Group 1 - UTStarcom filed its Annual Report on Form 20-F for the year ended December 31, 2024 with the U.S. Securities and Exchange Commission [1] - The report is accessible on the SEC EDGAR website and in PDF format on the company's website [1] - Interested parties can request a hard copy of the report free of charge [1] Group 2 - UTStarcom is a global telecommunications infrastructure provider focused on innovative, reliable, and cost-effective communication services [2] - The company offers advanced equipment optimized for mobile backhaul, metro aggregation, and broadband access [2] - UTStarcom has a global presence with a particular focus on markets in Japan and India [2]

Financial Performance - The company reported a net loss of $4.4 million, $3.9 million, and $5.0 million for the years ended December 31, 2024, 2023, and 2022, respectively[37]. - The company has a history of operating losses and may not have enough liquidity to execute its business plan without obtaining additional funding or selling additional securities[35]. - The company recorded a net loss of $0.7 million in 2022, a net gain of $1.9 million in 2023, and a net gain of $0.5 million in 2024[81]. - The company anticipates that future product sales will be unpredictable, leading to potential fluctuations in quarterly and annual operating results[58]. - The company may require additional capital in the future, and selling additional equity could lead to shareholder dilution[160]. Liquidity and Cash Management - As of December 31, 2024, the company had $43.9 million in cash or cash equivalents, indicating a need for liquidity management[37]. - The company may need to obtain additional financing, but there is uncertainty regarding the ability to secure funding under commercially reasonable terms[39]. - The company faces risks related to its reliance on a Japanese customer and an Indian customer for a significant portion of its net sales, which could adversely affect its financial condition[30]. Customer Relationships and Sales - The company relies significantly on two major customers: SoftBank Corp. and Bharat Sanchar Nigam Limited (BSNL), accounting for approximately 30% and 32% of total net sales in 2024, respectively[47]. - As of December 31, 2024, the gross accounts receivable owed by BSNL to the company was approximately $3.4 million (INR 0.3 billion), with payment collection taking longer than anticipated[50]. - The company collected $11 million, $21 million, $35 million, $23 million, and $10 million from BSNL in the years 2019 to 2023, indicating fluctuating payment patterns[54]. - In 2024, net sales totaled $10.878 million, with India contributing 45%, Japan 36%, and China 19%[208]. Competition and Market Risks - The company faces intense competition from both domestic and international firms, which may lead to reduced prices, revenues, and market share[64]. - Average selling prices of the company's products may decrease, potentially reducing revenues and gross profit margins[67]. - The company has a rapidly evolving business model, with new product offerings that may not attract or retain customers, posing risks to growth and operating results[56]. Regulatory and Legal Risks - The company is subject to various legal and operational risks associated with its operations in China, which could negatively impact its business[25]. - Changes in the regulatory environment in India may restrict the company's ability to participate in future biddings, negatively impacting operations in the region[63]. - The company is subject to evolving data privacy laws that may impose onerous compliance requirements, potentially affecting its operations and user data collection[96]. - The company must comply with the new PRC Company Law effective July 1, 2024, which requires shareholders to fully pay in their subscribed registered capital within five years of establishment[111]. Management and Operational Challenges - The company has faced significant management changes, including the appointment of new executives in key positions, which may create uncertainty in business operations[45]. - The company has identified a material weakness in its internal control over financial reporting as of December 31, 2024, indicating that its internal controls were not effective[106]. - The company is committed to improving its internal control processes to ensure compliance with regulatory requirements, although uncertainties remain regarding future material weaknesses[106]. Intellectual Property and Compliance - The company may incur substantial costs related to intellectual property infringement claims, which could harm its financial condition[88]. - The company faces risks related to the loss or misappropriation of intellectual property, which could harm its competitive position[87]. - The company has not received any claims of patent infringement in 2024, but past claims have diverted management's attention and resources[88]. Future Growth and Product Development - The company anticipates continued increases in labor costs, including wages and employee benefits, which may adversely affect its financial condition if not controlled or passed on[155]. - The company is actively exploring the Chinese market for new customers and opportunities related to the rollout of 5G networks[212]. - The company is evaluating acquisition prospects to complement existing product offerings and enhance market coverage, but faces risks related to assimilation and realization of anticipated synergies[86].

