Infowave Software Inc.
TSX : IW

Infowave Software Inc.

August 15, 2005 19:18 ET

Infowave Reports Second Quarter-End Results

VANCOUVER, BRITSH COLUMBIA--(CCNMatthews - Aug. 15, 2005) - Infowave Software (TSX:IW), a leading provider of enterprise mobile applications (EMA), today released financial results for the second quarter ended June 30, 2005. (All financial information is expressed in U.S. dollars and Canadian GAAP).

Highlights

- Infowave announced the next release of its award-winning enterprise mobile applications suite. Infowave has branded the new release IW 2.7. Infowave's IW 2.7 has been enhanced over previous releases with updates to the transaction server core and to the applications suite.

- Jerry Meerkatz announced that he will be stepping down from his position of CEO effective August 31, 2005 to pursue another opportunity outside of the mobile applications software market.

Mr. Meerkatz has served on the Board of Directors of Infowave since June 2003 and in November 2003 was appointed CEO by the Board to lead the Company's restructuring efforts. Under Mr. Meerkatz's leadership, Infowave successfully restructured and repositioned itself from a wireless middleware provider to a leading provider of vertical industry-focused enterprise mobile applications through its strategic acquisition of Telispark in January 2004. Infowave also experienced significant revenue growth and expanded its distribution strategy through its strategic partnership with IBM in 2004.

Mr. Meerkatz reflected: "I am proud of what we have accomplished over the past 18 months and am very confident that the Company's management team will execute successfully going forward. Infowave is well positioned and has the momentum necessary to be a winner in the expanding mobile applications enablement marketplace."

Total revenues for the second quarter of 2005 were $859,869 compared to $402,459 in the first quarter of 2005 and $845,355 in the same quarter of last year. The company posted gross margins of 66% for the current quarter. Total operating expenses were $2,194,452 for the quarter, compared with $2,110,464 for the first quarter 2005 and $3,217,357 in the same quarter of last year.

For the second quarter ended June 30, 2005, the Company had a net loss of $1,572,188 or $0.01 per share compared to net income of $1,399,133 or $0.01 earnings per share in the first quarter of 2005 (due to the company realizing a gain of $3,239,343 from the corporate reorganization) and a loss of $2,772,978 or $0.01 per share for the same quarter last year.

The Company incurred operating loss for the quarter of $1,627,335 as compared to $1,895,539 for the first quarter of 2005 and $2,693,808 for the same quarter of the prior year.

Cash and cash equivalents were approximately $5.9 million at the end of the quarter.

About Infowave

Infowave (TSX:IW) provides enterprises with scalable and robust mobile solutions for improving operational efficiency and increasing the productivity of mobile workers. Infowave's configurable enterprise mobile application (EMA) suite, Infowave Mobile Enterprise, is designed to streamline and integrate business operations required by mobile workers. Some of the world's most innovative organizations, including Hydro One, Shell Oil, Unilever and the U.S. Navy use Infowave solutions to increase the efficiency of their large mobile workforces.

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 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)

--------------------------------------------------------------------
--------------------------------------------------------------------
June 30, 2005 December 31, 2004
(Unaudited)
--------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 5,895,652 $ 2,911,108
Restricted cash - 980,013
Accounts receivable,
net of allowance of nil 644,774 560,334
Technology Partnerships
Canada ("TPC") receivable 351,257 1,101,833
Prepaid expenses 134,226 160,881
--------------------------------------------------------------------
7,025,909 5,714,169

Fixed assets 235,289 360,999

Intellectual property assets
held for sale 1,070,047 1,091,274

Other intangible assets 5,421,243 6,306,697

Goodwill 3,359,913 3,426,565

Deferred transaction costs - 954,710

--------------------------------------------------------------------

$17,112,401 $17,854,414
--------------------------------------------------------------------
--------------------------------------------------------------------

