/.
For those who cannot participate in the call, an audio replay will
be available on xG's website.
About xG Technology, Inc.
xG Technology's brands provide wireless video solutions to
broadcast, law enforcement and defense markets, and private mobile
broadband networks for use in challenging environments. xG's brand
portfolio includes Integrated Microwave Technologies (IMT),
Vislink, and xMax.
IMT has pioneered advanced digital microwave systems and is a
trusted supplier to broadcast, sports and entertainment, and MAG
(Military, Aerospace & Government) markets. Their products are
recognized for their high level of performance, reliability, build
quality, extended operating ranges and compact form factors. More
information about IMT can be found at www.imt-solutions.com.
Vislink specializes in the wireless capture, delivery and
management of secure, high-quality, live video, and serves
broadcast & media and public safety & surveillance markets.
More information about Vislink can be found at
http://www.vislink.com/.
xMax is a secure, rapid-deploy mobile broadband system that
delivers mission-assured wireless connectivity in demanding
operating environments. It was designed to serve as an
expeditionary and critical communications network for use in
unpredictable scenarios and during fluid situations, making it
ideal for disaster response, emergency communications, and defense
applications. More information about xMax can be found at
http://www.xgtechnology.com/system-overview/. In addition to the
above business lines, xG has a dedicated Federal Sector Group (xG
Federal) focused on providing next-generation spectrum sharing
solutions to national defense, scientific research and other
federal organizations. Additional information about xG Federal can
be found at http://www.xgtechnology.com/technology/xg-federal/.
Based in Sarasota, Florida, xG
Technology has over 100 patents and pending patent applications. xG
is a publicly traded company listed on the NASDAQ Capital Market
(symbol: XGTI) For more information, please visit
www.xgtechnology.com.
Cautionary Statement Regarding Forward Looking
Statements
Statements contained herein that are not based upon current or
historical fact are forward-looking in nature and constitute
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. Such forward-looking statements reflect the Company's
expectations about its future operating results, performance and
opportunities that involve substantial risks and uncertainties.
These statements include but are not limited to statements
regarding the intended terms of the offering, closing of the
offering and use of any proceeds from the offering. When used
herein, the words "anticipate," "believe," "estimate," "upcoming,"
"plan," "target", "intend" and "expect" and similar expressions, as
they relate to xG Technology, Inc., its subsidiaries, or its
management, are intended to identify such forward-looking
statements. These forward-looking statements are based on
information currently available to the Company and are subject to a
number of risks, uncertainties, and other factors that could cause
