Infowave Software Inc.
TSX : IW

Infowave Software Inc.

November 15, 2005 08:30 ET

Infowave Reports Third Quarter-End Results and Appoints Chairman

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

During the quarter, Infowave announced the appointment of James W. Suttie as the company's Chief Executive Officer. 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.

Infowave announces the appointment of Gregg Thompson as Chair of the Board of Directors of Infowave, effective November 14, 2005. Mr. Thompson is the Chairman and President of Bluepoint Leadership Development. He has also served as a senior HR executive for a large Calgary-based oil and gas company, and his broad business background has spanned 25 years in the petroleum, technology, manufacturing, environmental and financial sectors.

"Infowave is strengthening our competitive position in the enterprise mobile application market through renewed leadership," said James Suttie, CEO and President, Infowave. "We are focused on increasing our penetration as the market grows while expanding our vertical orientation to the natural resources sector, inclusive of the oil & gas industry, and the Hi-Tech field service sector. Our solutions offer real and tangible benefits to our clients in these and other industries."

Total revenues for the third quarter of 2005 were $484,533 compared to $859,869 in the second quarter of 2005 and $1,500,093 in the same quarter of last year. The company posted gross margins of 36% for the current quarter. Total operating expenses were $1,913,328 for the quarter, compared with $2,194,452 for the second quarter 2005 and $1,965,299 in the same quarter of last year.

For the third quarter ended September 30, 2005, the Company had a net loss of $1,784,220 or $0.01 per share compared to a net loss of $1,572,188 or $0.01 per share in the second quarter of 2005 and a net loss of $1,233,726 or $0.01 per share for the same quarter last year.

The Company incurred loss before interest, other expenses and non-controlling interest for the quarter of $1,740,323 as compared to $1,627,335 for the second quarter of 2005 and $1,031,758 for the same quarter of the prior year.

Cash and cash equivalents were approximately $4.7 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. 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 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)

--------------------------------------------------------------------
--------------------------------------------------------------------
September 30, December 31,
2005 2004
(unaudited)
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Assets

Current assets:
Cash and cash equivalents $ 4,693,733 $ 2,911,108
Restricted cash - 980,013
Accounts receivable, net of allowance
of nil 460,534 560,334
Technology Partnerships Canada ("TPC")
receivable 528,745 1,101,833
Prepaid expenses 190,206 160,881
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5,873,218 5,714,169

Fixed assets 204,135 360,999

Intellectual property assets held for sale 1,122,485 1,091,274

Other intangible assets 5,286,832 6,306,697

Goodwill 3,524,567 3,426,565

Deferred transaction costs - 954,710

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$ 16,011,237 $ 17,854,414
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Liabilities and Shareholders' Equity

Current liabilities:
Accounts payable and accrued
liabilities $ 473,791 $ 1,313,039
Convertible promissory note 190,516 278,836
Financial instruments 498,029 355,647
Deferred revenue 270,641 173,835
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1,432,977 2,121,357

Convertible promissory note - 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 390,607 1,006,082
Other equity instruments 3,259,039 3,259,039
Deficit (9,206,224) (70,936,761)
Cumulative translation account 1,409,838 1,028,648
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14,578,260 15,646,030
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$ 16,011,237 $ 17,854,414
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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,
2005 2004 2005 2004
(Unaudited) (Unaudited (Unaudited) (Unaudited
and restated and restated
- note 1) - note 1)
--------------------------------------------------------------------
Revenue:
Sales $ 484,533 $ 1,500,093 $ 1,746,861 $ 3,619,130
Cost of sales 311,528 566,552 791,814 1,455,836
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173,005 933,541 955,047 2,163,294
Expenses:
Research and
development 488,933 316,126 1,563,893 2,266,585
Sales and
marketing 476,116 688,442 1,429,984 2,897,444
Administration 510,055 581,817 1,892,827 2,306,635
Restructuring - - - 287,631
Depreciation
and
amortization 438,224 378,914 1,331,540 1,324,425
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1,913,328 1,965,299 6,218,244 9,082,720
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Operating loss 1,740,323 1,031,758 5,263,197 6,919,426

