News Release Details

Wi-LAN ANNOUNCES 2004 THIRD QUARTER CONSOLIDATED RESULTS

08/25/2004


 

Attached Financial Statement

CALGARY, Canada - August 25, 2004 - Wi-LAN Inc. (TSX:WIN), a global provider of broadband wireless communications products and technologies and a charter member of the WiMAX Forum , today announced financial results for the three months and nine months ended July 31, 2004. All financial amounts are expressed in thousands of Canadian dollars unless otherwise noted.

•  In the nine months ended July 31 , 2004 the Company achieved consolidated revenue of $19,188, compared with $18,931 for the nine months ended July 31, 2003. Cash flow from operations, including changes in non-cash working capital, for the nine months was $(5,734), compared with $(1,015) for the first nine months of the 2003 fiscal year. Net income (loss) for the first three quarters was $(4,188) or a loss of eleven cents per share, compared with a loss of $(3,740) or twelve cents per share in the first three quarters of 2003.

•  In the three months ended July 31 , 2004 the Company achieved consolidated revenue of $6,144, compared with $7,503 for the three months ended July 31, 2003. Cash flow from operations, including changes in non-cash working capital, for the three months was $(4,002), compared with $1,844 for the 2003 third quarter. Net income (loss) for the third quarter was $(2,168) or a loss of five cents per share, compared with income of $37 or zero cents per share in the 2003 third quarter.

•  Consolidated cash on July 31, 2004 was $15,344, compared with $24,875 on April 30, 2004.

• 

•  Because of an increase in non-cash working capital at the expense of cash, cash used in operations including changes in non-cash working capital balances may exceed $(6) million in the 2004 fiscal year. The Company has decided to continue investment in product development at unprecedented levels for the next nine months in this unique time in the company's history, when both WiMAX and mobile broadband wireless products are being brought to market.

"Revenue in the first three quarters was below our original guidance and we are taking immediate action to remedy the situation. All employees at Wi-LAN are held responsible for meeting their goals and contributing to the Company's success and we are replacing under-performing marketing and sales personnel, including some senior executives," said Dr. Sayed-Amr El-Hamamsy, President and Chief Executive Officer, Wi-LAN Inc. "Wi-LAN is currently recruiting candidates, from inside and outside of the Company, for two new vice presidents to lead its sales and marketing departments. They will be responsible for completing the Company's transformation into a sales and marketing driven company."

The timing of the decision to introduce new leadership for Wi-LAN's sales and marketing departments is appropriate, given that Wi-LAN is experiencing a historic shift in the marketplace as a result of the expectation of the introduction of WiMAX Certified equipment and mobile broadband wireless equipment in the near future. Wi-LAN is taking advantage of this transition period to complete its transformation to a sales and marketing company. The future opportunities are very significant and it is critical at this point that the Company ensures that it has the sales, marketing and technology practices, pricing and personnel in place to capitalize on them and meet the many challenges that this entails.

Wi-LAN is also in the process of finding a replacement for Shawn Taylor, former Vice President of Technology, from a strong slate of internal candidates. Mr. Taylor has decided to leave Wi-LAN to join a start-up company. Mr. Taylor's departure was a personal decision. Under his leadership the technology department continued Wi-LAN's tradition of technological leadership. For example, the Company recently improved its sales opportunities by adding new competitively priced products to its VIP product line, and projects are nearing completion for Wi-LAN's new Libra MX products and Libra Transit Mobility (TM) products. The replacement process is expected to be smooth and have no impact on ongoing project schedules.

Third quarter Financial Highlights

Consolidated revenue ($000's)

In the nine months ended July 31, 2004 the Company achieved consolidated revenue of $19,188, which is 1.4% growth over revenue of $18,931 for the first nine months of the 2003 fiscal year. Consolidated revenue for the three months ended July 31, 2004 was $6,144, which is $(1,359) or 18.1% less than the $7,503 reported for the same period in fiscal year 2003, and $(344) or 5.3% less than the $6,488 revenue

reported for the prior three months ended April 30, 2004.

