Straight Path Communications Inc. (NYSE MKT: STRP) Investor Presentation April 2015

Transcription

1 Straight Path Communications Inc. (NYSE MKT: STRP) Investor Presentation April 2015

2 SAFE HARBOR This presentation contains forward-looking statements. Statements that are not historical facts are forward-looking statements and such forwardlooking statements are statements made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of Examples of forward-looking statements include: statements about Straight Path Communications Inc. s future performance; projections of Straight Path Communications Inc. s results of operations or financial condition; statements regarding Straight Path Communications Inc. s plans, objectives or goals, including those relating to its strategies, initiatives, competition, acquisitions, dispositions and/or its products; and Words such as "believe," "anticipate," "plan," "expect," "intend," "target," "estimate," "project," "predict," "forecast," "guideline," "aim," "will," "should," likely, "continue" and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Readers are cautioned not to place undue reliance on these forward-looking statements and all such forward-looking statements are qualified in their entirety by reference to the following cautionary statements. Forward-looking statements are based on Straight Path Communications Inc. s current expectations, estimates and assumptions and because forwardlooking statements address future results, events and conditions, they, by their very nature, involve inherent risks and uncertainties, many of which are unforeseeable and beyond Straight Path Communications Inc. s control. Such known and unknown risks, uncertainties and other factors may cause Straight Path Communications Inc. s actual results, performance or other achievements to differ materially from the anticipated results, performance or achievements expressed, projected or implied by these forward-looking statements. These factors include those discussed under the headings "Risk Factors" and Management s Discussion and Analysis of Financial Condition and Results of Operations in Straight Path Communications Inc. s filings made with the Securities and Exchange Commission. Straight Path Communications Inc. cautions that such factors are not exhaustive and that other risks and uncertainties may cause actual results to differ materially from those in forward-looking statements. Forward-looking statements speak only as of the date they are made and are statements of current expectations concerning future results, events and conditions and neither Straight Path Communications Inc. is not under any obligation to update any of the forward-looking statements, whether as a result of new information, future events or otherwise. 2

3 STRAIGHT PATH OVERVIEW Straight Path Spectrum (100% owned by STRP) Largest holder of 39GHz Straight Path IP Group (84.5% owned by STRP) Strategic IP portfolio Strong Cash & Balance Sheet Straight Path Spectrum holds 39GHz spectrum nationwide and 28GHz in key markets 39GHz deep coverage over entire US more than Sprint & ATT in other bands Includes 828 licenses of 39GHz spectrum and 133 licenses of 28GHz spectrum (16 A Band) Data usage is exploding year over year multiple market applications need more spectrum FCC considering changing regulations to enable 39GHz spectrum for mobile access use Straight Path IP Group holds key patents with monetization potential Prominent contingency-based litigation partners Achieved Settlement & Licensing gross receipts totaling $18.3M in FY 2014 and 2015 Currently appealing adverse PTAB ruling at Federal level Low CapEx and OpEx spending projected for both subsidiaries for multiple year horizon Balance $21.1M cash at end of Q2 FY 2015, with budget of $4.0M FY 2015 spending 3

4 Straight Path Spectrum

5 MARKET OPPORTUNITY Wireless data demand expected to increase 300% by 2017 (3G 4G usage) Wireless Network Operators need to increase data backhaul Traditional fiber backhaul is costly Companies are searching for costeffective solutions Wireless networks growing US expected to see largest demand for wireless growth Wireless becoming more standard connection method for both Direct Access and Network Segments 5

6 LARGEST 39GHZ HOLDER IN THE US 39GHz Spectrum Availability, Propagation & FCC Rules Nationwide Availability Largest Spectrum Holdings in US (216B MHz-pop) mmwave Average 833 MHz in top 25 markets 96% of active 39GHz FCC licenses Current Rules Support Fixed Wireless Innovation FCC allows for smaller antennas FCC allows for Point-to-Multi-Point (PMP) Propagation Supports Major Networks Typical Path Range 3+ miles Ideal for Cities, often Congested 6

