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xG Technology Reports 2016 Results

SARASOTA, Fla., March 31, 2017 /PRNewswire/ -- xG Technology, Inc. ("xG" or "the Company") (Nasdaq: XGTI, XGTIW), a leading provider of wireless video solutions to broadcast, law enforcement and defense markets, and private mobile broadband networks for critical communications, announced its results for the fourth quarter and year ended December 31, 2016.

Key 2016 accomplishments:

  • Announced a binding agreement to acquire the assets of Vislink Communication Systems ("Vislink"), a provider of integrated video capture, delivery and management solutions to broadcast & media and law enforcement, public safety & defense markets. Subsequent to year-end 2016, xG completed the acquisition and assumed full ownership of the business. xG also announced the final settlement of all debt arising from the acquisition, as well as the release of all liens.
  • Received a $3.0 million award, won in partnership with Southwest Research Institute® ("SwRI®") and issued by the Defense Information Systems Agency, for Prototype Spectrum Sharing Systems for the 2025-2110 MHz Band.
  • Received an order from the US Army to supply an xMax software defined cognitive radio (SDCR) system to serve as a mobile tactical communications infrastructure. The order, received under a sole-source solicitation, was deployed at the U.S. Army Electronic Proving Ground (USAEPG) at Fort Huachuca, AZ. USAEPG is the premier organization of the Army for testing command, communications, control, computer, and intelligence systems and equipment.
  • Entered into a teaming agreement with Abilis Solutions, Inc. ("Abilis") and Radio IP Software, Inc. ("Radio IP") to include xMax broadband network technology in a secure wireless system for use by correctional agencies.
  • xG's Integrated Microwave Technologies ("IMT") business received a $500,000 order from a leading robotic defense contractor for wireless video transmission modules for use in military remote ordnance disposal applications.
  • IMT received a $450,000 order from a state investigation bureau located in the South Atlantic region for the IMT Airborne Video Downlink System ("AVDS"). The system consists of an integrated suite of downlink transmitters, receivers and antennas that will be used to capture and transmit real-time, reliable high-definition video from fixed-wing aircraft for display at command centers, mobile receivers and on video management systems.
  • IMT received a $200,000 order from a prominent state police agency located in the Mid-Atlantic region for the IMT AVDS.
  • IMT launched the Mini DirectVu handheld receiver for use in law enforcement, electronic news gathering and sporting events. The five-inch wireless diversity receiver enables exceptional portability while providing real-time live video from both ground and airborne mobile platforms.
  • IMT deployed the iSee™ RefCam HD-I wireless helmet-worn camera and transmitter at the Canadian Hockey League Memorial Cup Tournament. The RefCam is an HD video transmitter with an integrated high definition camera that captures unprecedented footage from the referee's point of view.
  • Awarded two new patents: one for adding intelligence and efficiency to cognitive radio wireless networks, and one covering an advanced employment of Multiple Input—Multiple Output (MIMO) antennas that significantly improves wireless communications.

George Schmitt, CEO and Board Chairman of xG Technology, said, "2016 was a transformative year for xG Technology, as we transitioned to a new emphasis on wireless video solutions for public safety, sports and entertainment, and broadcast markets. The acquisition of Vislink represents an excellent fit with our IMT business and offers numerous opportunities for sales, technology and manufacturing synergies between the two businesses. In 2016 we completed the integration of IMT with xG, and we look forward to integrating the IMT and Vislink businesses throughout 2017 and beyond."

Roger Branton, CFO and co-founder of xG Technology, said, "In 2016 we realized substantial operational cost savings driven primarily by synergies from the integration of IMT. On February 2, 2017, we closed on the $16 million asset acquisition of Vislink using $6.5 million of cash and issuing a $9.5 million promissory note to the seller. After closing, the Company assumed $4.6 million of trade liabilities from the seller offsetting the $9.5 million promissory note. Also, xG collected $5.2 million of cash and used $2 million of that cash to settle the remaining $4.9 million promissory note due the seller. The result was a gain of $2.9 million, full settlement of the promissory note and release of all liens from the seller.  We are very excited about the acquisition of Vislink, especially not having any remaining obligations to the seller." 

Review of Results

xG ended the fourth quarter 2016 with $9,054,000 in cash compared to $368,000 at December 31, 2015.

For the year ended December 31, 2016, revenue was $6,574,000 compared to $932,000 in 2015.  Of the $6,574,000 in revenue, $6,292,000 resulted from the sales of equipment and $282,000 resulted from engineering and consulting services agreements.

For the year ended December 31, 2016, net loss attributable to common shareholders was $22.7 million, or $(36.87) per share, compared to net loss of $20.9 million, or $(332.32) per share for the year ended December 31, 2015. Earnings before interest, taxes, depreciation and amortization (EBITDA) for December 31, 2016 was of $16.2 million compared to $15.5 million for the year ended December 31, 2015. The Company prospectively has written down approximately $5.1 million of non-cash items related to inventory and impairments of intangibles.  Excluding these one-time charges, the Company reported a loss of $11.1 million for December 31, 2016 compared to a loss of $12.6 million for December 31, 2015.

About xG Technology, Inc.

xG Technology's brands provide wireless video solutions to broadcast, law enforcement and defense markets, and private mobile broadband networks for use in challenging environments. Their focus is delivering communications technologies that provide enhanced levels of reliability, mobility, performance and efficiency to customer business operations and missions. xG's brand portfolio includes Integrated Microwave Technologies (IMT), Vislink, and xMax.