The following issues had a negative impact on revenue in the three months ended July 31, 2004:

•  Wi-LAN is experiencing a dramatic shift in the marketplace that has effectively caused delays in the purchasing decisions of its customers. Man y of Wi-LAN's current early adopter customers, including wireless Internet service providers, system integrators and value-added resellers, are entering a new phase where expansion plans are in various stages of finalization, including obtaining financing and regulatory approvals. Larger potential customers such as telecommunications carriers, cable companies, utility companies and large retailers are demonstrating interest in Wi-LAN's Continuity Program TM and in future WiMAX products but their sales cycle is longer than Wi-LAN's typical customer. Finally, mobile telecommunications operators and equipment suppliers are also demonstrating an interest in the capabilities of Wi-LAN's upcoming mobile LIBRA 5800 TM product but the market is still in the formative stage with initial sales expected over the next nine months.

•  While Wi-LAN's CONTINUITY PROGRAM TM has been instrumental in encouraging vendors to deploy Wi-LAN's pre-WiMAX equipment today, the company is experiencing a slow-down in sales in anticipation of Wi-LAN's Libra MX product series later this fall and of WiMAX Certified (1) equipment in the first half of 2005. Wi-LAN continues to expect to be the first vendor to introduce WiMAX Certified equipment in the first half of 2005.

•  Competitive pricing pressure has increased as other broadband wireless equipment vendors are offering BWA equipment at steeply discounted pricing to establish market share, particularly in the Chinese market.

•  Wi-LAN's antenna division, TIL-TEK Antennas, has not experienced the cellular infrastructure maintenance sales growth that was expected over the summer months.

Wi-LAN is undertaking a comprehensive review of its sales, marketing and product development practices, including processes, product features, pricing, and personnel. Wi-LAN has begun to take the actions required to meet today's challenges:

•  Wi-LAN is currently undertaking external and internal recruiting for two new vice presidents to lead its sales and marketing departments. Nico Roelofsen and Ramesh Uppal, former vice presidents of Global Sales and Marketing respectively, have resigned their positions. Their replacements will be responsible for completing the Company's transformation into a sales and marketing company.

•  All employees are held responsible for meeting their goals and contributing to the Company's success, and some members of the sales force are being replaced with high caliber sales people with a proven track record. All departments are pursuing similar actions.

•  New sales and marketing positions, focused on the Intelligent Transportation System (ITS) market and on large carrier and Original Equipment Manufacturers (OEMs), have been created and staffed.

•  The Company recently improved its sales opportunities by adding new competitively priced products to its VIP product line and providing bundled pricing for its Ultima3 and Libra 5800 products.

•  Projects for the Libra MX product series and the LIBRA Transit Mobility (TM) products are nearing completion. Progress is also being made on the WiMAX SoC and MAC software projects.

•  The Company's Calgary broadband wireless division is working towards achieving ISO 9001 certification. Improved quality control processes are being implemented and documented as part of the certification process. The company's antenna division, TIL-TEK Antennas, has achieved ISO 9001 certification.

•  TIL-TEK Antennas is actively seeking new market opportunities to increase its sales.

Revenue from the Company's broadband wireless access products for the nine months ended July 31, 2004 was $15,831, which is $171 or 1.1% more than the $15,660 reported for the first nine months in fiscal year 2003. Revenue from the Company's broadband wireless access products for the three months ended July 31, 2004 was $5,033, which is $(1,172) or 18.9% less than the $6,205 reported for the same period in fiscal year 2003 and $(330) or 6.2% less than the $5,363 reported for the prior three months ended April 30, 2004. The three-month revenue consisted of:

•  $1,419 from the company's Libra product series, which is $650 or 84.5% more than the $769 of Libra product series revenue reported for the same period in fiscal year 2003 and $(323) or 18.5% less than the $1,742 reported for the prior three months ended April 30, 2004. The Libra product series is based on Wi-LAN's patented W-OFDM (Wide-band Orthogonal Frequency Division Multiplexing) technology, which will form the basis for Wi-LAN's Wi-MAX Certified (1) products in 2005; and

•  $3,614 from Wi-LAN's other broadband wireless products, which is $(1,822) or 33.5% less than the $5,436 of other broadband wireless revenue reported for the same period in fiscal year 2003 and $(7) or 0.2% less than the $3,621 reported for the prior three months ended April 30, 2004.

