WebTech Wireless Inc.
TSX : WEW

WebTech Wireless Inc.

November 12, 2009 16:00 ET

WebTech Wireless Reports Loss for the Nine Months Ended September 30, 2009

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 12, 2009) - WebTech Wireless Inc. (TSX:WEW), a leading supplier of vehicle location-based and fleet telematics services, today reported revenue of US $4.5 million for the three month fiscal quarter ended September 30, 2009, and US$16.1 million for the nine months then ended. Delays in customers' projects and the negative impact of a weakening US dollar resulted in a 37% decrease in revenue over the prior year's comparable quarter and 10% on a comparable year to date (YTD) basis.

The Company is reporting a Net Loss of $2.0 million (3 cents per share) for the quarter and a Net Loss of $2.1 million for the nine months YTD (4 cents per share).

The Company is reporting Total Comprehensive Income of $356,000 for the nine months ended September 30, 2009 after accounting for a foreign exchange gain of $2.4 million resulting from its adoption of the US dollar as its reporting currency. Comprehensive Income is a GAAP measure which is not considered when reporting Earnings per Share.

WebTech Wireless is comparing its results for the quarter ended September 30, 2009 to its results for the quarter ended October 31, 2008 as it changed its fiscal year end from July 31 to December 31, and October 31, 2008 represents the nearest prior year reporting date to September 30. When the Company reports its results for the 12 months ended December 31, 2009, those results will be compared to the Company's results for the 12 months ended July 31, 2008, its last full fiscal year before its change in year end.

Revenues at $4.5 million were reflected in our traditional sales in the Government and Transportation verticals. Seasonal slowdown and delays in negotiating contracts with large customers in the US and Mexico contributed to our decline in revenue for this Quarter.

Profit margins at 59% for the quarter and YTD are above target and historical levels, due to continuing economies of scale, the effect of high margin recurring revenue being a higher than normal percentage of total sales, and a one-time contribution from a large, high margin enterprise license sale earlier in the year.

Expenses for the quarter of $3.8 million were approximately 14% below prior year, and YTD expense of $10.8 million are approximately 19% below prior year, despite increased spending on litigation and expenses indirectly related to the Company's recent acquisition of Grey Island Systems Inc.

Net loss for the three months was $2.0 million which includes several large one-time cash and non-cash charges such as a loss on the sale of its long term investment in MAV II notes, legal fees related to ongoing litigation, and a foreign exchange loss on operations related to continuing weakening of the US dollar. Combined these items account for approximately $1.5 million in expenses. For the nine months, the Company is reporting a net loss of $2.1 million.

As of September 30, 2009, the Company is reporting total assets of $21 million (December 31, 2008: $20.7 million) and working capital of $17.2 million (December 31, 2008: $13.9 million) primarily due to an increase in cash on hand.

"We are obviously disappointed to be reporting a slowdown in revenue growth - due primarily to delayed projects from major customers in the US and Mexico. We're pleased, however, that gross margins and our cost control measures continue to provide benefits," said Scott Edmonds, WebTech Wireless' CFO.

A reminder that the Financial Results Conference Call will be held today, November 12th, at 5:00 pm Eastern Time (2:00 pm Pacific Time). Interested parties may participate in the call by dialing 1-800-915-4217 or (212) 231-2900 (for international callers). The conference call will be archived on the Company's website at: www.webtechwireless.com.

About WebTech Wireless Inc.

WebTech Wireless Inc. (TSX:WEW) is a global Telematics, location-based services provider that develops, manufactures, and delivers turnkey wireless solutions designed to improve productivity and profitability. WebTech Wireless products include wireless hardware and software services running on cellular and satellite networks, and include Automatic Vehicle Location, Mapping, Reporting, Vehicle Diagnostics, Driver Status, In-vehicle Telemetry, Messaging, In-vehicle Navigation, and wireless application and Internet connectivity. WebTech Wireless is currently providing devices and services worldwide in eight languages to over forty-one countries covering five continents. WebTech Wireless' scalable solutions are used by a broad range of small, medium and Fortune 500 companies and by governments. For more information, please visit webtechwireless.com.

Forward Looking Statements

This press release contains forward-looking statements involving risks and uncertainties pertaining to, but not limited to product plans, timing, content, and pricing of products, market and industry expectations, the wireless communications industry, the mobile fleet industry, and general economic and political conditions. Given the risks and uncertainties inherent in the markets and industries referred to in this press release, WebTech Wireless cannot guarantee that any forward looking statements will be realized.

Trademarks are the property of their owners.



WEBTECH WIRELESS INC.
CONSOLIDATED BALANCE SHEET
(Amounts in thousands of USD)
(Unaudited)

30-Sep-09 31-Dec-08
---------------------

ASSETS

Current
Cash and cash equivalents $ 4,853 $ 3,176
Accounts receivable, net of allowance 6,282 6,344
Inventory, net of allowance 7,714 7,046
Prepaid expenses and deposits 601 369
---------------------
19,450 16,935

Property and equipment (Note 7) 1,335 1,326
Long term investments (Note 8) - 2,450
Deferred Charges 197 -
---------------------

$ 20,982 $ 20,711
---------------------
---------------------

LIABILITIES

Current
Bank indebtedness $ - $ 817
Accounts payable and accrued liabilities 1,820 1,626
Current portion of deferred revenue 410 559
---------------------
2,230 3,002

Long term
Deferred lease inducement 742 524
Deferred revenue 230 224
---------------------
972 748

