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xG Technology Reports Second Quarter 2014 Results

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SOURCE xG Technology, Inc.

SARASOTA, Fla., Aug. 14, 2014 /PRNewswire/ -- xG Technology, Inc. ("xG" or the "Company") (Nasdaq: XGTI, XGTIW), a developer of wireless communications and spectrum sharing technologies, announced its results for the second quarter ended June 30, 2014.

Key Recent Accomplishments

  • Received two new U.S. patent awards for cognitive radio interference mitigation techniques
  • Named subcontractor to provide communications and network services to two prime contractors in connection with the U.S. Army's Communications-Electronics Research, Development and Engineering Center (CERDEC) Space and Terrestrial Communications Directorate (S&TCD) five-year multiple-award indefinite delivery/indefinite quantity (IDIQ) prime contract
  • Signed Letter of Intent with Shoreline Energy International Limited to explore partnership and deployment opportunities in Africa

John C. Coleman, xG's CEO, stated, "xG's operating activities and sales and marketing outreach accelerated from first quarter. With strong new sales leadership in place, we further upgraded our sales force during the quarter, conducting over 30 demonstrations with more than 50 potential customers. We also extended our product's capabilities with the development, in just one fiscal quarter, of the xRM, a dual band wireless solution designed for the rural telco market to reliably meet and exceed all performance requirements, both current and those under discussion, for the rural carrier; we expect to receive FCC certification by mid-September and to begin shipping late in Q3. We have made measurable progress in each of our four target verticals, public safety, rural broadband, utility and government/DoD. For the second half of the year, we are single-mindedly focused on revenue generation through the winning of reference accounts, deeper penetration of our target verticals and conversion of our backlog. With a tremendous revenue opportunity, a paradigm-changing technology, a strengthened sales and marketing force and strong momentum in opportunities for revenue and growth, we are prepared to deliver."

Review of Results

Total second quarter 2014 revenues were $163,000 compared to $0 revenue in the second quarter of 2013. Revenue generated from equipment sales totaled $107,000, revenue from consulting revenue totaled $56,000. We did not record additional deferred revenue, which remained at $480,000.

Second quarter operating loss was $4.5 million compared to operating loss of $3.6 million in the second quarter of 2013. The increased loss is attributable to higher depreciation and amortization costs as the Company began to amortize capitalized costs as our products became available for sale as of September 30, 2013, increased in personal costs due to an increase in our number of employees, increased in  travel expenses associated with our sales and marketing program in the quarter relative to last year.

Net loss was $4.5 million, or $(0.20) per share compared to $3.6 million, or $(0.49) per share in the second quarter of 2013. Weighted average number of shares outstanding for the quarter ended June 30, 2014 was 22.8 million compared to 7.3 million for the quarter ended June 20, 2013.

xG ended second quarter 2014 with $5.0 million in cash, down from $5.5 million at December 31, 2013.

For the six months ended June 30, 2014, revenue was $413,000 compared to $0 in the first six months of 2013, resulted from $308,000 in sales of equipment and $105,000 from a consulting services agreement.

For the six months ended June 30, 2014, our net loss was $9.7 million compared to a net loss of $7.8 million for first six months of 2013. The increase in net loss is due mainly to the increase in general and administrative expenses, development expenses and amortization discussed above.

Conference Call

Management will host a conference call to discuss these results today, Thursday, August 14, 2014 at 5:00 p.m. ET.

To participate in the conference call, please call 888-803-5993 (toll free) or 706- 634-5454 (international call-in) and reference code # 70373247. The call is also being webcast at http://www.xgtechnology.com/Company/investors-overview.html.  All participants should call or access the website approximately 10 minutes before the conference begins. 

For those who cannot listen to the live broadcast, a replay of the call will be available from August 14, 2014 at 8:00 p.m. Eastern Time through August 16, 2014, and can be accessed by dialing (855) 859-2056 or (404) 537-3406, passcode # 70373247. A webcast replay will be available on xG's website for 90 days.

About xG Technology

xG Technology has created a broad portfolio of intellectual property that makes wireless networks more intelligent, accessible, affordable and reliable. The company has created xMax, a patented all-IP cognitive radio technology that enables robust mobile broadband communications for private, consumer and government networks. xMax can solve the crisis facing the wireless industry caused by data-hungry devices and applications that are straining network capacity. It eliminates the need to acquire scarce and expensive licensed spectrum, thus lowering the total cost of ownership for wireless broadband access. xG's goal is to help wireless broadband networks deliver voice, video and data services to fixed and mobile users. The xMax cognitive radio system incorporates advanced optimizing technologies that include spectrum sharing, interference mitigation, multiple-input multiple-output (MIMO) and software defined radio (SDR). These and other technologies make xMax ideal for wide area, as well as rapid emergency communication deployment. xG offers solutions for numerous industries worldwide, including urban and rural wireless broadband, utilities, defense, emergency response and public safety.