the Company's actual results, performance, prospects, and
opportunities to differ materially from those expressed in, or
implied by, these forward-looking statements.
FOR MORE INFORMATION
xG Technology:
Daniel
Carpini
941-953-9035
daniel.carpini@xgtechnology.com
xG TECHNOLOGY,
INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT PER SHARE DATA)
|
|
|
|
September
30, 2017
(unaudited)
|
|
|
December 31,
2016
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
4,713
|
|
|
$
|
9,054
|
|
Accounts receivable,
net
|
|
|
7,619
|
|
|
|
1,369
|
|
Inventories,
net
|
|
|
19,049
|
|
|
|
2,722
|
|
Prepaid expenses and
other current assets
|
|
|
2,077
|
|
|
|
111
|
|
Total current assets
|
|
|
33,458
|
|
|
|
13,256
|
|
Property and
equipment, net
|
|
|
3,746
|
|
|
|
771
|
|
Intangible assets,
net
|
|
|
7,566
|
|
|
|
5,872
|
|
Total assets
|
|
$
|
44,770
|
|
|
$
|
19,899
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
9,092
|
|
|
$
|
1,606
|
|
Accrued
expenses
|
|
|
2,566
|
|
|
|
1,813
|
|
Accrued
interest
|
|
|
87
|
|
|
|
269
|
|
Due to related
parties
|
|
|
1,368
|
|
|
|
96
|
|
Deferred revenue and
customer deposits
|
|
|
168
|
|
|
|
186
|
|
Obligation under
capital leases
|
|
|
30
|
|
|
|
58
|
|
Derivative
liabilities
|
|
|
1,365
|
|
|
|
1,183
|
|
Total current liabilities
|
|
|
14,676
|
|
|
|
5,211
|
|
Long-term obligation
under capital leases, net of current portion
|
|
|
34
|
|
|
|
49
|
|
Convertible note
payable
|
|
|
2,000
|
|
|
|
2,000
|
|
Total liabilities
|
|
|
16,710
|
|
|
|
7,260
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
|
|
|
Preferred stock –
$0.00001 par value per share: 10,000,000 shares
authorized as of
September 30, 2017 and December 31, 2016;
0 shares issued and outstanding as of
September 30, 2017 and December 31,
2016
|
|
|
—
|
|
|
|
—
|
|
Common
stock, – $0.00001 par value, 100,000,000 shares
authorized, 14,202,822 and
7,606,518 shares issued and 14,202,820 and
7,606,516 shares outstanding as of
September 30, 2017 and December 31, 2016,
respectively
|
|
|
—
|
|
|
|
—
|
|
Additional paid in
capital
|
|
|
235,190
|
|
|
|
221,960
|
|
Accumulated other
comprehensive income
|
|
|
462
|
|
|
|
—
|
|
Treasury stock, at
cost – 2 shares at September 30, 2017 and December 31, 2016,
respectively
|
|
|
(22)
|
|
|
|
(22)
|
|
Accumulated
deficit
|
|
|
(207,570)
|
|
|
|
(209,299)
|
|
Total stockholders' equity
|
|
|
28,060
|
|
|
|
12,639
|
|
Total liabilities and
stockholders' equity
|
|
$
|
44,770
|
|
|
$
|
19,899
|
|
The accompanying notes are an integral part of these condensed
consolidated financial statements.
xG TECHNOLOGY,
INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
(IN THOUSANDS EXCEPT NET LOSS PER SHARE
DATA)
|
|
|
|
For the Three Months Ended
|
|
|
For the Nine Months Ended
|
|
|
|
September
30,
|
|
|
September
30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Revenue
|
|
$
|
10,158
|
|
|
$
|
1,913
|
|
|
$
|
33,711
|
|
|
$
|
4,497
|
|
Cost of revenue
and operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of components
and personnel
|
|
|
5,050
|
|
|
|
970
|
|
|
|
