Infowave Software Inc.
TSX : IW

Infowave Software Inc.

August 11, 2006 20:59 ET

Infowave Reports Second Quarter-End Results

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 11, 2006) - Infowave Software (TSX:IW), a leading provider of enterprise mobile applications (EMA), today released financial results for the second quarter ended June 30, 2006 (all financial information is expressed in U.S. dollars and Canadian GAAP).

Financial Results

Total revenues for the second quarter of 2006 were $608,221 compared to $378,299 in the first quarter of 2006 and $859,869 in the same quarter of last year. The company posted gross margins of 73% for the current quarter. Total operating expenses were $1,395,908 for the quarter, compared with $1,476,937 for the first quarter 2006 and $2,250,105 in the same quarter of last year for decreases of 5% and 38% respectively.

For the second quarter ended June 30, 2006, the Company had a loss of $940,455 or $0.004 per share compared to a loss of $1,115,916 or $0.005 per share in the first quarter of 2006 and net loss of $2,056,371 or $0.007 per share for the same quarter last year.

Cash and cash equivalents were approximately $3.0 million at the end of the quarter.

"During the second quarter of 2006, we enhanced our management team with new Sales, Marketing and Product Management leadership and released Echo by Infowave™ v3.1," stated James Suttie, Infowave President and CEO. "With changes in management, continued improvements in product, and revenues and costs trending in a positive direction, Infowave is well positioned to capitalize on the mobile work force management market opportunity."

Highlights

- Infowave announced that Agfa Corporation has selected Echo by Infowave™, a mobile solution which optimizes the flow of information between the head office and field technicians, as their field service management platform. Echo by Infowave™ was designed to deliver tangible value to organizations by centralizing information and enhancing processes to geographically dispersed workers.

- Infowave announced the corporate sponsorship of Best Practices in Mobile Field Service Report by Aberdeen Group, a Boston-based, global market research firm focusing on the technology-driven value chain. Research and interviews with over 200 companies uncovered detailed information on mobile field service strategies, experiences and results of best-in-class organizations.

- Infowave announced the release of Echo by Infowave™ v3.1 which further builds upon v3.0's solid foundation for work order management and inspection applications.

- Infowave appointed Claudia Ng as the Company's Vice President, Product Management. Ms. Ng brings over ten years of senior-level experience managing products and setting strategic direction. Prior to Infowave, Ms. Ng successfully founded and led as CEO of FatPort Corporation, Canada's largest Wi-Fi hotspot provider.

- Infowave appointed Richard Hoy as the Company's Vice President, Sales. Mr. Hoy brings over twenty-five years of experience in leading sales, marketing, channel management and organizational development. Prior to Infowave, Mr. Hoy worked at such companies as TELUS Communications, Xerox, Cable and Wireless Communications, and Apparent Networks.

- Infowave appointed Wayne J. Henderson as Chairman of the Finance Committee responsible for advising the Board with respect financing and M&A opportunities. Currently, Mr. Henderson is the President and CEO of Henderson Capital, Chairman, BC Medical Innovation Fund and is a candidate to receive his 'ICD' designation from the Institute of Corporate Directors

Infowave also announced that the Board of Directors has accepted the resignations of Owen Wiberg and Keith Triginer as directors of the Company. Infowave's Chairman, Gregg Thompson said, "On behalf of the Company and my fellow directors, I would like to thank Keith and Owen for their significant contributions since they joined the Board."

The Audit Committee has reviewed and approved of the contents of this Press Release.

About Infowave Software Inc.

Infowave Software Inc.'s (TSX:IW) Echo by Infowave™ 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.



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

--------------------------------------------------------------------
--------------------------------------------------------------------
June 30, December 31,
2006 2005
(unaudited)
--------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 3,049,036 $ 4,313,406
Accounts receivable, net of
allowance of $nil 243,266 26,691
Technology Partnership Canada
("TPC") receivable 150,586 144,658
Prepaid expenses 164,881 203,105
--------------------------------------------------------------------
3,607,769 4,687,860

Fixed assets 122,273 166,376

Intellectual property assets held for sale - 75,000

Other intangible assets 1,110,903 1,185,745

Goodwill 3,685,675 3,540,587

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

$ 8,526,620 $ 9,655,568
--------------------------------------------------------------------
--------------------------------------------------------------------

Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 514,483 $ 470,653
Convertible promissory note 102,029 95,210
Financial instruments 566,639 544,333
Deferred revenue 444,309 105,825
--------------------------------------------------------------------
1,627,460 1,216,021

Shareholders' equity
Share capital
Authorized: Unlimited voting common
shares without par value
Issued: 243,334,208
(December 31, 2005: 243,302,951)
common shares 18,815,760 18,814,147
Contributed surplus 689,331 487,413
Other equity instruments 3,259,039 3,259,039
Deficit (17,610,947) (15,554,576)
Cumulative translation account 1,745,977 1,433,524
--------------------------------------------------------------------
6,899,160 8,439,547
--------------------------------------------------------------------

$ 8,526,620 $ 9,655,568
--------------------------------------------------------------------
--------------------------------------------------------------------


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,
2006 2005 2006 2005
(Unaudited) (Unaudited (Unaudited) (Unaudited
and restated and restated
- note 1) - note 1)

