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xG Technology Inc. (XGT)

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Thursday 07 March, 2013

xG Technology Inc.

Final Results

RNS Number : 4966Z
xG Technology Inc.
07 March 2013
 

March 7, 2013

xG Technology, Inc.

("xG", "xG Technology"or the "Company")


Financial results

for the year ended December 31, 2012

 

 

xG Technology, the developer of a portfolio of wireless communications technologies, including cognitive radio networks, is pleased to announce its audited financial results for the year ended December 31, 2012. These results have been prepared in accordance with U.S. GAAP. 

 

Financial Summary

 

2012 revenue was $nil, compared with the $150,000 reported in 2011.

 

General and administrative expenses remained approximately the same at $5.5 million in the year ended December 31, 2011 and the year ended December 31, 2012. Due to a combination of a reduction in demonstration events and an increase in personnel costs, development expenses decreased from $5.2 million in the year ended December 31, 2011 to $4.8 million in the year ended December 31, 2012, with a decrease of $0.9 million related to expenses incurred for the year ended December 31, 2011 for demonstrations at the U.S. Army base in Fort Bliss, Texas, tower sites needed for xG's Fort Lauderdale network and costs incurred for demonstrations in Lewisville, Arkansas, being partially offset by an increase in payroll, facility, and miscellaneous development expenses of $0.5 million.

 

Stock based compensation decreased from $1.0 million in the year ended December 31, 2011 to $0.6 million in the year ended December 31, 2012 as the number of employees who received option grants in fiscal 2012 decreased. The Company had approximately $1.6 million of unrecognized stock-based compensation expense related to unvested stock options, net of estimated forfeitures, as of December 31, 2012, which is expected to be recognized over the next three years.

 

Amortization and depreciation expenses increased from $1.8 million in the year ended December 31, 2011 to $2.1 million in the year ended December 31, 2012. The increase is attributed to a full year of amortization on products sold in 2011 and available for sale in 2012 as compared to a partial year of amortization in 2011.

 

Other expense was comprised of net interest expense and impairment charges. While the indebtedness under the May 2011 convertible shareholder loan from MB Technology Holding, LLC ("MBTH", majority shareholder of xG) increased from $6.8 million at December 31, 2011 to $17.2 million at December 31, 2012, net interest expense fell from $1.8 million in the year ended December 31, 2011 to $0.5 million in the year ended December 31, 2012 due to minimum interest charges being incurred in 2011 as a result of the Company refinancing previous loans with MBTH and with $0.5 million being attributed in 2011 to accretion of a debt discount on the previous $10 million convertible shareholder loan from MBTH.

 

U.S. GAAP net loss for 2012 was $13.8 million, compared with a net loss of $15.7 million in 2011 as a result of decreased expenses. U.S. GAAP net loss per basic and diluted share was $0.07 for 2012 compared to $0.09 for 2011.

 

The Company's cash balances were $271,000 and $133,000 at the years ended December 31, 2012 and 2011 respectively.

 

As a means for financing xG's operations, on January 16, 2013 the Company entered into a convertible bridge loan that matures in one year for the Company to borrow up to $10 million. MBTH has committed $5 million under the bridge loan. As of February 28, 2013, the Company had drawn down $15.0 million of principal balance under the May 2011 convertible shareholder loan from MBTH and $5.3 million under the bridge loan. In addition, MBTH has provided the Company with a Notice to Convert the $15 million May 2011 convertible shareholder loan into shares of xG common stock.

 

During the year ended December 31, 2012 and subsequently the Company signed a number of purchase agreements with rural telecommunications providers in the U.S. and with U.S. resellers. This, combined, inter alia, with the Company being incorporated in Delaware has led the Board to elect to change the basis of preparation of the Company's accounts from IFRS to U.S. GAAP.

 

The Company also announced that the audit report from its independent registered public accounting firm on its financial statements for the fiscal year ended December 31, 2012, contains an explanatory paragraph regarding the Company's ability to continue as a going concern.

