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ERF Wireless Reports 1st Quarter 2014 Results

Net Cash Used by Operating Activities Is Reduced by $1,108,000 as Compared to the Same Quarter Last Year

LEAGUE CITY, TX -- (Marketwired) -- 05/22/14 -- ERF Wireless Inc. (OTCQB: ERFB), a leading provider of enterprise-class wireless and broadband products and services, announced today that the Company has filed its Form 10-Q with the Securities and Exchange Commission reporting results for the quarter ended March 31, 2014.

The Company's revenues and gross profits declined slightly in the first quarter of 2014 as compared to the prior year same quarter ended March 31, 2013. Financial highlights are as follows:

  • The Company reported revenues of $1,592,000 for the quarter ended March 31, 2014, as compared to revenues of $1,913,000 for the quarter ended March 31, 2013; a decrease of $321,000 or 17%.
  • The Company reported gross profit of $660,000 for the quarter ended March 31, 2014, compared to $889,000 for the quarter ended March 31, 2013, a decrease of $229,000 or 26%.
  • The Company reported total comprehensive loss of $1,050,000 for the quarter ended March 31, 2014, as compared to a total comprehensive loss of $1,656,000 for the quarter ended March 31, 2013; a decrease of $606,000 or 37%.
  • The Company's Energy Broadband, Inc. subsidiary reported revenues of $889,000 for the quarter ended March 31, 2014, as compared to revenues of $1,205,000 for the quarter ended March 31, 2013; a decrease of $316,000 or 26%.
  • The Company reported a decrease of $654,000 or 32% in operating expenses in the quarter ended March 31, 2014, as compared to the quarter ended March 31, 2013. The decrease is primarily related to lower employment expenses of $390,000 associated with a headcount decrease of 17 employees and approximately $235,000 in lower legal and professional fees associated with the concluded arbitration proceedings with Schlumberger pertaining to disputes to resolve certain financial issues contained in the 2009 exclusive reseller agreement.
  • The Company reduced its burn rate as measured by Earnings Before Interest Taxes Depreciation and Amortization ("EBITDA") to a loss or burn rate of $269,000 for the quarter ended March 31, 2014, as compared to a EBITDA loss or burn rate of $647,000 for the quarter ended March 31, 2013, a decrease of $378,000 or 58%.
  • The Company reported Net Cash used by Operating Activities of ($1,000) for the quarter ended March 31, 2014 as compared to Net Cash used by Operating Activities of ($1,109,000) for the quarter ended March 31, 2013, a decrease of $1,108,000.

R. Greg Smith, CFO of ERF Wireless, commented, "We initiated some decisive actions aimed at reducing our operating expenses in the first quarter ended March 31, 2014, that resulted in a decrease of $654,000 or 32% in operating expenses as compared to the quarter ended March 31, 2013. This reduction is the equivalent of $2.6 million reduction on an annualized basis and compares to an overall EBITDA loss or burn rate of $2,583,000 for Calendar 2013. With this substantial cost reduction in place, coupled with increased demand for our Energy Broadband communication services already occurring in the second quarter of 2014, we continue to make good progress on executing on our restructuring plan aimed at reaching profitability and positive cash flow from operations in calendar 2014. We are aggressively focused on driving market share increases for our products and services and associated revenue growth in this primary objective to reach profitability and positive cash flow from operations."

Dr. H. Dean Cubley, CEO of ERF Wireless, commented, "With our second quarter off to a good start, we anticipate that with continued expansion of the U.S. oil and gas exploration and production in 2014 we will continue to make solid progress on reaching these planned objectives. We have a number of specific key objectives planned for 2014 that we believe will be extremely beneficial to our shareholders. Below is a summary of a number of these new objectives that are intended to restore the value to our common stock and move the company forward into profitability."

Future Plans

It is management's goal to build shareholder value through:

(1) certain divestitures of non-core business units and corresponding use of proceeds for debt reduction and consolidation
(2) internal growth of its core Energy Broadband and Enterprise Networks business units
(3) an aggressive acquisition strategy of certain profitable competitors and complementary businesses, and
(4) a focused approach to expansion and operating capital acquisition in conjunction with a national market listing.

In addition to debt reduction plans, management has been active over the last several months positioning the company to capitalize on the renewed exponential growth taking place in the wireless broadband oil and gas sector. The application of new technologies and discoveries taking place in this sector has created increased demand for wireless broadband access and services. This positioning has already put ERF Wireless at the forefront of this demand resulting in significant opportunities for internal revenue that have already begun with the current addition of multiple new customers and other growth under new contracts already beginning with the 2nd quarter of 2014. To complement this internal growth and further capitalize on the expansion within the wireless broadband industry, ERF Wireless has also begun an aggressive acquisition strategy in the 2nd quarter of 2014. To date, management has identified multiple qualified acquisition candidates that would not only add revenues and accretive positive cash flow to the company but would also expand its footprint within the industry substantially. Further details and information on these endeavors will be forthcoming as contracts and agreements materialize.

About ERF Wireless

ERF Wireless Inc. is a fully reporting public corporation located in League City, Texas, and is the parent company of Energy Broadband Inc., ERF Enterprise Network Services, ERF Bundled Wireless Services, ERF Wireless Messaging Services and ERF Network Services. The company specializes in providing wireless and broadband product and service solutions to enterprise, commercial and residential clients on a regional, national and international basis. Its principals have been in the wireless broadband, network integration, triple-play FTTH, IPTV and content delivery business for more than 40 years. For more information, please visit our websites at www.erfwireless.com, www.energybroadband.com and www.erfwireless.net or call 281-538-2101. (ERFBG)

Forward-Looking Information

The information in this release may contain forward-looking statements relating to anticipated or expected events, activities, trends or results. Forward-looking statements, can be identified by the use of forward looking terminology such as "believes," "suggests," "expects," "may," "goal," "estimates," "should," "likelihood," "plans," "targets," "intends," "could," or "anticipates," or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy or objectives. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties. Forward-looking statements in this release include, without limitation, the Company's expectations of continued expansion into oil and gas markets and of our terrestrial broadband networks, along with other performance results. These statements are made to provide the public with management's current assessment of our business, and it should not be assumed that that the forward looking statements will prove to be correct. Security holders are cautioned that such forward-looking statements involve risks and uncertainties. The forward-looking statements contained in this release only as of the date hereof, and we expressly disclaim any obligation or undertaking to report any updates or revisions to any such statement to reflect any change in management's expectations or any change in events, conditions or circumstances on which any such statement is based. Certain factors may cause results to differ materially from those anticipated by some of the statements made in this release. Please carefully review our filings with the Securities and Exchange Commission as we have identified many risk factors that impact our business plan.

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