Core Viewpoint - UTStarcom reported significant declines in revenue and profit for the second half and full year of 2024, while also highlighting a major contract win with China Telecom Research Institute for 5G transport network routers, indicating potential future growth opportunities despite current financial challenges [1][3][7]. Financial Results Summary Second Half of 2024 - Revenue decreased to $5.2 million, down 43.5% from $9.2 million in the same period of 2023 [4]. - Gross profit was $1.2 million, representing a 53.8% decline from $2.6 million year-over-year [4]. - Operating loss increased to $3.7 million from $2.8 million in the prior year [4]. - Net loss attributable to shareholders was $2.4 million, compared to $1.8 million in the same period of 2023 [19]. - Basic EPS was reported at ($0.26), down from ($0.20) [19]. - Cash balance decreased by 10.9% to $53.1 million from $59.6 million [4]. Full Year 2024 - Total revenue for the year was $10.9 million, a decrease of 31.0% from $15.8 million in 2023 [6]. - Gross profit for the year was $2.9 million, down 34.1% from $4.4 million [6]. - Operating loss for the year was $7.3 million, compared to $6.8 million in 2023 [16]. - Net loss attributable to shareholders was $4.4 million, compared to $3.9 million in 2023 [19]. - Basic EPS for the year was ($0.48), down from ($0.42) [19]. - Cash balance remained at $53.1 million, consistent with the second half of the year [6]. Business Developments - The company secured a multi-million dollar RFP from China Telecom Research Institute for manufacturing 5G transport network routers, marking a significant milestone in its 5G transport network portfolio [7]. - Cooperation with a European mobile network operator led to the development of a customized NG-PTN product, with anticipated orders in 2025 [7]. - Continued global post-sale support services were provided, with renewal orders received for existing products [7]. Operating Expenses - Operating expenses for the second half of 2024 were $4.9 million, a decrease of 9.3% from $5.4 million in the same period of 2023 [4]. - Full year operating expenses totaled $10.2 million, down from $11.2 million in 2023 [15]. Cash Flow and Financial Position - Cash used in operating activities for the second half of 2024 was $2.0 million, with no cash provided by financing activities [20]. - As of December 31, 2024, the company had cash, cash equivalents, and restricted cash of $53.1 million [20].

Core Viewpoint - UTStarcom has been selected as a major winner of the RFP for manufacturing disaggregated router hardware platforms for China Telecom's STN network, which is essential for supporting its 5G mobile network services and other offerings [1][2][3]. Company Overview - UTStarcom is a global telecommunications infrastructure provider focused on delivering innovative, reliable, and cost-effective communication services [4]. - The company has operations and customers worldwide, with a particular emphasis on Japan, India, and China [4]. Project Details - The RFP involves the manufacturing of STN-A1 and STN-A3 carrier-grade disaggregated routers, divided into two packages [2]. - UTStarcom was awarded 70% of the STN-A1 router package and 100% of the STN-A3 router package [6]. Strategic Importance - This contract signifies a shift from product design services to volume manufacturing for China Telecom's 5G transport network, highlighting UTStarcom's leadership in disaggregated network products [3]. - Network disaggregation technology is a strategic focus for UTStarcom, offering benefits such as breaking vendor lock-in and reducing costs [3]. Collaboration with China Telecom - The project builds on UTStarcom's ongoing collaboration with China Telecom Research Institute, which has been focused on developing a "white-box" disaggregated router platform optimized for 5G transport networks [2][3]. China Telecom Research Institute Overview - The China Telecom Research Institute serves the internal needs of China Telecom Group, focusing on strategic planning, core technology research, and management decision-making [5]. - It has evolved into a comprehensive base for core technology research, product development, and training for high-tech talents [5].

