Infowave Software Inc.
TSX : IW

Infowave Software Inc.

May 15, 2006 21:06 ET

Infowave Reports First Quarter-End Results

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - May 15, 2006) - Infowave Software (TSX:IW), a leading provider of enterprise mobile applications (EMA), today released financial results for the first quarter ended March 31, 2006 (All financial information is expressed in U.S. dollars and Canadian GAAP).

Financial Results

Total revenues for the first quarter of 2006 were $378,299 compared to $180,430 in the fourth quarter of 2005 and $402,459 in the same quarter of last year. The company posted gross margins of 85% for the current quarter. Total operating expenses were $1,476,937 for the quarter, compared with $6,561,988 for the fourth quarter 2005 and $2,188,388 in the same quarter of last year for decreases of 77% and 33% respectively. Fourth quarter, 2005 operating expenses included intangible asset impairment charges of $4,651,792.

For the first quarter ended March 31, 2006, the Company had a loss of $1,115,916 or $0.01 per share compared to a loss of $6,348,352 or $0.03 per share in the fourth quarter of 2005 and net income of $1,399,133 or $0.01 per share for the same quarter last year. First quarter, 2005 net income included gain of $3,239,343 from the corporate reorganization.

Cash and cash equivalents were approximately $3.8 million at the end of the quarter.

Highlights

- Infowave released Echo by Infowave™, its award-winning mobile product suite, which further enhances this proven enterprise solution by providing customer flexibility in choosing current and future networks and devices. The product also supports stand alone mode for digitizing of manual paperwork and integrating to one or multiple backend systems, allowing continual access to data and complete elimination of any redundant data entry. After installation, the product can be updated and tailored, without the need for programming skills. A configuration tool is provided to enable the system administrator or a business analyst to make the ongoing form changes required by the business or external regulations and requirements.

- Infowave announced the undertaking of a non-brokered private placement of up to approximately US$2,000,000. The Company expects to issue units at a price determined in accordance with TSX policies, with each unit consisting of one common share and one-half of one common share purchase warrant. Each whole purchase warrant will entitle the holder to acquire one common share for a period of two years. The common shares and warrants comprising the units will be subject to a four month hold period.

- Infowave appointed Jason de Boer as the Company's Vice President, Sales. Mr. de Boer brings over twenty years of Hi-tech industry experience in sales management and business development to the company. Prior to Infowave, Mr. de Boer had a very successful career at NetiQ, Oracle, Epiphany and Digital Equipment.

- Infowave appointed Allen Sello to the Board of Directors as well as Chairman of the Audit Committee. Mr. Sello is presently a Trustee of the Sterling Shoes Income Fund and a Director of North American Energy Partners Inc. a construction company based in Alberta. He is also Vice-Chairman of the Vancouver Board of Trade Government Budget and Finance Committee.

"During 2006, we revised our management team with new Sales and Marketing leadership, created a new sales team, and launched our new Echo by Infowave™ product line which have resulted in increasing sales," stated James Suttie, Infowave President and CEO. "The additional funding will enable Infowave to accelerate our revised business strategy to capitalize on the mobile work force management market opportunity."

About Infowave Software Inc.

Infowave Software Inc.'s (TSX:IW) Echo by Infowave™ enterprise mobile application suite is designed to streamline and integrate business operations by empowering mobile workers. The solution provides scalable, secure, and reliable mobile business applications for improving operational efficiency and increasing productivity. Some of the world's most innovative organizations in energy & utilities, defense, communications, and medical instrumentation use Infowave solutions to increase the efficiency of their mobile workforces. For more information, please email info@infowave.com or visit www.infowave.com.

Forward-Looking Statement

This press release contains statements which, to the extent that they are not recitations of historical fact may constitute forward-looking information. Such forward-looking statements may include financial and other projections as well as statements regarding the Company's future plans, objectives, performance, revenues, growth, profits, operating expenses or the Company's underlying assumptions. The words "may", "would", "could", "will", "likely", "expect", "anticipate", "intend", "estimate", "intend", "plan", "forecast", "project", "estimate" and "believe" or other similar words and phrases are intended to identify forward-looking statements. Persons reading this press release are cautioned that such statements are only predictions, and that the Company's actual future results or performance may be materially different. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties include the risk factors set out in the Company's Annual Information Form, as well as include the ability to complete the proposed private placement on the terms announced, or at all, and is subject to a number of risks, uncertainties and other factors, such as the need to develop, integrate and deploy applications to meet our customer's requirements, the possibility of development or deployment difficulties or delays, the dependence on our customer's satisfaction with Infowave's software, its continued commitment to the deployment of the solution, the risks involved in developing software solutions and integrating them with third-party software and services. The Company disclaims any intention or obligation to update or revise forward-looking information, whether as a result of new information, future events or otherwise.