--------------------------------------------------------------------
Revenue:
Sales $ 608,221 $ 859,869 $ 986,520 $ 1,262,328
Cost of sales 162,143 239,099 217,213 348,709
--------------------------------------------------------------------
446,078 620,770 769,307 913,619
Expenses:
Research and
development 466,957 539,466 956,497 1,074,960
Sales and
marketing 429,157 537,549 913,457 1,085,445
Administration 407,752 721,189 819,132 1,382,772
Depreciation and
amortization 92,042 449,901 183,759 893,316
--------------------------------------------------------------------
1,395,908 2,248,105 2,872,845 4,436,493
--------------------------------------------------------------------
Income (loss)
before
undernoted items (949,830) (1,627,335) (2,103,538) (3,522,874)

Other earnings
(expenses):
Interest and
other earnings 27,963 35,818 58,613 58,930
Interest expense (1,247) (2,325) (1,457) (4,005)
Foreign exchange
gain (loss) (17,341) 21,654 (9,989) 55,551
--------------------------------------------------------------------
9,375 55,147 47,167 110,476
--------------------------------------------------------------------
Income (loss)
before gain
from corporate
reorganization (940,455) (1,572,188) (2,056,371) (3,412,398)

Gain from
corporate
reorganization - - - 3,239,343
--------------------------------------------------------------------

Loss for
the period (940,455) (1,572,188) (2,056,371) (173,055)

Deficit,
beginning of
period (16,670,492) (5,849,816) (15,554,576) (70,936,761)

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

Deficit,
end of period $(17,610,947)$ (7,422,004)$(17,610,947)$ (7,422,004)
--------------------------------------------------------------------
--------------------------------------------------------------------

Loss per share,
basic $ 0.00 $ (0.01)$ (0.01)$ 0.00
--------------------------------------------------------------------
--------------------------------------------------------------------

Loss per share,
fully diluted $ 0.00 $ (0.01)$ (0.01)$ 0.00
--------------------------------------------------------------------
--------------------------------------------------------------------

Weighted average
number of shares
outstanding 243,323,903 239,887,020 243,313,485 238,868,906
--------------------------------------------------------------------
--------------------------------------------------------------------


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,
2006 2005 2006 2005
(Unaudited) (Unaudited) (Unaudited) (Unaudited)

--------------------------------------------------------------------
Cash flows from
operations:
Loss for the
period $ (940,455)$ (1,572,188)$ (2,056,371)$ (173,055)
Items not
involving cash:
Depreciation
and
amortization 92,042 449,901 183,759 893,316
Amortization
of TPC warrants - 44,391 - 76,222
Stock-based
compensation 99,924 138,288 205,565 341,109
Gain from
corporate
reorganization - - - (3,239,343)
Changes in
non-cash
operating
working capital:
Accounts
receivable (96,023) (381,649) (211,662) (89,940)
TPC receivables - 249,921 - 727,046
Prepaid expenses (7,168) 56,175 44,996 22,752
Accounts payable
and accrued
liabilities (28,053) (49,754) 23,089 (584,804)
Deferred
revenue (2,108) (214,072) 324,283 91,006
-------------------------------------------------------------------
(881,841) (1,278,987) (1,486,341) (1,935,691)
Cash flows from
investing
activities:
Purchase of
fixed assets - (16,312) (12,116) (16,312)
Extension fee
payment (note 5) - - 75,000 -
Restricted
cash released - - - 963,020
Corporate
reorganization,
net proceeds - - - 4,066,370
-------------------------------------------------------------------
- (16,312) 62,884 5,013,078
Cash flows
from financing
activities:
Issuance of
shares and
warrants for
cash, net of
issue costs 835 - 835 -
-------------------------------------------------------------------
835 - 835 -
Foreign exchange
gain (loss) on
cash and cash
equivalents held
in a foreign
currency 157,068 (87,654) 158,252 (92,843)
--------------------------------------------------------------------

Increase
(decrease) in
cash and cash
equivalents (723,938) (1,382,953) (1,264,370) 2,984,544

Cash and cash
equivalents,
beginning of
period 3,772,974 7,278,605 4,313,406 2,911,108

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

Cash and cash
equivalents,
end of period $ 3,049,036 $ 5,895,652 $ 3,049,036 $ 5,895,652
--------------------------------------------------------------------
--------------------------------------------------------------------

Note:
1. Effective January 1, 2006, the Company changed its policy with
respect to the classification of sales commissions which are now
classified under operating expenses. In prior periods, sales
commissions were recorded under cost of sales. The impact of this
change on the June 30, 2005 financial statements (had the policy
been changed effective January 1, 2005) is as follows:


--------------------------------------------------------------------
Balance as
Financial Statement Account Previously Revised
(Three Months Ended June 30, 2005) Reported Adjustment Balance
--------------------------------------------------------------------

Cost of Sales $ 292,752 ($53,653) $ 239,099
Gross Margin $ 567,117 $53,653 $ 620,770
Sales and Marketing $ 483,896 $53,653 $ 537,549
Total Expenses $2,194,452 $53,653 $2,248,105
--------------------------------------------------------------------


--------------------------------------------------------------------
Balance as
Financial Statement Account Previously Revised
(Six Months Ended June 30, 2005) Reported Adjustment Balance
--------------------------------------------------------------------

Cost of Sales $ 480,286 ($131,577) $ 348,709
Gross Margin $ 782,042 $131,577 $ 913,619
Sales and Marketing $ 953,868 $131,577 $1,085,445
Total Expenses $4,304,916 $131,577 $4,436,493
--------------------------------------------------------------------



Contact Information