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xG Technology Announces Results for the First Quarter of 2018
[May 15, 2018]

xG Technology Announces Results for the First Quarter of 2018


SARASOTA, Fla., May 15, 2018 /PRNewswire/ -- xG Technology, Inc. (Nasdaq: XGTI, XGTIW), whose IMT and Vislink brands are recognized as the global leaders in live video communications in the broadcast, law enforcement and defense markets, announced today its results for the first quarter ended March 31, 2018. Management will hold a conference call to discuss these results on Wednesday, May 16, 2018 at 5:00 p.m. Eastern Time (details below).

First Quarter Results

  • First quarter 2018 revenues increased 4.3% to $9.7 million compared to $9.3 million in the first quarter of 2017.  
  • Gross margins increased to 51% in the first quarter of 2018, compared to 40% in the first quarter of 2017.
  • For the first quarter of 2018, net loss attributable to common shareholders was $3.8 million, or $(0.25) per share, compared to net income of $8.3 million, or $0.87 per share in the first quarter of 2017. Excluding stock option expense, discontinued operations and a division held for sale, xG reported a net loss of $501,000 in the first quarter of 2018.
  • EBITDA (earnings before interest, taxes depreciation and motorization) was a negative $2.8 million for the three months ended March 31, 2018. Excluding stock option expense, discontinued operations and a division held for sale, the Company reported adjusted EBITDA loss of $179,000 for March 31, 2018 which includes a write down of approximately $113,000 in non-cash items related to inventory.
  • Ended the first quarter 2018 with $455,000 in cash compared to $2.8 million at December 31, 2017.

First Quarter Non-GAAP RESULTS¹

  • Adjusted revenue was $9.3 million excluding discontinued operations and a division held for sale.
  • Adjusted net loss was $501,000 and adjusted EBITDA loss was $179,000 in the first quarter of 2018 excluding stock option expense, discontinued operations and a division held for sale.

"The accomplishments made during the first quarter reflect our commitment to strategically refocus our efforts on instituting the policies and practices necessary to drive revenue, cut costs and ultimately achieve profitability," said Gary Cuccio, Executive Chairman of the Board and CEO of xG Technology. "I am very pleased to report that our gross margin increased from 40% to 51% while our revenues increased as well. We also continue to lead the industry in product innovation by successfully introducing the Vislink AirPro-75.  We look forward to continuing this healthy trend by winning new business, forming strategic partnerships and recognizing potential M&A opportunities that make sense for us.  I am excited about leading this team and their ability to execute."

First Quarter 2018 Key Business Highlights

  • The HCAM HEVC 4K wireless camera systems were successfully deployed in their first live outside broadcast events.
  • Received an order in excess of $1 million from leading European outside broadcasting provider AMP Visual TV for HCAM HEVC 4K wireless camera systems and related equipment.
  • Announced a collaboration between its IMT business and Marshall Electronics, a recognized leader in supplying professional cameras and display monitors, to offer a full wireless video solution for live broadcasts and sporting events.
  • Launched the Vislink AirPro-75, a small, lightweight, low-cost, single-button deployment IP satellite data terminal for use with Eutelsat's Tooway™ & ViaSat™ Exede® services.
  • Adjusted EBITDA loss was $179,000 when taking into account previously announced cost reduction initiatives. 

"The combination of our revenue increase and our team's renewed focus on cost control helped us deliver improved margins and solid first quarter results," said Roger Branton, xG Technology CFO and co-founder. "The results and our previous announcement on cost reductions are an indication of our ability to transform into a profitable model and of our continued commitment of becoming the industry leading provider of comprehensive video, broadband and satellite solutions for broadcast, sports and entertainment, and public safety markets."

Financial Results Conference Call Details

xG management will hold a conference call to discuss its Q1 2018 results and provide a corporate update on Wednesday, May 16, 2018 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 made available on xG's website.

¹NON-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.

About xG Technology, Inc.

xG Technology's IMT and Vislink brands are recognized as the global leaders in live video communications and are trusted suppliers to tier-1 customers in broadcast/sports/entertainment, and law enforcement/public safety/defense markets. Their products are recognized for outstanding performance, reliability and build quality, extended operating ranges and compact form factors. In the broadcast, sports and entertainment sectors, IMT and Vislink provide high-definition communication links to reliably capture, transmit and manage live event footage. In the law enforcement, public safety & defense markets, IMT and Vislink provide secure video communications and mission-critical solutions to local, national and international agencies and organizations. More information can be found at www.imt-solutions.com and www.vislink.com.

xG is also the developer of xMax, a secure, rapid-deploy mobile broadband system that delivers mission-assured wireless connectivity in demanding operating environments. xMax was specifically designed to serve as an expeditionary and critical communications network for use in unpredictable scenarios and during fluid situations. This makes it a compelling solution 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