3,202 3,750
---------------------

SHAREHOLDERS' EQUITY

Share Capital (Note 9) 57,010 56,819
Contributed Surplus (Note 10) 3,947 3,675
Retained Deficit (39,171) (37,105)
Accumulated Other Comprehensive Income (4,006) (6,428)
---------------------

Total Shareholders' Equity 17,780 16,961
---------------------
$ 20,982 $ 20,711
---------------------
---------------------

Commitments (Note 12)

APPROVED BY THE DIRECTORS:

"Signed" "Signed"
------------------------- -------------------------
Anwar Sukkarie Peter W. Roberts


WEBTECH WIRELESS INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Amounts in thousands of USD except Gross margin and per share amounts)
(Unaudited)

3 months ended 9 months ended
30-Sep-09 31-Oct-08 30-Sep-09 31-Oct-08
------------------------ ------------------------

Revenue $ 4,525 $ 7,133 $ 16,091 $ 17,947

Cost of goods sold 1,855 3,646 6,556 9,288
------------------------ ------------------------

Gross profit 2,670 3,487 9,535 8,659
------------------------ ------------------------

Gross margin 59.00% 48.89% 59.26% 48.25%

Expenses
Sales and marketing 1,447 2,123 4,806 6,109
Research and
development 1,152 1,145 3,222 3,318
General and
administrative 1,037 997 2,372 3,508
Amortization 148 120 400 366
------------------------ ------------------------

3,784 4,385 10,800 13,301

------------------------ ------------------------
Loss before other items (1,114) (898) (1,265) (4,642)

Other items
Interest and
other income 13 25 78 157
Foreign exchange
gain/(loss) on
operations (649) 937 (782) 1,050
Loss in the fair
value of long term
investments (Note 8) - - - (827)
Gain on
restructuring of
long term
investments (Note 8) - - 166 -
Loss on sale of long
term investments
(Note 8) (263) - (263) -
------------------------ ------------------------
Net profit/(loss) $ (2,013) $ 64 $ (2,066) $ (4,262)
------------------------ ------------------------

Other comprehensive
profit/(loss):
Foreign exchange
gain/(loss) due to
translation into USD
reporting currency 1,490 (3,702) 2,422 (4,941)

------------------------ ------------------------
Total comprehensive
profit/(loss) for
the period $ (523) $ (3,638) $ 356 $ (9,203)
------------------------ ------------------------

Basic and fully
diluted earnings
gain/(loss) per share $ (0.03) $ - $ (0.04) $ (0.07)
Weighted average
shares outstanding
during the year 58,193,788 57,885,269 58,125,539 57,856,820


WEBTECH WIRELESS INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Amounts in thousands of USD)
(Unaudited)

3 months ended 9 months ended
30-Sep-09 31-Oct-08 30-Sep-09 31-Oct-08
------------------------ ------------------------

Operating Activities
Net gain/(loss) for
the period $ (2,013) $ 64 $ (2,066) $ (4,262)
Add items not
affecting cash:
Amortization 148 120 397 366
Stock based
compensation 83 325 408 855
Amortization of
leasehold inducement (26) (14) (77) (55)
FX adjustment on
accounts receivable 259 (918) 194 (976)
FX adjustment on
accounts payable (17) 3 (4) 118
Loss in the fair
value of long term
investments - - - 801
Loss on sale of long
term investments 263 - 247 -
------------------------ ------------------------

(1,303) (420) (901) (3,153)
Changes in non-cash
working capital
items related to
operations:
Accounts receivable 754 (3,212) 690 (2,941)
Inventory (138) 36 306 (1,558)
Prepaid expense and
deposits 74 367 (164) 131
Accounts payable and
accrued liabilities (197) 941 (29) (138)
Deferred Revenue (206) 77 (232) 85
Deferred lease
inducement - 45 209 503
------------------------ ------------------------

(1,016) (2,166) (121) (7,071)
------------------------ ------------------------

Financing Activities
Common shares
issued, net of costs 38 32 65 111
Share repurchased - - - (647)
Repayment of bank
line of credit - - (855) -
Repayment of borrowing
against long term
investments (1,558) - (1,462) -
Borrowing - against
long term investments - - 1,462 -
------------------------ ------------------------

(1,520) 32 (790) (536)
------------------------ ------------------------
Investing Activities
Purchase of
capital assets (75) (55) (232) (411)
Increase in long
term investment - - - -
Proceeds from sale
of long term
investments 2,470 - 2,316 -
Deferred Charges -
GIS acquisition (192) - (180) -
------------------------ ------------------------

2,203 (55) 1,904 (411)
------------------------ ------------------------

Effect of changes in
FX rates on cash and
cash equivalents 396 (897) 684 (1,003)

Net increase
(decrease) in cash
during the period 63 (3,086) 1,677 (9,021)

Cash and cash
equivalents,
beginning of period 4,790 7,064 3,176 12,999
------------------------ ------------------------

Cash and cash
equivalents, end of
period $ 4,853 $ 3,978 $ 4,853 $ 3,978
------------------------ ------------------------
------------------------ ------------------------

Cash and cash
equivalents
consist of:
Cash $ 4,853 $ 3,978 $ 4,853 $ 3,978
------------------------ ------------------------
------------------------ ------------------------

Supplemental cash
flow information
Interest paid $ 2 $ 1 $ 17 $ 2
Income taxes paid - - - -

Non-cash Transactions
Transfer of property
under development to
property and
equipment $ - $ 78 $ - $ -


The Toronto Stock Exchange does not accept responsibility for the adequacy or accuracy of this release.

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