Search the web
Welcome, Guest
[Sign Out, My Account]
EDGAR_Online

Quotes & Info
Enter Symbol(s):
e.g. YHOO, ^DJI
Symbol Lookup | Financial Search
ARCW > SEC Filings for ARCW > Form 10-Q on 14-Nov-2011All Recent SEC Filings

Show all filings for ARC WIRELESS SOLUTIONS INC

Form 10-Q for ARC WIRELESS SOLUTIONS INC


14-Nov-2011

Quarterly Report


Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion is intended to assist you in understanding our business and the results of our operations. It should be read in conjunction with the Consolidated Condensed Financial Statements and the related notes that appear elsewhere in this report as well as our Annual Report on Form 10-K for the year ended December 31, 2010. Certain statements made in our discussion may be forward looking. Forward-looking statements involve risks and uncertainties and a number of factors could cause actual results or outcomes to differ materially from our expectations. These risks, uncertainties, and other factors include, among others, the risks described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010 filed with the Securities and Exchange Commission, as well as other risks described in this Quarterly Report. Unless the context requires otherwise, when we refer to "we," "us" and "our," we are describing ARC Wireless Solutions, Inc. and its consolidated subsidiaries on a consolidated basis.

BUSINESS OVERVIEW

We focus on wireless broadband technology related to propagation and optimization. We design and develop antennas that extend the reach of broadband and other wireless networks and that simplify the implementation of those networks. We supply our products to public and private carriers, wireless infrastructure providers, wireless equipment distributors, value added resellers and other original equipment manufacturers. Our strategy is focused on enhancing value for our stockholders by increasing revenues while at the same time reducing our overhead.

Growth in product revenue is dependent both on gaining further traction with current and new customers for the existing product portfolio as well as further acquisitions to support our wireless initiatives. Revenue growth for antenna products is correlated to overall global wireless market growth and a portion of our growth in this market has slowed due to the increasing use of fully integrated solutions and the current global economic conditions. We continue to focus on keeping our operational and general costs down in order to improve our gross margins until demand rebounds.

Specific growth areas are last mile wireless broadband Internet delivered over standards-based solutions such as Worldwide Interoperability for Microwave Access ("WiMAX"), WiFi or vendor specific proprietary solutions for point-to-point and point-to-multipoint applications, and industrial automation markets; Global Positioning Systems ("GPS") and Mobile SATCOM solutions for network timing, fleet and asset tracking and monitoring; Machine to machine ("M2M") communications for controlling or monitoring data from devices; and cellular base station antennas to build out or optimize carrier networks.

During the third quarter of 2010, we began utilizing the manufacturing, product sourcing, and outsourcing services of Rainbow Industrial Limited ("RIL") which is based in China. RIL is wholly owned by an affiliate of Quadrant Management, Inc., which is affiliated with us and our Chief Executive Officer. We purchase goods and services from RIL valued at approximately $200 thousand per month; however the actual dollar amount can vary significantly with normal fluctuations in business activity. We use RIL's services because we believe in doing so it may lower our costs and simplify our internal accounting procedures.

Financial Condition

At September 30, 2011, we had approximately $11.5million in working capital, which represents a decrease of approximately $400 thousand from working capital at December 31, 2010 of $11.9 million.


We have seen a decline in orders from customers, both domestically and internationally, as a result of the current economic environment and due to the increasing use of fully integrated solutions rather than the component solutions we offer. While we do not expect this trend to reverse in 2011, we continue our efforts to acquire new customers and update our product portfolio.

Management believes that current working capital will be sufficient to allow us to maintain our operations through September 30, 2012 and into the foreseeable future.

Results of Continuing Operations for the Three Months Ended September 30, 2011 and 2010

Total revenues were approximately $629 thousand for the three months ended September 30, 2011 and $968 thousand for the three months ended September 30, 2010. The decrease in revenues during the three months ended September 30, 2011 compared to the three months ended September 30, 2010 is primarily attributable to general decrease in sales across all product lines.

Gross profit margins were 39% and 38% for the three months ended September 30, 2011 and 2010, respectively. The slight increase in gross margin is primarily due to product mix.

Selling, general and administrative expenses (SG&A) increased 9% to $482 thousand for the three months ended September 30, 2011 as compared to $441 thousand for the three months ended September 30, 2010. SG&A as a percent of total revenues increased from 46% for the three months ended September 30, 2010 to 77% for the three months ended September 30, 2011. The primary reason for the increase in the % of SG&A compared to revenues is the 35% decrease in revenues comparing the three months ended September 30, 2011 to September 30, 2010. Salaries and wages, remains the largest component of SG&A costs, constituting 26% of the total SG&A costs for the three months ended September 30, 2011 and 2010. The majority of the overall increase in SG&A is related to a increase in research and development costs and salary costs. We are continuing our efforts to streamline our operations and reduce costs in other areas.

Other income decreased during the third quarter 2011 to approximately $10 thousand as compared to $12 thousand in the third quarter 2010. The decline is primarily due to decreased interest income as a result of the decline in our cash balances in addition to a decline in interest rates on money market funds where a significant portion of the funds are invested.

There is no provision for income taxes for both the three months ended September 30, 2011 and 2010 due to our net losses for both periods.

Results of Continuing Operations for the Nine Months Ended September 30, 2011 and 2010

Total revenues were approximately $2.3 million for the nine months ended September 30, 2011 and approximately $3.1 million for the nine months ended September 30, 2010. The decrease in revenues during the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010 is primarily attributable to general decrease in broadband wireless sales which was partially offset by an increase in our GPS antenna sales.

Gross profit margins were 34% and 33% for the nine months ended September 30, 2011 and 2010, respectively. The slight increase in gross margin is primarily due to product mix.

Selling, general and administrative expenses (SG&A) decreased 18% to approximately $1.3 million for the nine months ended September 30, 2011 as compared to approximately $1.58 million for the nine months ended September 30, 2010. SG&A as a percent of total revenues increased from 52% for the nine months ended September 30, 2010 to 56% for the nine months ended September 30, 2011. Salaries and wages, remains the largest component of SG&A costs, constituting 28% of the total SG&A costs for the nine months ended September 30, 2011 and 2010. The majority of the overall decrease in SG&A is related to a decrease in salary costs and decreases in US facility costs. We are continuing our efforts to streamline our operations and reduce costs in other areas.


Other income decreased during the nine months ended September 30, 2011 to approximately $30 thousand as compared to $32 thousand in the nine months ended September 30, 2010. The decline is primarily due to decreased interest income as a result of the decline in our cash balances in addition to a decline in interest rates on money market funds where a significant portion of the funds are invested.

There is no provision for income taxes for both the nine months ended September 30, 2011 and 2010 due to our net losses for both periods.

  Add ARCW to Portfolio     Set Alert         Email to a Friend  
Get SEC Filings for Another Symbol: Symbol Lookup
Quotes & Info for ARCW - All Recent SEC Filings
Copyright © 2014 Yahoo! Inc. All rights reserved. Privacy Policy - Terms of Service
SEC Filing data and information provided by EDGAR Online, Inc. (1-800-416-6651). All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.