WEST CHICAGO, Ill., Aug. 13, 2004 (PRIMEZONE) -- M-Wave, Inc. (Nasdaq:MWAV) today announced sales of $5.59 million for its fiscal 2004 second quarter, an increase of 35% over the $4.14 million in sales for last year's second quarter. Net income for the second quarter of fiscal 2004 was $9,789 compared with a net loss of $2.9 million in the same period of fiscal 2003. The second quarter 2004 results include certain non-recurring expenses and accrual adjustments relating to executive separation expenses of $106K, non-recurring fees of $61K, and non-cash compensation of $66K, as well non-recurring gains predominately from debt forgiveness of $321K.
For the six months of fiscal 2004, sales were $9.5 million, an increase of 29% over the $7.34 million in sales for the comparable six months ending in 2003. Net income for the first six months of fiscal 2004 was $144K, or $.03 per share compared with a net loss of $8.29 million, or ($1.87) per share in the same period of fiscal 2003.
Chief Executive Officer, Jim Mayer, commented, "Management is optimistic that we have turned the corner with the revised operating model and our balance sheet results, and expect to make further progress by expanding our customer-centric services as our go-forward strategy." Mayer further noted, "Our customers are increasingly taking advantage of our local expertise in China and Southeast Asia, as they seek production options even in the area of higher technology. Supplier relationships in Asia are also expanding consistent with our goal to offer the broadest range of product and service offerings in PCB fulfillment for our customers."
The following is a condensed statement of income for the quarter and year-to-date periods ending June 30, 2004:
2004 2003 2004 2003
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2nd Qtr. 2nd Qtr. Six Months Six Months
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Net sales $ 5,592,198 $ 4,141,050 $ 9,508,276 $ 7,346,095
Cost of goods
sold 4,887,503 4,338,479 7,851,080 9,271,350
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Gross profit 704,695 (197,429) 1,657,196 (1,925,255)
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Total operating
expenses 852,433 2,725,591 1,818,996 7,247,422
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Operating income (147,738) (2,923,020) (161,791) (9,172,677)
Total other income
(expense) 270,205 (502) 418,682 (9,980)
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Income before
income taxes 122,467 (2,923,522) 256,892 (9,182,657)
Provision for
income taxes 112,678 0 112,678
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Net income $ 9,789 ($ 2,923,522)($ 8,294,324) $ 144,214
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Subsequent Events
On June 28, the company paid off its existing accounts receivable purchase facility with Silicon Valley Bank with the proceeds of a new $4.5 million, two-year revolving credit line with the Bank, secured by all assets of the company, including its accounts receivable and inventory. Under the facility, the company may draw up to 85% of its eligible accounts receivable under 90 days aged, and up to $750,000 of finished goods inventory, so long as that inventory represents 33% or less of the total advanced at any one time and the total loan does not exceed $4.5 million. The effective rate of interest is approximately 8% inclusive of one-time and servicing costs, a significant improvement from the prior facility.
Also, on July 28, M-Wave issued 30,000 shares of the company's newly designated Series A Preferred Stock to Mercator Momentum Fund LP; Mercator Momentum Fund III LP and Monarch Pointe Ltd. through Mercator Advisory Group LLC ("Mercator") for $100 per share, or an aggregate of $3 million. The Series A Preferred Stock is convertible to up to 3,061,000 shares of Common Stock at the floor price of $.98 per share. The company also issued three-year warrants to purchase an aggregate of 1.53 million shares of Common Stock at $1.27 per share to the three purchasers of the Series A Preferred Stock and to Mercator Advisory Group, LLC. The transaction netted M-Wave approximately $2.6 million, net of estimated fees and expenses. The proceeds, in part, will be utilized to support inorganic growth by acquisition of smaller PCB producers' customer relationships, marketing and customer service functions, improvement of operating systems and general working capital. The company's capitalization at June 30, restated on a pro forma basis for the issuance of the Series A Preferred Stock, is as follows:
PROFORMA June 30
2004
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STOCKHOLDERS' EQUITY:
Preferred stock 1,756,146
Common stock 30,901
Additional paid-in capital 11,582,849
Retained earnings (7,472,336)
Treasury stock (2,285,170)
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Total stockholders' equity 3,612,390
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About M-Wave Inc.
Established in 1988 and headquartered in the Chicago suburb of West Chicago, M-Wave is a value-added service provider of high performance circuit boards. The company's products are used in a variety of telecommunications and industrial electronics applications. M-Wave services customers like Federal Signal on digital products and Celestica - Nortel and Remec with its patented bonding technology, Flexlink IITM, and its supply chain management services including Virtual Manufacturing (VM) and the Virtual Agent Procure-ment Program (VAP) whereby customers are represented in Asia either on an exclusive or occasional basis in sourcing and fulfilling high volume and technology circuit board production in Asia through the company's Singapore office. The company trades on the NASDAQ National market under the symbol MWAV. M-Wave's website is located at www.mwav.com.
The discussion above contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements by their nature involve substantial risks and uncertainties as described by M-Wave's periodic filings. Actual results may differ materially depending on a variety of factors, including, but not limited to the following: the achievement of M-Wave's projected operating results, the achievement of efficient volume production and related sales revenue, and the ability of M-Wave to identify and successfully pursue other business opportunities. Additional information with respect to the risks and uncertainties faced by M-Wave may be found in, and the prior discussion is qualified in its entirety by, the Risk Factors contained in the company's filings with the Securities and Exchange Commission including M-Wave's Report on Form 10-K for the period ended December 31, 2003, Forms 10-Q, and other SEC filings.
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