Mti Wireless Regulatory News (MWE)

MTI WIRELESS EDGE LTD

 FINANCIAL RESULTS FOR THE NINE MONTHS ENDED

 30 SEPTEMBER 2010

MTI Wireless Edge Ltd., (ticker: MWE) ('MTI' or 'the Company'), a market leader in the manufacture of flat panel antennas for fixed wireless broadband, today announces its unaudited results for the nine months ended 30 September 2010.

Highlights

·; Third quarter revenues increase to $3.5m (Q3 2009: $3.4m)

·; Nine month revenues of $9.6m (2009: $10.3m)

·; Nine month gross profit of $3.3m (2009: $3.6m)

·; Nine month gross margins of 34% (2009: 35%)

·; Cash and cash equivalents at $11.9m (Q3 2009: $13.5m)

Dov Feiner, Chief Executive Officer, commented:

"It is pleasing to report that the Company is continuing, quarter by quarter, to make progress. The improvement that we saw in the closing months of the half year has gathered momentum in the third quarter with revenues of $3.5m, some 2% higher than the comparable period of 2009, with gross margins for the nine month period virtually maintained. This is the first time since 2008 that MTI has achieved quarterly revenue growth against the previous year. Third quarter sales are also 5% up on the second quarter of this year, which has been accomplished while increasing our backlog both for the fourth quarter and longer term.

"Our largest division, where we are a market leader in manufacturing flat panel antennas for fixed wireless broadband, is demonstrating steady growth on the back of a moderately improving market and revenue for the nine months is now only 3% behind the 2009 level, a gap that I believe we can close in the final quarter of the year. Our sales of antennas for RFID readers are continuing to demonstrate healthy growth and we have a strong order book for military products following last June's order for US$2.2m of equipment.

"Overall, we are making steady progress despite a challenging market and, supported by a strong balance sheet, the Board remains confident in MTI's long term prospects."

MTI Wireless Edge Ltd + 972 3 900 8900

Moni Borovitz, Finance Director

Dov Feiner, CEO

Allenby Capital +44 203 328 5656

Nick Naylor

Alex Price

Threadneedle Communications +44 20 7653 9850

Graham Herring

Terry Garrett

About MTI Wireless Edge

MTI designs and manufactures flat panel antennas, largely supplied to international OEMs of fixed broadband wireless access systems. With over 30 years of technical 'know-how', flexible high volume manufacturing capabilities and low failure rates, MTI's antennas now comprise approximately 25% of the global fixed broadband wireless antenna market. In addition, the Company has successfully developed products for new commercial applications as wireless systems become increasingly prevalent in new markets.

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

The accompanying notes form an integral part of the financial statements.

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the nine months ended September 30, 2010:

The ac companying notes form an integral part of the financial statements.

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the nine months ended September 30, 2009:

The ac companying notes form an integral part of the financial statements.

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended December 31, 2009:

The ac companying notes form an integral part of the financial statements.

INTERIM CONSOLIDATED STATMENT OF FINANCIAL POSITION

The accompanying notes form an integral part of the financial statements.

INTERIM CONSOLIDATED STATMENTE OF FINANCIAL POSITION

The accompanying notes form an integral part of the financial statements.

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

The accompanying notes form an integral part of the financial statements.

 INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

Appendix A - Non-cash activities:

The accompanying notes form an integral part of the financial statements.

Note 1 - General:

M.T.I Wireless Edge Ltd. (hereafter - the Company) is an Israeli corporation. It was incorporated under the Companies Act in Israel on December 30, 1998 as a wholly- owned subsidiary of M.T.I Computers and Software Services (1982) Ltd. (hereafter - the Parent Company) and commenced operations on July 1, 2000 and since March 2006, the Company's shares have been traded on the AIM Stock Exchange.

The formal address of the company is 11 Hamelacha Street, Afek industrial Park, Rosh-Ha'Ayin, Israel.

The Company is engaged in the development, design, manufacture and marketing of antennas and accessories.

Note 2 - Significant Accounting Policies:

The interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for the preparation of financial statements for interim periods, as prescribed in International Financial Reporting Standard IAS 34 ("Interim Financial Reporting").

