WebTech Wireless Inc.
TSX : WEW

WebTech Wireless Inc.

June 13, 2007 16:30 ET

WebTech Wireless Announces Third Quarter Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 13, 2007) - WebTech Wireless Inc. (TSX:WEW) (the "Company"), a provider of location-based and fleet Telematics services, today announced results for the third quarter ended April 30, 2007. The Company reported gross revenues of $9.6 million, up 102% over third quarter revenues of the prior year. Revenue for the nine months ended April 30, 2007 was $22.0 million, compared with $11.4 million for the comparable nine month period. The Company reported a loss of $0.36 per share for the nine month period, driven by $19.0 million in write offs from its Brazilian operations, compared with earnings per share of $0.01 for the prior comparable period.

The increase in revenues for the three and nine month periods was primarily due to delivery of locators to Crown Telecom, the Company's value added reseller ("VAR") in Brazil. Subsequent to the end of the quarter, the Company reported that the VAR was in default under its distribution and loan agreements and agreed to a cure period expiring July 20, 2007. Due to the financial instability of the reseller, the Company has made provision for amounts relating to its business with the VAR as follows:

- During the quarter, the Company made a full provision for a loan receivable owing by the VAR of $13.3 million, inclusive of accrued interest and incurred a bad debt of $1.6 million for accounts receivable owing; and

- During the quarter, the Company recorded a provision of $4.1 million to reflect potential inventory obsolescence. The Company purchased long-lead inventory components and made purchase commitments to support the Brazil business, resulting in high inventory levels which are expected to result in low inventory turnover.

The Company is actively perfecting its security in Brazil in the event that the breaches are not cured and has commenced discussions with the VAR's end customer (an automobile manufacturer) in Brazil to continue with its business by supplying the automobile manufacturer directly. It is important to note that the Company achieved a number of significant milestones in Brazil - the production, shipping and direct installation of record numbers of the Company's product on the production line of a global automobile manufacturer among them. In addition, the Company has proven it has the logistical ability to fulfill such an order and provide monitoring and other value added services on a scale well above industry norms.

Also during the quarter, the Company reported a foreign exchange loss of $1.9 million, which was contributed to in large measure by foreign currency losses realized on the accounts receivable and loan balances provided for above.

Despite the write-offs taken for the Company's Brazil business, working capital remains strong. At April 30, 2007 the Company reported a net working capital balance of $38.2 million, compared with $18.8 million at the end of the most recently completed fiscal year.

The Company continues to pursue business under its personal automotive division. Over the past six months the Company has signed up distributors in Central and South America that are expected to contribute both personal automotive and commercial fleet opportunities.

During the quarter the Company reported its exclusive contract with a Canadian GSM operator, and is in discussions with other GSM operators worldwide. The Company's strategy of developing relationships with telecommunication carriers is ahead of schedule. Carrier relationships in Canada and Latin America are creating significant opportunities for both commercial fleet and personal automotive initiatives earlier than expected.

Commercial fleet business in North America was up 25% over the third quarter of the prior year. Growth in this core area of business for the Company continues to demonstrate the company's ability to deliver industry-leading fleet Telematics products and services to transportation, service and government fleet segments.

The Company continues to develop new technology for commercial and transportation fleet applications. During the quarter, the Company announced its new satellite solution, which is still on track for release in the summer of 2007. This dual-mode cellular and satellite asset tracking solution will be positioned to deliver reduced data transfer costs to organizations tracking vehicles that may not have continuous terrestrial cellular coverage.

Trials with large transportation fleets in North America are reaching promising levels of maturity. Investment of time, energy and resources into such trials has ensured positive feedback and successful completion of significant trial milestones. Although the sell-period is long for such large opportunities, success to-date has confirmed that this strategy will be an ongoing area of focus for the Company.

In Latin America, the Company's distributor agreement in Mexico with Prolog, a leading Logistics Consulting and Systems Integration Company, has produced an order with a key Mexican government agency. This is a promising beginning to plans to further develop government contracts in the region. Prolog is also conducting trials with large commercial fleets, creating opportunities within the large transport sector in Latin America.