Core Viewpoint - UTStarcom reported its unaudited financial results for the first half of 2024, highlighting a decrease in revenue and net loss compared to the same period in 2023, while also noting significant business developments and orders in Europe and India [1][4][6]. Business Highlights - Received an expansion order for a mobile transport network from a European mobile operator, including new features for network expansion and SDN solution integration [2]. - Secured an additional order for Broadband Core solutions in India, including software and services for a key customer [2]. - Collected $3.39 million from BSNL in India, with $4.57 million still outstanding [2]. Financial Results - Total revenues for 1H 2024 were $5.7 million, down 12.3% from $6.5 million in 1H 2023 [5][6]. - Net equipment sales decreased by 20.4% to $0.8 million, while net services sales fell by 10.7% to $4.9 million [6]. - Gross profit was $1.7 million, representing 30.0% of net sales, compared to $1.8 million and 28.0% in the prior year [7][24]. - Operating expenses decreased to $5.3 million from $5.8 million in 1H 2023, primarily due to reduced personnel costs [9][27]. - Operating loss improved to $3.6 million from $4.0 million in the same period last year [10][28]. - Net loss attributable to shareholders remained stable at $2.0 million, with a basic net loss per share of $0.22 [13][31]. Cash Flow and Balance Sheet - Cash used in operating activities was $2.5 million, with total cash, cash equivalents, and restricted cash at $56.0 million as of June 30, 2024 [14][34]. - Total assets decreased to $71.8 million from $77.5 million at the end of 2023, with current liabilities also declining [19][20].

Financial Performance - Total revenues for the first half of 2024 were $5.7 million, a decrease of 12.3% compared to $6.5 million in the first half of 2023[6] - Gross profit was $1.7 million, representing 30.0% of net sales, compared to $1.8 million or 28.0% in the same period last year[7] - Operating expenses decreased to $5.3 million from $5.8 million, a reduction of 8.6% year-over-year[8] - The operating loss for the first half of 2024 was $3.6 million, an improvement from a loss of $4.0 million in the first half of 2023[9] - Net loss attributable to shareholders remained at $2.0 million, with basic net loss per share unchanged at $0.22[13] Cash and Receivables - Cash balance, including restricted cash, decreased by 7.6% to $56.0 million from $60.6 million at the end of 2023[4] - The company collected $3.39 million from its major customer in India, leaving $4.57 million still outstanding[5] Orders and Margins - New orders received included an expansion order for a mobile transport network in Europe and an IMS solution in India[5] - Service gross margin improved to 33.1% from 24.1% year-over-year, attributed to decreased personnel costs[11] Interest Income - Net interest income increased to $1.3 million from $0.9 million in the prior year[10]

Company Overview - UTStarcom is a global telecommunications infrastructure provider focused on delivering innovative, reliable, and cost-effective communication services [2] - The company specializes in high-performance advanced equipment for rapidly growing network functions, including mobile backhaul, metro aggregation, and broadband access [2] - Founded in 1991, UTStarcom has been listed on the Nasdaq Market since 2000 under the symbol UTSI [2] Recent Developments - UTStarcom filed its Annual Report on Form 20-F for the year ended December 31, 2023, with the U.S. Securities and Exchange Commission [1] - The report is accessible on the SEC EDGAR website and in PDF format on the company's official site [1] - Interested parties can request a hard copy of the report free of charge [1] Market Focus - UTStarcom has operations and customers globally, with a particular emphasis on markets in Japan and India [2]

