DDS Wireless International Inc.
TSX : DD

DDS Wireless International Inc.

May 14, 2008 08:00 ET

DDS Wireless Reports Cash Positive First Quarter Results

RICHMOND, BRITISH COLUMBIA--(Marketwire - May 14, 2008) - DDS Wireless International Inc. (TSX:DD), a global leader in providing application software and solutions for wireless fleet management to multiple markets, today released unaudited financial results for the first quarter ended March 31, 2008. All financial information is expressed in Canadian dollars and in accordance with Canadian generally accepted accounting principles ("GAAP") except where noted specifically.

EBITDAS is a non-GAAP financial measure and the Company defines it as Earnings before interest, taxes, depreciation which includes depreciation of fixed assets charged to Cost of Sales ("COS"), amortization and stock compensation expenses. EBITDAS for this quarter was $33,000. Due to the acquisitions of MobiSoft and StrataGen in 2007 there is $633,000 of amortization pertaining to acquired intellectual property (or approximately $2.5 million on an annualized basis) and therefore EBITDAS is being provided to evaluate the Company cash earnings. EBITDAS for the fourth and first quarters of 2007 were ($602,000) and ($639,000) respectively.

Total revenues for the three months ended March 31, 2008, were $7.0 million compared with total revenues of $7.3 million in the three months ended December 31, 2007, and $3.9 million for the same period last year. The Company experienced overall gross margin of 45% compared with a gross margin of 44% and 52% for the three months ended December 31, 2007, and March 31, 2007, respectively. Gross margin before amortization of fixed assets charged to COS was 47% for the three months ended March 31, 2008. Total operating expenses were $3.5 million for the three months ended March 31, 2008, compared with $4.0 million for the three months ended December 31, 2007, and $2.5 million in the same period last year. For the three months ended March 31, 2008, the Company reported a net loss of $646,000 or ($0.05) per share compared to a net loss of $1.0 million or ($0.08) per share and a net loss of $574,000 or ($0.05) per share for the three months ended December 31, 2007, and March 31, 2007, respectively. The comparative data should be reviewed carefully as 2007 Q1 had no acquisitions included and 2007 Q4 had all of MobiSoft Oy revenue included for that quarter but only 21 days of StrataGen Systems Inc. revenue included in that quarter. The Company acquired Mobisoft on October 1, 2007, and StrataGen on December 7, 2007. The financial results for the first quarter of 2008 include both acquisitions. Traditionally due to seasonality, the first quarter is not as strong as the last quarter of a fiscal year.



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Quarter Ending March 31st Dec 31st March 31st
In Millions of C$ except per share amount 2008 2007 2007
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Revenue $7.0 $7.3 $3.9
Gross margin w/o sales related amortization 47% 45% 52%
Gross margin with sales related amortization 45% 44% 52%
Expenses (G&A, Sales R&D) $3.5 $4.0 $2.5
Net (Loss) ($0.6) ($1.0) ($0.6)
------------------------------
Net (Loss) per share (1) ($0.05) ($0.08) ($0.05)
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Notes:
(1) Based on weighted average common shares of 13,164,506, 13,143,191 and
11,863,201 for the quarters ending in March 31, 2008, December 31, 2007
and March 31, 2007 respectively.


As of March 31, 2008, the Company had $0.7 million in cash with $0.3 million having been drawn on its $4.2 million line of credit facility. The Company had 13,789,746 shares outstanding as at March 31, 2008. The increase in shares from December 31, 2007, resulted from the Company issuing 646,555 shares from treasury to the vendors of StrataGen on March 28, 2008. The Company's guidance provided for revenues for its 2008 fiscal year of $36 to $38 million remains unchanged.

"We expect 2008 to be a break out year for DDS Wireless leveraging our new multi-business unit structure to drive increased growth in our various target markets," stated Vari Ghai, CEO for DDS Wireless. "We have significantly strengthened our leadership team with the addition of Steven Juliver and Michael Nienhuis as respective Presidents for our global Taxi and Transit businesses. We have a strong outstanding customer backlog coming into 2008 in addition to several significant short-term opportunities for each of our business units."

For a more detailed analysis, please refer to Management's Discussion and Analysis of Financial Conditions and Results of Operations, which is available on the Company website (www.ddswireless.com) and on SEDAR.