 

"2012 was an important year for xG Technology. We entered into equipment purchase agreements with the following rural telecommunications providers: Northeast Florida Telephone Company, Inc. (based in Florida), Electra Telephone Company and Tatum Telephone Company (both based in Texas), Choctaw Telephone Company and MoKanDial Telephone Company (both based in Kansas), Haxtun Telephone Company (based in Colorado), and Walnut Hill Telephone Company (based in Arkansas)," commented Richard Mooers, Executive Chairman of xG Technology. "Since the year-end, we have additionally entered into equipment purchase agreements with TelAtlantic Wireless (based in Virginia), Assist Wireless (based in Texas) and Carolina Satellite Networks (based in Virginia) and reseller agreements with Cornet Technology, Inc. (based in North Virginia), PMC Associates (based in New Jersey), Communications Marketing Southeast (based in Georgia), Mobile-One Communications (based in Florida) and Telemedicine MM Systems (based in New York).These purchase agreements, made both direct with end-customers as well as with indirect channel network partners, are an important component in our objective of executing on our sales and marketing strategy. These customer engagements primarily relate to two of our target markets in rural telecommunications and defense."

 

END

Contacts

xG Technology, Inc.

www.xgtechnology.com

John Coleman, Chief Executive Officer

+1 212 651 4219

Roger Branton, Chief Financial Officer

+1 212 651 4219

James Woodyatt, Investor Relations

+1 954 572 0395



Allenby Capital Limited

 

 Joi Jopi)

www.allenbycapital.com

(Nominated Adviser and Joint Broker)

+44 20 3328 5656

Nick Naylor

+44 20 3328 5656

Mark Connelly




First Columbus LLP (Joint Broker)

www.first-columbus.com

Chris Crawford

+44 20 3002 2073



Fusion PR (Media and Analyst Relations)

www.fusionpr.com

 

 

David Worthington

+1 212 651 4200

 

ABOUT xG TECHNOLOGY

xG Technology has developed a broad portfolio of innovative intellectual property that we believe will enhance wireless communications. Its patented intellectual property portfolio covers a wide range of applications, including smart wireless networks that can help address the global wireless spectrum crisis through advanced technology. xG is commercializing some of these technologies to create xMax, a cognitive, or 'smart', radio network system. The Company's technology provides ways to increase the efficient use of spectrum, allowing network operators to offload existing voice or data traffic, reduce dropped calls, and enhance network capacity for their customers. xMax's standards-based IP architecture minimizes network deployment, management and operational costs while simplifying the delivery of high quality fixed and mobile voice and data services. xMax can enhance and extend wireless networks, and provides an economical last mile solution for hard to reach customers and devices. Using field-proven technology, xMax enables the delivery of mobile broadband services to consumers, agencies and enterprises worldwide in both licensed and free unlicensed bands. In the U.S., the Company has 43 patents granted, 16 patent applications pending, and 5 provisional applications pending. Internationally, we have 51 patents granted, 82 patent applications pending, and 10 Patent Cooperation Treaty (PCT) applications. For more information, please visit www.xgtechnology.com.

 

 

 

 

xG TECHNOLOGY, INC.

STATEMENTS OF OPERATIONS- U.S. GAAP Basis

(In thousands except per share data)

(Audited)

 

  


For the Year Ended


December 31,


2012


2011





Revenue

 $                -


 $            150

Cost of revenue and operating expenses




Cost of components and personnel

                 -  


                 50

General and administrative expenses

            5,543


            5,505

Development

            4,806


            5,249

Stock based compensation

               554


            1,020

Amortization and depreciation

            2,063


            1,806

           Total cost of revenue and operating expenses

           12,966


           13,630

Loss from operations

         (12,966)


         (13,480)





Other income (expense)




Interest expense, net

             (535)


           (1,847)

Impairment

             (286)


               (341)  

           Total other income (expense)

             (821)


           (2,188)





Loss before income tax provision

         (13,787)


         (15,668)





Income tax provision

                   -


                   -

Net loss

 $      (13,787)


 $      (15,668)





Basic and diluted net loss per share

            (0.07)


            (0.09)

Weighted average number of shares outstanding basic and diluted

         211,098


         180,082

 



 

xG TECHNOLOGY, INC.