Liabilities and Shareholders' Equity

Current liabilities:
Accounts payable and
accrued liabilities $ 703,223 $ 1,313,039
Convertible promissory notes 91,103 278,836
Financial instruments 425,437 355,647
Deferred revenue 264,129 173,835
--------------------------------------------------------------------
1,483,892 2,121,357

Convertible promissory note 87,845 87,027

Shareholders' equity
Share capital
Authorized: Unlimited voting
common shares without par value
Issued: 241,361,290 (December 31,
2004: 237,145,351) common shares 18,725,000 81,273,081
Additional paid in capital - 15,941
Contributed surplus 284,085 1,006,082
Other equity instruments 3,259,039 3,259,039
Deficit (7,422,004) (70,936,761)
Cumulative translation account 694,544 1,028,648
--------------------------------------------------------------------
15,540,664 15,646,030
--------------------------------------------------------------------

$17,112,401 $17,854,414
--------------------------------------------------------------------
--------------------------------------------------------------------


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

--------------------------------------------------------------------
--------------------------------------------------------------------
Three months ended Six months ended
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
(Unaudited) (Unaudited (Unaudited) (Unaudited
and and
restated restated
- note 1) - note 1)

--------------------------------------------------------------------
Revenue:
Sales $ 859,869 $ 845,355 $ 1,262,328 $ 2,119,037
Cost of sales 292,752 321,766 480,286 889,285
--------------------------------------------------------------------
567,117 523,589 782,042 1,229,752
Expenses:
Research and
development 539,466 889,668 1,074,960 1,950,459
Sales and
marketing 483,896 1,237,949 953,868 2,209,002
Administration 721,189 739,916 1,382,772 1,724,818
Restructuring - 61,885 - 287,631
Depreciation and
amortization 449,901 287,979 893,316 945,511
--------------------------------------------------------------------
2,194,452 3,217,397 4,304,916 7,117,421
--------------------------------------------------------------------

Operating loss 1,627,335 2,693,808 3,522,874 5,887,669
Other earnings
(expenses):
Interest and
other earnings 35,818 20,831 58,930 40,653
Interest expense (2,325) (382) (4,005) (1,102,705)
Foreign exchange
gain (loss) 21,654 (99,619) 55,551 (143,089)
Gain from corporate
reorganization - - 3,239,343 -
--------------------------------------------------------------------
55,147 (79,170) 3,349,819 (1,205,141)
--------------------------------------------------------------------

Loss for the
period, before
non-controlling
interest 1,572,188 2,772,978 173,055 7,092,810
Non-controlling
interest - - - (72,308)
--------------------------------------------------------------------

Loss for the period 1,572,188 2,772,978 173,055 7,020,502

Deficit, beginning
of period 5,849,816 64,680,074 70,936,761 60,432,550

Deficit reduction
from corporate
reorganization - - (63,687,812) -
--------------------------------------------------------------------

Deficit, end
of period $ 7,422,004 $ 67,453,052 $ 7,422,004 $ 67,453,052
--------------------------------------------------------------------
--------------------------------------------------------------------

Loss per
share, basic $ 0.01 $ 0.01 $ 0.00 $ 0.03
--------------------------------------------------------------------
--------------------------------------------------------------------

Loss per share,
fully diluted $ 0.01 $ 0.01 $ 0.00 $ 0.03
--------------------------------------------------------------------
--------------------------------------------------------------------

Weighted average
number of shares
outstanding 239,887,020 234,059,804 238,868,906 211,573,690
--------------------------------------------------------------------
--------------------------------------------------------------------


INFOWAVE SOFTWARE, INC.
Consolidated Statements of Cash Flows
(Expressed in U.S. dollars)

--------------------------------------------------------------------
--------------------------------------------------------------------
Three months ended Six months ended
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
(Unaudited) (Unaudited (Unaudited) (Unaudited
and and
restated restated
- note 1) - note 1)

--------------------------------------------------------------------
Cash flows from
operations:

