Revenue for the three months ended January 31, 2002 was $4.8 million, compared to $5.7 million for the same period in 2001, and $5.4 million for the prior three months ended October 31, 2001. China and India were significant contributors to international sales in the quarter, and fixed wireless markets are showing signs of renewed strength globally.
The current cash balance, including the funds from the recent financing, is in excess of $9 million. The cash balance at January 31, 2002 was $4.8 million, compared to $5.5 million on October 31, 2001. Management’s expectation has been to maintain a minimum cash balance of $3 million over the next twelve months without recourse to external financing, and reductions in cash used in operations continue to be on track with that expectation. In addition, Wi-LAN raised $5.2 million (net cash of $4.8 million) through a public offering of 1.5 million units at a price of $3.40 per unit, each unit consisting of one common share and one-half of one common share purchase warrant. The financing provides additional cash reserves in excess of the $3 million minimum. The current cash balance is expected to be adequate to sustain the company’s current operations indefinitely, since management’s expectation is to exit fiscal 2002 with cash flow positive operations.
Wi-LAN expects to exceed its fiscal 2001 revenues of $24.8 million in the twelve months ended October 31, 2002.
Wi-LAN has maintained a strong sales force that, with the added presence of growing distribution channels and Original Equipment Manufacturer (OEM) agreements, is continuing to drive forward in the broadband wireless access market. Wi-LAN’s Broadband Wireless Access Systems (BWS) products, based on Wi-LAN’s patented Wide-band Orthogonal Frequency Division Multiplexing (W-OFDM) technology, are now shipping to ten countries including China, and sales of Advanced Wireless Ethernet Bridge (AWE) products, VINE Internet Protocol (VIP) wireless Ethernet bridge products, and TIL-TEK Antennas continue worldwide.
"Our greatest accomplishment this quarter is the significant reduction in our cash expenses as a result of the structural changes we made in 2001. This will prepare Wi-LAN for its future growth," said Hatim Zaghloul, Chairman, President and CEO, Wi-LAN. "We expect to exceed our 2001 revenues in our 2002 financial year, especially with sales to countries like China, where we are continuing to build momentum."
In the second half of 2001, structural changes were put in place to improve the company’s cash flow. These changes included significant staff and expenditure reductions. The fixed components of cash used in operations have been sharply reduced, while the variable components of cash used in operations going forward will only be incurred to support new sales. Fewer resources are required for product development as the main effort shifts from development of the BWS 3000 series based on Wi-LAN’s W-OFDM technology to product enhancements and cost reductions of the full product line to improve gross margins and market penetration. Master Service Agreements and integrators reduce the need for in-house network design.
"The difficult restructuring decisions that we made in 2001 are bringing us closer to profitability," said Steven Bellamy, Chief Financial Officer, Wi-LAN. "The progress we have made in controlling our spending and managing working capital allowed us to maintain a healthy cash balance at the end of the quarter, in spite of reduced revenues."
Operations Highlights
Several significant strategic initiatives were accomplished in the first quarter, including:
Wi-LAN supported the proposal of the IEEE’s Task Group G, a United States wireless standards setting body, for a new wireless local area network (LAN) standard (IEEE 802.11g) based on OFDM technology that will allow data rates up to 54 Mbps in the 2.4 GHz frequency band. Wi-LAN’s receipt of official certification for its patented W-OFDM technology from the Federal Communications Commission (FCC) on June 5, 2001 paved the way for this IEEE 802.11g standard.
Wi-LAN’s new 11 megabit-per-second VIP 110-24 wireless Ethernet bridge was certified for use in the 2.4 GHz license-exempt frequency band under the authority of the United States Federal Communications Commission (FCC), European Telecommunications Standards Institute, (ETSI) and Industry Canada.
Wi-LAN announced the sale of its controlling interest in Digital Transmission Systems (DTS) to a DTS Employee Stock Ownership Program (ESOP). On December 31, 2001, the ESOP entered into an agreement to purchase all DTS equity instruments held by Wi-LAN. As a result of the transaction, the ESOP assumes controlling interest in DTS and Wi-LAN relinquishes its DTS Board seats. The transaction with the DTS ESOP will liquidate all Wi-LAN equity holdings in DTS.
Wi-LAN received a purchase order for the 2002 calendar year of over $9 million of Wi-LAN’s W-OFDM based BWS 3000 series from Wi-Comm United Communications, a key supplier of Wi-LAN products to the Chinese marketplace headquartered in Beijing.
Wi-LAN announced its 20% equity interest in Wi-Comm Communications Co. Ltd. (Wi-Comm), a Chinese joint venture company based in Beijing, China. The joint venture was created to accelerate penetration into the Chinese market by accessing experienced talent to drive Wi-LAN product sales in China.
Wi-LAN announced its joint venture, Wi-Comm, will supply China Satellite Communications Group (Chinasat), a Chinese telecommunications operator, with Wi-LAN’s 3.5 GHz BWS 3500 System for deployment in the city of Nanjing. Chinasat is the first customer for the $9 million purchase order of Wi-LAN’s W-OFDM based BWS 3500 system in the 2002 calendar year. Chinasat was established in 1985 as one of six China telecommunications operators and is an operator of satellite-based rural telephone systems, multi-media communications systems, and broadband wireless data access systems.
Quarterly Consolidated Results
Wi-LAN intends to release its consolidated results for the three months ended January 31, 2002 in mid-March 2002. A conference call to discuss the results will be held on the following day. Details with regard to the call will be press released and posted on Wi-LAN's website at www.wi-lan.com.
About Wi-LAN Inc.
Wi-LAN is a global innovator in the field of high-speed wireless data communications, specializing in high-speed Internet access, LAN/WAN extension and broadband wireless access. Wi-LAN is the Chair Company of the OFDM Forum (www.ofdm-forum.com). Wi-LAN believes its W-OFDM patent is necessary for the implementation of devices using the IEEE 802.11a or ETSI BRAN HiperLAN/2 standards. Wi-LAN's products have been sold in more than 50 countries on six continents. Wi-LAN's common shares trade on The Toronto Stock Exchange under the symbol "WIN." Detailed information on Wi-LAN can be found at www.wi-lan.com. |