Wi-LAN expects its broadband wireless product sales to show growth as existing customers grow their networks and its Continuity Program tm ensures they can continue to expand their existing Libra networks as WiMAX Certified equipment comes on line.

Revenue from the Company's antenna products for the nine months ended July 31, 2004 was $3,027, which is $(152) or 4.8% less than the $3,179 reported for the first nine months in fiscal year 2003. Revenue from the Company's antenna products for the three months ended July 31, 2004 was $1,072, which is $(226) or 17.4% less than the $1,298 reported for the same period in fiscal year 2003 and $(53) or 4.7% less than the $1,125 recorded for the prior three months ended April 30, 2004. Antenna product sales have not experienced expected growth over the past several quarters and the division is actively seeking new market opportunities to increase its sales.

Revenue from the Company's license, technology and engineering services for the nine months ended July 31, 2004 was $330, which is $238 or 258.7% more than the $92 reported for the first nine months in fiscal year 2003. License, technology and engineering services revenue for the three months ended July 31, 2004 was $39, compared with $nil reported for the same period in fiscal year 2003 and $nil reported for the prior three months ended April 30, 2004.

•  Most of the license, technology and engineering services revenue for the first nine months of the 2004 fiscal year resulted from third parties assisting with project funding to develop new applications for Wi-LAN's W-OFDM technology, namely its next generation Libra access point, cost-reduced Libra customer premise equipment, and its LIBRA Transit Mobility (TM) products. Completion of these projects is expected in the fourth quarter of the 2004 fiscal year.

•  Wi-LAN is currently in discussions regarding the licensing agreement with Philips Semiconductor covering its second generation WiFi (802.11a/g and 802.11g) chipsets, which became available in production quantities in Q4 2003.

•  Licensing revenue from Wi-LAN's agreement with Fujitsu Microelectronics America is expected to begin in the third quarter of the 2005 fiscal year.

•  Wi-LAN is in the process of negotiating additional licensing agreements with other semiconductor companies.

•  On June 23, 2004 Wi-LAN initiated a patent infringement lawsuit against Cisco Systems and OCR for sales of Cisco's 802.11a and g based Linksys and Aironet products in Canada.

•  Wi-LAN's patent infringement lawsuit with Redline Communications has been settled, and Redline has agreed to pay Wi-LAN a royalty for every advanced OFDM wireless device that it has produced and will produce in the future, regardless of where the devices are sold. The license, technology and engineering services revenue recognized in the three months ended July 31, 2004 resulted from this settlement.

•  Wi-LAN recently agreed to acquire 17 U.S. patents and patent applications, including their foreign counterparts from Ensemble Communications Inc. , a U.S. broadband wireless equipment supplier that recently decided to wind-up its business. This acquisition advances Wi-LAN's goal to produce the world's first WiMAX Certified (1) broadband wireless systems and strengthens Wi-LAN's technology licensing strategy with regard to such systems.

Product gross margin (% of product revenue)

Product gross margin was 48.3% for the nine months ended July 31, 2004, which is 1.2 percentage points less than the product gross margin of 49.5% for the first nine months of the 2003 fiscal year. Product gross margin for the three months ended July 31, 2004 was 46.9%, which is 2.8 percentage points less than the 49.7% reported for the same period in fiscal year 2003, and 1.9 percentage points more than the 45.0% reported for the prior three months ended April 30, 2004. Product gross margin was less than the Company's target of 50% due to a combination of factors. Although Wi-LAN's cost-reduced broadband wireless access products, Ultima3, LIBRA 5800 and VIP 110-24, continued to dominate the sales mix and sales of previously written down legacy products (AWE 45-24 and AWE 120-24) also increased the margin contribution, these factors were partly offset by increased sales of lower margin Libra 3000 Customer Premise Equipment (CPE's) as some customers continued to fill in their existing networks. Wi-LAN continues to focus on reducing the production costs of its Libra CPE's, to increase margin and market penetration. Another reason for reduced gross margin in the quarter was increased sales of a lower margin low-throughput serial product, which is a legacy of Wi-LAN's acquisition of UCWireless in 2001.

