Infowave Software Inc.
TSX : IW

Infowave Software Inc.

March 31, 2006 17:00 ET

Infowave Reports Fiscal 2005 and Fourth Quarter Year-End Results

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - March 31, 2006) - Infowave Software (TSX:IW), a leading provider of enterprise mobile applications, today released results for the fourth quarter and year ended December 31, 2005 (all financial information is expressed in U.S. dollars and Canadian GAAP).

Annual Highlights

- Infowave appointed James W. Suttie as the company's Chief Executive Officer on September 1, 2005. Mr. Suttie brings over twenty five years of senior executive management experience in the IT industry, most recently as the former Executive Vice President, Corporate Treasury Services of Thomson Financial Inc. Mr. Suttie was the Founder and Chief Executive Officer of Selkirk Financial Technologies Inc. prior to its successful merger with Thomson Financial Inc. While at Selkirk Technologies, Inc., Mr. Suttie spear-headed their enterprise treasury software initiatives, resulting in over 230 deployments in Fortune 2000 firms. Prior to founding Selkirk Financial Technologies Inc., Mr. Suttie held a variety of senior management and marketing positions at Gulf Canada Limited, Noranda Mines Ltd., and IBM Canada Ltd.

- Infowave announced that it has deployed its mobile software throughout Agfa's U.S. Healthcare Division.

- Infowave recently launched its new product offering, Echo by Infowave™, which provides an easy to use mobile inspection and work order management solution, aimed at mid market companies looking for a fast and simple deployment.

- Infowave was judged to have the "Best IBM WebSphere On Demand Solution" in the annual IBM PartnerWorld Beacon Awards competition, honoring IBM Business Partners for their ingenuity, customer satisfaction and outstanding achievements in providing on demand business solutions.

- Infowave won three Silver and one Bright Mobile Star Awards™ from MobileVillage®, a leader in mobile technology news services, for its technology solutions and leadership.

- Infowave's solutions were validated by Symbol Technologies, a leading mobile device manufacturer for the enterprise.

- Infowave raised $4.57 million in non-dilutive proceeds through a corporate reorganization in January 2005 which has enabled the Company to invest in additional product development and sales and marketing resources to grow its revenues.

"During the past six months, Infowave has undergone a significant transition," stated James Suttie, President and CEO. "Infowave has a new leadership team, we've released new versions of our products, hired a new sales and marketing team, significantly reduced costs and improved our cash position. We are now poised to drive increased revenue through our expanded sales strategy with flexible "software as a service" solutions targeted at mid sized companies. We have made the tough choices in the company; those are now behind us, so we can focus our energies on building a great business. We have many satisfied clients using our technology, and with a new product and an aggressive sales and marketing strategy, are bullish about our future."

Financial Results

Infowave recorded 2005 annual revenues of $1,927,291, a decrease of 53% from $4,104,034 in 2004. Total operating expenses for the year were $12,780,232, an increase of 13% over $11,288,330 in 2004. The Company charged $4,651,792 in impairment costs to operating expenses during the year compared to $412,632 for 2004. Loss for the year was $8,305,627, down 21% from $10,504,211 in 2004.

Total revenues for the fourth quarter ending December 31, 2005 were $180,430 compared to $484,533 in the third quarter of 2005 and $484,904 in fourth quarter 2004. The company posted gross margins of 89% for the current quarter. Total operating expenses were $6,561,988 in fourth quarter 2005, compared with $1,913,328 in third quarter 2005 and $2,205,610 in fourth quarter 2004. Fourth quarter 2005 results included the $4,651,792 impairment charge mentioned above. As a result, loss for fourth quarter 2005 was $6,348,352 or $0.03 per share, compared to $1,784,220 or $0.01 per share in third quarter 2005 and $2,113,458 or $0.01 per share in fourth quarter 2004. Cash and cash equivalents were approximately $4.3 million at December 31, 2005.