7 DEEP COVERAGE IN MAJOR CITIES Seattle 900 MHz Enough Spectrum to carry multiple national wireless networks Minneapolis 1000 MHz Chicago 1000 MHz Detroit 800 MHz Boston 800 MHz New York 800 MHz San Francisco Philadelphia 1000 MHz 600 MHz DC 1000 MHz Los Angeles 800 MHz Dallas 900 MHz Houston 900 MHz Atlanta 800 MHz Miami 1000 MHz 7

8 INCREASED VALUE WITH NEW DEMAND & RADIOS New technology & regulation drives use & value Point-to-Point Point-to-Multi-Point Great operator economics (1 1 vs. 1 30) Great Spectrum economics (link vs. area) Common carrier cannot compete (PTP only) Currently available in LMDS A Band; 39GHz anticipated within 18 months Macro Cells Small Cells More cells need to be backhauled Fiber to new sites often cost prohibitive Test beds & joint sales anticipated FY Fixed Wireless Mobile Access Thousands of sites billions of devices Mbps (LTE) Gbps (5G) Fraction of penny dollars FCC Notice of Inquiry ( NOI ) ( overwhelming support ) Next step is potentially 39GHz in FCC s Notice of Pending Rulemaking 8

9 Straight Path IP Group

10 PATENT HOLDINGS Straight Path IP Group s 704 Patent portfolio has been successfully asserted in various lawsuits in the United States district courts, the International Trade Commission, and endured one of the most extensive reexaminations in the history of the USPTO Prior litigation and extensive re-examination in 2010 and 2011 has confirmed the validity of key patent claims, although with AIA attempts to invalidate have been made Current adverse decision at Patent Trial and Appeal Board (PTAB) Patents expire September 25, 2015 with six year look-back for damages List of patent holdings available on SPCI s website 10

11 IP LICENSING & ASSERTIONS $18.3M gross receipts to date from top tech & communications firms Pending Appeal 11

12 PTAB DECISION; STATUS & STRATEGY Declared 17 claims in 704 unpatentable Construed 3 patent terms: On-line / connected to the computer network Upon connection Point to point Appeal at Federal Circuit Court of Appeals On-line vs. Being registered Process vs. Computer Opportunity to receive binding claim construction Cases have been stayed or dismissed w/o prejudice during the appeal and IPRs Filed opposition to 6 IPR petitions 12

13 Financial Summary

14 CONSOLIDATED BALANCE SHEET Assets (in thousands) Cash & cash equivalents Trade accounts receivable, net Prepaid Expenses current portion Other current assets Prepaid Expenses long-term portion Intangibles Other assets TOTAL ASSETS End Q2 FY 2015 $21,115 $67 $3,346 $1,728 $26,256 $0 $350 $543 $27,149 End Q4 FY 2014 $21,232 $61 $4,999 $2,484 $28, $350 $552 $30,439 14

15 CONSOLIDATED BALANCE SHEET (in thousands) Trade accounts payable Accrued expenses Deferred revenue current portion Income taxes payable Note payable Total current liabilities Deferred revenue long-term portion Total Liabilities Liabilities & Equity End Q2 FY 2015 $195 $1,195 $6,904 $388 $43 $8,725 $117 $8,842 End Q4 FY 2014 $0 $1,334 $10,254 $470 $6 $12,064 $1,676 $13,740 Class A shares Class B shares Additional paid-in capital Current earnings Treasury Stock 32 shares at cost Non-controlling interest Total Equity TOTAL LIABILITIES & EQUITY $8 $112 $16,139 $2,466 ($283) $18,442 ($135) $18,307 $27,149 $8 $110 $14,886 $2,037 $0 $17,041 ($342) $16,699 $30,439 15

16 CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands) REVENUES IP Settlements Spectrum Income Statement Q2 FY 2015 $2,781 $2,687 $94 Q2 FY 2014 $453 $344 $109 COSTS & EXPENSES: Direct cost of revenues Selling, general and admin Total Costs & Expenses $1,338 $1,605 $2,943 $283 $1,042 $1,325 Income from Operations ($162) ($872) Interest income Other income (expense) Income before income taxes Income taxes Net Income $9 $0 ($153) ($100) ($253) $4 $0 ($868) - ($868) Non-controlling interest NET INCOME attributable to SPCI $24 ($277) ($141) ($727) 16