Operating expense ($000's)

Operating expenses for the nine months ended July 31, 2004 were $14,149, an increase of $1,454 or 11.5% compared with $12,695 for the first nine months of the 2003 fiscal year. Operating expenses for the three months ended July 31, 2004 were $5,139, an increase of $1,615 or 45.8% compared with $3,524 for the same period in fiscal year 2003, and an increase of $408 or 8.6% compared with $4,731 for the prior quarter ended April 30, 2004.

The largest reason for the $1,615 increase in operating expenses over Q3 2003 was an increase of $668 in research and development (R&D), from $1,022 in Q3 2003 to $1,690 in Q3 2004, as Wi-LAN continues to develop its next generation Libra access point, its cost-reduced Libra CPE, its LIBRA Transit Mobility (TM) products and, in collaboration with Fujitsu Microelectronics of America, the WiMAX System-on-Chip (SoC), which are all scheduled for completion in the fourth quarter of the 2004 fiscal year. R&D expense is expected to stabilize in Q4 2004. R&D expense was reduced in the quarter by received and accrued cash receipts from Technology Partnerships Canada (TPC) of $660, and increased by non-cash amortization of future warrants owed to TPC in the amount of $211.

 

3 months ended July 31

9 months ended July 31

$000's

2004

2003

2004

2003

Total R&D expenditures

$ 2,139

$ 1,016

$ 5,245

$ 3,107

Less: TPC contributions (1)

660

1,800

1,460

1,800

Cash R&D expense

1,479

(784)

3,785

1,307

Add: Amortization of

TPC warrants (1)

211

1,806

1,169

1,806

Reported R&D expense

1,690

1,022

4,954

3,113

(1) The amounts related to TPC that were received, accrued and amortized in Q3 2003 were retroactive to November 1, 2002. The amounts directly applicable to the three months ended July 31, 2003 were $0.4 million, rather than $1.8 million.

Wi-LAN believes it is critical to maintain key R&D expenditures, in spite of lagging revenue, because the company must complete the development of products for potentially large future WiMAX and Intelligent Transportation Systems (ITS) opportunities. The extent of product development activity needed over the next nine months is unprecedented in Wi-LAN's history, but this development activity is finite.

Afterwards expenditures, particularly research and development, will be sized to revenue and gross margin to ensure cash flow positive operations. Essential product development projects are as follows:

•  Several projects are underway to develop Wi-LAN's WiMAX Certified equipment, which Wi-LAN expects to be the first such equipment to be commercially available in the first half of 2005. This market has been estimated by Intel to be in the range of seven million units sold annually, a multi-billion dollar market, by 2007 and to grow significantly thereafter as mobile applications are addressed. Wi-LAN believes it can significantly grow its share of this market by being the first to introduce WiMAX Certified equipment.

•  Wi-LAN has agreed to provide Wellink, its South Korean ITS equipment co-development partner, with broadband mobile wireless products valued at several million dollars over the next nine months. The feature enhancements of Wi-LAN's Libra 5800 Transit Mobility (TM) products required in the agreement have been completed and delivered to Wellink. The rate at which Wellink will be able to deliver orders for Wi-LAN's products is now dependent on Wellink's customers' decision making processes and business needs. These mobile wireless systems are initially intended for broadband communications for high-speed trains in the Asia-Pacific region, including real-time video security, video advertising and broadband wireless Internet. Wi-LAN believes that the global demand for this equipment will be significant over the next few years, driven largely by the requirement for better security on public transportation systems, and that Wi-LAN has, as with the WiMAX market, a significant technology lead over its competition that it must maintain in order to capitalize on the expected market demand.

Cash operating expenses excluding R&D (sales and marketing, operations, general and administrative, interest on long term debt) for the three months and nine months ended July 31, 2004 were $3,142 and $8,477 respectively, compared with $2,230 and $7,706 reported for the same three and nine month periods in fiscal year 2003, an increase of $912 for the three month period and $771 for the nine month period.

