xG Technology Reports First Quarter 2017 Results

May 15, 2017

xG Technology, Inc. announced its results for the first quarter ended March 31, 2017. Management will hold a conference call to discuss these results on Wednesday, May 17, 2017 at 5:00 p.m. Eastern Time (details below).

George Schmitt, CEO and Chairman of the Board of xG Technology, said, "In the first quarter, not only did we successfully conclude the acquisition of the assets of Vislink, but we have already completed the vast majority of the operational tasks identified as essential to the smooth integration of our businesses. With the Vislink acquisition now complete, we have effectively repositioned our business to focus on offering end-to-end, reliable, high-data rate, long-range video transmission solutions to the broadcast, sports and entertainment and defense markets. We are already seeing the promised synergies between xG, Vislink and IMT start to bear fruit in areas such as sales, joint technology and product development and manufacturing, and we are now leveraging the strength of our expanded solutions in the marketplace. As a result, we are well-positioned to expand our customer base, gain additional market share in key sectors, and deliver strong overall financial performance through the remainder of 2017."

Roger Branton, CFO and co-founder of xG Technology, said, "We are pleased to report that we began the year 2017 with record quarterly revenue in Q1. We recorded a revenue run rate of approximately $1 million per week, once revenues from Vislink commenced in the second month of the quarter, and we expect this revenue run rate to continue into Q2. An adverse movement in the British Pound to US Dollar exchange rate reduced revenues by $350,000 compared to our forecasts for the quarter. We ended the quarter with positive cash flow and our working capital ratios improved substantially."

Mr. Branton continued, "Our results include a preliminary bargain purchase gain from the Vislink acquisition which, while a one-time event, also means that no goodwill has been added to the balance sheet. The Vislink acquisition was concluded without incurring any debt, and the total amount of cash actually paid was substantially less than the purchase price. The IMT acquisition completed in 2016 also produced a bargain purchase gain, proving that we are acquiring these companies at favorable prices. This has helped place us on a strong financial footing to allow our companies to further capture business in their target markets. Therefore, we are considering establishing credit lines, both debt and equity, to access capital, specifically for acquisitions and to take advantage of opportunities that are time sensitive."

Review of Results

Total first quarter 2017 revenues were $9.3 million compared to $929,000 in the first quarter of 2016. First quarter operating loss was $5.7 million compared to operating loss of $4.6 million in the first quarter of 2016.

Net income attributable to common shareholders was $8.3 million, or $0.87 per share compared to a net loss of $4.4 million, or $(21.42) per share in the first quarter of 2016.

xG ended first quarter 2017 with $4.7 million in cash compared to $9.1 million at December 31, 2016.