Investor Relations:
John Marco
CORE IR
516-222-2560
johnm@coreir.com





xG TECHNOLOGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS EXCEPT PER SHARE DATA)




March 31,



December 31,




2018



2017




(unaudited)





ASSETS









Current assets









Cash


$

455



$

2,799


Accounts receivable, net



6,652




8,337


Inventories, net



16,192




14,753


Prepaid expenses and other current assets



875




626


   Total current assets



24,174




26,515


Property and equipment, net



2,926




3,237


Intangible assets, net



6,317




6,894


   Total assets


$

33,417



$

36,646


LIABILITIES AND STOCKHOLDERS' EQUITY









Current liabilities









Accounts payable


$

10,451



$

10,918


Accrued expenses



3,556




3,150


Convertible note payable



2,000




2,000


Due to related parties



943




998


Deferred revenue and customer deposits



915




634


Obligation under capital leases



10




18


Derivative liabilities



662




1,271


      Total current liabilities



18,537




18,989


Long-term obligation under capital leases, net of current portion



27




30


      Total liabilities



18,564




19,019


Commitments and contingencies









Stockholders' equity









Preferred stock – $0.00001 par value per share:  10,000,000 shares authorized as of 
     March 31, 2018 and December 31, 2017; 0 shares issued and outstanding as of March 
     31, 2018 and December 31, 2017







Common stock – $0.00001 par value per share, 100,000,000 shares authorized, 
     14,959,784 and 14,897,392 shares issued and 14,959,782 and 14,897,390 outstanding 
     as of March 31, 2018 and December 31, 2017, respectively







     Additional paid in capital



238,052




237,140


     Accumulated other comprehensive income



437




354


     Treasury stock, at cost – 2 shares at March 31, 2018 and December 31, 2017, 
        respectively



(22)




(22)


      Accumulated deficit



(223,614)




(219,845)


         Total stockholders' equity



14,853




17,627


Total liabilities and stockholders' equity


$

33,417



$

36,646







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 (LOSS) INCOME

(IN THOUSANDS EXCEPT NET (LOSS) INCOME PER SHARE DATA)




For the Three Months Ended



March 31,



2018



2017


Revenue, net


$

9,733



$

9,335


Cost of revenue and operating expenses









Cost of components and personnel



4,790




5,571


Inventory valuation adjustments



113




99


General and administrative expenses



5,832




6,548


Research and development expenses



2,442




1,874


Amortization and depreciation



887




989


   Total cost of revenue and operating expenses



(14,064)




(15,081)


   Loss from operations



(4,331)




(5,746)


Other income (expense)









Changes in fair value of derivative liabilities



609




(217)


Preliminary gain on bargain purchase






11,839


Gain on debt extinguishment






2,900


Interest expense



(47)




(484)


   Total other income



562




14,038


Net (loss) income


$

(3,769)



$

8,292











Basic (loss) earnings per share


$

(0.25)



$

0.87











Diluted (loss) earnings per share


$

(0.25)




0.84











Weighted average number of shares outstanding:









Basic



14,948




9,585











Diluted



14,948




9,925











Comprehensive (loss) income:









Net (loss) income


$

(3,769)



$

8,292


Unrealized gain (loss) on currency translation adjustment



437




(17)











Comprehensive (loss) income


$

(3,332)



$

8,275












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.

RECONCILIATION OF GAAP to NON-GAAP RESULTS

QUARTER ENDING MARCH 31, 2018




Stock

Discontinued

Non


GAAP

Option

Operation/

GAAP

In thousands of US$

Q1

Expense

Division for Sale

Q1

Revenue

$9,733


$ (401)

$9,332

                Gross margin

50.8%



49.6%






Cost of revenue and operating expenses





    Cost of components and personnel

4,790


(84)

4,706

    Inventory valuation adjustments

113



113

    General and administrative expenses

5,832

(411)

(1,157)

4,264

    Research and development expenses

2,442

(404)

(1,001)

1,037

    Amortization and depreciation

887

-

(612)

275

Total cost of revenue and operating expenses

14,064

(815)

(2,854)

10,395






Income (loss) from operations

(4,331)

815

2,453

(1,063)






Other income (expense)





    Changes in fair value of derivative liabilities

609

-

-

609

    Interest expense, net

(47)

-

-

(47)

Total other income (expense)

562

-

-

562






Net income (loss)

$(3,769)

$815

$2,453

$(501)






EBITDA

$(2,835)

$815

$1,841

$(179)

 

 

 (PRNewsfoto/xG Technology, Inc.)

Cision View original content with multimedia:http://www.prnewswire.com/news-releases/xg-technology-announces-results-for-the-first-quarter-of-2018-300649084.html

SOURCE xG Technology, Inc.


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