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AirIQ Releases Second Quarter 2008 Results
(Wireless News Via Acquire Media NewsEdge)
AirIQ, a provider of wireless location-based services, specializing in
Telematics and Security, announced the results of its second quarter
2008.
"We have described 2008 as a 'Year of Prudent Growth'," said Steve
Willey, President and CEO of AirIQ. "The second quarter results begin
to reflect AirIQ's focus on expense reduction, margin improvement, and
targeting more profitable markets and applications.
"While revenues were down slightly quarter over quarter, from $3.5
million to $3.2 million, profit margins improved from 35.8 percent to
42.1 percent", said Donald Gibbs, Interim CFO of AirIQ. "In addition, a
more stable foreign exchange environment reduced foreign exchange
losses to $64,000 in the second quarter of 2008, compared to $942,000
in the second quarter one year ago."
The company noted the following highlights of the second quarter:
- Sale of certain assets and liabilities of the Company's subsidiary,
AirIQ U.S. in March 2007, and
- Substantial reduction of the Company's U.S. and Canadian subscriber
base as a result of the carrier termination of North America's analog
network.
As a consequence of these two events, AirIQ trimmed its workforce from
123 at the beginning of 2007 to approximately 50 by the end of the
second quarter 2008. While the expense reduction relating to recent
changes was not immediately evident due to severance and related
termination costs, management believes that significant expense
improvements will be observed in the second half of the year.
To further reduce costs, AirIQ implemented lean manufacturing
techniques including variable cost assembly, automation of test
processes and introduction of 'Just-In-Time' inventory methods in the
most recent quarter. The Company's operating objective is to maintain
hardware device profit margins despite the present lower volume of
shipments.
During the first half of 2008, the Company has been actively reviewing
potential strategic consolidation or financing opportunities with a
goal of better leveraging its extensive applications portfolio and
telematics expertise. A Special Committee of the Board continues to
oversee this process, reporting recently on its progress at the
Company's Annual General Meeting. While the Special Committee had
anticipated that the review would be completed in August, discussions
with interested parties continue.
The accompanying unaudited interim condensed consolidated statements of
loss and deficit are presented for the three months and six months
ended June 30, and June 30, 2007, comparatively, and include the
operating results of AirIQ and its subsidiaries. The Company's
unaudited interim consolidated financial statements as at and for the
period ended June 30, including notes thereto and the accompanying
Management's Discussion and Analysis will be filed with the Canadian
securities regulatory authorities by end of day August 14.
Revenues for the three months ended June 30, decreased 52.0 percent to
$3,237,234 from $6,737,255 for the three months ended June 30, 2007;
and 55.7 percent to $6,783,005 from $15,306,857 for the six months
ended June 30, and 2007, respectively.
The decrease in revenues for the three months ended June 30, compared
to the same three month period the previous year was due to lower
airtime revenues of approximately $936,000 resulting from the reduction
of the Company's Canadian and U.S. analog subscriber base following the
termination of the analog network in Canada on May 31, 2007 and in the
U.S. on January 31. In addition, the Company recorded lower revenues of
approximately $1,974,000 due to reduced product sales to the purchaser
of certain assets and liabilities of AirIQ US relating to its vehicle
finance industry tracking business in March 2007 (the "Sale of Certain
Assets and Liabilities). Revenues also decreased by approximately
$604,000 due to the expiration of customer hardware contracts.
The decrease in revenues for the six months ended June 30, was
primarily due to the Sale of Certain Assets and Liabilities. Total
revenues decreased from the comparable six month period in 2007 by
$3,568,649 due to the Sale of Certain Assets and Liabilities. In
addition, revenues decreased due to lower airtime revenues of
approximately $1,461,000 resulting from the reduction in its Canadian
and U.S. analog subscriber base following the termination of the analog
network in Canada on May 31, 2007 and in the U.S. on January 31. The
Company also recorded lower revenues of approximately $2,366,000 due to
reduced product sales to the purchaser of certain assets and
liabilities of AirIQ US. Revenues also decreased by approximately
$604,000 due to the expiration of customer hardware contracts.
Gross profit for the three months and six months ended June 30, was
$1,362,892 and $2,633,574, respectively, representing a decrease of
25.5 percent and 46.8 percent, respectively, compared to gross profit
of $1,829,793 and $4,954,411, respectively, for the three months and
six months ended June 30, 2007.