"Although we are disappointed with the performance of our VAR in Brazil, and its impact on our third quarter results, we remain financially strong with $38.2 million of net working capital," commented WebTech Wireless President and Chief Executive Officer, Anwar Sukkarie. "The capability of our manufacturing operation and the quality of our product has been proven and, as a result, we are seeing further opportunities in the consumer automotive market. In fact, our sales funnel has never been so promising, in both consumer and commercial markets. We continue to develop our technology to ensure that we maintain our position as an industry leader."

A conference call to discuss the third quarter financial results is scheduled for today at 5:00pm Eastern Time. Interested parties may participate in the call by dialing 1-888-693-1085 (outside North America +1-212-231-2245). The conference call will be archived on the Company's website within 24 hours of the call.

The financial statements and management's discussion and analysis will be posted on the Company's website prior to the conference call. Further information on the Company may be viewed at www.sedar.com.

About WebTech Wireless Inc.

WebTech Wireless Inc. (TSX:WEW) is a global Telematics, location-based services provider that develops, manufactures, and delivers turnkey wireless solutions designed to improve productivity and profitability. WebTech Wireless products include wireless hardware and software services running on cellular and satellite networks, and include Automatic Vehicle Location, Mapping, Reporting, Vehicle Diagnostics, Driver Status, In-vehicle Telemetry, Messaging, In-vehicle Navigation, and wireless application and Internet connectivity. WebTech Wireless is currently providing devices and services worldwide in eight languages to over forty-one countries covering five continents. WebTech Wireless' scalable solutions are used by a broad range of small, medium and Fortune 500 companies and by governments. For more information, please visit www.webtechwireless.com.

Forward-Looking Statements

This press release contains forward-looking statements involving risks and uncertainties pertaining to, but not limited to product plans, timing, content, and pricing of products, market and industry expectations, the wireless communications industry, the mobile fleet industry, and general economic and political conditions. Given the risks and uncertainties inherent in the markets and industries referred to in this press release, WebTech Wireless cannot guarantee that any forward-looking statements will be realized.

Trademarks are the property of their owners.



WEBTECH WIRELESS INC.
CONSOLIDATED BALANCE SHEET
(amounts in 000's)

April 30, 2007 July 31, 2006
-------------- -------------
(unaudited) (audited)

ASSETS

Current
Cash & cash equivalents $ 28,863 $ 10,640
Accounts receivable, net of
allowance (Note 3) 4,183 7,015
Inventory, net of allowance (Note 3) 4,442 2,849
Prepaid expenses and deposits 3,318 800
-------------- -------------

40,806 21,304
-------------- -------------

Capital Assets 1,070 738
Intangible assets (Note 2 (b) & 4) 342 292
Loan Receivable (Note 5) - -
-------------- -------------

$ 42,218 $ 22,334
-------------- -------------
-------------- -------------

LIABILITIES

Current
Accounts payable and accrued
liabilities $ 2,151 $ 2,198
Deferred revenue 423 294
-------------- -------------

2,574 2,492

SHAREHOLDERS' EQUITY

Share capital (Note 7) 60,005 21,105
Contributed surplus (Note 8) 515 574
Deficit (20,875) (1,837)
-------------- -------------

39,644 19,842
-------------- -------------

$ 42,218 $ 22,334
-------------- -------------
-------------- -------------

Subsequent Events (Note 13)


APPROVED BY THE DIRECTORS:

Anwar Sukkarie Cameron Fraser

The notes form an integral part of these Consolidated Financial Statements.


WEBTECH WIRELESS INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Prepared by Management without audit)

Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
30-Apr-07 30-Apr-06 30-Apr-07 30-Apr-06
--------- --------- --------- ---------
(000's) (000's) (000's) (000's)

Sales (Note 11) $ 9,583 $ 4,734 $ 22,046 $ 11,353

Cost of goods sold 5,734 2,361 13,159 5,670
--------- --------- --------- ---------

Gross profit 3,849 2,373 8,887 5,683
--------- --------- --------- ---------

Expenses
Administration (Note 10) 1,285 511 2,510 1,242
Amortization 106 92 271 209
Bad debt - Crown Telecom
(Note 3) 1,633 - 1,633 -
Marketing and sales 1,102 746 3,113 1,991
Research and development
(Note 10) 1,000 543 2,510 1,504
--------- --------- --------- ---------

5,126 1,892 10,037 4,946

Income (loss) before
other items (1,277) 481 (1,150) 737
--------- --------- --------- ---------

