Final Results - '08

Those of you familiar with xG will be able to look through the hyperbole and spot the inaccuracies, lies, and exaggerations that these reports always contain. It’s always entertaining to compare what we know to be true with what xG say is true. Lets’s remind ourselves about AIM rule 16, which in essence says that potentially stock moving news – good OR BAD – must be released to the market as it becomes known.

Where’s the news about ACH? Where’s the news about the collapse of the Florida launch? About the base stations and phones not having FCC approval? About the base stations being returned as they didn’t work?

Let’s have a look at their key points and compare them with the truth:

They Say:
· Recorded sales of a total of 327 base stations, resulting in $16.4 million in revenues, compared to $0.3 million in 2007. Operating Profit before interest and share-based compensation was $7.7 million (2007: $6.2 million loss) and xG made a net profit of $2.0 million (2007: $12.0 million loss)…. [costs of] $6.3 million related to non-cash stock-based compensation costs (2007: $7.1 million)

We Know:
· They’ve shipped basestations to customers that didn’t even want them, and then booked those down as ‘Sales’! How the hell can they sell BTS without FCC approval! They can’t be used, and they don’t work as advertised. So from the very start these accounts are a lie, or at the extreme end of aggressive accounting – booking BTS shipped (to customers who can’t use them, or don’t want them) as receivables and those future receivables as current sales.
· Share based compensation! Who are they compensating and for what?! Fredrik Walhlman, James Woodyatt for the chop-stock they’ve sold, and perhaps a few coppers for Marc too. It’s $6.3M worth of shares – what a pity they can’t be sold for full price, huh?

They Say:
· The Company remains well-financed, with year-end net cash and cash equivalents of $15.8 million (2007: $32.7 million).

We Know:
· They are burning through cash at a record rate: half their cash gone in one year. It’d be interesting to know exactly what these ‘cash equivalents’ are, and what proportion of the cash went to making a network, and what proportion ended up in the hands of Mooers and Branton? I bet they aren’t paying themselves in stock….

They Say:
· The initial phase of deployment of the xMax BSN250 base stations in the Southern Florida market has begun, xG took delivery of the first fully commercial, production-ready TX60 handsets designed and developed by Cambridge Consultants Ltd. and completed testing the integration of the TX60 handset with our BSN250 base station, enabling xMax mobile VoIP calls between our TX60 handsets and base stations. …..The xMax system provides an extended range of operation and is expected to provide superior handset battery performance and double the call capacity of mobile WiMAX networks.

We Know:
· ‘Deployment has BEGUN’? They LAUNCHED November 2006! Their only actual customer dropped them, they delivered unworking BTS to another (and booked it as revenue even though the money was refunded). Where’s the news about any of this? Evidently I missed the news that none of the equipment has FCC approval – and none of it works as advertised.
· Double the call capacity of WiMax! Superior handset battery life! They can’t even get it to work in a very simple, basic demo! Marc – I’ve worked out who your dope dealer is…

They Say:
· xG signed an agreement with Treco International, S.A. to act as its exclusive infrastructure partner in the United States, allowing xMax carriers to finance, by equipment lease, a substantial part of the capital costs needed to deploy xMax networks.

We Know:
· That Johan Bohman who owns Treco is a cocaine fuelled dodgy dealer. And I suspect that Treco seems to be a loan shark for xMax dealers. It’s a clever idea. It probably works like this: All the ‘sales’ go though Treco, which means that xG don’t have to announce who their ‘customers’ are. The BTS is shipped – whether it works or not, or the customer wants it or not – and xG record a ‘sale’ of $75k. Treco gets a kickback of $x,000 (possibly in ‘Share based Compensation’)?. Treco start sending demands to the customer of say $5k a month forever…. The only one that loses is the ‘customer.’
· Oh, and has anybody noticed that a BTS seems to be $50k to anyone else, but if you order 1000 the price goes UP to $75k!? Could that be to increase the figure the end ‘customer’ would owe Treco? It can’t be an increase in unit costs, because they are boasting elsewhere of a margin of 92.5%…!

They Say:
· Continued patent filing activity, enhancing the Company's portfolio of intellectual property. The patent portfolio now comprises a total of 47 United States matters (10 patents issued, 18 pending utility applications and 19 pending provisional applications) and a total of 82 foreign matters (8 issued, 64 pending applications, and 10 applications).

We Know:
· Patents are worth nothing unless the invention actually works, and none of xG’s have raised a flicker of interest from any technological expert. Luckily nobody except Marc has taken out a patent on Gullibility.

Rick Mooers says:
"We have created the xMax Authorized Carrier Partner Program and are actively talking to interested parties and building our pipeline of customers."

We Know:
· They’ve lost: SkyTel, Telefonica, National Grid, Gama, Far Reach, Flashcomm, and ALL the other ‘customers’ that were signed up for the $57M pre-launch in the non-IPO documents. EVERY customer they’ve boasted about they have lost. They also name-dropped: Bear Sterns (old one!) Microsoft, Google, Credit Suisse, GE, Barclays, and the good old Pheonix Foundation. Well, they all came up trumps didn’t they?
· They’ve also lost/parted company with: 2 Nomads, their second biggest shareholder, and more PR companies than I can remember. Great job Rick.

They Say:
· Another significant industry trend witnessed in 2008 was the considerable increase in the number of subscribers choosing flat-rate, unlimited minute wireless calling plans, particularly prepaid plans.

We Know:
· None of them were your subscribers Rick! End users for xMax, umm, Zero.

Richard Mooers..... Roger Branton..... Mats Wennberg..... Olaf Hendgren..... Robyn Harte-Bunting..... Victor Suno..... James Woodyatt..... Palmi Sigmarsson..... Stefan Bennici ..... Gunnar Engellau..... Marc Dannenberg..... Jonas Krepp..... Paul Behler..... Charlie Geller..... Daniel Briggs..... Simon Starr..... Xavier Moreels..... Johan Bohman…and Stuart Schwartz – YOU BOYS TOOK A HELL OF A BEATING – A HELL OF A BEATING.