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xG Technology Reports First Quarter 2014 Results

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SOURCE xG Technology, Inc.

Executing Well Toward 2014 Objectives

SARASOTA, Fla., May 15, 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 first quarter ended March 31, 2014.

Key Recent 2014 Accomplishments

  • Delivered the General Availability (GA) release of xMax cognitive radio software, extending key enabling technologies
  • Entered into a funded product testing agreement with Autonomous University of Nuevo Leon in Monterey, Mexico commissioned by a major Mexican corporation
  • Shipped $1.75 million of xMax cognitive networking equipment and engineering services to multiple customers
  • Completed an underwritten public offering of common stock, receiving $9.1 million in net proceeds

John C. Coleman, xG's CEO, stated, "xG is off to a good start in 2014, making very strong progress on all aspects of our strategy during the first quarter. We booked revenue in the quarter, including a second order from an existing customer. We completed several highly successful product demonstrations and now have the luxury of being approached by organizations, both domestic and international, who are coming to us to explore upgrading their security and surveillance needs with our unique solution. Our supply chain and manufacturing capability is nearly complete, with the transition to manufacturer testing expected to be concluded shortly and our lines achieving full production in the second half. We continue to innovate, with another significant software update under development that will meaningfully enhance xMax's speed and functionality. And we have expanded and upgraded the talent of our sales and marketing team, which is driving our value proposition and penetration of the rural telco, public safety and security markets and capturing the opportunities coming to xG. In all, we are proud of our execution to date and remain focused on building on the momentum we have created in the year to positively disrupt the wireless marketplace and develop consistent revenue streams and returns for our shareholders."

Review of Results

Total first quarter 2014 revenues were $250,000 compared to $0.0 revenue in the first quarter of 2013. The components of first quarter revenue were $200,000 from sales of equipment and $50,000 from engineering and consulting services agreement.

First quarter operating loss was $5.1 million compared to operating loss of $3.6 million in the first quarter of 2013. This increased loss is attributable to higher depreciation and amortization costs as the Company began to amortize capitalized costs as they became available for sale, higher general and administrative, development, and stock based compensation expenses in the quarter relative to last year.

Net loss was $5.2 million, or $(0.27) per share compared to $4.2 million, or $(0.68) per share in the first quarter of 2013. Weighted average number of shares outstanding for the quarter ended March 31, 2014 was 18.8 million compared to 6.1 million for the quarter ended March 31, 2013.

xG ended first quarter 2014 with $0.7 million in cash, down from $5.5 million at December 31, 2013.

Conference Call

Management will host a conference call to discuss these results today, Thursday May 15, 2014 at 5:00 p.m. ET.

To participate in the conference call, please dial 888-803-5993 (toll free) or (706) 634-5454 (international call-in) and passcode # 37132241. 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 May 15, 2014 at 8:00 p.m. Eastern Time through May 18, 2014, and can be accessed by dialing (855) 859-2056 or (404) 537-3406, passcode # 37132241. 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
David Worthington
Fusion PR
www.fusionpr.com
(212) 651-4200

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

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

 

xG TECHNOLOGY, INC.

STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)




For the Three Months Ended



March 31,



2014


2013

Revenue


$

250


$

-

Cost of revenue and operating expenses







Cost of components and personnel



63



-

General and administrative expenses



1,679



1,350

Development



2,453



1,647

Stock based compensation



214



135

Amortization and depreciation



948



435

Total cost of revenue and operating expenses



5,357



3,567

Loss from operations



(5,107)



(3,567)

Other














Interest expense, net



(46)



(614)

Total other income (expense)



(46)



(614)

Loss before income tax provision



(5,153)



(4,181)

Income tax provision



-



-

Net loss


$

(5,153)


$

(4,181)








Basic and diluted net loss per share


$

(0.27)


$

(0.68)

Weighted average number of shares outstanding basic and diluted



18,757



6,114

 

xG TECHNOLOGY, INC.

BALANCE SHEETS

(IN THOUSANDS EXCEPT SHARE DATA)

(UNAUDITED)



March 31, 2014



December 31, 2013


ASSETS








Current assets








   Cash

$

686



$

5,517


   Inventory


3,878




2,916


    Accounts Receivable, net of allowance of $18 ($470 from related

    party, net of allowance of $10)


886




788


   Prepaid expenses and other current assets


74




49


   Due from related party


-




1,350


      Total current assets


5,524




10,620


   Property and equipment, net


839




806


   Intangible assets, net


17,492




18,196


      Total assets

$

23,855



$

29,622


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)








Current liabilities








   Accounts payable

$

1,190



$

1,841


   Accrued expenses


788




772


   Accrued bonuses


130




298


   Accrued interest


87




42


   Due to related party


1,281




1,526


   Deferred revenue - related party


480




480


   Obligation under capital lease


129




129


Total current liabilities


4,085




5,088


Long-term obligation under capital lease


87




118


Convertible notes payable to related party


2,000




2,000


Total liabilities


6,172




7,206


Commitments
















Stockholders' equity (deficit)








Series A Convertible Preferred Stock – $0.01 par value per share:








25,000,000 shares authorized, none issued or
    outstanding as of March 31, 2014 and December 31, 2013


-




-


Common stock – $0.00001 par value, 300,000,000 shares
    authorized at March 31, 2014 and December 31, 2013;
    18,800,564 and 18,682,310 shares issued at March 31, 2014

    and December 31, 2013, respectively


-

*



-

*

Additional paid in capital


174,420




174,000


Accumulated deficit


(156,715)




(151,562)


Treasury stock, at cost – 2,284 shares at March 31, 2014 and

    December 31, 2013, respectively


(22)




(22)


Total stockholders' equity (deficit)


17,683




(22,416)


Total liabilities and stockholders' equity (deficit)

$

23,855



$

29,622



* Less than $1

 

 

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