About Infowave

Infowave's (TSX:IW) 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

Statements made herein may contain forward-looking information about management's expectations, new strategic objectives, business prospects, revenue growth opportunities, anticipated financial performance and other similar matters. A variety of factors, many of which are beyond the Company's control, affect the operations, performance and business strategy and results of the Company and could cause actual results and experiences to differ materially from the expectations and objectives expressed in these statements. These factors include, but are not limited to, the sufficiency of the Company's restructuring activities and strategic initiatives, including the potential for higher actual costs incurred in restructuring actions and strategic initiatives compared to the estimated costs of such actions or initiatives; the ability to retain and recruit qualified employees; the ability to manage business in light of recent management changes and personnel reductions. Other potential risk factors are described in the Company's 2004 annual report on Form 20-F, in addition to reports on Form 8-K and Form 6-K, which are available at the SEC's Web site at www.sec.gov. Forward-looking statements are based on management's beliefs, opinions and projections on the date the statements are made. The Company undertakes no obligation to update forward-looking statements if circumstances or management's beliefs, opinions or projections should change.



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

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December 31, December 31,
2005 2004
(Restated-
note 1)
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Assets
Current assets:
Cash and cash equivalents $ 4,313,406 $ 2,911,108
Restricted cash - 980,013
Accounts receivable 26,691 560,334
Technology Partnership Canada ("TPC")
receivable 144,658 1,101,833
Prepaid expenses 203,105 160,881
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4,687,860 5,714,169

Fixed assets 166,376 360,999
Intellectual property assets held for sale 75,000 1,091,274
Other intangible assets 1,185,745 6,306,697
Goodwill 3,540,587 3,426,565
Deferred transactions costs - 954,710
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$ 9,655,568 $ 17,854,414
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 470,653 $ 1,313,039
Convertible promissory notes 95,210 278,836
Financial instruments 544,333 355,656
Deferred revenue 105,825 173,835
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1,216,021 2,121,366

Convertible promissory note - 87,027

Shareholders' equity
Share capital
Authorized: Unlimited voting common
shares without par value
Issued: 243,302,951 (2004 - 237,145,351)
common shares 18,814,147 81,273,081
Additional paid in capital - 15,941
Contributed surplus 487,413 1,006,082
Other equity instruments 3,259,039 3,259,039
Deficit (15,554,576) (70,936,761)
Cumulative translation account 1,433,524 1,028,639
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8,439,547 15,646,021
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$ 9,655,568 $ 17,854,414
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Notes:

1. Effective January 1, 2005, the Company adopted the amended HB
3860 - "Financial Instruments - Disclosure and Presentation"
related to financial instruments that are contractual obligations
of a fixed amount but are settled with a variable number of the
Company's common shares. Handbook Section 3860 requires that these
financial instruments be classified as liabilities rather than
shareholders' equity because they do not represent a residual
interest in the Company until the common shares are issued.
Accordingly, the value assigned to the Technology Partnerships
Canada ("TPC") warrants and the Company's obligation to issue
shares, aggregating $355,656, which was included in "Other Equity
Instruments" in fiscal 2004 are, for accounting purposes, in
substance a liability to the Company, because the number of common
shares to be issued in settlement is determined based on a fixed
contractual amount of fair value due TPC. These fixed contractual
amounts will be settled with equity contractual amount of fair
value due TPC. These fixed contractual amounts will be settled
with equity instruments with the number of such instruments to be
determined based on the market value of the Company's common
shares on the date these instruments are settled. As permitted by
the transitional rules of Handbook Section 3861, the Company has
changed its accounting policy to treat these amounts as
liabilities effective for the Company's fiscal year beginning
January 1, 2005 and prior period financial statements have been
restated to reflect this change in accounting policy.


INFOWAVE SOFTWARE, INC.
Consolidated Statements of Operations and Deficit
(Expressed in U.S. dollars)

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Three months ended Year ended
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December 31, December 31, December 31, December 31,
2005 2004 2005 2004
(Unaudited) (Unaudited)
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Revenue
Sales $ 180,430 $ 484,904 $ 1,927,291 $ 4,104,034
Cost of sales
(excluding
depreciation
and
amortization
below) 19,557 317,282 811,371 1,773,119
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160,873 167,622 1,115,920 2,330,915
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Expenses
Research
and
development 460,976 235,547 2,024,869 2,502,132
Sales and
marketing 529,816 442,605 1,959,800 3,340,049
Administration 479,203 647,066 2,372,030 2,953,701
Restructuring - - - 287,631
Impairment
charge 4,651,792 412,632 4,651,792 412,632
Depreciation
and
amortization 440,201 467,760 1,771,741 1,792,185
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6,561,988 2,205,610 12,780,232 11,288,330
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Loss before
undernoted
items 6,401,115 2,037,988 11,664,312 8,957,415