The interim consolidated financial information set out above does not constitute full year end accounts within the meaning of Israeli Companies Law. It has been prepared on a going concern basis in accordance with the recognition and measurement criteria of the International Financial Reporting Standards (IFRS). Statutory financial information for the financial year ended 31 December 2009 was approved by the board on 25 February 2010. The report of the auditors on those financial statements was unqualified. The interim consolidated financial statements as of 30 September 2010 have not been audited.

The significant accounting policies applied in the annual financial statements of the Company as of December 31, 2009 are applied consistently in these interim consolidated financial statements, except for the impact of the adoption of the Standards and Interpretations described below.

- IFRS 3 (Revised) - Business Combinations and IAS 27 (Revised) - Consolidated and Separate Financial Statements:

These standards have been applied prospectively from 1 January 2010. The implementation of these standards will affect future acquisitions and transactions with non-controlling interests.

The principal changes following the adoption of these Standards are:

(a) IFRS 3 previously prescribes that goodwill, as opposed to the acquiree's other identifiable assets and liabilities, should be measured as the excess of the cost of the acquisition over the acquirer's share in the fair value of the identifiable assets, net on the acquisition date. According to the Revised Standards, goodwill can be measured at its full fair value and not only based on the acquired part, this in respect of each business combination transaction measured separately.

(b) A contingent consideration in a business combination is measured at fair value and changes in the fair value of the contingent consideration, which do not represent adjustments to the acquisition cost in the measurement period, should not be simultaneously recognized as goodwill adjustment. Normally, the contingent consideration is considered a financial derivative within the scope of IAS 39 and presented at fair value through profit or loss.

(c) Direct acquisition costs attributed to a business combination transaction is recognized in the comprehensive income statement as incurred as opposed to the previous requirement of carrying them as part of the consideration of the cost of the business combination, which has been removed.

(d) A minority transaction, whether a sale or an acquisition, will be accounted for as an equity transaction and will therefore not be recognized in the statement of income or have any effect on the amount of goodwill, respectively.

(e) A subsidiary's losses, although resulting in the subsidiary's deficiency, is allocated between the parent company and non-controlling interests, even if the non-controlling interests has not guaranteed or has no contractual obligation of sustaining the subsidiary or carrying out another investment.

(f) On the loss of control of a subsidiary, the remaining investment in the subsidiary, if any, is revalued to fair value against gain and loss from the sale and this fair value will represent the cost basis for the purpose of subsequent treatment.

- Amendments to IFRS 2 - Group Cash-settled Share-based Payment Transactions

In June 2009 the International Accounting Standards Board amended IFRS 2 to clarify its scope and the accounting for group cash-settled share-based payment transactions in the separate or individual financial statements of the entity receiving the goods or services when that entity has no obligation to settle the share based payment transaction. The amendments also incorporate the guidance contained in the following Interpretations:

• IFRIC 8 Scope of IFRS 2

• IFRIC 11 IFRS 2-Group and Treasury Share Transactions.

The implementation of Amendments to IFRS 2 has had no impact on the reported results or financial position of the Company.

- Improvements to International Financial Reporting Standards 2009

- IAS 7 - Statement of Cash Flows: Explicitly states that only expenditure that results in recognizing an asset can be classified as a cash flow from investing activities.  

- IAS 36 - Impairment of Assets: The amendment to IAS 36 defines the required accounting unit to which goodwill will be allocated for impairment testing of goodwill. Pursuant to the amendment, the largest unit permitted for impairment testing of goodwill acquired in a business combination is an operating segment as defined in IFRS 8, "Operating Segments" before the aggregation for reporting purposes.

The initial adoption of these Standards did not have any material effect on the consolidated financial statements.

The following new standards, new interpretations and amendments to standards and interpretations have been issued but are not effective for the financial year beginning 1 January 2010 and have not been early adopted:

- IFRS 9, 'Financial instruments', In November 2009, the IASB issued IFRS 9, "Financial Instruments", which represents the first phase of a project to replace IAS 39, "Financial Instruments: Recognition and Measurement". IFRS 9 focuses mainly on the classification and measurement of financial assets and it applies to all financial assets within the scope of IAS 39.