20,316
|
|
|
|
2,210
|
|
Inventory valuation
adjustments
|
|
|
355
|
|
|
|
80
|
|
|
|
431
|
|
|
|
192
|
|
General and
administrative expenses
|
|
|
6,359
|
|
|
|
2,260
|
|
|
|
19,348
|
|
|
|
6,671
|
|
Research and
development expenses
|
|
|
2,758
|
|
|
|
1,424
|
|
|
|
7,143
|
|
|
|
4,627
|
|
Amortization and
depreciation
|
|
|
1,128
|
|
|
|
1,254
|
|
|
|
3,260
|
|
|
|
4,118
|
|
Total cost of revenue and operating expenses
|
|
|
15,650
|
|
|
|
5,988
|
|
|
|
50,498
|
|
|
|
17,818
|
|
Loss from operations
|
|
|
(5,492)
|
|
|
|
(4,075)
|
|
|
|
(16,787)
|
|
|
|
(13,321)
|
|
Other income
(expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in fair value
of derivative liabilities
|
|
|
8
|
|
|
|
2,566
|
|
|
|
(182)
|
|
|
|
1,305
|
|
Offering
expenses
|
|
|
—
|
|
|
|
(526)
|
|
|
|
—
|
|
|
|
(684)
|
|
Gain on bargain
purchase
|
|
|
—
|
|
|
|
—
|
|
|
|
15,530
|
|
|
|
2,749
|
|
Gain on debt and
payables extinguishments
|
|
|
12
|
|
|
|
—
|
|
|
|
3,999
|
|
|
|
—
|
|
Other
expense
|
|
|
—
|
|
|
|
(924)
|
|
|
|
(250)
|
|
|
|
(981)
|
|
Interest expense,
net
|
|
|
(50)
|
|
|
|
(147)
|
|
|
|
(581)
|
|
|
|
(818)
|
|
Total other income (expense)
|
|
|
(30)
|
|
|
|
969
|
|
|
|
18,516
|
|
|
|
1,571
|
|
Net income
(loss)
|
|
$
|
(5,522)
|
|
|
$
|
(3,106)
|
|
|
$
|
1,729
|
|
|
$
|
(11,750)
|
|
Dividends and deemed
dividends
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,808)
|
|
Net income (loss)
attributable to common stockholders
|
|
$
|
(5,522)
|
|
|
$
|
(3,106)
|
|
|
$
|
1,729
|
|
|
$
|
(13,558)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss)
per share
|
|
$
|
(0.43)
|
|
|
$
|
(1.98)
|
|
|
$
|
0.15
|
|
|
$
|
(16.91)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share
|
|
$
|
(0.43)
|
|
|
$
|
(1.98)
|
|
|
$
|
0.15
|
|
|
$
|
(16.91)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
12,845
|
|
|
|
1,570
|
|
|
|
11,290
|
|
|
|
802
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
12,845
|
|
|
|
1,570
|
|
|
|
11,290
|
|
|
|
802
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
(5,522)
|
|
|
$
|
(3,106)
|
|
|
$
|
1,729
|
|
|
$
|
(13,558)
|
|
Unrealized gain on
currency translation adjustment
|
|
|
114
|
|
|
|
—
|
|
|
|
462
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
(loss)
|
|
$
|
(5,408)
|
|
|
$
|
(3,106)
|
|
|
$
|
2,191
|
|
|
$
|
(13,558)
|
|
The accompanying notes are an integral part of these condensed
consolidated financial statements.
Reconciliation of GAAP to Non-GAAP Results
Our financial statements are prepared in accordance with US GAAP
on a basis consistent for all periods presented. In addition
to results reported in accordance with US GAAP, we use non-GAAP
financial measures as supplemental indicators of our operating
performance. We disclose non-GAAP measures as we believe that these
measures provide better information on actual operating
results.
Readers are cautioned that non-GAAP financial measures do not
have any standardized meaning prescribed by US GAAP and therefore
may not be comparable to similar measures presented by other
companies.
xG TECHNOLOGY,
INC.
Q3 2017 RECONCILIATION OF GAAP to NON-GAAP RESULTS
