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Wialan Technologies, Inc. Reports First Quarter Results

Continued Progress in Developing Key Market Segments

SUNRISE, FL -- (Marketwired) -- 05/14/14 -- Wialan Technologies Inc. (OTC Pink: WLAN) (PINKSHEETS: WLAN) (the "Company"), a next generation telecommunications provider, today announced operating results for the first quarter ended March 31, 2014 and the current status of its business. The Company ended the quarter well positioned to leverage its successful operational experience with Miami-Dade County and other customers, market segments and very significant partnerships that are being developed to help scale up Wialan's business.

As described later herein, while the revenues for the quarter for the Company is still low given its early stage of rollout, the Company finished the quarter by signing a $250,000 contract with California-based Wi-Fidelity, LLC and has begun selling equipment under that agreement. Highlights of the first quarter include specific contracts as well as building blocks for the growth of Wialan. Provided below are also descriptions of other meaningful developments as of the filing of the results for the first quarter.

The key sales contracts and other developing opportunities for the quarter and to date include:

Miami-Dade County

  • During the quarter, Wialan expanded the scope of its work with Miami-Dade County to support the County's expansion of its public safety and free Wi Fi based broadband Internet access services in its public parks and facilities.
  • Subsequent to the end of the quarter, on April 4, the County invited bids from contractors to install specified Wialan wireless equipment to provide public safety in the 4.9 GHz band and Wi Fi coverage at the African Heritage Cultural Arts Center in Miami, Florida. Wialan is currently in the process of supplying the equipment that would provide Internet services to up to 200 simultaneous patrons in each of the various arts centers on the campus, covering at least 95% of the areas including picnic areas and parking lots.
  • As previously reported, Wialan wireless equipment have already been deployed by Miami-Dade County at many locations -- Goulds Park, Haulover Park, Haulover Beach, Bill Bird Marina, Omni (bus) Station, Cutler Ridge Park and East Ridge retirement community. The Company expects to earn on-going monthly maintenance and support fees for each of these locations.
  • Wialan continues to monitor other upcoming projects from the County and expects to secure meaningful contracts.

Based upon its continuing successful experience with Miami-Dade County, a principal Wialan focus going forward is on working with counties, cities and local governments in North America to rollout public safety and Wi Fi access platforms that can be leveraged to provide not only broadband internet access in public areas, but also provide public safety (e.g., 24/7 video surveillance using the 4.9 GHz band which is a licensed band available for use only by public safety agencies) and other applications that can piggyback on the highly flexible industrial grade Wialan platform.

Belle Harbor Marina

  • In line with the objective of increasing sales of products and services to marinas, on February 24, Wialan entered into an agreement with Belle Harbor Condominiums, Clearwater Beach, Florida, to provide Wi-Fi access and video surveillance to its marina and public access areas. The wireless Wialan solution adds to a previously installed cabled video surveillance system. Wialan has just completed the first phase installation of a network and the Company is in discussions with the luxury property owners to broaden and deepen the scope of coverage including personal video services available to boat owners and condominium residents.
  • Belle Harbor and other Wialan networks currently in operation in the marina market segment in Florida (Deering Bay marina and Cocoplum Marina, both in Coral Gables, Galleon Resort in Key West and Marina Bay in Fort Lauderdale) as well as in the Bahamas (Brown Marina in Bimini and the luxury Baker Bay Marina and golf course) are all successful demonstrations of the high-quality of service and complete coverage provided by Wialan products and services to marinas.
  • Our success opens up more opportunities in this market segment. For example, the property management company that operates Belle Harbor also runs over 100 other similar properties, which represent an excellent opportunity for Wialan.
  • Depending upon the size of the marinas, revenues from a typical installation will likely range from $10,000 to $50,000, but will also yield monthly support and maintenance fees and provide additional opportunities to provide value-added personal video and broadband services to boat owners and other users in and around the marinas.

The Company plans to build on its success and focus on the hundreds of marinas in Florida and to an estimated 11,000 marinas around North America. Wialan is in the process of securing the sales staff and partnerships to support that growth.

Wi-Fidelity, LLC

  • During the first quarter, Wialan entered into a contract with Wi-Fidelity, LLC to supply $250,000 worth of wireless equipment, out of which about $26,000 worth of products were supplied in March under this agreement. The contract also includes standard monthly maintenance fees as well as revenue sharing agreements under which Wialan will provide subscriber management services to support Wi-Fidelity's subscription business.
  • Wi-Fidelity is a California-based entity that was set up by former Wialan CEO, Mr. Tim Peabody and other investors. It plans to use Wialan wireless products and applications to provide broadband Internet access, security and other applications to commercial and residential users in California and other pre-agreed markets. Mr. Peabody remains a significant shareholder of Wialan but is currently not involved in the management or day-to-day operations of the Company.

Wialan made progress in other projects that the Company has announced before and given below is a summary update on some of them.

Wireless Early Warning Systems in beaches

  • During the quarter, the Company continued to work with Clearwater Beach city on rolling out its beach public address Wireless Early Warning System (WEWS) at Clearwater Beach and the Company will provide more details on this project as they are finalized.
  • It is anticipated that the proposed five-tower public address system will be installed and commissioned during the second quarter to cover the widely used two-mile stretch along Clearwater Beach. Each of the solar-powered towers will have a Wialan access point, transmitter and PA system that the Clearwater Beach city will use to provide beach safety and security services.
  • Further, Wialan and potential partners will provide low-cost, high-quality broadband Internet services to Clearwater Beach users and others along the beach on a pay-as-you-go or subscription basis. As configured currently, the Company anticipates that its system can support thousands of users on the beach, and can be further expanded as needed to address even higher demand.
  • Depending upon the size of the beach to be covered and configurations of such systems, typical installations of this size could yield revenues ranging from $25,000 to $50,000 and could provide potential additional sources of ongoing revenues from subscription services and applications as well as support and maintenance fees.

