CellPoint Reports First Quarter Results

CellPoint Reports First Quarter Results LONDON, November 20th 2001 - CellPoint Inc. (Nasdaq: CLPT), a global provider of mobile location technology and services, announced today results for the fiscal first quarter ended September 30, 2001. The Company reported total revenues from 'continuing 'operations' of $415,205 compared to $925,553 in the quarter ended September 30, 2000. Continuing operations and discontinued operations refer to the location technology business and the discontinued telematics business respectively*. During the quarter, CellPoint continued to expand its worldwide presence. The Company recently announced: · Group License Frame Agreement for Mobile Location Systems signed with the KPN Group with terms negotiated for other operators within the KPN-Group · Technology partnership with SiRF to provide GSM/3G operators with an Anytime, Anywhere Location Information Platform based on CellPoint's technology and A-GPS · Launch of Location Developers' Zone for third-party development of applications and services based on CellPoint's mobile location platforms CellPoint continues to improve its financial position and during the quarter announced: · Private placements launched to raise further capital · Restricting of Convertible Notes held by Castle Creek Technology Partners, remaining $6.1 million principal on notes fixed at $4.00 conversion price · Liquidation of telematics subsidiary, Unwire AB, and South African subsidiary, CellPoint Systems SA (Pty) Ltd. In addition, after the end of the quarter, CellPoint announced: · US$6.62 million raised through private placements · Jan Rynning, Swedish legal professional specializing in international business law, appointed to the Board of Directors · Restructuring completed and further cost-savings programs executed; CellPoint Europe liquidated, UK branch office continues to serve current and future customers, development and support expanded and centralized in Sweden · Benchmark Challenge - CellPoint sets the standard for the location services industry with an entry-level system performing 504,000 location requests per hour Financial Results The location services business area, referred to as continuing operations, reported revenues in the first fiscal quarter of $415,205, compared to revenues of $925,553 for the quarter ending September 30, 2000. Total revenue for the quarter, including revenues of $264,087 from discontinued telematics operations, was $679,292 compared to total revenues of $978,121 in the first quarter last year. Reported EBITDA** from continuing operations of -$5,707,441 includes a non-cash, one-time cost of $3,049,449 related to the liquidation of the Company's subsidiary in the UK. EBITDA adjusted for a one-time, non-cash item amounts to -$2,657,992 for the period compared to -$1,658,856 for the comparable period in the previous year. All revenues in the quarter came from the European market. Operating expenses from continuing operations were $7,111,819, of which $1,010,219 was depreciation and amortization and $3,049,499 was related to the liquidation of the UK subsidiary. In the first quarter last fiscal year, operating expenses from continuing operations were $3,265,550, of which $909,974 was depreciation and amortization. Selling, general and administrative expenses for continuing operations were $4,863,818 including the one-time charge of $3,049,449 for the period, compared to $1,354,778 in the first fiscal quarter of 2000. Research and development expenses were $1,072,107 in the current quarter compared to $779,300 in the comparable quarter last year. Financial items, net of $1,540,578 includes a non-cash charge of $1,120,945*** for the debt discount related to recent financings. The Company incurred a loss from continuing operations of $8,258,238, compared to a loss of $2,718,473 for the comparable quarter in fiscal 2000. Net loss for the comparable quarter in the previous fiscal year was $5,347,298, which included a loss from discontinued operations of $2,628,825. The total number of staff in continuing operations at the end of the quarter was 76 compared to 93 during the same period last year. The total stockholders' equity at the end of the quarter was $2,428,667, compared to $4,026,846 in the first fiscal quarter last year. Private Placements CellPoint announced it raised a total of US$6.62 million to date through initial closings on private placements in Europe and North America. The private placements included 50% warrant coverage with strike prices over two years ranging from $2.25 per share to $5.00 per share. Use of proceeds included the prepayment and restructuring of the outstanding convertible notes in the total amount of US$3.25 million paid in July and September. The remainder of these funds raised will be used for working capital. Restructuring of Convertible Notes In September 2001, CellPoint entered into an agreement to restructure the convertible notes held by Castle Creek Technology Partners. CellPoint paid $2.25 million to buy down a portion of the remaining principal and accrued interest on the notes. The remaining outstanding notes are subject to a fixed conversion price at $4.00 and are scheduled to be retired in October of 2002 for approximately $6.1 million plus accrued interest. The outstanding notes are repayable in part or in whole at any time. Restructuring Programs In order to be cash flow positive as soon as possible, CellPoint launched several cost-cutting programs. In July, the Company announced a plan to focus on its core business, streamlining the organization with the focus on location platforms and enabling services. The Company liquidated the telematics subsidiary, Unwire, which had operations in Sweden and South Africa and also liquidated CellPoint South Africa. The Company also discontinued the