|
|
|
|
|
Purchase
|
|
Acquisition
|
|
|
|
Non
|
|
GAAP
|
|
Price
|
|
Related,
|
|
Foreign
|
|
GAAP
|
In thousands of
US$
|
Q3
|
|
Amortization
|
|
Restructuring
|
|
Exchange
|
|
Q3
|
Revenue
|
$10,158
|
|
|
|
|
|
$188
|
|
$10,346
|
Cost of revenue
and operating expenses
|
|
|
|
|
|
|
|
|
|
Cost of components and personnel
|
5,050
|
|
(957)
|
|
|
|
|
|
4,093
|
Inventory valuation adjustments
|
355
|
|
|
|
|
|
|
|
355
|
General and administrative expenses
|
6,359
|
|
|
|
(842)
|
|
|
|
5,517
|
Research and development expenses
|
2,758
|
|
|
|
(410)
|
|
|
|
2,348
|
Amortization and depreciation
|
1,128
|
|
(573)
|
|
-
|
|
-
|
|
555
|
Total cost of revenue
and operating expenses
|
15,650
|
|
(1,530)
|
|
(1,252)
|
|
-
|
|
12,868
|
Income (loss) from
operations
|
(5,492)
|
|
1,530
|
|
1,252
|
|
188
|
|
(2,522)
|
Other income
(expense)
|
|
|
|
|
|
|
|
|
|
Changes in fair value of derivative liabilities
|
8
|
|
|
|
|
|
|
|
8
|
Gain on bargain purchase
|
-
|
|
|
|
|
|
|
|
-
|
Gain on debt & payables extinguishments
|
12
|
|
|
|
|
|
|
|
12
|
Other expense
|
-
|
|
|
|
|
|
|
|
-
|
Interest expense, net
|
(50)
|
|
-
|
|
-
|
|
-
|
|
(50)
|
Total other
income
|
(30)
|
|
-
|
|
-
|
|
-
|
|
(30)
|
Net income
(loss)
|
$(5,522)
|
|
$1,530
|
|
$1,252
|
|
$188
|
|
$(2,552)
|
EBITDA
|
$(4,344)
|
|
$957
|
|
$1,252
|
|
$188
|
|
$(1,947)
|
(Earnings before
interest, taxes, depreciation & amortization)
|
|
|
|
|
|
|
|
|
|
xG TECHNOLOGY,
INC.
2017 YEAR TO DATE
RECONCILIATION OF GAAP to NON-GAAP RESULTS
|
|
|
|
|
Purchase
|
|
Acquisition
|
|
|
|
Non
|
|
|
GAAP
|
|
Price
|
|
Related,
|
|
Foreign
|
|
GAAP
|
|
In thousands of
US$
|
YTD
Q3
|
|
Amortization
|
|
Restructuring
|
|
Exchange
|
|
YTD
Q3
|
|
Revenue
|
$33,711
|
|
|
|
|
|
$959
|
|
$34,670
|
|
Cost of revenue
and operating expenses
|
|
|
|
|
|
|
|
|
|
|
Cost of components and personnel
|
20,316
|
|
(2,533)
|
|
|
|
|
|
17,783
|
|
Inventory valuation adjustments
|
431
|
|
|
|
|
|
|
|
431
|
|
General and administrative expenses
|
19,348
|
|
|
|
(4,853)
|
|
|
|
14,495
|
|
Research and development expenses
|
7,143
|
|
|
|
(992)
|
|
|
|
6,151
|
|
Amortization and depreciation
|
3,260
|
|
(1,648)
|
|
-
|
|
-
|
|
1,612
|
|
Total cost of revenue
and operating expenses
|
50,498
|
|
(4,181)
|
|
(5,845)
|
|
-
|
|
40,472
|
|
Income (loss) from
operations
|
(16,787)
|
|
4,181
|
|
5,845
|
|
959
|
|
(5,802)
|
|
Other income
(expense)
|
|
|
|
|
|
|
|
|
|
|
Changes in fair value of derivative liabilities
|
(182)
|
|
|
|
|
|
|
|
(182)
|
|
Gain on bargain purchase
|
15,530
|
|
|
|
|
|
|
|
15,530
|
|
Gain on debt & payables extinguishments
|
3,999
|
|
|
|
|
|
|
|
3,999
|
|
Other expense
|
(250)
|
|
|
|
250
|
|
|
|
-
|
|
Interest expense, net
|
(581)
|
|
-
|
|
-
|
|
-
|
|
(581)
|
|
Total other
income
|
18,516
|
|
-
|
|
250
|
|
-
|
|
18,766
|
|
Net
income
|
$1,729
|
|
$4,181
|
|
$6,095
|
|
$959
|
|
$12,964
|
|
EBITDA
|
$5,570
|
|
$2,533
|
|
$6,095
|
|
$959
|
|
$15,157
|
|
(Earnings before
interest, taxes, depreciation & amortization)
|
|
|
|
|
|
|
|
|
|
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SOURCE xG Technology, Inc.