•  Sales and marketing (S&M) increased by $266 and $484 for the three months and nine months ended July 31, 2004 respectively, when compared with the same periods in fiscal year 2003, as Wi-LAN strengthened its sales and marketing in an effort to grow future sales.

•  Operations expense increased by $385 and $81 for the three months and nine months ended July 31, 2004 respectively, when compared with the same periods in fiscal year 2003 largely due to a generous customer satisfaction program initiated to address issues which were reported in Q1, initiation of new quality control processes, and proactive product refurbishment initiatives. These actions are expected to result in improved product quality and higher customer retention and satisfaction rates.

•  General and administration (G&A) increased by $162 and $81 for the three months and nine months ended July 31, 2004 respectively, when compared with the same periods in fiscal year 2003 largely due to reclassification of rental income from an offset to office rent to other income, pursuant to the Company's purchase of its office building in Q1, and also due to legal expenses incurred pursuant to the Company's recent purchase of a patent portfolio from Ensemble Communications, Inc.

•  Interest on long term debt was $99 and $125 for the three months and nine months ended July 31, 2004 respectively, compared to $nil in the same periods in fiscal year 2003 due to the mortgage on the Company's head office building which the Company purchased on March 22, 2004. The Company leased the building in 2003, so no interest expense was recorded in that year.

Net income (loss) ($000's)

Net income (loss) for the nine months ended July 31, 2004 was $(4,188) compared with $(3,740) in the first nine months of the 2003 fiscal year, a change of $(448). Net income (loss) for the three months ended July 31, 2004 was $(2,168), which is $(2,205) less than the $37 reported for the same period in fiscal year 2003, and $(659) less than the $(1,509) net loss for the prior three months ended April 30, 2004. Net income in the quarter declined due to lower product gross margin and higher operating expenses, which are detailed above. The Company believes revenue growth in the fourth quarter of fiscal year 2004, along with gross margins in the 50% range and controlled operating expenses will allow it to manage the net loss in Q4 2004.

Cash flow management ($000's)

In the nine months ended July 31, 2004 the Company's cash flow from (used in) operations , including changes in non-cash working capital balances, was $(5,734), a $(4,719) decline compared with $(1,015)

in the first nine months of the 2003 fiscal year. Net cash flow from operations, including changes in non-cash working capital balances, for the three months ended July 31, 2004 was $(4,002), a decline of $(5,846) compared with $1,844 for the same period in fiscal year 2003, and a reduction of $(2,835) compared with $(1,167) for the prior quarter ended April 30, 2004.

The cash used in operations in the third quarter of fiscal year 2004 including changes in non-cash working capital balances of $(4,002) was due to increases in non-cash operating working capital balances which decreased cash flow from operations by $(2,434), and the cash net loss from continuing operations, which decreased cash flow from operations by $(1,568).

•  Negative non-cash working capital changes in the quarter were primarily an increase in accounts receivable, which used $(930) of cash in the quarter and a reduction in accounts payable and accrued liabilities, which used $(1,330) of cash in the quarter. These changes were due to changes in the timing of cash receipts and payments throughout the quarter. Other working capital items used an additional $(174) of cash in the quarter.

•  The net loss from continuing operations in the three months ended July 31, 2004 of $(1,568) was composed of gross margin of $2,900, which was more than offset by cash expenses of $(4,468). A large component of the cash expenses was R&D. Spending continued on development of the next-generation access point and customer premise equipment for W-LAN's W-OFDM based Libra product line, and the development of semiconductor intellectual property (SIP) cores, all of which will form the basis of Wi-LAN's future WiMAX Certified (1) product series, and on development of Wi-LAN's LIBRA 5800 Transit Mobility products. Operating expense changes are explained in more detail in the Operating Expense section above.

Because of an increase in non-cash working capital at the expense of cash, cash used in operations including changes in non-cash working capital balances may exceed $(6) million in the 2004 fiscal year. The Company has decided to continue investment in product development at unprecedented levels for the next nine months in this unique time in the company's history, when both WiMAX and mobile broadband wireless products are being brought to market.