BALANCE SHEETS

(In thousands)

(Audited)

                                                                                                               

 


December 31,


2012


2011

ASSETS




Current assets




Cash

 $              271


 $            133

Prepaid expenses and other current assets

                  16


                 44

Due from related party

                  -  


            1,500

Total current assets

                287


            1,677





Property and equipment, net

              1,725


            2,140

Intangible assets, net

            17,608


            14,537

           Total assets

 $         19,620


 $        18,354





LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)




Current liabilities




Accounts payable

 $              655


 $            686

Accrued expenses

                754


               564

Accrued bonuses

              2,633


            1,375

Accrued interest to related parties

              1,169


               169

Due to related party

              1,098


                 -  

Convertible notes payable to related party

            17,198


            6,883

Total current liabilities

            23,507


            9,677





Convertible notes payable to related party

              2,000


            2,000

Total liabilities

            25,507


           11,677





Commitments








Stockholders' equity (deficit)




Series A Convertible Preferred Stock - $0.01 par value per share:




Authorized - 25,000,000 shares;




Issued - zero




Common stock - $0.01 par value per share




Authorized - 250,000,000 shares; Issued - 211,468,130 and 210,575,954

              2,115


            2,106

Additional paid in capital

          116,132


         114,906

Accumulated deficit

         (124,112)


       (110,325)

Treasury stock, at cost - 80,000 shares and 40,000 shares at December 31, 2012 and 2011, respectively

                 (22)


               (10)

Total stockholder's equity (deficit)

            (5,887)


            6,677

Total liabilities and stockholders' equity (deficit)

 $        19,620


 $      18,354

 

xG TECHNOLOGY, INC.

STATEMENTS OF CASHFLOWS

(In thousands

(Audited)

 

 

 


Year Ended December 31,


2012


2011

Cash flows from operating activities




Net loss

 $                (13,787)


 $          (15,668)

Adjustments to reconcile net loss to net cash used in operating activities




Stock based compensation

                          554


                 1,020

Share-based consulting and other services

                          100


                    191

Depreciation and amortization

                       2,063


                 1,806

Impairment

                           286 


                    341

Accretion of financing instruments

                            -  


                    483

Amounts paid by affiliate on behalf of xG

                       1,500


                    517

Changes in assets and liabilities




Inventory

                            -  


                    187

Prepaid expenses and other current assets

                            28


                      24

Accounts payable

                          (32)


                    200

Accrued expenses

                          191


                 1,861

Accrued bonuses

                       1,258


                 1,375

Accrued interest to related party

                       1,180


                      56

Due to related party

                       1,098


                       -  

Net cash used in operating activities

                     (5,561)


               (7,607)





Cash flows from investing activities




Acquisition of property and equipment

                        (515)


               (1,175)

Acquisition of intangible assets

                     (4,491)


               (4,848)

Net cash used in investing activities

                     (5,006)


               (6,023)





Cash flows from financing activities




Proceeds from convertible notes payable

                     10,315


               13,656

Proceeds from issuance of common stock

                          400


                       -  

Purchase of treasury stock

                          (12)


                    (10)

Proceeds from exercise of options

                              2


                       -  

Proceeds from issuance of Warrants

                            -  


                      26

Net cash provided by financing activities

                     10,705


               13,672





Net increase in cash

                          138


                      42

Cash, beginning of year

                          133


                      91

Cash, end of year

 $                       271


 $                 133





Supplemental cash flow disclosures of investing and financing activities




Conversion of notes payable

                            -  


               10,483

Stock issued to affiliate for assumption of liabilities

                            -  


                 3,000

Stock issued as payment for interest on convertible notes

                          180


                 1,561

Stock issued in Treco settlement

                            -  


                    360

Convertible debt issued in Treco settlement

                            -  


                 2,000

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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