Conference Call

The Company will host a conference call at 5:00 PM EST (2:00 PM PST) on May 14, 2008 to discuss the financial results. Please call 416-641-6142 or 1-866-300-7687 to participate in the call. A replay of this conference call will be available until May 21, 2008, by dialing 416-695-5800 or 1-800-408-3053 and entering access code 3260464.

Forward-Looking Statements

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, market opportunities, objectives, performance, revenues, growth, profits, operating expenses or the Company's underlying assumptions. Factors that could cause actual events or results to differ materially from those suggested by these forward-looking statements include, but are not limited to: 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 DDS Wireless' products; the timing of entering into significant contracts; our customers' continued commitment to the deployment of our solutions; the risks involved in developing integrated software and hardware solutions and integrating them with third-party communication and other services; the performance of the global economy and growth in software industry sales; market acceptance of the company's products and services; customer and industry analyst perception of the company and its technology vision and future prospects; the success of certain business combinations engaged in by the Company or by competitors; political unrest or acts of war; possible disruptive effects of organizational or personnel changes; technological change, new products and standards; risks related to acquisitions and international expansion; reliance on large customers; concentration of sales; international operations and sales; management of growth and expansion; dependence upon key personnel and hiring; reliance on a limited number of suppliers; industry growth; competition; intellectual property; product defects and product liability; currency exchange rate risk; concentration of ownership; and including but not limited to other factors described in DDS Wireless' reports filed on Sedar, including its Annual Information Form and financial report for the year ended December 31, 2007.
In drawing a conclusion or making a forecast or projection set out in the forward-looking information, the Company takes into account the following material factors and assumptions in addition to the above factors the Company's ability to execute on its business plan; the acceptance of the Company's products and services by its customers; the timing of execution of outstanding or potential customer contracts by the Company; the sales opportunities available to the Company; the Company's subjective assessment of the likelihood of success of a sales lead or opportunity; the Company's historic ability to generate sales leads or opportunities; and that sales will be completed at or above the Company's estimated margins. This list is not exhaustive of the factors that may affect our forward-looking information. These and other factors should be considered carefully and readers should not place undue reliance on such forward-looking information. All forward-looking statements made in this press release are qualified by this cautionary statement and there can be no assurance that actual results or developments anticipated by the Company will be realized. 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.

About DDS Wireless International Inc.

DDS Wireless International Inc. is a global leader in providing application software and solutions for wireless fleet management to multiple vertical markets. The Company specializes in transit routing and scheduling, real-time dispatching, vehicle location and tracking software applications, communications infrastructure as well as in-vehicle wireless devices. DDS Wireless operates four businesses dedicated for Transit, Taxi, Work Trucks and Limousines, and Wireless Devices and Communication Infrastructure. The Company supports its customers worldwide through its offices in Canada, Finland, Singapore, Sweden, U.K. and U.S.A.

Visit www.ddswireless.com for more information.

SEE ATTACHED FINANCIAL STATEMENTS



DDS WIRELESS INTERNATIONAL INC.
Consolidated Balance Sheets
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March 31, 2008 December 31, 2007
(Unaudited) (Audited)
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Assets
Current assets:
Cash and cash equivalents $ 686,060 $ 1,075,203
Accounts receivable 10,129,991 10,799,802
Income taxes receivable 41,346 147,601
Future income taxes 22,479 76,100
Inventories 3,113,141 2,917,686
Prepaid expenses 824,419 620,444
Current portion of leases receivable 384,365 475,377
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15,201,801 16,112,213

Plant and equipment 2,856,624 2,660,921
Long-term leases receivable 1,715,999 1,784,818
Future income taxes 4,428,400 3,933,562
Acquired intangibles 10,378,000 11,011,000
Goodwill 3,329,000 3,329,000
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37,909,824 38,831,514
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Liabilities and Shareholders' Equity
Current liabilities:
Line of credit 330,000 1,255,954
Deferred acquisition costs payable 2,413,558 4,097,802
Accounts payable and accrued liabilities 3,900,130 4,527,892
Future income taxes 763,655 820,761
Deferred revenue 2,619,559 1,459,894
Deferred gain 95,538 143,308
Current portion of long-term debt 153,196 144,193
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10,275,636 12,449,804

