Infowave Software Inc.
TSX : IW

Infowave Software Inc.

August 14, 2007 14:56 ET

Infowave Reports Second Quarter 2007 Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 14, 2007) - Infowave Software (TSX:IW), a leading provider of enterprise mobile applications (EMA), today released financial results for the three and six months ended June 30, 2007 (all financial information is expressed in CDN dollars and prepared in accordance to Canadian GAAP).



Three months Six months
ended June 30, ended June 30,
2007 2006 2007 2006
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Revenue $ 785,492 $ 683,537 $ 2,047,302 $ 1,120,083
Operating expenses $ 1,906,495 $ 1,568,763 $ 3,771,258 $ 3,273,106
Loss $(1,724,837) $(1,056,911) $(2,656,788) $(2,344,646)
Loss per share $ (0.14) $ (0.09) $ (0.22) $ (0.19)
Shares outstanding
(weighted average) 12,326,950 12,166,195 12,326,950 12,165,674
Total assets $ 7,130,744 $ 9,517,413 $ 7,130,744 $ 9,517,413


Revenue for the first three and six months of 2007 was $785,492 and $2,047,302, respectively compared to $683,537 and $1,120,083 in the corresponding periods last year. These increases reflect additional professional services business combined with recurring revenue from our maintenance and support contracts.

Operating expenses for the three and six months of 2007 were $1,906,495 and $3,771,258, respectively compared with $1,568,763 and $3,273,106 during the same periods last year. These increases reflect higher sales and marketing expenses partially offset by lower administration and research and development costs.

For the three and six months ended June 30, 2007, the Company recorded a net loss of $1,724,837 or $0.14 per share and $2,656,788 or $0.22 per share, respectively. This compared to a net loss of $1,056,911 or $0.09 per share and $2,344,646 or $0.19 per share for the same periods last year.

The Audit Committee has reviewed the contents of this press release.



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

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June 30, December 31,
2007 2006
(unaudited)
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Assets
Current assets:
Cash and cash equivalents $ 694,344 $ 2,469,318
Accounts receivable, net of allowance of
nil (2006 - nil) 1,040,521 1,837,491
Technology Partnership Canada ("TPC")
receivable (note 4) - 168,671
Prepaid expenses 121,613 146,025
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1,856,478 4,621,505

Fixed assets (note 5) 178,135 149,046

Intangible assets (note 7) 967,806 1,106,064

Goodwill 4,128,325 4,128,325

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$ 7,130,744 $ 10,004,940
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 912,592 $ 1,098,291
Financial instruments (note 4) 634,692 634,692
Deferred revenue 1,301,776 1,401,287
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2,849,060 3,134,270

Shareholders' equity:
Share capital (note 8(b)):
Authorized: Unlimited voting common
shares without par value
Issued: 12,326,950 (December 31, 2006:
12,326,950) common shares 27,459,074 27,459,074
Contributed surplus (note 8(e)) 4,248,663 4,180,861
Other equity instruments (note 8(f)) 1,451,839 1,451,839
Deficit (28,484,342) (25,827,554)
Accumulated other comprehensive income (393,550) (393,550)
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4,281,684 6,870,670
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$ 7,130,744 $ 10,004,940
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INFOWAVE SOFTWARE, INC.
Consolidated Statements of Operations and Deficit (unaudited)
(Expressed in Canadian dollars)

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For the three months ended For the six months ended
-------------------------------------------------------
June 30, June 30, June 30, June 30,
2007 2006 2007 2006
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Revenue:
Sales $ 785,492 $ 683,537 $ 2,047,302 $ 1,120,083
Cost of sales 427,756 182,221 738,793 247,770
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357,736 501,316 1,308,509 874,313

Operating
expenses:
Research and
development 258,913 524,780 487,405 1,089,695
Sales and
marketing 1,024,289 482,299 2,075,479 1,041,168
Administration 364,786 458,244 863,243 932,964
Depreciation and
amortization 89,836 103,440 176,460 209,279
TPC receivable
write off 168,671 - 168,671 -
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1,906,495 1,568,763 3,771,258 3,273,106
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Loss before
undernoted items (1,548,759) (1,067,447) (2,462,749) (2,398,793)

Other income
(expenses):
Interest income
and other income 14,464 31,426 32,429 66,795
Interest expense (19) (1,401) (244) (1,643)
Foreign exchange
gain (loss) (190,523) (19,489) (226,224) (11,005)
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(176,078) 10,536 (194,039) 54,147
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Loss for the
period (1,724,837) (1,056,911) (2,656,788) (2,344,646)