Other earnings
(expenses):
Interest and
other earnings 25,995 13,893 84,925 54,546
Interest expense (230) (3,430) (4,235) (1,106,135)
Foreign exchange
gain (loss) (69,662) (212,431) (14,111) (355,520)
Gain from
corporate
reorganization - - 3,239,343 -
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(43,897) (201,968) 3,305,922 (1,407,109)
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Loss for the
period, before
non-controlling
interest 1,784,220 1,233,726 1,957,275 8,326,535
Non-controlling
interest - - - (72,308)
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Loss for the
period 1,784,220 1,233,726 1,957,275 8,254,227

Deficit,
beginning of
period 7,422,004 67,453,052 70,936,761 60,432,550

Deficit
reduction from
corporate
reorganization - - (63,687,812) -
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Deficit, end
of period $ 9,206,224 $ 68,686,778 $ 9,206,224 $ 68,686,777
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Loss per share,
basic $ 0.01 $ 0.01 $ 0.01 $ 0.04
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Loss per
share, fully
diluted $ 0.01 $ 0.01 $ 0.01 $ 0.04
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Weighted
average number
of shares
outstanding 241,361,920 235,421,485 239,473,269 219,580,979
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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,
2005 2004 2005 2004
(Unaudited) (Unaudited (Unaudited) (Unaudited
and restated and restated
- note 1) - note 1)
--------------------------------------------------------------------
Cash flows from
operations:
Loss for the
period $ (1,784,220) $ (1,233,726) $ (1,957,275) $ (8,254,227)
Items not
involving
cash:
Depreciation
and
amortization 438,224 378,914 1,331,540 1,324,425
Amortization
of TPC warrants 50,354 81,814 126,576 81,814
Stock-based
compensation 109,245 404,494 450,354 1,411,618
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 210,044 175,636 120,104 (607,968)
TPC
receivables (155,972) (133,034) 571,074 (133,034)
Prepaid
expenses (48,076) 70,521 (25,324) 294,454
Accounts
payable and
accrued
liabilities (256,810) (658,382) (841,614) (1,087,773)
Deferred
revenue (6,259) (192,776) 84,747 83,235
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(1,443,470) (1,106,539) (3,379,161) (5,858,385)
Cash flows
from investing
activities:
Redemption of
short-term
investments,
net - - - 223,322
Purchase of
fixed assets (7,346) (5,501) (23,658) (24,692)
Net purchase
of intangible
assets - (48,688) - (48,688)
Deferred charges - (57,299) - (57,299)
Acquisition
costs, net of
cash acquired - - - 145,542
Restricted cash
released - - 963,020 -
Corporate
reorganization,
net proceeds - - 4,066,370 -
--------------------------------------------------------------------
(7,346) (111,488) 5,005,732 238,185
Cash flows from
financing
activities:
Issuance of
shares and
warrants for
cash, net of
issue costs - 4,485 - 5,659,468
--------------------------------------------------------------------
- 4,485 - 5,659,468

Foreign exchange
gain (loss) on
cash and cash
equivalents held
in a foreign
currency 248,897 408,127 156,054 173,672
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Increase
(decrease) in
cash and cash
equivalents (1,201,919) (805,415) 1,782,625 212,940

Cash and cash
equivalents,
beginning of
period 5,895,652 5,929,960 2,911,108 4,911,605

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Cash and cash
equivalents,
end of
period $ 4,693,733 $ 5,124,545 $ 4,693,733 $ 5,124,545
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Notes:

1. The Company identified an adjustment to previously reported
foreign exchange balances for the three and nine months ended
September 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:

--------------------------------------------------------------------
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Three months ended September 30, 2004
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Foreign exchange loss, as previously reported $ 56,841
Adjustment 155,590
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Revised foreign exchange loss $ 212,431
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Three months ended September 30, 2004
--------------------------------------------------------------------

Net loss, as previously reported $ 1,078,136
Foreign exchange loss adjustment 155,590
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Revised net loss $ 1,233,726
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Nine months ended September 30, 2004
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Foreign exchange loss, as previously reported $ 492,046
Adjustment (136,526)
--------------------------------------------------------------------

Revised foreign exchange loss $ 355,520
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Nine months ended September 30, 2004
--------------------------------------------------------------------

Net loss, as previously reported $ 8,390,753
Foreign exchange loss adjustment (136,526)
--------------------------------------------------------------------

Revised net loss $ 8,254,227
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