According to IFRS 9, upon initial recognition, all the financial assets (including hybrid contracts with financial asset hosts) will be measured at fair value. In subsequent periods, debt instruments can be measured at amortized cost if both of the following conditions are met:

- The asset is held within a business model whose objective is to hold assets in order to collect the contractual cash flows.

- The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent measurement of all other debt instruments and financial assets will be at fair value.

Financial assets that are equity instruments will be measured in subsequent periods at fair value and the changes will be recognized in the statement of income or in other comprehensive income (loss), in accordance with the election of the accounting policy on an instrument-by-instrument basis. Nevertheless, if the equity instruments are held for trading, they must be measured at fair value through profit or loss. This election is final and irrevocable. When an entity changes its business model for managing financial assets it shall reclassify all affected financial assets. In all other circumstances, reclassification of financial instruments is not permitted.

The Standard will be effective starting January 1, 2013. Earlier application is permitted. Early adoption will be made with a retrospective restatement of comparative figures, subject to the reliefs set out in the Standard.

The Company is evaluating the possible effect of the adoption of the new Standard on the consolidated financial statements but is presently unable to assess such effect, if any.

- Revised IAS 24, 'Related party disclosures', issued in November 2009. It supersedes IAS 24, 'Related party disclosures', issued in 2003. The revised IAS 24 is required to be applied from 1 January 2011. Earlier application, in whole or in part, is permitted.

- 'Classification of rights issues' (Amendment to IAS 32), issued in October 2009. For rights issues offered for a fixed amount of foreign currency, current practice appears to require such issues to be accounted for as derivative liabilities. The amendment states that if such rights are issued pro rata to all the entity's existing shareholders in the same class for a fixed amount of currency, they should be

The following new standards, new interpretations and amendments to standards and interpretations have been issued but are not effective for the financial year beginning 1 January 2010 and have not been early adopted(Cont.):

classified as equity regardless of the currency in which the exercise price is denominated. The amendment should be applied for annual periods beginning on or after 1 February 2010. Earlier application is permitted.

Note 3 - SEGMENTS:

The following table's present revenue and profit information regarding the Group's operating segments for the nine months ended 30 September 2010 and 2009, respectively.

 (*) The Group cannot distinguish between Commercial and Military assets and liabilities, due to the fact that some of the assets and liabilitiesare used by both segments.

Note 4 -TRANSACTIONS WITH RELATED PARTIES:

The Parent Group and other related party provides certain services to the Group as follows:

All Transactions are made on market value.

As of September 30, 2010 the parent group and related party owes to the Group US $41,000. On 30 September 2009 the Group owed to the parent group and related party US $159,000.

NOTE 5 - SIGNIFICANT EVENTS:

1. On June 15, 2010, the Company has received a US$2.2m order from an existing client for the development and manufacture of Military antennas. Deliveries will be over a two year period. 

2. On June 15, 2010 the company has received a US$0.7m order from an existing client for fixed broadband wireless antennas. Deliveries of the order will be over an 18 month period.

NOTE 6 - SUBSEQUENT EVENTS:

On October 20, 2010 the Company announced that it has reached agreement in principle with its largest shareholder, MTI Computers & Software Services (1982) Ltd. ("MTI Computers"), to acquire the leasehold interest of its head office located at 11 Hamelacha St., Afek Industrial Park, Rosh-Ha'Ayin, 48091, Israel (the "Property").

The purchase price to be paid by the Company is NIS 18,800,000 (approximately US$ 5.2 Million) plus 5 per cent purchase tax (the "Purchase Price"), and this has been calculated on the basis an independent valuation report dated 26 September 2010 prepared by Haushner & Co (the "Appraisal Report").

The Company intends to fund approximately US$ 2.9 million of the Purchase Price from its existing cash resources and the remainder of the Consideration, together with any applicable taxes (approximately US$2.5 million in aggregate) will be financed via a bank loan secured on the Property.

The transaction is subject to the approval of the shareholders of the company and an extra ordinary meeting to approve the transaction was called and will take place on November 24, 2010.