Other earnings
(expenses)
Interest
income
and other
earnings 39,031 18,605 123,956 73,530
Interest
expense (698) - (4,933) (1,106,513)
Foreign
exchange
gain (loss) 14,430 (94,075) 319 (586,121)
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52,763 (75,470) 119,342 (1,619,104)
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Loss for
the period,
before non-
controlling
interest and
gain from
corporate
reorganization 6,348,352 2,113,458 11,544,970 10,576,519

Non-
controlling
interest - - - (72,308)
Gain from
corporate
reorganization - - (3,239,343) -
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Loss for
the period 6,348,352 2,113,458 8,305,627 10,504,211
Deficit,
beginning
of period 9,206,224 68,823,303 70,936,761 60,432,550
Deficit
reduction
from corporate
reorganization - - (63,687,812) -
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Deficit,
end of
period $ 15,554,576 $ 70,936,761 $ 15,554,576 $ 70,936,761
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Loss per
share, basic
and diluted $ 0.03 $ 0.01 $ 0.04 $ 0.05
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Weighted
average
number of
shares
outstanding 241,394,794 235,421,485 240,139,435 223,996,067
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INFOWAVE SOFTWARE, INC.
Consolidated Statements of Cash Flows
(Expressed in U.S. dollars)

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--------------------------------------------------------------------
Three months ended Year ended
December 31, December 31, December 31, December 31,
2005 2004 2005 2004
(Unaudited) (Unaudited)
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Cash flows
from
operations:
Loss for
the period $ (6,348,352) $ (2,113,458) $ (8,305,627) $(10,504,211)
Items not
involving
cash:
Depreciation
and
amortization 440,201 467,760 1,771,741 1,792,185
Write down
of fixed
assets 16,197 - 16,197 -
Amortization
of TPC
warrants 43,741 31,797 170,317 113,611
Impairment
charge 4,651,792 412,632 4,651,792 412,632
Non-cash
interest and
financing
costs - - - 1,101,380
Stock-based
compensation 100,422 224,707 550,776 1,636,325
Gain from
corporate
reorganization - - (3,239,343) -
Interest
earned on
intangible
assets held
for sale (6,269) - (6,269) -
Non-
controlling
interest - - - (72,308)
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(1,102,268) (976,562) (4,390,416) (5,520,386)
Changes in
non-cash
operating
working
capital:
Accounts
receivable 432,973 693,668 553,075 85,700
TPC
receivables 383,863 (98,507) 954,937 (231,541)
Prepaid
expenses (11,953) 26,361 (37,277) 320,815
Accounts
payable and
accrued
liabilities (5,254) 156,357 (846,869) (931,417)
Deferred
revenue (164,918) (388,546) (80,170) (305,312)
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Net cash used
in operations (467,557) (587,229) (3,846,720) (6,582,141)

Cash flows
from
investing
activities:
Redemption
(purchase)
of short-term
investments,
net - - - 223,322
Purchase of
fixed assets (18,805) (4,044) (42,463) (28,736)
Purchase of
intangible
assets - - - (48,688)
Extension
fee payment 100,000 - 100,000 -
Acquisition
costs, net
of cash
acquired - - - 145,542
Deferred
transaction
costs - (881,059) - (938,358)
Restricted
cash released - (980,013) 963,020 (980,013)
Corporate
reorganization,
net proceeds - - 4,066,370 -
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81,195 (1,865,116) 5,086,927 (1,626,931)

Cash flows
from financing
activities:
Issuance of
shares and
warrants for
cash, net of
issue costs 852 - 852 5,659,468

Foreign
exchange
gain on cash
and cash
equivalents
held in a
foreign
currency 5,183 238,908 161,239 549,107
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Increase
(decrease)
in cash
and cash
equivalents (380,327) (2,213,437) 1,402,298 (2,000,497)

Cash and cash
equivalents,
beginning of
period 4,693,733 5,124,545 2,911,108 4,911,605
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Cash and cash
equivalents,
end of
period $ 4,313,406 $ 2,911,108 $ 4,313,406 $ 2,911,108
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