LEAGUE CITY, TX — (Marketwire) — 08/23/11 — ERF Wireless (OTCBB: ERFWD), a leading provider of enterprise-class wireless and broadband products and services, announced today that the company has filed its Form 10-Q with the Securities and Exchange Commission reporting results for the second quarter ended June 30, 2011. The company reported Positive Adjusted EBITDA, as defined below, of $1,136,000 for the six-month period ended June 30, 2011, including a one-time gain of $1,176,000 on the divestiture of certain non-core assets and operations previously reported in the company–s first quarter results. Adjusted EBITDA losses, excluding the one-time gain, were $171,000 and $40,000, respectively for the three- and six-month periods ended June 30, 2011, as compared to Adjusted EBITDA losses of $732,000 and $1,737,000 respectively for the same prior year reporting periods ended June 30, 2010; or Adjusted EBITDA improvements of $561,000 and $1,697,000 respectively when compared to the prior year three- and six-month periods ended June 30, 2010.
Richard Royall, CFO of ERF Wireless, commented, “During the second quarter of 2011, we continued to generate substantial growth in the oil and gas sector and have dramatically improved our overall financial condition since fiscal year end, including 212% increase in Net Sales for our oil and gas subsidiary, Energy Broadband Inc. for the quarter and six-month period ended June 30, 2011, a $2.0 million improvement in our liquidity position and a $1.5 million improvement in our Shareholders– Equity. Additionally, we retired some $0.7 million in certain debt and capital leases in the first six months of 2011, resulting in an overall $1.4 million decrease in current liabilities and an increase of $0.6 million in current assets.”
Dr. H. Dean Cubley, CEO of ERF Wireless, commented, “During the quarter ended June 30, 2011, we experienced dramatically improved financial and operational results, including a 212% increase in revenues in our oil and gas Energy Broadband subsidiary as compared to the same period in 2010. This $642,000 in revenue also represented a 20% increase in Energy Broadband revenues as compared to the previous quarter. These results remain consistent with our strategic decisions to divest certain wireless assets and operations during the first quarter of 2011 that were not core to our oil and gas vertical market focus. We continued to lay the foundation for future growth by partnering with other large wireless network operators to provide wireless broadband connectivity in regions where ERF Wireless does not currently own networks and thus expand our operational footprint in active oil and gas drilling regions in preparation for the dramatic increases being experienced in the oil and gas industry. Given the foundation that we have put in place during the last two years along with recent new contract wins with major oil and gas producers, we expect to begin realizing substantially more recurring wireless circuit, construction and services revenues from all of our oil and gas contracts for the balance of calendar year 2011.”
The company–s financial condition improved dramatically as compared to the most recent fiscal year ended December 31, 2010, and the prior year same quarterly and six-month reporting period ended June 30, 2010, including but not limited to the following attributes:
The company reported a Net Loss of $1,161,000 for the quarter ended June 30, 2011, as compared to a Net Loss of $1,859,000 for the same prior quarter ended June 30, 2010; an improvement of $698,000 or 38%.
The company reported a Net Loss of $994,000 for the six-month period ended June 30, 2011, as compared to a Net Loss of $3,934,000 for the same prior six-month period ended June 30, 2010; an improvement of $2,940,000 or 75% that included a $1,176,000 gain associated with the recent divestiture of certain non-core wireless broadband assets and operations and a gain on sale of other assets of $8,000.
The company reported a Loss from continuing operations of $992,000 for the quarter ended June 30, 2011, as compared to a Loss from continuing operations of $1,547,000 for the same prior quarter ended June 30, 2010; an improvement of $555,000 or 36%.
The company–s Energy Broadband subsidiary reported revenues of $642,000 for the quarter ended June 30, 2011, as compared to revenues of $206,000 for the same prior year quarter ended June 30, 2010; an increase of $436,000 or 212%.
The company–s Energy Broadband subsidiary reported revenues of $1,178,000 for the six-month period ended June 30, 2011, as compared to revenues of $378,000 for the same prior year six-month period ended June 30, 2010; an increase of $800,000 or 212%.
The company–s overall revenues of $1,311,000 increased by 28% as compared to the same prior year quarter; comprised of a decline of $65,000 in wireless internet services, a $62,000 decline in wireless messaging services, a $21,000 decline in enterprise network services; offset by the $436,000 increase in revenues in our oil and gas operations subsidiary, Energy Broadband Inc.
The company reported a reduction of $348,000 or 19% decline in Operating Expenses in the quarter ended June 30, 2011, as compared to the same prior year quarter ended June 30, 2010.
The company reported a $1,522,000 improvement in Shareholders– Equity for the quarter ended June 30, 2011, as compared to the most recent balance sheet at fiscal year ended December 31, 2010.