As reported previously, the Company has filed for patents for its WEWS (application # 14050516), a product that was developed at the request of various safety and municipal officials for the safety of the public in beaches. The Company is currently developing a pipeline for other similar installations in Florida beaches that includes Coquina Beach in Manatee County and Haulover Beach in Miami-Dade County as well as in other parts of North America over time.

Dominican Republic

  • Along with its joint venture partner in Dominican Republic (DR), Wialan continued to plan to deploy Wialan equipment and satellite-based broadband Internet access services to schools. As a first step, the Company and its partners have contributed the equipment and are currently in the process of setting up a pilot to demonstrate (to the DR government) the availability and quality of service to a school located in a remote part of the country. The equipment required for the "pilot" have been shipped and it is anticipated that the installation will be completed during the second quarter of 2014.
  • For this DR project, Germantown, MD, based Hughes Network Systems has communicated its willingness to contribute satellite bandwidth and network services for the three-month demonstration period following which the parties intend for Hughes to provide satellite bandwidth and network services as part of Wialan JV's services to DR schools.
  • Should a contract with the DR government result, Wialan anticipates rolling out services to 300 DR schools initially, followed by expansion to more schools in a phased manner.

Other Markets

  • In Brazil, Wialan is in the process of getting its wireless products certified by the Brazilian regulatory body, ANATEL. To meet requirements in that market, Wialan is finalizing modifications to its products that would allow it to operate in additional frequencies that are permitted for commercial use in Brazil. While business development and operations are pending receipt of the regulatory approval, Brazil remains a promising market for Wialan.
  • Wialan has established relationships with in-country partners for distribution and sales of its products in Haiti, Mexico, Central America, Ecuador and Venezuela. These partners have purchased Wialan equipment for demonstrative and business development purposes.

While none of these market opportunities are integral to Wialan's immediate business prospects, they represent promising beginnings in underserved markets. The Company will continue to update investors as concrete milestones are achieved in this regard.

Other Updates

  • On April 1, the Company retained Mediaworld Ventures, LLC to provide executive advisory services to the Board of Directors of Wialan, the Interim CEO and the Company's management on operations, business and execution planning, and strategic initiatives to support the growth of the Company. The Company believes that Mediaworld will add significant depth of experience and business skill by enhancing management strength to accelerate business development, market expansion, financing and communications. As part of the agreement, during the term of its agreement with Wialan, Mediaworld Ventures President and CEO, Mr. Sridhar Ganesan, will also provide leadership for the Company as acting chief operating officer. Mediaworld will also bring other senior executive resources from time to time as needed to support Wialan's Board, interim CEO and management.
  • The Wialan board has also embarked on a search for a new CEO for the Company and will update investors in that regard.

Operating and Financial results from the first quarter
Wialan is a development stage company that has focused for many years on the development of wireless technologies and equipment and selling products and services in Florida and selected other markets, primarily as an early entry strategy to demonstrate its products. As previously reported, on August 28, 2013 Wialan Technologies merged into American Community Development Group, Inc. (ACYD), with the latter acquiring all of the assets and business operations of Wialan.

Since the date of the merger, the merged Company's new and only business focus has been Wialan's business -- manufacturing, marketing, sale and installation of industrial wireless access equipment. The name of the Company was changed from ACYD to Wialan Technologies, Inc. on January 22, 2014 and its trading symbol was changed from ACYD to WLAN.

For two years prior to the merger, Wialan's focus has been almost entirely on research and development oriented towards refining and testing public safety and wireless products. Following the merger, Wialan has begun to develop and implement new strategies, refine market focus to scale up its business and to build an organization to support its growth.

For the first quarter of 2014, Wialan reported revenues of $48,530. Wialan's previous business (under ACYD name) did not yield any meaningful revenues nor was the business comparable, so there are no quarter-to-quarter revenue comparisons available. On a sequential basis, revenues in the first quarter of 2014 more than doubled when compared with full-year revenues of $20,174 reported for the calendar year ended December 31, 2013.

Cost of Sales and Gross Margins
The Company's cost of sales includes the cost of materials, parts and other costs related to production of its wireless equipment. For the first quarter, the Company recorded cost of sales of $23,340, resulting in a gross margin of about 52%.

Operating Expenses, Operating Loss and Net Loss
Total operating expenses including depreciation for the first quarter of 2014 were $71,153. Wialan recorded an operating loss of $45,963 and net loss in the first quarter of 2014 was $48,290.

Cash and liquidity
As of March 31, 2014, the Company had cash and cash equivalents of $74,220, compared with cash of $58,433 as of December 31, 2013. At the end of the first quarter, the Company also had cash due from investors of more than $100,000. The Company did not conclude any financing during the first quarter including the previously announced $10 million potential financing in August 2013, when ACYD acquired Wialan. The Company is in the process of finalizing its strategic and operational execution plan, and raising critical additional capital to support the growth of its business.

Wialan is strongly interested in communicating with its investors and providing information as needed and practicable. In line with that and in lieu of an investor conference call, the Company invites its investors to send any questions to [email protected] for any additional information that may be available with regards to the first quarter of 2014 as well as some of the outside of first quarter developments described in this release. The Company will make all reasonable efforts to aggregate questions received by May 25 and publish its responses to as many clearly articulated questions as it can.

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