INFOWAVE SOFTWARE, INC.
Consolidated Balance Sheets
(Expressed in U.S. dollars)

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March 31, 2006 December 31, 2005
(unaudited)
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Assets
Current assets:
Cash and cash equivalents $ 3,772,974 $ 4,313,406
Accounts receivable, net of
allowance of $nil 140,945 26,691
Technology Partnership Canada
(TPC) receivable 144,460 144,658
Prepaid expenses 151,272 203,105
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4,209,651 4,687,860

Fixed assets 146,684 166,376

Intellectual property assets
held for sale - 75,000

Other intangible assets 1,124,914 1,185,745

Goodwill 3,535,736 3,540,587

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$ 9,016,985 $ 9,655,568
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued
liabilities $ 520,555 $ 470,653
Convertible promissory note 96,452 95,210
Financial instruments 543,587 544,333
Deferred revenue 428,261 105,825
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1,588,855 1,216,021

Shareholders' equity
Share capital
Authorized: Unlimited voting
common shares without par value
Issued: 243,302,951 (December
31, 2005: 243,302,951) common
shares 18,814,147 18,814,147
Contributed surplus 591,667 487,413
Other equity instruments 3,259,039 3,259,039
Deficit (16,670,492) (15,554,576)
Cumulative translation account 1,433,769 1,433,524
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7,428,130 8,439,547
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$ 9,016,985 $ 9,655,568
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INFOWAVE SOFTWARE, INC.
Consolidated Statements of Operations and Deficit
(Expressed in U.S. dollars)

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Three months ended
March 31, 2006 March 31, 2005
(Unaudited) (Unaudited and
revised - note 1)
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Revenue:
Sales $ 378,299 $ 402,459
Cost of sales 55,070 109,610
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323,229 292,849

Expenses:
Research and development 489,540 535,494
Sales and marketing 484,300 547,896
Administration 411,380 661,583
Depreciation and amortization 91,717 443,415
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1,476,937 2,188,388
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Income (loss) before
undernoted items (1,153,708) (1,895,539)

Other earnings (expenses):
Interest and other earnings 30,650 23,112
Interest expense (210) (1,680)
Foreign exchange gain 7,352 33,897
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37,792 55,329
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Income (loss) before gain from
corporate reorganization (1,115,916) (1,840,210)

Gain from corporate reorganization - 3,239,343
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Income (loss) for the period (1,115,916) 1,399,133

Deficit, beginning of period (15,554,576) (70,936,761)

Deficit reduction from
corporate reorganization - 63,687,812
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Deficit, end of period $ (16,670,492) $ (5,849,816)
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Income (loss) per share, basic $ (0.01) $ 0.01
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Income (loss) per share, fully
diluted $ (0.01) $ 0.01
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Weighted average number of
shares outstanding 243,302,951 237,869,943
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INFOWAVE SOFTWARE, INC.
Consolidated Statements of Cash Flows
(Expressed in U.S. dollars)

--------------------------------------------------------------------
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Three months ended
March 31, 2006 March 31, 2005
(Unaudited) (Unaudited)
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Cash flows from operations:

Income (loss) for the period $ (1,115,916) $ 1,399,133
Items not involving cash:
Depreciation and amortization 91,717 443,415
Amortization of TPC warrants - 31,831
Stock-based compensation 105,641 202,821
Gain from corporate reorganization - (3,239,343)
Changes in non-cash operating
working capital:
Accounts receivable (115,639) 291,709
TPC receivables - 477,125
Prepaid expenses 52,164 (33,423)
Accounts payable and accrued
liabilities 51,142 (535,050)
Deferred revenue 326,391 305,078
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(604,500) (656,704)
Cash flows from investing
activities:
Purchase of fixed assets (12,116) -
Extension fee payment 75,000 -
Restricted cash released - 963,020
Corporate reorganization, net
proceeds - 4,066,370
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62,884 5,029,390
Cash flows from financing activities:

Issuance of shares and warrants
for cash, net of issue costs - -
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Foreign exchange gain (loss)
on cash and cash equivalents
held in a foreign currency 1,184 (5,189)
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Increase (decrease) in cash
and cash equivalents (540,432) 4,367,497

Cash and cash equivalents,
beginning of period 4,313,406 2,911,108

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Cash and cash equivalents, end
of period $ 3,772,974 $ 7,278,605
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Note:
1. Effective January 1, 2006, the Company changed its policy with
respect to the classification of sales commissions which are now
classified under operating expenses. In prior periods, sales
commissions were recorded under cost of sales. The impact of this
change on the March 31, 2005 financial statements (had the policy
been changed effective January 1, 2005) is as follows:


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Balance as
Financial Statement Previously Adjustment Revised
Account Reported Balance
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Cost of Sales $ 187,534 ($77,924) $ 109,610
Gross Margin $ 214,925 $77,924 $ 292,849
Sales and Marketing $ 469,972 $77,924 $ 547,896
Total Expenses $2,110,464 $77,924 $2,188,388
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