The company–s liquidity position improved by $2,003,000 for the quarter ended June 30, 2011, as compared to the most recent balance sheet at fiscal year ended December 31, 2010; including a $622,000 increase in Current Assets, a $1,381,000 decrease in Current Liabilities that included $693,000 retirement of long-term debt and Capital Lease obligations.
Lastly, the company invested $1,300,000 in cash during the six-month period ended June 30, 2011, primarily for the purchase of assets in its Energy Broadband subsidiary for the continued expansion of networks and infrastructure, including increasing its Mobile Broadband Trailer (“MBT”) fleet associated with the increased oil and gas business growth being experienced.
Recent Events
During and subsequent to the second quarter ended June 30, 2011, the company continued to make progress with its strategic business plan as evidenced by the completion and announcement of numerous significant agreements and activities. These include:
The company recently completed four separate wireless broadband projects with four Texas Independent Public School Districts that involved the design, engineering, and construction of wireless broadband networks utilizing the respective districts– 2.5-GHz Education Broadband Service (EBS) licenses. Three of the four contracts represent one-time revenues that were recorded in the second fiscal quarter ended on June 30, 2011, while the fourth contract represents a five-year agreement for providing Direct Internet Access and Internet Protocol bandwidth circuits connecting all of the campuses in that school district under a Master Capacity Services Agreement, with revenue recognition to begin on July 1, 2011. These projects mark the company–s entry into a new strategic education vertical market that has been under development for some time.
The completion of a Master Services Agreement with TISD Inc. to deliver digital oilfield solutions in the northeastern Eagle Ford Shale market in South Texas.
The company implemented a reverse split of 1 for 500 effective August 5, 2011.
The company announced that it would dividend one unit of Energy Broadband Inc. securities consisting of 100 Energy Broadband common shares, one warrant to purchase 100 shares at a fixed price of $4.00 per share and one warrant to purchase an additional 100 shares at a fixed price of $6.00 per share for each 200 shares of ERF Wireless Inc. common stock, or preferred stock convertible into 200 common shares, that a shareholder owns as of September 30, 2011.
The company announced that it has filed the formal arbitration documentation to conduct arbitration of a major contractual dispute between ERF Wireless and Schlumberger Technology Corporation, a subsidiary of Schlumberger, Ltd. This dispute has arisen regarding two exclusive reseller contracts between Schlumberger and ERF Wireless signed January 16, 2009, and still continuing until January 15, 2012, unless cancelled due to a default by either party or extended under the provisions of the contracts. Neither Schlumberger nor ERF Wireless cancelled the contract due to default of the other party. The arbitration now commenced involves one of these contracts with the GCS Division of Schlumberger for all of the U.S. including the Gulf of Mexico. A second and similar contract for all of Canada with their Canadian Division may be the subject of a separate proceeding. In spite of this contractual dispute, ERF Wireless has continued to expand its wireless network coverage in most North American oil and gas regions, as required by the contracts, and to increase its market presence by servicing industry customers that were originally exempted from the exclusivity provisions of the contracts. The ruling in the arbitration will be binding, and the arbitration is expected to be completed by year end.
About ERF Wireless
ERF Wireless Inc. is a fully reporting public corporation located in League City, Texas, and is the parent company of Energy Broadband Inc., ERF Enterprise Network Services, ERF Bundled Wireless Services, ERF Wireless Messaging Services and ERF Network Services. The company specializes in providing wireless and broadband product and service solutions to enterprise, commercial and residential clients on a regional, national and international basis. Its principals have been in the wireless broadband, network integration, triple-play FTTH, IPTV and content delivery business for more than 40 years. For more information, please visit our websites at and or call 281-538-2101. (ERFWDG)
The company refers in this press release to a non-GAAP financial measure called Adjusted EBITDA for illustration purposes because of management–s belief that this measure is a financial indicator of the company–s ability to internally generate operating cash flow. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization and stock based compensation expense. Management also believes that this non-GAAP financial measure is useful information to investors because it is widely used by professional research analysts in the valuation and investment recommendation of companies in the company–s peer group. Adjusted EBITDA is not utilized in any of the company–s SEC filings and should not be considered an alternative to net income, as defined by U.S. GAAP.
Forward-looking statements in this release regarding ERF Wireless Inc. are made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties, including, without limitation, continued acceptance of the company–s products, increased levels of competition, new products and technological changes, the company–s dependence upon third-party suppliers, intellectual property rights, and other risks detailed from time to time in the company–s periodic reports filed with the Securities and Exchange Commission.
Contact:
ERF Wireless Inc.
Clareen O–Quinn
281-538-2101 ext. 113
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