majority of external consulting contracts, primarily on the development side. CellPoint consolidated its core operations back to its office in Kista, Sweden in November 2001 and Stephen Childs, a director of CellPoint Inc., was appointed interim President while the Company actively recruits for this new permanent position. The Company's UK subsidiary, CellPoint Europe, was liquidated but a branch sales office remains in the UK to serve current and future customers. Immediate cost savings will be achieved as well as ongoing financial, legal and communication cost savings within the consolidated structure. To further consolidate, CellPoint acquired 100% of its part-owned development company, Micronet MLS AB in Karlskrona, Sweden, purchasing the outstanding 42% of Micronet MLS. Micronet staff has been transferred to CellPoint's payroll ensuring that all development knowledge remains in-house which provides further cost savings going forward. These combined efforts are estimated to save the company more than $950,000 per month as compared to the average monthly costs from January to March 2001, and will further strengthen the Company's focus on its core business of Mobile Location Platforms for GSM and 3G operators. Business Development In August, CellPoint announced a strategic partnership with SiRF Technology to deliver a platform to GSM cell phone operators that provides highly accurate location information to mobile phone users in any environment. With this agreement, SiRF's Assisted GPS (A-GPS) technology will be integrated with CellPoint's network-based Enhanced Cell-ID (E-Cell-ID) location platform technology, providing consumers and wireless network operators the best of both location-information systems. CEO Commentary "The foundation has been built for stable and long-term financial development despite a difficult economic backdrop. We have lowered the cost structure from a high of $1,700,000 per month in the beginning of the calendar year to $750,000 by the end of 2001," said Peter Henricsson, Chairman and CEO of CellPoint Inc. "Having passed through the intensive development stage which created our unique and powerful technology, we are now focused on development to further enhance functionality and on commercializing our mobile location technology platforms. Our reorganization creates a lean, cost-effective company prepared to act as a prime mover in this emerging industry." The Company's full report filed with the SEC on Form 10KSB can be viewed at www.cellpoint.com and www.freeedgar.com. The Annual Stockholders' Meeting will be held on December 12, 2001 in Stockholm, Sweden. This Meeting was rescheduled to one week later than previously announced to allow sufficient time for mail delivery of proxy materials. Stockholders of record at the close of business on October 19, 2001 shall be entitled to receive full details in the notice of, and to vote at, the annual meeting. CellPoint's Financial Calendar for the Fiscal Year Q2 2001/2002 for the quarter ending December, 2001 - February 14, 2002 Q3 2001/2002 for the quarter ending March 31, 2002 - May 15, 2002 Fiscal Year 2001/2002 for the year ending June 30, 2002 - Preliminary Results August 29, 2002; SEC 10KSB filing September 30, 2002 (*) The previously announced liquidation of the Company's telematics subsidiary, Unwire, requires CellPoint to disclose results of its telematics operations as 'discontinued operations' in accordance with U.S. Generally Accepted Accounting Principles (US GAAP). (**) EBITDA is defined as: Earnings (loss) before financial items, taxes, depreciation and amortization. (***) According to US GAAP, the value of the beneficial conversion feature for the Castle Creek notes was recorded as a reduction to the carrying amount of the convertible debt and an addition to paid-in- capital. The fair value of the warrants was recorded as a further reduction to the carrying amount and an addition to paid-in-capital. The Company therefore has recorded a total debt discount of approximately $3,514,000 and is amortizing the discount over the term of the debt (approximately 22 months). Amortization is accelerated when conversion and repayment of the debt principal occurs. A non-cash charge of $1,120,045 was recorded as financial items in the quarter whereof $1,020,083 refers to amortization, conversion and accelerated repayment of the original amount from December 2000, and $100,862 refers to the new warrants issued to Castle Creek in the July 2001 restructuring agreements. CellPoint Inc. (Nasdaq and Stockholmsbörsen: CLPT, www.cellpoint.com) is a US company with operations in Sweden and Great Britain delivering location solutions for GSM/3G cellular operators worldwide, enabling them to provide location services to consumers and business users. CellPoint's products consist of MLS (Mobile Location System), MLB (Mobile Location Broker) and key location applications. CellPoint's entry-level location platform handles over 500,000 location requests per hour. For information, please contact: CellPoint Inc.: Lynn Duplessis, Tel: +44 (0)1344 624 565 Info@cellpoint.com KCSA Public Relations Worldwide: Sarah Shepard / Michael Cimini (212) 896-1236 / (212) 896-1233 sshepard@kcsa.com / mcimini@kcsa.com CellPointtm and CellPoint Systemstm are trademarks of CellPoint Inc. Forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Act of 1995. Actual results may differ materially from those projected in any forward- looking statement. Investors are cautioned that such forward-looking statements involve risk and uncertainties which may cause actual results to differ from those described. Copyright © CellPoint Inc. 2001 ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/11/20/20011120BIT00060/bit0002.doc The Full Report http://www.waymaker.net/bitonline/2001/11/20/20011120BIT00060/bit0002.pdf The Full Report