Consolidated cash on July 31, 2004 was $15,344 compared with $27,553 on October 31, 2003, a reduction of $(12,209), and a reduction of $(9,531) compared with $24,875 on April 30, 2004. Working capital on July 31, 2004 was $20,218 compared with $28,607 on October 31, 2003, a reduction of $(8,389), and a reduction of $(7,114) compared with $27,332 on April 30, 2004. Wi-LAN's July 31, 2004 consolidated cash and working capital is expected to be adequate to sustain the Company's growth in existing operations.

Financial summary ($000's)

($000's unless stated otherwise)

3 months ended

9 months ended

Statement of Operations Info.

July 31, 2004

Apr. 30, 2004

July 31, 2003

July 31, 2004

July 31, 2003

Revenue - geographic

   

 

 

North America

$ 3,088

$ 2,925

$ 3,277

$ 8,727

$ 8,194

Europe

1,125

1,395

775

3,712

2,148

Asia & other international

1,931

2,168

3,451

6,749

8,589

Subtotal

6,144

6,488

7,503

19,188

18,931

Revenue by product category

   

 

 

OFDM radios

1,419

1,742

769

5,202

2,404

Other radios

3,614

3,621

5,436

10,629

13,256

Antennas

1,072

1,125

1,298

3,027

3,179

Subtotal

6,105

6,488

7,503

18,858

18,839

License, technology & engineering revenue

39

0

0

330

92

Total revenue

6,144

6,488

7,503

19,188

18,931

Product gross margin

2,861

2,921

3,728

9,101

9,315

% of product revenue

46.9%

45.0%

49.7%

48.3%

49.5%

Operating income (loss)

(2,239)

(1,810)

204

(4,718)

(3,288)

Net income (loss)

(2,168)

(1,509)

37

(4,188)

(3,740)

Earnings (loss) per share ($ / share)

$ (0.05)

$ (0.04)

$ 0.00

$ (0.11)

$ (0.12)

Cash Flow Information

July 31, 2004

Apr. 30, 2004

July 31, 2003

July 31, 2004

July 31, 2003

Cash from (used in) operations

$ (4,002)

$ (794)

$ 1,844

$ (5,734)

$ (1,015)

Financing

(22)

10,758

25

12,648

(80)

Investments

(5,507)

(12,035)

(8)

(19,123)

(23)

Change in cash

(9,531)

(2,071)

1,861

(12,209)

(1,118)

Cash, beginning of period

24,875

26,946

2,607

27,553

5,586

Cash, end of period

15,344

24,875

4,468

15,344

4,468

Balance Sheet Information

July 31, 2004

Apr. 30, 2004

Oct.31, 2003

 

Working capital

$ 20,218

$ 27,332

$ 28,607

 

Long term debt

7,932

8,000

0

 

Shareholders' equity

41,881

38,715

34,880

 

Total assets

55,349

53,666

44,683

 

Third quarter Operations Highlights

Patent Action

On May 25, 2004 Wi-LAN announced an agreement to acquire 17 U.S. patents and patent applications, including their foreign counterparts from Ensemble Communications (Ensemble) , a U.S. broadband wireless equipment supplier that recently decided to wind up its business. This acquisition advances Wi-LAN's goal to produce the world's first WiMAX Certified (1) broadband wireless systems and strengthens Wi-LAN's technology licensing strategy with regard to such systems. Under the terms of the agreement, Wi-LAN paid $5,340 (US$3.9 million) in cash and $4,970 in special warrants exercisable into Wi-LAN common shares. Ensemble will license back the patent portfolio and Wi-LAN will pay Ensemble a range of 5% to 15%, depending on quantities, timing and other factors, of any royalty revenue that it receives from the purchased patents. Upon closing of the acquisition on May 21, the patents became part of Wi-LAN's patent portfolio and ongoing licensing strategy.