Loss for the
period $ (1,572,188) $ (2,772,978) $ (173,055) $ (7,020,502)
Items not
involving
cash:
Depreciation
and
amortization 449,901 287,979 893,316 945,511
Amortization of
TPC warrants 44,391 - 76,222 -
Stock-based
compensation 138,288 651,378 341,109 1,007,124
Gain from
corporate
reorganization - - (3,239,343) -
Non controlling
interest - - - (72,308)
Non-cash
interest and
financing costs - - - 1,101,379
Changes in
non-cash
operating
working capital:
Accounts
receivable (381,649) 310,956 (89,940) (783,604)
TPC receivables 249,921 - 727,046 -
Prepaid expenses 56,175 148,053 22,752 223,933
Accounts payable
and accrued
liabilities (49,754) (627,941) (584,804) (429,391)
Deferred revenue (214,072) 49,502 91,006 276,011
--------------------------------------------------------------------
(1,278,987) (1,953,051) (1,935,691) (4,751,847)
Cash flows from
investing
activities:
Redemption of
short-term
investments, net - - - 223,322
Purchase of
fixed assets (16,312) (12,442) (16,312) (19,191)
Acquisition costs,
net of cash
acquired - - - 145,542
Restricted cash
released - - 963,020 -
Corporate
reorganization,
net proceeds - - 4,066,370 -
--------------------------------------------------------------------
(16,312) (12,442) 5,013,078 349,673

Cash flows from
financing
activities:

Issuance of shares
and warrants for
cash, net of
issue costs - 24,172 - 5,654,983
--------------------------------------------------------------------
- 24,172 - 5,654,983
Foreign exchange gain
(loss) on cash and
cash equivalents
held in a foreign
currency (87,654) (240,002) (92,843) (234,454)
--------------------------------------------------------------------

Increase (decrease)
in cash and cash
equivalents (1,382,953) (2,181,323) 2,984,544 1,018,355

Cash and cash
equivalents,
beginning of
period 7,278,605 8,111,283 2,911,108 4,911,605
--------------------------------------------------------------------

Cash and cash
equivalents,
end of period $ 5,895,652 $ 5,929,960 $ 5,895,652 $ 5,929,960
--------------------------------------------------------------------
--------------------------------------------------------------------


Notes:

1. The Company identified an adjustment to previously reported foreign
exchange balances for the three and six months ended June 30, 2004,
attributable to the foreign exchange translation method of accounting
utilized by the Company's US subsidiaries, Infowave USA and Telispark.
The financial impact of this adjustment is summarized below:

--------------------------------------------------------------------
--------------------------------------------------------------------
Three months ended June 30, 2004
--------------------------------------------------------------------

Foreign exchange loss, as previously reported $ 415,442
Adjustment (315,823)
--------------------------------------------------------------------

Revised foreign exchange loss $99,619
--------------------------------------------------------------------
--------------------------------------------------------------------

--------------------------------------------------------------------
--------------------------------------------------------------------
Three months ended June 30, 2004
--------------------------------------------------------------------

Net loss, as previously reported $3,088,801
Foreign exchange loss adjustment (315,823)
--------------------------------------------------------------------

Revised net loss $2,772,978
--------------------------------------------------------------------
--------------------------------------------------------------------


--------------------------------------------------------------------
--------------------------------------------------------------------
Six months ended June 30, 2004
--------------------------------------------------------------------

Foreign exchange loss, as previously reported $ 435,205
Adjustment (292,116)
--------------------------------------------------------------------

Revised foreign exchange loss $ 143,089
--------------------------------------------------------------------
--------------------------------------------------------------------

--------------------------------------------------------------------
--------------------------------------------------------------------
Six months ended June 30, 2004
--------------------------------------------------------------------

Net loss, as previously reported $7,312,618
Foreign exchange loss adjustment (292,116)
--------------------------------------------------------------------

Revised net loss $7,020,502
--------------------------------------------------------------------
--------------------------------------------------------------------



Contact Information