IMT has pioneered advanced digital microwave systems and is a trusted supplier to broadcast, sports and entertainment, and MAG (Military, Aerospace & Government) markets. Their products are recognized for their high level of performance, reliability, build quality, extended operating ranges and compact form factors. More information about IMT can be found at www.imt-solutions.com. Vislink specializes in the wireless capture, delivery and management of secure, high-quality, live video, and serves broadcast & media and public safety & surveillance markets. More information about Vislink can be found at http://www.vislink.com/.

xMax is a secure, rapid-deploy mobile broadband system that delivers mission-assured wireless connectivity in demanding operating environments. xMax was specifically designed to serve as an expeditionary and critical communications network for use in unpredictable scenarios and during fluid situations. This makes it a compelling solution for disaster response, emergency communications, and defense applications. More information about xMax can be found at http://www.xgtechnology.com/system-overview/.

In addition to the above business lines, xG has a dedicated Federal Sector Group (xG Federal) focused on providing next-generation spectrum sharing solutions to national defense, scientific research and other federal organizations. Additional information about xG Federal can be found at http://www.xgtechnology.com/technology/xg-federal/.

Based in Sarasota, Florida, xG Technology has over 100 patents and pending patent applications. xG is a publicly traded company listed on the NASDAQ Capital Market (XGTI) For more information, please visit www.xgtechnology.com.

Cautionary Statement Regarding Forward Looking Statements

Statements contained herein that are not based upon current or historical fact are forward-looking in nature and constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements reflect the Company's expectations about its future operating results, performance and opportunities that involve substantial risks and uncertainties.  These statements include but are not limited to statements regarding the intended terms of the offering, closing of the offering and use of any proceeds from the offering. When used herein, the words "anticipate," "believe," "estimate," "upcoming," "plan," "target", "intend" and "expect" and similar expressions, as they relate to xG Technology, Inc., its subsidiaries, or its management, are intended to identify such forward-looking statements. These forward-looking statements are based on information currently available to the Company and are subject to a number of risks, uncertainties, and other factors that could cause the Company's actual results, performance, prospects, and opportunities to differ materially from those expressed in, or implied by, these forward-looking statements.

For More Information:

Media Relations
Daniel Carpini
xG Technology
daniel.carpini@xgtechnology.com
(941) 953-9035

 

 

xG TECHNOLOGY, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS EXCEPT NET LOSS PER SHARE DATA)





For the Years Ended




December 31,




2016



2015


Revenue


$

6,574



$

932


Cost of Revenue and operating expenses









Cost of components and personnel



3,133




510


Inventory valuation adjustments



2,417




861


General and administrative expenses



9,534




7,573


Research and development



6,106




4,928


Impairment charge



2,683




2,092


Amortization and depreciation



5,561




4,829


    Total cost of revenue and operating expenses



(29,434)




(20,793)


    Loss from operations



(22,860)




(19,861)


Other income (expenses)









Changes in fair value of derivative liabilities



2,545




2,559


Offering expenses



(684)





Gain on bargain purchase



2,749





Other expense



(1,727)




(26)


Interest expense



(925)




(529)


    Total other income



1,958




2,004


Net loss


$

(20,902)



$

(17,857)


Dividends and deemed dividends



(1,808)




(3,079)


Net loss attributable to common shareholders


$

(22,710)



$

(20,936)


Basic and diluted net loss per common share


$

(36.87)



$

(332.32)


Weighted average number of shares outstanding basic and diluted



616




63


 

 


 

xG TECHNOLOGY, INC. AND SUBSIDIARY




CONSOLIDATED BALANCE SHEETS




(IN THOUSANDS EXCEPT PER SHARE DATA)











December 31,







2016


2015



ASSETS








Current assets








Cash


$

9,054


368



Accounts receivable, net



1,369


641



Inventories, net



2,722


777



Prepaid expenses and other current assets



111


15



   Total Current Assets 



13,256


1,801



Inventories, net




2,078



Property and equipment, net



771


792



Intangible assets, net



5,872


11,903



    Total assets


$

19,899


16,574



LIABILITIES AND STOCKHOLDERS' EQUITY








Current liabilities








Accounts payable


$

1,606


1,196



Accrued expenses



1,813


252



Accrued interest



269


137



Due to related parties



96


324



Customer deposits and deferred revenue



186


149



Convertible notes payable




781



Obligation under capital lease



58


54



Derivative liabilities



1,183


1,284



    Total current liabilities



5,211


4,177



Obligation under capital lease, net of current portion



49


106



Convertible notes payable



2,000


2,000



    Total liabilities



7,260


6,283



Commitments and contingencies








Stockholders' equity








Preferred stock – $0.00001 par value per share:
10,000,000 shares authorized at December 31, 2016 and 2015; 0 shares issued and outstanding as of December 31, 2016 and 2015






Common stock, – $0.00001 par value, 100,000,000 shares authorized, 7,606,518 and 168,565 shares issued and 7,606,516 and 168,563 outstanding as of December 31, 2016 and 2015, respectively






Additional paid in capital



221,960


198,710



Treasury stock, at cost – 2 shares as of December 31, 2016 and 2015, respectively



(22)


(22)



Accumulated deficit



(209,299)


(188,397)



    Total stockholder's equity



12,639


10,291



Total liabilities and stockholders' equity


$

19,899


16,574



 

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