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ERF Wireless Reports First Quarter 2006 Results; Regional Banking Networks and Municipal Wireless Broadband Projects Contribute to 691% Increase in Sales in the First Quarter

Posted on: Tuesday, 23 May 2006, 16:56 CDT

ERF Wireless (OTCBB:ERFW), a leading provider of enterprise-class wireless broadband products and services, announced today that the company has filed its Form 10-QSB with the Securities and Exchange Commission reporting results for the first fiscal quarter ended March 31, 2006.

R. Greg Smith, CEO of ERF Wireless, commented, "The company has now begun realizing revenues against contracts for designing, constructing, maintaining and monitoring enterprise-class wireless banking networks following the completion of a key asset purchase agreement in August 2005. That acquisition now operates as our Enterprise Network Services subsidiary and is responsible for our rapidly expanding enterprise-class encrypted wireless banking network business. The primary contract contributing to our first quarter results includes the design, construction, maintenance and monitoring of a 20-Mbps enterprise-class wireless banking network for a Baton Rouge, Louisiana, bank and involves point-to-point links in excess of 25 miles with installation of two 180-foot towers, two 120-foot towers, six 96-foot towers, two 65-foot towers and 31 Motorola industrial microwave radios. The project also involves installation of 12 of our proprietary CryptoVue encryption devices at the branch locations and at the bank's main operations center. The company expects to complete this project in the second quarter of 2006 along with an upgrade to another existing banking network in Jennings, Louisiana, that interconnects 15 branch locations in 10 cities with its primary operations center."

For the first quarter of 2006, the company reported total net sales of $862,000, an increase of 691% compared with $109,000 in first quarter of 2005. Cash used for operating activities in the first quarter of 2006 was $799,000, up from $280,000 in the first quarter of 2005. The company also reported a loss from operations of $1,321,000 for the first quarter of 2006, as compared to a loss from operations of $467,000 for the first quarter of 2005. The loss from operations can be attributed to the company's increased personnel and operating expenses required to put in place the necessary infrastructure associated with the wireless banking network business of its Enterprise Network Services subsidiary, the company's Bundled Wireless Services division, as well as both the new and expanded Network Operations Centers (NOCs) - all key contributors to creating a higher-margin, recurring revenue model. Primary and fully-diluted net loss per share for the company's first quarters 2006 and 2005 were ($0.08) and ($0.10), respectively.

Key operational and financial highlights included:

-- A 691% increase in total net sales in the first quarter of 2006 compared with the first quarter of 2005.

-- The appointment of communications industry veteran Mike Moehle as Executive Vice President of Marketing, Sales and Business Development to lead the expansion efforts of its enterprise network wireless broadband banking business.

-- Expansion of the existing NOC and initial construction of a new secure, high-capacity NOC to provide overall day-to-day operations and 24/7 monitoring for all wireless broadband networks.

-- The company's Wireless Messaging Services (WMS) division completed the implementation of a video surveillance project for a municipality east of Houston and a city-wide wireless broadband network for a municipality in Florida.

-- A two-year unsecured revolving line of credit with certain private investors to fund general working capital, acquisitions and project financing.

-- The introduction of the company's regional banking solutions to the Texas community banking market at the 3rd Annual Technology in Banking Conference sponsored by the Texas Bankers Association.

-- An Authorized Channel Partner Agreement with 5G Wireless Communications Inc. to provide its new cellular-style wireless base stations and high-performance microcells.

John Burns, CEO of ERF Enterprise Network Services, commented, "We're making great progress in providing banks with the next generation of WAN facilities through our BankNet and BranchNet Enterprise Networks solutions. These high-speed telecommunications infrastructure networks provide both redundancy and expansion of computer LAN and WAN technology, while allowing banks the advantage of owning their own networks rather than leasing long-term from telecom providers. Wireless broadband networks also provide for fast delivery of encrypted data, voice, video information and services across an entire enterprise or geographical area."

Looking forward, Smith added, "We now have a solid foundation in place to provide secure enterprise-class encrypted wireless banking networks and city-wide wireless broadband networks for municipalities and, thus, we believe 2006 will be a year of strong revenue growth and improved operating results."

ABOUT ERF WIRELESS:

ERF Wireless Inc. is a fully reporting public corporation located in League City, Texas. The company specializes in providing wireless broadband product and service solutions to enterprise, commercial and residential clients on a regional and national basis. For more information, please visit our website at www.erfwireless.com or call 281-538-2101. To automatically receive periodic company information that has appeared in the media, please visit our website and join our opt-in Investor Information Program. (ERFWF)

Forward-looking statements in this release regarding ERF Wireless Inc. are made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties, including, without limitation, continued acceptance of the company's products, increased levels of competition, new products and technological changes, the company's dependence upon third-party suppliers, intellectual property rights, and other risks detailed from time to time in the company's periodic reports filed with the Securities and Exchange Commission.

Source: Business Wire

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