Press Releases

Floware Announces Second Quarter 2001 Results

Revenues for the quarter were $17,405,000 
 
OR YEHUDA, Israel – July 26, 2001 - Floware Wireless Systems Ltd. (NASDAQ: FLRE), a leading provider of broadband wireless access (BWA) communication systems, today announced financial results for the second quarter and first six months ended June 30, 2001.

Highlights:
- Revenues for the quarter were $17,405,000, up 184% from 2Q00, but down 14% from 1Q01
- Gross margins for the quarter increased to 32% of revenues, from 11% in 2Q00 and 29% in 1Q01
- 7 new commercial deployments were initiated during the quarter, resulting in a total of 49 commercial deployments in 25 countries, in addition to 19 field trials
Revenues for the second quarter of 2001 increased 184% to $17,405,000 compared to $6,135,000 for the same period in 2000. This represents a decrease of 14% from $20,337,000 recorded in the first quarter of 2000. Gross profit for the second quarter of 2001 was $5,595,000, or 32% of revenues, compared to $657,000, or 11% of revenues in the second quarter of 2000. The gross profit in the first quarter of 2001 was equal to 29% of revenues.
On a pro-forma basis, excluding $1,483,000 in amortization of deferred stock compensation, the net loss for the quarter was $2,200,000, or $0.07 per share. This compares to a pro-forma net loss for the second quarter of 2000 of $2,927,000, or $0.11 per share. The pro-forma net loss for the first quarter of 2001 was $1,431,000, or $0.04 per share.
Revenues for the first six months of 2001 increased 309% to $37,742,000 compared to $9,218,000 recorded in the same period last year. The gross profit for the first half of 2001 was $11,555,000, or 31% of revenues, compared to $692,000, or 8% of revenues, for the first half of 2000. The pro-forma net loss for the first six months of 2001, excluding $2,525,000 in amortization of deferred stock compensation was $3,632,000, or $0.11 per share, compared to a net loss of $5,987,000, or $0.23 per share, for the same period last year.
Commenting on the quarter, Amnon Yacoby, CEO of Floware, said, “Continued weakness in the overall telecom market impacted the network deployment plans of some of our carrier customers, and caused us to record lower revenues than originally forecast. We are nevertheless encouraged by the relative stability of our business during this time of unprecedented industry turmoil. We have benefited from our focus on major carriers in major countries, most of whom continue to plan, install, and deploy their wireless networks. Our successful penetration into China, a large untapped market, has also contributed to our ability to weather the downturn. Also, we have been able once again to improve gross margin despite lower revenues.”
During the quarter, the Company delivered equipment worth more than $750,000 to each of six carrier customers: two leading operators in China, ArcTel in Germany, NEO and FirstMark in Spain, and Vivendi in Hungary. The Company's equipment was deployed in seven new commercial installations in Russia, Hungary, Ukraine, India, Mexico, and Uruguay. This brings the Company's total commercial deployments to 49 in 25 countries, in addition to 19 field trials.
Mr. Yacoby continued, “The deregulation process continues, opening new markets and paving the way for new operators that need infrastructure solutions. Our sales and marketing team has ramped up activities in countries where spectrum auctions are expected in the short-to-medium-term, including, among others, China, Brazil, Italy, and several Eastern European countries.”
“In light of our lower revenues and current market conditions, we began implementing cost-cutting measures this quarter including a workforce reduction of 15%. These savings will begin affecting our results already during the third quarter, and their full effect will be felt in the fourth quarter of 2001.” “Our CFO, Tali Idan, is taking the opportunity of the merger to pursue other interests and will be leaving us after the merger is completed. Tali was a major driver of the IPO process, and has been an important part of Floware’s success. I’d like to take this opportunity to thank Tali for his contributions and to wish him much success in his future endeavors. After the merger, Dafna Gruber, currently CFO of BreezeCOM, will take over as CFO of the merged company.”
Mr. Yacoby concluded, "Overall, we are optimistic regarding the long-term prospects of the broadband wireless industry. We believe that our excellent technology, established relationships with leading integrators, and focus on well-financed customers – as well as our imminent merger with BreezeCOM – will position us for leadership when the market recovers. ”
Floware and BreezeCOM will hold a joint conference call today, July 26, 2001, at 9:00AM (Eastern Daylight Time). To participate in the call, please dial (877) 715-5317 (inside the US), or (973) 628-9554 (outside the US) ten minutes prior to the scheduled start time. A replay of the conference call will be available from approximately 11:00 a.m. (EDT) on July 26 until 11:59 p.m. EDT on July 28. To access the replay, please dial (877) 519-4471 (inside the US), or (973) 341-3080 (outside the US) and enter authorization code 2725996.
About Floware
Floware Wireless Systems Ltd. is a leading provider of point-to-multipoint fixed broadband wireless access (BWA) systems. These systems are used mainly by new carriers which connect business customers in the "last mile." Floware's WALKair system enables carriers to provide high-speed Internet access, as well as a wide range of voice and data services, on the 3.5, 10.5 and 26 GHz radio frequency bands. Floware currently has more than 60 deployments worldwide. On April 5, 2001 Floware entered into an agreement and plan of merger with BreezeCOM Ltd., pursuant to which, upon satisfaction of certain conditions, Floware will merge into BreezeCOM and each Floware share will convert into 0.767 shares of BreezeCOM Ltd. For more information about Floware, visit Floware's website at www.floware.com.

In connection with the proposed merger between Floware and BreezeCOM, Ltd., BreezeCOM has filed a Registration Statement on Form F-4 with the United States Securities and Exchange Commission. Investors and security holders are advised to read the Registration Statement on Form F-4, because it contains important information. Free copies of the Registration Statement on Form F-4 and BreezeCOM'S or Floware's other filings with the SEC may also be obtained from BreezeCOM or Floware, respectively. A copy of both companies filings with the SEC may be inspected without charge at the Public Reference Room of the United States Securities and Exchange Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of all or any part of the such filings may be obtained from the Public Reference Section of the United States Securities and Exchange Commission upon the payment of the fees prescribed by the United States Securities and Exchange Commission.
This press release and statements by Floware in shareholder reports and public filings, as well as in oral public statements by Floware s representatives may contain forward looking statements. Such statements are subjected to certain facts, risks and uncertainties that may cause actual results, events and performance to differ materially from those referred to in such statements. The risks are identified in Floware’s Form 20-F filed with the Securities and Exchange Commission on July 2, 2001. 

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