Financial Performance - The company reported a net loss of $3.9 million, $5.0 million, and $5.8 million for the years ended December 31, 2023, 2022, and 2021, respectively[36]. - As of December 31, 2023, the company had $50.0 million in cash or cash equivalents, indicating a focus on maintaining liquidity[36]. - The company anticipates future cost-reduction initiatives and restructuring plans that may adversely impact operations and financial results[42]. - The company has incurred significant legal and compliance costs as a public entity, which could negatively impact net income and liquidity[159]. - The company's ordinary shares have traded below the $1.00 minimum bid price required by NASDAQ multiple times, risking delisting[160]. - In 2023, net sales totaled $15.753 million, a 12.1% increase from $14.052 million in 2022[198]. - R&D expenses for 2023 were $5.9 million, an increase from $4.8 million in 2022 but a decrease from $6.9 million in 2021[213]. Customer Dependence and Sales - The company relies significantly on two customers: SoftBank Corp. and Bharat Sanchar Nigam Limited (BSNL), which accounted for approximately 23% and 36% of total net sales in 2023, respectively[45]. - Net sales to Softbank in 2023 were approximately $3.7 million, representing 23% of total net sales, down from 28% in 2022[204]. - Net sales to BSNL in 2023 totaled approximately $5.6 million, accounting for 36% of total net sales, compared to 44% in 2022[204]. - Accounts receivable from BSNL as of December 31, 2023, amounted to approximately $5.5 million (INR 0.5 billion), with payment collection taking longer than expected[48]. - The company collected $10 million and $2.2 million from BSNL in 2023 and Q1 2024, respectively, indicating ongoing challenges in payment collection despite significant past collections[52]. Market and Competitive Environment - The company faces intense competition, which may lead to reduced prices, revenues, and market share, necessitating continual cost reductions in manufacturing[59]. - The company is actively exploring opportunities in the Chinese market for 5G network solutions, anticipating further orders due to the rapid rollout of 5G technology[190]. - The India market represented 53% of net sales in 2023, up from 51% in 2022, while Japan's share decreased to 31% from 37%[198]. - The company has observed high interest in its products in India, particularly in optical transport and broadband access[200]. Operational Risks - The company faces risks related to its reliance on a Japanese customer and an Indian customer for a significant portion of net sales, which could adversely affect its financial condition[30]. - The company has faced challenges in maintaining relationships with suppliers due to its current financial condition, which may impact cash flows[37]. - The company is subject to various risks associated with conducting business in China, including regulatory approvals and data security oversight[25]. - The company faces risks from reliance on sole source suppliers for key components, which may affect manufacturing and product shipments[66]. - The company is subject to complex and evolving laws regarding privacy and data protection, which may impose significant compliance burdens and costs[88]. Regulatory and Compliance Issues - The company is subject to foreign exchange control regulations in China and India, which may restrict the ability to transfer funds outside these countries[75]. - The regulatory framework for data security in China is evolving, with new laws potentially imposing additional compliance requirements on the company[107][108]. - Non-compliance with anti-corruption and anti-bribery laws could lead to severe administrative, civil, and criminal penalties, adversely affecting the company's reputation and financial condition[89]. - The company identified a material weakness in internal control over financial reporting as of December 31, 2023, and concluded that these controls were not effective[97]. Strategic Initiatives and Future Outlook - The company’s strategic plan aims to optimize revenue and improve margins, but there is no assurance of success in achieving these goals[39]. - The company is focusing on expanding its broadband infrastructure products in India, Japan, and China due to strong consumer demand[199]. - The company established a domestic enterprise sales team in 2023 to target Smart Cities and Digital Construction opportunities in China[196]. - The company anticipates providing value-added support services in the telecom sector as a significant component of its future business model[129]. Product Development and Innovation - The core business focuses on telecommunications network products and solutions, including SDN platforms and broadband access technologies[166]. - New product developments are targeted at 5G mobile transport networks and disaggregated network platforms, leveraging existing expertise[168]. - The SkyFlux CPT platform was launched in 2020, with two products released: SkyFlux SPN803S (320Gbps switching capacity) and SkyFlux SPN805S (640Gbps switching capacity) designed for high-capacity access applications[171]. - The SkyFlux UAR Disaggregated Router platform was released in 2022, featuring advanced capabilities for 5G transport networks, including support for SR-MPLS and L2VPN/L3VPN[174]. - Collaboration with China Unicom Research Institute has led to the development of a disaggregated network platform for 5G transport, with successful interoperability testing completed in 2023[175].

