Form 10KSB for Ambient Corp.: Revenues for the 2006 period were $2,337,136, an 887% increase over 2005 revenues of $236,903

http://www.ambientcorp.com
28-Mar-2007
Annual Report
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Ambient Corporation is focused on the design, development, commercialization and marketing of Broadband over Power Lines (BPL) equipment, technologies, and services. BPL technology enables power line infrastructure landlords (electric utilities and property owners) to use their existing medium voltage and low voltage power lines for the delivery of high-speed data services including Smart Grid utility applications, residential Internet access, and governmental and industrial applications.

Ambient has developed and patented effective BPL coupling technology, and as of January 2007, we hold 15 patents on this key technology with several other patent applications allowed, pending, or under review. Our products also incorporate state of the art BPL chipset technology and consumer modems. Ambient has designed our equipment for cost effective volume manufacturing, and we have secured reliable, scalable production sources. Ambient's next generation X² communications node has been certified fully compliant with current FCC rules and requirements for Access BPL equipment. Ambient participates in key BPL industry associations, and Ambient technical personnel currently chair key IEEE BPL safety and standardization committees.

We are currently conducting several field trials, pilot demonstrations, and commercial roll outs with major electric utilities that serve in aggregate over 15 million electric customers. These projects have a variety of goals, including developing and demonstrating Smart Grid utility applications, residential and multi-dwelling unit consumer broadband Internet access, and the successful commercial operation of Ambient's next generation hardware products and network management software.

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During 2006, multiple Ambient BPL pilot networks continued to operate, two new pilots with major utilities were begun, two pilots moved to advanced and expanded stages, and one pilot moved to full scale commercial rollout. We developed our next generation of nodes and couplers, contracted with scalable manufacturing sources, developed our custom network management software application AmbientNMS, and received FCC certification for our core product. We also strengthened our existing partnerships and strategic relationships with utilities and other technology and manufacturing companies that enhance our ability to develop, manufacture, deploy, and commercialize our BPL technology.
Critical to the commercialization of our BPL technology, in September 2006, we received a grant of BPL Equipment Authorization from the Federal Communications Commission for our second-generation X² communication node. This certification allows us to market, sell and install our newest generation of nodes for commercial deployments nationwide.

In September 2006, we began the expansion of our BPL pilot network at Duke Energy Corporation in Charlotte, North Carolina to an initial commercial build-out of approximately 6,000 homes. This network will use our newest FCC-certified node, our next-generation couplers and BPL modems, and be managed by the latest version of the AmbientNMS network management system.

In 2006, other pilots and trials also advanced to their next stages. In January, we successfully completed field trials and entered into an agreement with Con Edison and the New York State Energy Research and Development Authority to begin an Advanced Grid Management Pilot Phase, generating $325,000 of first quarter income. Our BPL pilot network evaluating Smart Grid and consumer broadband applications on the San Diego Gas & Electric Company grid was extended and enhanced in October. The upgraded network will deploy our FCC-certified next generation X² nodes, be managed by the latest version of AmbientNMS, and test additional BPL applications. We also initiated new pilots, one with Akron, Ohio based First Energy Service Company for a residential BPL network covering several hundred homes in Ohio and managed by AmbientNMS, and a Smart Grid utility applications pilot program with Entergy Corporation in Little Rock, Arkansas. We also continued to run several smaller scale residential and MDU BPL networks.

In the coming year, Ambient will continue to focus on our core business of designing, developing and commercializing BPL equipment, technologies, and services. Our goal is to continue becoming a leading supplier of commercially deployed turn-key BPL networks that deliver high-speed data services to electric utilities, commercial, governmental, and residential customers. We intend to generate revenues from the design of these BPL networks, as well as the sales, installation, and support of the necessary equipment and technologies, and from the licensing of our Network Management System.

Aided by our partnerships and strategic relationships, we plan to continue development of the next generation of BPL equipment and technology, including our network management system, AmbientNMS, and to protect our intellectual property by expanding our patent portfolio, and, when necessary, aggressively protecting our proprietary technologies. In addition, we will continue to pursue a role as a leading BPL systems designer, integrator, and coordinator to position Ambient to generate revenue from all phases of a BPL deployment. We intend to continue to drive industry standardization efforts through leadership roles in industry associations such as the Universal Powerline Association and the United Power Line Council and standards setting organizations such as the Institute of Electrical and Electronics Engineers.

We intend to actively seek new opportunities for commercial pilots and work to bring new and existing networks to full commercialization. In 2007, our principal target customers will continue to be electric utilities in North America and elsewhere that will be deploying Smart Grid utility applications and consumer broadband access. We will work with our utility customers to drive the development of new utility and consumer applications that create the need for our BPL networks. We will also continue our efforts to identify, pursue and develop other diversified market opportunities including the MDU market in residential, hotels and other commercial businesses, and industrial and governmental network applications.

As of December 31, 2006, we had an accumulated deficit of approximately $98.9 million (which includes approximately $57.5 million in stock-based charges and other non-cash charges).

RESULTS OF OPERATIONS

COMPARISON OF THE YEAR ENDED DECEMBER 31, 2006 (the "2006 period") AND THE YEAR
ENDED DECEMBER 31, 2005 (the "2005 period")

REVENUES. Revenues for the 2006 period were $2,337,136, an 887% increase over 2005 revenues of $236,903. Revenues during each of the periods were attributable to the sales of equipment, software and related

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network design and installation services from new pilots that were launched in 2005. Revenues for the 2006 period and 2005 period related to the sales of equipment totaled $1,930,314 and $145,150, respectively. Revenues in the 2006 period include sales to Duke Energy of $1,776,778. Revenues from the sale of software and related network design and installation services for the 2006 period and the 2005 period totaled $406,822 and $91,753. The 2006 period included the recording as revenue that $325,000 advance received from Consolidated Edison Company of New York, Inc. ("Con Edison"), an affiliate of Consolidated Edison, Inc., a principal stockholder of Ambient in connection with the initial feasibility trial of BPL technology.
Revenues were first generated by the Company during the third quarter of 2005.

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Form 10KSB for AMBIENT CORP