On May 27, 2004 Wi-LAN announced settlement of the legal action in Canada that it launched in July 2002 against a private Canadian company, Redline Communications . Redline produces a wireless device utilizing advanced orthogonal frequency division multiplexing (OFDM) technology, and it is Wi-LAN's belief that this device infringes Wi-LAN's W-OFDM patents, specifically Canadian patent number 2,064,975 and U.S. patent number 5,282,222. Redline has agreed to pay Wi-LAN a royalty for every advanced OFDM wireless device that it has produced and will produce in the future, regardless of where the devices are sold.

On June 23, 2004 Wi-LAN announced the beginning of a new phase in its intellectual property licensing strategy. Wi-LAN is escalating its active pursuit of licensing and protecting its intellectual property. In that regard, Wi-LAN has commenced legal action in Canada against Cisco Systems Inc. , a manufacturer and marketer of networking and communications products, for producing and marketing IEEE standard 802.11a and 802.11g devices without a license from Wi-LAN. Wi-LAN is seeking compensation for use of its intellectual property as well as punitive damages.

On July 13, 2004 Wi-LAN announced that it has filed a letter of assurance with the IEEE Standards Association (IEEE-SA) for the patents and patent applications recently acquired from Ensemble Communications Inc. Wi-LAN's letter of assurance states that it is prepared to grant a license for the

patents and patent applications to an unrestricted number of applicants on a worldwide, non-discriminatory basis on reasonable terms and conditions. Wi-LAN believes the infringement of these patents is unavoidable in any implementation of the IEEE 802.16 WirelessMAN Standard (1) . The WiMAX Forum (1) intends to certify equipment designed to this standard.

Board Changes

On May 27, 2004 Wi-LAN announced the appointment of George R. Horhota , Co-Founder, Executive Vice President & Chief Financial Officer of Suiteworks Inc., to the Company's Board of Directors. Mr. Horhota will fill the vacancy created by the resignation from the board of Dr. Robert Schulz in March 2004 and will serve as a member of the board's Audit Committee. Mr. Horhota founded and led Royal Bank of Canada's Information Technology and Media Portfolio Group in Corporate Banking between 1993 and 1996 and was seconded from his earlier Systems and Technology position with the bank to serve one year as President (1991 to 1992) and three years as a Director with the Canadian Business Telecommunications Alliance. He then went on to become Chief Financial Officer and Vice President Corporate Development with TSE-listed ACC Canada until 1998 when its NASDAQ listed parent corporation, ACC Corp., was acquired by AT&T Corp. Subsequently, Mr. Horhota spent 3 years as President of Cannect Networks, Canada's first packet-based CLEC, then in 2002 joined BCE Emergis Inc. as its Vice President of Operations before founding Suiteworks Inc. in the later part of 2003. Mr. Horhota is a member of the Law Society of Upper Canada, having received a Juris Doctor Degree from the University of Toronto, Faculty of Law, and was a founding Director of Humber College's Telecommunications Learning Institute.

Sales Announcements

On May 6, 2004 Wi-LAN and Adino Telecom Limited (Adino), India's premier broadband solutions company, announced an additional $0.3 million of Wi-LAN's VINE based VIP 110-24 fixed wireless access products and accessories have been ordered for deployment in India. More than half of the order is for further expansion of the Gujarat State Wide Area Network (GSWAN), and the balance is being used primarily for corporate wide area networks (WANs). GSWAN's initial order for Wi- LAN equipment was announced on May 29, 2003, and Wi-LAN shipped $0.2 million of broadband wireless products to GSWAN prior to receipt of this latest order. GSWAN, which has been operational for three years, will continue to be expanded further using the VIP 110-24 broadband wireless products to provide voice, video and data services for many additional offices and departments of the State Government.

On May 11, 2004 Wi-LAN and Tulip IT Services (Tulip), one of India's leading integrated IT solutions providers, announced the deployment of Wi-LAN's broadband wireless products in the state of Kerala, India to service Internet kiosks . The Internet kiosks, called Akshaya Centres, are being provided by the Kerala State IT Mission Department (KSITM). The initial $100,000 order is for the Mallapuram district, and the entire infrastructure installation for this district is expected to be in place by May 30. Demand for applications such as Internet browsing, voice-over-internet-protocol (VoIP) and videoconferencing is expected from various government offices and private businesses, resulting in the provision of additional services. As well, Tulip has signed a letter of intent with KSITM to provide the same service to four additional districts. In total, there are 14 districts in Kerala and it is the intent of KSITM to set up these training centers in all of them.