Core Viewpoint - UTStarcom reported its unaudited financial results for the second half and full year of 2023, showing significant revenue growth and ongoing developments in its 5G transport network solutions, while also facing increased operating expenses and net losses [1][3]. Business Update - Continued cooperation with mobile operators in China on next-generation disaggregated 5G transport network solutions, completing field trials and interoperability tests by the end of 2023 [2]. - Received additional orders from a European mobile network operator for network expansion and post-sale technical support services [2]. - Secured orders for broadband core platform expansion from key customers in India, including hardware and software for the SSTP platform [2]. - Ongoing global post-sale support services for various platforms, including NetRing PTN and SyncRing [2]. - Exploration of new market opportunities in China related to Smart Cities and Digital Construction [2]. Financial Results Second Half of 2023 - Revenue reached $9.2 million, a 39.4% increase from $6.6 million in the same period of 2022 [4]. - Gross profit was $2.6 million, representing a 100% increase from $1.3 million in the previous year [4]. - Operating expenses totaled $5.4 million, up 86.2% from $2.9 million in 2022 [4]. - Net loss was $2.0 million, an improvement from a net loss of $3.3 million in the same period of 2022 [4][17]. - Basic EPS improved to ($0.22) from ($0.37) year-over-year [4][17]. Full Year 2023 - Total revenue for the year was $15.8 million, a 12.1% increase from $14.1 million in 2022 [6]. - Gross profit for the year was $4.4 million, or 27.9% of net sales, compared to $2.7 million, or 19.0% in 2022 [11]. - Operating expenses for the year were $11.2 million, up from $7.1 million in 2022 [14]. - Full year net loss was $4.0 million, an improvement from $5.0 million in 2022 [17]. Cash Flow - Cash used in operating activities for the second half of 2023 was $0.7 million, with no cash used in investing or financing activities [18]. - As of December 31, 2023, the company had a cash balance of $59.6 million, down 10.9% from $66.9 million at the end of 2022 [4][18].

Revenue Performance - Total revenue for the second half of 2023 was $9.2 million, a 39.4% increase from $6.6 million in the same period of 2022[5] - For the full year 2023, total revenue was $15.8 million, a 12.1% increase from $14.1 million in 2022[6] - Net sales for the six months ended December 31, 2023, increased to $9,239,000, compared to $6,560,000 for the same period in 2022, representing a growth of 40.5%[24] Profitability - Gross profit for the second half of 2023 was $2.6 million, representing 27.8% of net sales, compared to $1.3 million or 20.4% of net sales in the same period of 2022[10] - Full year gross profit for 2023 was $4.4 million, or 27.9% of net sales, compared to $2.7 million or 19.0% in 2022[11] - Gross profit for the six months ended December 31, 2023, was $2,570,000, with a gross margin of 27.8%, up from a gross profit of $1,340,000 and a margin of 20.4% in the prior year[24] Operating Expenses - Operating expenses for the second half of 2023 were $5.4 million, an 86.2% increase from $2.9 million in the same period of 2022[12] - Operating expenses for the six months ended December 31, 2023, totaled $5,431,000, significantly higher than $2,921,000 in the same period of 2022, marking an increase of 85.7%[24] - Research and development expenses for the six months ended December 31, 2023, were $3,007,000, compared to $2,148,000 in the prior year, reflecting a rise of 39.9%[24] Net Loss - The net loss for the second half of 2023 was $2.0 million, a decrease from $3.3 million in the corresponding period in 2022, resulting in a basic net loss per share of $0.22 compared to $0.37[17] - Net loss attributable to UTStarcom Holdings Corp. for the six months ended December 31, 2023, was $(2,003,000), an improvement from $(3,322,000) in the prior year[24] Assets and Liabilities - Total current assets decreased to $70,551,000 as of December 31, 2023, down from $81,801,000 a year earlier, reflecting a decline of 13.7%[23] - Total liabilities decreased to $26,462,000 as of December 31, 2023, compared to $31,766,000 in the previous year, a reduction of 16.8%[23] - Cash and cash equivalents at the end of the period were $49,966,000, down from $54,517,000, representing a decrease of 8.5%[23] Market Development - The company continued to develop new access products in the SkyFlux CPT product line to meet the growing demand in the Chinese market[2] - UTStarcom received orders for the expansion of its IMS and SSTP broadband core platforms from key customers in India during the second half of 2023[3] - The company is exploring new market opportunities in China related to Smart Cities and Digital Construction[4]