Long-term portion of debt 633,903 506,053
Future income taxes long-term 1,054,213 1,139,849
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11,963,752 14,095,706
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Shareholders' equity:
Share capital 24,608,246 22,836,687
Contributed surplus 693,771 660,231
Retained earnings 1,460,607 2,106,161
Accumulated other comprehensive loss (816,552) (867,271)
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25,946,072 24,735,808
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$ 37,909,824 $ 38,831,514
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DDS WIRELESS INTERNATIONAL INC.
Consolidated Statements of Operations
--------------------------------------------------------------------------
Three months ended Three months ended
March 31, 2008 March 31, 2007
(Unaudited) (Unaudited)
--------------------------------------------------------------------------

Revenue $ 7,001,000 $ 3,855,690

Cost of sales
Sales related expenses 3,702,031 1,861,068
Amortization of sales related assets 123,549 -
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Total cost of sales 3,825,580 1,861,068
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Gross margin 3,175,420 1,994,622

Operations expenses:
Research and development 1,270,447 959,752
Sales and marketing 938,303 910,873
General and administrative 1,277,841 677,562
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3,486,591 2,548,187
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Loss before under noted (311,171) (553,565)

Other (income) expense:
Amortization of plant and equipment 143,936 69,490
Amortization of acquired intangibles 633,000
Foreign exchange (178,770) 132,622
Stock compensation 33,540 75,000
Other (41,596) (47,176)
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590,110 229,936
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Loss before income taxes $ (901,281) $ (783,501)

Income taxes
Current (recovery) 328,233 (218,657)
Future (recovery) (583,960) 8,827
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(255,727) (209,830)
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Net loss (645,554) (573,671)
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Loss earnings per common share:
Basic $ (0.05) $ (0.05)
Diluted $ (0.05) $ (0.05)

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DDS WIRELESS INTERNATIONAL INC.
Consolidated Statements of Comprehensive loss
--------------------------------------------------------------------------
March 31, 2008 March 31, 2007
(Unaudited) (Unaudited)
--------------------------------------------------------------------------

Net loss $ (645,554) ($573,671)

Other Comprehensive (Loss) Income
Unrealized gain on translation of
self-sustaining foreign operations 50,719 -

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Comprehensive (Loss) Income (594,835) ($573,671)
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Consolidated Statements of Changes in Retained Earnings and Accumulated
Other Comprehensive loss

--------------------------------------------------------------------------
Three months ended Three months ended
March 31, 2008 March 31, 2007
(Unaudited) (Unaudited)
--------------------------------------------------------------------------
Retained Earnings
Beginning of period $ 2,106,161 $ 5,467,430

Net (loss) earnings (645,554) (573,671)
--------------------------------------------------------------------------
1,460,607 4,893,759
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Accumulated Other Comprehensive
Loss on translation of Self-
sustaining Foreign Operations

Beginning of period (867,271) (896,614)

Net unrealized gain on translation
of self-sustaining foreign operations
in the year 50,719
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(816,552) (896,614)
--------------------------------------------------------------------------

Total Retained Earnings and Accumulated
Other Comprehensive Loss $ 644,055 $ 3,997,145
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DDS WIRELESS INTERNATIONAL INC.
Consolidated Statements of Cash Flows
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Three months ended Three months ended
March 31, 2008 March 31, 2007
(Unaudited) (Unaudited)
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Cash provided by (used in):

Operations:
Net (loss) earnings $ (645,554) $ (573,671)
Items not involving cash:
Amortization of plant and equipment 267,485 69,490
Amortization of acquired intangibles 633,000 -
Future income taxes (583,960) 8,827
Amortization of gain on disposition
property (47,770) (47,769)
Stock compensation 33,540 75,000
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(343,259) (468,123)
Change in non-cash operating working
capital 1,096,112 167,914
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752,853 (300,209)

Investing:
Increase (decrease) due to short-term
investment - (265,572)
Purchase of plant and equipment (463,188) (200,057)
Acquisitions, net of cash and cash
equivalents 87,315 -
Repayments of lease receivables 159,831 277,439
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(216,042) (188,190)

Financing:
Decrease in line of credit (925,954) -
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(925,954) -

Decrease in cash and cash equivalents (389,143) (488,399)

Cash and cash equivalents, beginning
of period 1,075,203 6,712,786
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Cash and cash equivalents, end of period $ 686,060 $ 6,224,387
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The Toronto Stock Exchange has neither approved nor disapproved the contents of this press release.

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