Based in Sarasota, Florida, xG has 60 U.S. and over 140 international patents and pending patent applications, and its products have been sold in both domestic and foreign markets. xG is a publicly traded company listed on the NASDAQ Capital Market where xG common stock is traded under the symbol XGTI and xG warrants are traded under the symbol XGTIW.

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 and Analyst Relations
Daniel Carpini
xG Technology
www.xgtechnology.com
(941) 953-9035

Investor Relations:
James Woodyatt
xG Technology
www.xgtechnology.com  
(954) 572-0395   

Carolyn Capaccio/Jody Burfening
LHA
212-838-3777
ccapaccio@lhai.com 

xG TECHNOLOGY, INC.


UNAUDITED CONDENSED STATEMENTS OF OPERATIONS


(IN THOUSANDS, EXCEPT PER SHARE DATA)






For the Three Months Ended


For the Six Months Ended




June 30,


June 30,




2014


2013


2014


2013


Revenue


$

163


$

-


$

413


$

-


Cost of revenue and operating expenses














Cost of components and personnel



41



-



105



-


General and administrative expenses



1,447



1,158



3,126



2,508


Development



2,056



1,352



4,510



2,999


Stock based compensation



148



201



361



336


Amortization and depreciation



958



435



1,906



870


Total cost of revenue and operating expenses



4,650



3,146



10,008



6,713


Loss from operations



(4,487)



(3,146)



(9,595)



(6,713)


Other




























Interest expense, net



(43)



(424)



(88)



(1,038)


Total other income (expense)



(43)



(424)



(88)



(1,038)


Loss before income tax provision



(4,530)



(3,570)



(9,683)



(7,751)


Income tax provision



-



-



-



-


Net loss


$

(4,530)


$

(3,570)


$

(9,683)


$

(7,751)
















Basic and diluted net loss per share


$

(0.20)


$

(0.49)


$

(0.47)


$

(1.15)


Weighted average number of shares outstanding basic and
diluted



22,829



7,319



20,815



6,723


 

xG TECHNOLOGY, INC.


UNAUDITED CONDENSED BALANCE SHEETS


(IN THOUSANDS EXCEPT SHARE DATA)






June 30,
2014



December 31,
2013


ASSETS









Current assets









Cash


$

4,960



$

5,517


Inventory



4,202




2,916


Accounts Receivable, net of allowance of $20 and $16
($478 and $470 from related parties, net of allowance of $10)



996




788


Prepaid expenses and other current assets



65




49


Due from related party



-




1,350


Total current assets



10,223




10,620


Property and equipment, net



806




806


Intangible assets, net



16,968




18,196


      Total assets


$

27,997



$

29,622


LIABILITIES AND STOCKHOLDERS' EQUITY









Current liabilities









Accounts payable


$

795



$

1,841


Accrued expenses



1,005




772


Accrued bonuses



78




298


Accrued interest



42




42


Due to related party



1,131




1,526


Deferred revenue - related parties



480




480


Obligation under capital lease



129




129


     Total current liabilities



3,660




5,088


Long-term obligation under capital lease



56




118


Convertible notes payable



2,000




2,000


     Total liabilities



5,716




7,206


Commitments and contingencies


















Stockholders' equity









Series A Convertible Preferred Stock – $0.00001 par value per share:









10,000,000 shares authorized at June 30, 2014 and December 31, 2013;

none issued or outstanding as of June 30, 2014 and December 31, 2013



-




-


Common stock – $0.00001 par value, 100,000,000 and 300,000,000 shares
    authorized at June 30, 2014 and December 31, 2013, respectively
    24,137,177 and 18,682,310 shares issued at June 30, 2014 and December 31, 2013,

respectively



-

*



-

*

Additional paid in capital



183,548




174,000


Accumulated deficit



(161,245)




(151,562)


Treasury stock, at cost – 2,284 shares at June 30, 2014 and
    December 31, 2013, respectively



(22)




(22)


Total stockholders' equity



22,281




22,416


Total liabilities and stockholders' equity


$

27,997



$

29,622


__________________


* Less than $1


 

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