BURNABY, British Columbia, Aug. 11, 2005 (PRIMEZONE) -- Unity Wireless Corporation (OTCBB:UTYW), a developer of integrated wireless subsystems, power amplifiers and coverage enhancement solutions, reported today summary financial results for the three and six-month periods ended June 30, 2005.
Revenues for the second quarter of 2005 were $1,716,888 compared to $2,063,198 in the same period in 2004. The gross margin of $492,862, or 28.7 percent, for the second quarter of 2005 represented an increase in gross margin from $229,224, or 11.1 percent, for the second quarter of 2004. Loss for the second quarter of 2005 was $1,365,404 compared to $757,823 for the same period in 2004. Net of stock-based compensation and other non-cash items of $749,950 and $197,461, respectively, loss for the second quarter of 2005 was $615,454 compared to $560,362 for the same period in 2004.
Revenues for the first six-months of 2005 were $3,684,458, up 30 percent, compared to $2,823,580 in the same period in 2004. The gross margin of $837,749, or 22.7 percent of net sales, for the first half of 2005 represented an increase from a gross margin of $496,264, or 17.6 percent of net sales, for the first half of 2004. Loss for the first six-months of 2005 was $2,543,579 compared to $1,420,725 for the same period in 2004. Net of stock based compensation and other non-cash items of $1,171,785 and $541,223, respectively, loss for the first six-months of 2005 was $1,371,794 compared to $879,502 for the same period in 2004. The major contributor to the increased loss was a 193 percent increase in research in development expenses, incurred mostly in the first quarter, as the Company accelerated new product development for time-sensitive customer opportunities. These expenditures raised research and development expenses above typical levels, and included costs to upgrade lab equipment and simulation tools, to increase outsourced contract engineering assignments and to purchase prototyping materials.
Ilan Kenig, President and CEO of Unity Wireless stated, "We have been focusing on initiatives to reduce our costs and improve efficiencies in our manufacturing and testing processes and are proud to report that these initiatives have significantly contributed to our third sequential, quarter-over-quarter improvement in gross margins. If we are as successful at driving top line revenue growth, continue to capitalize on current product opportunities, and are able to maintain current levels of operating expenses and gross margins we will ultimately be rewarded by improved bottom line performance and profitability."
The Company's Form 10Q-SB for the period ended June 30, 2005 contains additional financial information, and can be accessed at the Company's website or through the Securities and Exchange Commissions website at www.sec.gov.
About Unity Wireless www.unitywireless.com
Unity Wireless is an ISO 9001:2000 certified developer of RF (radio frequency) power amplifiers, components, integrated front-ends and coverage enhancement solutions for wireless communications networks. Our products are an integral part of the base station and repeater infrastructure that comprise the backbone of wireless communications networks around the world. From analog cellular to 3G mobile and fixed wireless applications from 450 MHz to 3.5 GHz, Unity Wireless products deliver enhanced efficiency and performance with field-proven quality and reliability in tens of thousands of base stations and repeaters around the world.
Forward Looking Statements
Forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "feel," "plan," "anticipate," "should" and other similar expressions generally identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. These forward-looking statements are subject to a number of risks and uncertainties, including without limitation, inability to raise the funds necessary for the Company's continued operations, changes in external market factors including the economy and other risks and uncertainties indicated in the Company's most recent SEC filing on form SB-2. Actual results could differ materially from the results referred to in the forward-looking statements.
Non-GAAP Financial Information
This press release contains certain non-GAAP financial information as defined by the U.S. Securities Commission Regulation G. Pursuant to the requirements of this regulation, a reconciliation of this financial information to our financial statements as prepared under generally accepted accounting principles in the United States (GAAP) is included in this press release. Unity's management believes that the disclosure of this non-GAAP financial information is useful to our investors and the investment community since certain non-cash charges and expenses may not be reflective of future expenses.
UNITY WIRELESS CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
RECONCILIATION OF PRO FORMA RESULTS
--------------------------------------------------------------------
Three months ended
June 30,
2005
--------------------------------------------------------------------
Original Adjustment Pro Forma
Net sales $ 1,716,888 $ -- $ 1,716,888
Cost of goods sold 1,224,026 (8,762)(a) 1,215,264
--------------------------------------------------------------------
492,862 8,762 501,624
Expenses:
Research and development 530,197 (16,959)(a) 513,238
Government grant 25,753 -- 25,753
Sales and marketing 187,983 (15,609)(a) 172,374
Depreciation and
amortization 53,846 (53,846)(b) --
Exchange (gain) loss 66,982 -- 66,982
Interest expense,
excluding accretion of
interest and debt
settlement 76,273 (56,070)(c) 20,203
General and
administrative 463,091 (144,563)(a) 318,528
---------------------------------------------------------------------
1,404,125 (287,047) 1,117,078
---------------------------------------------------------------------
Operating loss
for the period (911,263) 295,809 (615,454)
Accretion of interest
and debt settlement (454,141) 454,141(d) --
Other income -- -- --
---------------------------------------------------------------------
Loss for the period $(1,365,404) $ 749,950 $ (615,454)
(a) -- This represents stock-based compensation.