Deficit,
beginning of
period (26,759,505) (23,619,964) (25,827,554) (22,332,229)
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Deficit, end of
period $(28,484,342) $(24,676,875) $(28,484,342) $(24,676,875)
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Loss per share,
basic and diluted $ (0.14) $ (0.09) $ (0.22) $ (0.19)
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Weighted average
number of shares
outstanding 12,326,950 12,166,195 12,326,950 12,165,674


INFOWAVE SOFTWARE, INC.
Consolidated Statements of Cash Flows (unaudited)
(Expressed in Canadian dollars)

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For the three months ended For the six months ended
-------------------------------------------------------
June 30, June 30, June 30, June 30,
2007 2006 2007 2006
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Cash flows from
operations:
Loss for the
period $ (1,724,837) $ (1,056,911) $ (2,656,788) $ (2,344,646)
Items not
involving cash:
Depreciation
and
amortization 89,836 103,440 176,459 234,203
Stock-based
compensation 28,787 112,296 67,802 209,279
Changes in
non-cash
operating
working
capital:
Accounts
receivable 119,934 (107,914) 796,971 (241,358)
TPC receivable
write off 168,671 - 168,671 -
Prepaid expenses 50,061 (8,058) 24,412 52,138
Accounts payable
and accrued
liabilities (105,154) (31,528) (185,699) 27,489
Deferred revenue 27,830 (2,368) (99,512) 374,278
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(1,344,872) (991,043) (1,707,684) (1,688,617)

Cash flows from
investing
activities:
Purchase of fixed
assets (39,280) - (67,290) (13,982)
Extension fee
payment (note 6) - - - 87,450
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(39,280) - (67,290) 73,468

Cash flows from
financing
activities:
Issuance of
shares and
warrants for
cash, net of
issue costs - 938 - 938
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- 938 - 938
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Decrease in cash
and cash
equivalents (1,384,152) (990,105) (1,774,974) (1,614,211)

Cash and cash
equivalents,
beginning of
period 2,078,496 4,405,325 2,469,318 5,029,431

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Cash and cash
equivalents, end
of period $ 694,344 $ 3,415,220 $ 694,344 $ 3,415,220
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Continuing Operations

These consolidated interim financial statements have been prepared on a going concern basis notwithstanding the fact that the Company has experienced operating losses and negative cash flows from operations during the three and six months ended June 30, 2007 and in prior periods. To date, the Company has financed its continuing operations through revenue and equity financings.

Management is of the opinion that cash and cash equivalents of approximately $0.7 million at June 30, 2007, together with collection of current outstanding receivables (net of accounts payable and accrued liabilities), order backlog of $0.4 million, and recurring revenue from existing customers, will provide sufficient working capital to meet the Company's projected cash requirements through September, 2007 assuming a prudent level of expenditures. The sufficiency of cash available to fund operations beyond September 30, 2007 is currently uncertain. As a result there exists significant doubt about the Company's ability to operate as a going concern for the next twelve months. A Special Committee of the Board of Directors has retained PricewaterhouseCoopers Corporate Finance to explore strategic alternatives to maximize shareholder value including but not limited to a financing or sale of the business. In addition the Special Committee is in discussion with the major shareholder regarding a financing in the form of a secured credit facility. There can be no assurances that these alternatives will be completed on a timely basis, or if they are completed what the implications will be for the Company's future operations. To the extent that these alternatives are not completed the Company will not be able to continue operations. The Company will continue to minimize its expenditures relative to its available cash and continue to maximize its revenue from its existing customers.

Forward Looking Statements

This Management Discussion and Analysis 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. Forward-looking information is subject to known and unknown business and economic uncertainties, risks and other factors. Generally, this forward-looking information can be identified by the use of forward-looking terminology such as "outlook", "anticipate", "project", "target", "believe", "estimate", "expect", "intend", "should", "scheduled", "will", "plan" and similar expressions. 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 Infowave Software products; 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; and including but not limited to other factors described in Infowave Software reports filed on SEDAR, including its Annual Information Form for the year ended December 31, 2006 and report for the three and six months ended June 30, 2007. 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 Infowave

Infowave Software Inc.'s (TSX:IW) Echo Solutions an 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. Additional details are available in the Company's Management Discussion and Analysis and Financial Statements for the three and six months ended June 30, 2007 filed on SEDAR at www.sedar.com. For more information, please email info@infowave.com or visit the Company's website at www.infowave.com.

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