Infowave Software Inc.
TSX : IW

Infowave Software Inc.

November 09, 2006 21:28 ET

Infowave Reports Strong Revenue Growth for Q3 2006

Infowave posts highest revenue quarter in the Company's history

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 9, 2006) - Infowave Software (TSX:IW), a leading provider of enterprise mobile applications (EMA), today released financial results for the third quarter ended September 30, 2006 (all financial information is expressed in U.S. dollars and prepared in accordance to Canadian GAAP).

Highlights

- Recorded quarterly revenue of $2.1 million for the third quarter of 2006, up significantly from $0.6 million for the second quarter of 2006 and $0.5 million for third quarter of 2005.

- Reduced operating expenses by 15% from the same quarter of last year.

- Total cash and trade accounts receivable were $3.8 million at September 30, 2006, up from $3.3 million at June 30, 2006.

Financial Results

Total revenues for the third quarter of 2006 were $2,050,957 compared to $608,221 during the previous quarter and $484,533 during the third quarter of last year. This strengthened performance reflects a major license sale in the current quarter combined with two significant professional services projects. The company posted gross margins of 76% for the current quarter compared to 73% in the previous quarter and 39% in the third quarter of last year.

Total operating expenses were $1,637,103 during third quarter of 2006, compared with $1,395,908 during the previous quarter and $1,929,559 during the third quarter of last year.

For the third quarter of 2006, the Company recorded a net loss of $55,843 or $0.0002 per share compared to a net loss of $940,455 or $0.0039 per share in the second quarter of 2006 and a net loss of $1,784,220 or $0.0074 per share in the third quarter of last year.

Earnings before interest, taxes, depreciation and amortization ("EBITDA"(1)) was $4,981 for the third quarter of 2006 compared to ($857,788) for the previous quarter and ($1,302,099) for the third quarter of last year.

Cash and cash equivalents were approximately $1.8 million at September 30, 2006. Total cash and trade accounts receivable of $3.8 million as of that date were up from $3.3 million at June 30, 2006.

"Over the past year, we have taken numerous actions to improve our business and products, which has produced the highest revenue quarter in Infowave's history and a positive EBITDA," states James Suttie, Infowave President and CEO. "We have made positive strides in penetrating the market, expanding our product offerings, and leveraging the expertise of our people to deliver value to organizations seeking to improve the efficiency of their mobile processes."

The Audit Committee has reviewed and approved 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.

(C) 2006 Infowave Software, Inc. All rights reserved. Infowave and the Infowave logo are trademarks of Infowave Software, Inc. Other product or service names mentioned herein are the trademarks of their respective owners.

(1) Earnings before interest, income taxes, depreciation and amortization ("EBITDA") is a non-GAAP measure, does not have any standardized meaning prescribed by GAAP, and may not be comparable to similar measures used by other companies. Management believes EBITDA is a useful measure to assist in the assessment of Infowave's ability to generate cash flows from its operations. See "EBITDA" in Management's Discussion and Analysis for reconciliation of EBITDA to the most directly comparable measure calculated in accordance with GAAP.



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

-----------------------------------------------------------------------
-----------------------------------------------------------------------
September 30, December 31,
2006 2005
(unaudited)
-----------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 1,847,601 $ 4,313,406
Accounts receivable, net of
allowance of $nil 1,948,859 26,691
Technology Partnership Canada
("TPC") receivable 151,383 144,658
Prepaid expenses 128,900 203,105
-----------------------------------------------------------------------
4,076,743 4,687,860

Fixed assets 124,441 166,376

Intellectual property assets held
for sale - 75,000

Other intangible assets 1,054,742 1,185,745

Goodwill 3,705,192 3,540,587

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$ 8,961,118 $ 9,655,568
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-----------------------------------------------------------------------

Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable and accrued
liabilities $ 958,377 $ 470,653
Convertible promissory note - 95,210
Financial instruments 569,639 544,333
Deferred revenue 356,489 105,825
-----------------------------------------------------------------------
1,884,505 1,216,021

Shareholders' equity
Share capital
Authorized: Unlimited voting common
shares without par value
Issued: 246,539,009 (December 31,
2005: 243,302,951) common shares 18,955,001 18,814,147
Contributed surplus 746,960 487,413
Other equity instruments 3,259,039 3,259,039
Deficit (17,666,790) (15,554,576)
Cumulative translation account 1,782,403 1,433,524
-----------------------------------------------------------------------
7,076,613 8,439,547
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$ 8,961,118 $ 9,655,568
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INFOWAVE SOFTWARE, INC.
Consolidated Statements of Operations and Deficit
(Expressed in U.S. dollars)

-----------------------------------------------------------------------
-----------------------------------------------------------------------
Three months ended Nine months ended

September 30, September 30, September 30, September 30,
2006 2005 2006 2005
(Unaudited) (Unaudited (Unaudited) (Unaudited
and restated and restated
- note 1) - note 1)
-----------------------------------------------------------------------
Revenue:
Sales $ 2,050,957 $ 484,533 $ 3,037,477 $ 1,746,861
Cost of sales 488,305 295,297 705,518 644,006
-----------------------------------------------------------------------
1,562,652 189,236 2,331,959 1,102,855