(b) -- This represents costs related to the amortization
of equipment and intangible assets.
(c) -- This represents shares issued in settlement
of interest expense.
(d) -- This represents accretion of interest and debt
settlement related to convertible debentures.
--------------------------------------------------------------------
Three months ended
June 30,
2004
--------------------------------------------------------------------
Original Adjustment Pro Forma
Net sales $ 2,063,198 $ -- $ 2,063,198
Cost of goods sold 1,833,974 (8,201)(a) 1,825,773
---------------------------------------------------------------------
229,224 8,201 237,425
Expenses:
Research and development 395,732 (14,769)(a) 380,963
Government grant 30,948 -- 30,948
Sales and marketing 144,456 (21,862)(a) 122,594
Depreciation and
amortization 14,216 (14,216)(b) --
Exchange (gain) loss (15,682) -- (15,682)
Interest expense,
excluding accretion of
interest and debt
settlement 3,345 -- 3,345
General and
administrative 414,032 (138,413)(a) 275,619
---------------------------------------------------------------------
987,047 (189,260) 797,787
---------------------------------------------------------------------
Operating loss
for the period (757,823) 197,461 (560,362)
Accretion of interest
and debt settlement -- -- --
Other income -- -- --
---------------------------------------------------------------------
Loss for the period $ (757,823) $ 197,461 $ (560,362)
(a) -- This represents stock-based compensation.
(b) -- This represents costs related to the amortization
of equipment and intangible assets.
(c) -- This represents shares issued in settlement
of interest expense.
(d) -- This represents accretion of interest and debt
settlement related to convertible debentures.
UNITY WIRELESS CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
RECONCILIATION OF PRO FORMA RESULTS
---------------------------------------------------------------------
Six Months Ended
June 30,
2005
---------------------------------------------------------------------
Original Adjustment Pro Forma
Net sales $ 3,684,458 $ -- $ 3,684,458
Cost of goods sold 2,846,709 (11,988)(a) 2,834,721
---------------------------------------------------------------------
837,749 11,988 849,737
Expenses:
Research and development 1,248,449 (37,284)(a) 1,211,165
Government grant 55,267 -- 55,267
Sales and marketing 262,274 39,459(a) 301,733
Depreciation and
amortization 93,912 (93,912)(b) --
Exchange (gain) loss 42,038 -- 42,038
Interest expense,
excluding accretion of
interest and debt
settlement 131,039 (79,527)(c) 51,512
General and
administrative 953,128 (393,312)(a) 559,816
---------------------------------------------------------------------
2,786,107 (564,576) 2,221,531
---------------------------------------------------------------------
Operating loss for the
period (1,948,358) 576,564 (1,371,794)
Accretion of interest
and debt settlement (595,221) 595,221(d) --
Other income -- -- --
---------------------------------------------------------------------
Loss for the period $(2,543,579) $ 1,171,785 $(1,371,794)
(a) -- This represents stock-based compensation.
(b) -- This represents costs related to the amortization
of equipment and intangible assets.
(c) -- This represents shares issued in settlement
of interest expense.
(d) -- This represents accretion of interest and debt
settlement related to convertible debentures.
---------------------------------------------------------------------
Six months ended
June 30,
2004
---------------------------------------------------------------------
Original Adjustment Pro Forma
Net sales $ 2,823,580 $ -- $ 2,823,580
Cost of goods sold 2,327,316 (9,120)(a) 2,318,196
---------------------------------------------------------------------
496,264 9,120 505,384
Expenses:
Research and development 648,105 (21,573)(a) 626,532
Government grant 42,354 -- 42,354
Sales and marketing 278,863 (47,446)(a) 231,417
Depreciation and
amortization 26,562 (26,562)(b) --
Exchange (gain) loss (1,349) -- (1,349)
Interest expense,
excluding accretion of
interest and debt
settlement 14,523 -- 14,523
General and
administrative 884,671 (399,129)(a) 485,542
---------------------------------------------------------------------
1,893,729 (494,710) 1,399,019
---------------------------------------------------------------------
Operating loss for the
period (1,397,465) 503,830 (893,635)
Accretion of interest
and debt settlement (37,393) 37,393(d) --
Other income 14,133 -- 14,133
---------------------------------------------------------------------
Loss for the period $(1,420,725) $ 541,223 $ (879,502)
(a) -- This represents stock-based compensation.
(b) -- This represents costs related to the amortization
of equipment and intangible assets.
(c) -- This represents shares issued in settlement
of interest expense.
(d) -- This represents accretion of interest and debt
settlement related to convertible debentures.