On May 21, 2004 Wi-LAN and O'Connor's Singapore Pte. Ltd ., a Wi-LAN Channel Partner in S.E. Asia, announced deployment of Wi-LAN's broadband wireless products at the National Institute of Education (NIE), Singapore and the Riau Island Provincial Government Office, Indonesia . The NIE, a national teacher training institute, is using the products to provide connectivity for trainee teachers to access e-learning and video-based materials. The Riau Island Provincial Government is using the products for Internet, and backhaul for data and Voice-over-IP (VoIP). Wi-LAN's VIP 110-24 and Ultima3 series are being deployed.

On June 1, 2004 Wi-LAN and Radionet Oy, a leading supplier of Wi-Fi Hotzone technology announced the sale of broadband wireless equipment for the expansion of the Mäntsälä regional wireless network in southern Finland . Owned and operated by the local energy company Mäntsälän Sähkö, the

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Wi-LAN Inc. and its affiliates (“WIN”) have no control over the External Site, any data or other content contained therein or any additional linked websites. The link to the External Site is provided for convenience purposes only.

By clicking “Accept” you acknowledge and agree that neither WIN nor third party provider Virtua Research, Inc. (“Virtua) is responsible, or accepts or assumes any responsibility or liability whatsoever for, the content, the data or the technical operation of the Linked Site. Further, by entering the External Site, you also acknowledge and agree that you completely and irrevocably waive any and all rights and claims against WIN and Virtua and further acknowledge and agree that in no event shall WIN or Virtua, or their respective officers, employees, directors and agents be liable for any (i) indirect, consequential, incidental, special, compensatory or punitive damages, (ii) damages for loss of income, loss of business profits, business interruption, loss of data or business information, loss of or damage to property, (iii) claims of third parties, or (iv) other pecuniary loss, arising out of or related to the Legal Notice, this disclaimer or the External Site

By entering the External Site, you further acknowledge and agree that the disclaimer of warranties and limitations of liability set out in this disclaimer shall apply regardless of the causes, circumstances or form of action giving rise to the loss, damage, claim or liability, even if such loss, damage, claim or liability is based upon breach of contract (including, without limitation, a claim of fundamental breach or breach of a fundamental term), tort (including, without limitation, negligence), strict liability or any other legal or equitable theory, and even if WIN and Virtua are advised of the possibility of the loss, damage, claim or liability. The waiver and release specifically includes, without limitation, any and all rights and claims pertaining to the processing of personal data, including but not limited to any rights under any applicable data protection statute(s).

If in any jurisdiction, any part of this disclaimer is held to be unenforceable by a court of competent jurisdiction, such part of this disclaimer shall be restricted or eliminated to the minimum extent and the remaining disclaimer shall otherwise remain in full force and effect.

Please note the information presented is deemed representative at the time of its original release. Changes in historical information may occur due to adjustments in accounting and reporting standards & procedures.

Non-GAAP Information

In addition to disclosing results determined in accordance with GAAP, WIN may also disclose certain non-GAAP and pro forma non-GAAP results of operations, including certain ratios, operational and miscellaneous data, as well as net income, diluted earnings per share, operating expenses, and operating income that make certain adjustments or exclude certain charges and gains that are outlined in the schedules included in this website. Management believes that this non-GAAP and pro forma non-GAAP information provides investors with additional information to assess WIN operating performance by making certain adjustments or excluding costs or gains and assists investors in comparing WIN's operating performance to prior periods. Management uses this non-GAAP and pro forma non-GAAP information, along with GAAP information, in evaluating its historical operating performance. WIN and Virtua also take no responsibility for third party pricing data provided for informational purposes and certain ratio results formulated from the provided third party pricing data.

The non-GAAP information is not prepared in accordance with GAAP and may not be comparable to non-GAAP information used by other companies. The non-GAAP information should not be viewed as a substitute for, or superior to, other data prepared in accordance with GAAP.

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