The reduction in gross profit from the three months and six months
ended June 30, compared to the same periods in 2007 of approximately
$467,000 and $807,000, respectively, is primarily attributable to a
reduction in the Company's Canadian and U.S. analog subscriber base due
to the termination of the analog networks in North America.
The reduction in gross profit in the six months ended June 30, compared
to the same six month period the previous year was also due to the
transfer of certain customers and customer contracts pursuant to the
Sale of Certain Assets and Liabilities. The reduction in gross profit
in the six months ended June 30, compared to same six month period
month period the previous year attributable to revenue lost in this
transaction was approximately $1,500,000.
Expenses totaled $2,483,223 and $4,950,962, respectively, for the three
months and six months ended June 30, compared to $3,793,817 and
$8,416,719, respectively, for the three months and six months ended
June 30, 2007.
The Company realized an expense decrease of approximately $880,000 due
to reductions in foreign exchange losses related to the strengthening
of the Canadian dollar compared to the U.S. dollar in the three months
ended June 30, compared to the same three month period in 2007. The
Company also achieved expense reductions of approximately $206,000 in
other areas primarily due to the reduction in personnel and other
operating expenses. In addition, the Company capitalized approximately
$225,000 related to costs associated with the strategic alternatives
review announced in 2007. Included in the expenses in the three month
period ended June 30, was a bad debt reserve of approximately $404,000.
Expenses reductions in the six month period ended June 30, compared to
the same six month period the previous year were primarily due to the
integration of the Company's operating segments following the Sale of
Certain Assets and Liabilities. The reduction in expenses for the six
months ended June 30, compared to same six month period the previous
year related to this transaction was approximately $1,100,000. The
Company also realized an expense decrease of approximately $1,350,000
due to reductions in foreign exchange losses related to the
strengthening of the Canadian dollar compared to the U.S. dollar in the
six months ended June 30, compared to the same six month period in
2007. In addition, the Company achieved expense reductions of
approximately $775,000 in other areas primarily due to the reduction in
personnel and other operating expenses. The Company also capitalized
approximately $225,000 related to costs associated with the strategic
alternatives review in the six month period ended June 2008.
Included in the expenses for the six month period ended June 30, was a
bad debt reserve of approximately $404,000 compared to $293,000 in the
same six months ended June 30, 2007.
Net interest expense for the three months and six months ended June 30,
totaled $126,288 and $241,648, respectively, compared to $48,792 and
$988,181, respectively, for the three months and six months ended June
30, 2007.
The increase in net interest expense for the three months ended June
30, compared to the three months ended June 30, 2007 is primarily due
to lower interest income earned from investments. The decrease in net
interest expense for the six months ended June 30, compared to the same
six month period the previous year is primarily due to the repayment by
the Company of both the secured debenture and revolving operating loans
during the first quarter of 2007. As a result, the Company did not
incur interest or financing charges in the second quarter of 2008
related to the secured debenture and revolving operating loans.
Net interest charges for the three months and six months ended June 30,
include cash payments of $94,132 and $188,263, respectively, related to
the term loans and $12,833 and $23,606, respectively, related to
interest on capital leases and service contracts. Total cash interest
for the second quarter of 2008 was $106,965. In addition, net interest
expense included $34,482 relating to the non-cash accreted interest on
the term loans. The Company earned interest income of $15,860 during
the first six months of 2008 which was recorded as a reduction in net
interest expense in the period.
Of the total net interest expense and other financing charges for the
six months ended June 30, 2007, $333,207 represented cash interest,
plus an amount of $201,120 in work fees charged by the Company's Senior
Lender.
Included in the net interest expense and other financing charges for
the three months and six months ended June 30, 2007 was an amount of
$23,560 and $51,501, respectively, related to the accreted interest on
the term loans. During the first quarter of 2007, an amount of $143,251
related to the accelerated accreted interest on the secured debenture
which was repaid in full during the period. Also included in net
interest expense in the first quarter of 2007, was an expense of
$202,780 in non-cash deferred financing costs related to the secured
debenture which was repaid in full during the period, and this amount
was included in net interest expense and other financing charges.
((Comments on this story may be sent to newsdesk@closeupmedia.com))
((Distributed on behalf of 10Meters via M2 Communications Ltd -
http://www.m2.com))
((10Meters - http://www.10meters.com))
Copyright ? 2008 Wireless News
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