Other items
Interest income
(expenses) 447 16 622 20
Foreign exchange gain
(loss) (Note 12) (1,935) (5) (1,167) (262)
Inventory impairment
(Note 3) (4,063) - (4,063) -

--------- --------- --------- ---------
Income (loss) before
impairment of loan
receivable (6,828) 492 (5,758) 495

Impairment of loan
receivable
(Note 3 & 5) (13,280) - (13,280) -
--------- --------- --------- ---------

Net income (loss) for
the period $ (20,108) $ 492 $ (19,038) $ 495
--------- --------- --------- ---------

Basic and fully
diluted earnings
per share $ (0.38) $ 0.01 $ (0.36) $ 0.01


WEBTECH WIRELESS INC.
CONSOLIDATED STATEMENT OF DEFICIT
(Prepared by Management without audit)

Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
30-Apr-07 30-Apr-06 30-Apr-07 30-Apr-06
--------- --------- --------- ---------
(000's) (000's) (000's) (000's)

Deficit, beginning of
the period $ (767) $ (2,937) $ (1,837) $ (2,941)
Income for the period (20,108) 492 (19,038) 495

--------- --------- --------- ---------
Deficit, end of period $ (20,875) $ (2,445) $ (20,875) $ (2,445)
--------- --------- --------- ---------

The notes form an integral part of these Consolidated Financial Statements.


WEBTECH WIRELESS INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Prepared by Management without audit)

Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
30-Apr-07 30-Apr-06 30-Apr-07 30-Apr-06
--------- --------- --------- ---------

Operating Activities
Net income for the
period $ (20,108) $ 492 $ (19,038) $ 495
Add items not
affecting cash:
Stock based
compensation
(Note 2(d)) 98 43 271 116
Amortization 106 - 271 -
Currency loss on loan
receivable 870 - 870 -
Accounts receivable
provision - Crown
Telecom (Note 3) 1,633 - 1,633 -
Inventory impairment
(Note 3) 4,063 - 4,063 -
Impairment of loan
receivable (Note 3 & 5) 13,280 92 13,280 209
--------- --------- --------- ---------
(58) 627 1,350 820

Changes in non-cash
working capital items
related to operations:
Accounts receivable
(Note 3) 663 (1,106) (4,432) (2,709)
Inventory (Note 3) (1,899) 155 (5,656) (273)
Prepaid expense and
deposits 1,529 (99) (2,518) (421)
Accounts payable and
accrued liabilities (829) (222) (47) 469
Deferred Revenue (5,252) 61 (6,003) 143
--------- --------- --------- ---------

(5,846) (584) (17,306) (1,971)
--------- --------- --------- ---------

Financing Activities
Common shares issued,
net of costs (Note 7) 376 9,256 38,570 12,822
--------- --------- --------- ---------

376 9,256 38,570 12,822
--------- --------- --------- ---------

Investing Activities
Purchase of intangible
assets (Note 4) (27) (28) (81) (89)
Purchase of capital
assets (151) (161) (572) (430)
Cash advanced under loan
receivable (Note 3 & 5) - - (2,387) -
--------- --------- --------- ---------

(178) (190) (3,040) (518)
--------- --------- --------- ---------

Net increase (decrease)
in cash during the period (5,648) 8,482 18,224 10,333

Cash, beginning of period 34,511 2,923 10,640 1,072
--------- --------- --------- ---------

Cash, end of period $ 28,863 $ 11,405 $ 28,863 $ 11,405
--------- --------- --------- ---------
--------- --------- --------- ---------

Cash and cash equivalents
consist of:
Cash $ 28,863 $ 655 $ 28,863 $ 655
Term deposits - 10,750 - 10,750

--------- --------- --------- ---------
$ 28,863 $ 11,405 $ 28,863 $ 11,405
--------- --------- --------- ---------
--------- --------- --------- ---------

Net non-cash transactions

Loan Receivable $ - $ - $ (14,150) $ -
Customer deposits - ` 6,132 -
Payout of accounts
receivable - - 5,631 -
--------- --------- --------- ---------

Cash advanced under
loan receivable $ - $ - $ (2,387) $ -
--------- --------- --------- ---------

The notes form an integral part of these Consolidated Financial Statements.


The Toronto Stock Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information