Expenses:
Research and
Development 312,553 488,933 1,269,050 1,563,893
Sales and marketing 862,438 492,347 1,775,895 1,577,792
Administration 382,680 510,055 1,201,812 1,892,827
Depreciation and
amortization 79,432 438,224 263,191 1,331,540
-----------------------------------------------------------------------
1,637,103 1,929,559 4,509,948 6,366,052
-----------------------------------------------------------------------
Income (loss)
before
undernoted items (74,451) (1,740,323) (2,177,989) (5,263,197)

Other earnings
(expenses):
Interest and other
earnings 21,749 25,995 80,362 84,925
Interest expense (2,299) (230) (3,756) (4,235)
Foreign exchange
gain (loss) (842) (69,662) (10,831) (14,111)
-----------------------------------------------------------------------
18,608 (43,897) 65,775 66,579
-----------------------------------------------------------------------
Income (loss)
before gain from
corporate
reorganization (55,843) (1,784,220) (2,112,214) (5,196,618)

Gain from corporate
reorganization - - - 3,239,343
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Loss for the period (55,843) (1,784,220) (2,112,214) (1,957,275)

Deficit, beginning
of period (17,610,947) (7,422,004) (15,554,576) (70,936,761)
Deficit reduction
from corporate
reorganization - - - 63,687,812
-----------------------------------------------------------------------
Deficit, end
of period $ (17,666,790) $ (9,206,224) $(17,666,790) $ (9,206,224)
-----------------------------------------------------------------------
-----------------------------------------------------------------------

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

Weighted average
number of shares
outstanding 244,395,556 241,361,920 243,313,485 239,473,269
-----------------------------------------------------------------------
-----------------------------------------------------------------------


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

-----------------------------------------------------------------------
-----------------------------------------------------------------------
Three months ended Nine months ended

September 30, September 30, September 30, September 30,
2006 2005 2006 2005
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
-----------------------------------------------------------------------
Cash flows
from
operations:
Loss for
the period $ (55,843)$ (1,784,220) $ (2,112,214) $ (1,957,275)
Items not
Involving
cash:
Depreciation
and
amortization 79,432 438,224 263,191 1,331,540
Amortization
of TPC
warrants - 50,354 - 126,576
Stock-based
compensation 83,647 109,245 289,212 450,354
Gain from
corporate
reorganization - - - (3,239,343)
Changes in
non-cash
operating
working
capital:
Accounts
receivable (1,694,011) 210,044 (1,905,673) 120,104
TPC
receivables - (155,972) - 571,074
Prepaid
expenses 36,632 (48,076) 81,628 (25,324)
Accounts
payable
and accrued
liabilities 438,506 (256,810) 461,595 (841,614)
Deferred
revenue (89,629) (6,259) 234,654 84,747
----------------------------------------------------------------------
(1,201,266) (1,443,470) (2,687,607) (3,379,161)

Cash flows
from investing
activities:
Purchase of
fixed assets (19,276) (7,346) (31,392) (23,658)
Extension
fee payment - - 75,000 -
Restricted
cash released - - - 963,020
Corporate
reorganization,
net proceeds - - - 4,066,370
----------------------------------------------------------------------
(19,276) (7,346) 43,608 5,005,732

Cash flows from
financing
activities:
Issuance of
shares and
warrants for
cash, net of
issue costs 26,763 - 27,598 -
----------------------------------------------------------------------
26,763 - 27,598 -
Foreign exchange
gain (loss)
on cash and
cash equivalents
held in a
foreign currency (7,656) 248,897 150,596 156,054
-----------------------------------------------------------------------

Increase (decrease)
in cash and
cash equivalents (1,201,435) (1,201,919) (2,465,805) 1,782,625

Cash and cash
equivalents,
beginning of
period 3,049,036 5,895,652 4,313,406 2,911,108

-----------------------------------------------------------------------
Cash and cash
equivalents,
end of period $ 1,847,601 $ 4,693,733 $ 1,847,601 $ 4,693,733
-----------------------------------------------------------------------
-----------------------------------------------------------------------

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
September 30, 2005 financial statements (had the policy been
changed effective January 1, 2005) is as follows:

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

Cost of Sales $ 311,528 ($16,231) $ 295,297
Gross Margin $ 205,467 $16,231 $ 189,236
Sales and Marketing $ 476,116 $16,231 $ 492,347
Total Expenses $1,913,328 $16,231 $1,929,559
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--------------------------------------------------------------------------
Financial Statement Account
(Nine Months Ended Balance as Revised
September 30, 2005) Previously Reported Adjustment Balance
--------------------------------------------------------------------------

Cost of Sales $ 791,814 ($147,808) $ 644,006
Gross Margin $ 955,047 $147,808 $1,102,855
Sales and Marketing $1,429,984 $147,808 $1,577,792
Total Expenses $6,218,244 $147,808 $6,366,052
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