WebTech Wireless Inc.
TSX : WEW

WebTech Wireless Inc.

October 08, 2008 16:00 ET

WebTech Wireless Reports 36% Growth in Revenue in FY 2008

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 8, 2008) - WebTech Wireless Inc. (TSX:WEW), a leading supplier of location-based and fleet Telematics services, today reported revenue of $20.8 million for the year ended July 31, 2008 representing a 36% increase year over year.

Revenue grew in all geographic segments lead by Canada with growth of more than 75% year over year. Revenue growth rates in the US, Europe and the Middle East/Asia, were 15%, 34% and 67% respectively. In Latin America revenue grew by 23% as the Company reestablished itself with a new distributor in Brazil and commenced operations in Mexico.

Profit margins at 49% continued to meet the Company's stated sustainable goal of at or near 50% and were down from an unusually high figure of 57% in the prior year.

Net loss for the year was $7.8 million ($0.13 per common share) including more than $3.5 million in onetime charges related to a write-down of the Company's ABCP ($2.3 million) and litigation related costs ($1.2 million). The loss for the year compares with a loss of $26.2 million ($0.49 per common share) for the prior year.

For the quarter ended July 31, 2007, WebTech reported revenues of $4.8 million representing an increase of 26% over the prior comparable quarter. Net loss in the quarter of $2.4 million ($0.04 per common share) compares with a net loss of $7.1 million ($0.12 per common share) in the prior comparable quarter.

At year-end, the Company reported total assets of $28.2 million (2007: $36.7 million) and working capital of $19.2 million (2007: $31.8 million). The decrease in working capital was largely a result of the build-up of inventory for a large US courier company, deliveries of which commence in Q1 of FY 2009, and due to the Company's share buyback program ($2.3 million) and reclassification of the Company's ABCP from short to long-term investments combined with the aforementioned write-down of this asset ($6 million).

"2008 was a year of transition as we closed our first ever Quadrant enterprise deal with our US courier customer, commenced the rollout of our insurance program in Mexico, reestablished our business in Brazil and focused on successfully fighting the LunarEye lawsuit," said Scott Edmonds, Chief Financial Officer, WebTech Wireless Inc. "While we did not return to profitability in Q4 as was our hope, we believe that with our strong balance sheet, well established pipeline and international distribution network, that profitability is an achievable goal in FY 2009."

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)

31-Jul-08 31-Jul-07
----------- -----------

ASSETS
Current
Cash and cash equivalents $ 7,246 $ 22,344
Accounts receivable, net of allowance 4,345 4,128
Inventory, net of allowance 10,070 7,640
Prepaid expenses and deposits 1,131 1,583
----------- -----------
22,792 35,695

Property and equipment (Note 6) 1,638 1,021
Property under development (Note 6) 86 -
Long term investments (Note 7) 3,669 -
----------- -----------

$ 28,185 $ 36,716
----------- -----------
----------- -----------

LIABILITIES
Current
Accounts payable and accrued liabilities $ 3,224 $ 3,533
Current portion of deferred revenue 383 260
----------- -----------
3,607 3,793

Long term
Deferred lease inducement 534 110
Deferred revenue 93 -
----------- -----------
627 110

4,234 3,903
----------- -----------

SHAREHOLDERS' EQUITY
Share capital (Note 8) 59,620 60,142
Contributed surplus (Note 9) 1,791 858
Deficit (37,460) (28,187)
----------- -----------

23,951 32,813
----------- -----------

$ 28,185 $ 36,716
----------- -----------
----------- -----------

Commitments (Note 14)

APPROVED BY THE DIRECTORS:

"Signed" "Signed"
------------------------------- -------------------------------
Anwar Sukkarie R.H. (Dick) Pinder

The accompanying notes form an integral part of these financial statements.


WEBTECH WIRELESS INC.
CONSOLIDATED STATEMENT OF OPERATIONS, COMPREHENSIVE LOSS AND DEFICIT
(Amounts in 000's except per share amounts)

31-Jul-08 31-Jul-07
----------- -----------

Revenue $ 20,810 $ 15,304

Cost of goods sold 10,610 6,536
----------- -----------

Gross profit 10,200 8,768
----------- -----------

Expenses
Marketing and Sales 7,044 4,352
Research and Development 3,935 3,810
General and Administration 4,516 2,914
Amortization 523 674
----------- -----------

16,018 11,750

----------- -----------
Loss before other items (5,818) (2,982)

Other items
Interest income 466 873
Foreign exchange loss (110) (1,499)
Loss in the fair value of long-term
investments (Note 7) (2,331) -
Inventory impairment - (7,437)
Loss from inventory shipped - (7,814)
Impairment of loan receivable - (5,251)
Intangible asset impairment (Note 4) - (371)
Loss on contract - (1,677)
----------- -----------
Net loss and comprehensive loss for the year $ (7,793) $ (26,158)
----------- -----------

Deficit, beginning of the year (28,187) (1,837)
Change in amortization policy - (192)
Loss for the year (7,793) (26,158)
Shares repurchased - excess of purchase
price over carrying value (1,480) -

----------- -----------
Deficit, end of year $ (37,460) $ (28,187)
----------- -----------
----------- -----------

Accumulated other comprehensive earnings
Balance - beginning and end of year $ - $ -

Basic and fully diluted (loss)
earnings per share $ (0.13) $ (0.49)
Weighted average shares outstanding
during the year 58,060,842 53,676,990

The accompanying notes form an integral part of these financial statements.


WEBTECH WIRELESS INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Amounts in 000's)

31-Jul-08 31-Jul-07
----------- -----------
Operating Activities
Net loss for the year $ (7,793) $ (26,158)
Add items not affecting cash:
Amortization 523 674
Stock-based compensation 1,024 652
Amortization of leasehold inducement (49) (5)
Loss in the fair value of long-term
investments (Note 7) 2,331 -
Intangible asset impairment - 371
Loss on inventory shipped - 7,814
Impairment of loan receivable - 5,262
Inventory impairment - 4,063
Loss on contract - 1,677
----------- -----------

(3,964) (5,650)
Changes in non-cash working capital
items related to operations:
Accounts receivable (217) 12
Inventory (2,430) (8,854)
Prepaid expense and deposits 452 (783)
Inventory shipped - (7,814)
Accounts payable and accrued liabilities (309) (543)
Deferred lease inducement 473 115
Deferred revenue 216 167
----------- -----------

(5,779) (23,350)
----------- -----------

Financing Activities
Common shares issued, net of costs 233 38,669
Shares repurchased (Note 8) (2,326) -
Loan receivable - (2,387)
----------- -----------

(2,093) 36,282
----------- -----------

Investing Activities
Purchase of intangible assets - (129)
Purchase of capital assets (693) (1,099)
Purchase of property under development (533) -
Increase in long-term investment (6,000) -
----------- -----------

(7,226) (1,228)
----------- -----------

Net increase (decrease) in cash during the year (15,098) 11,704

Cash and cash equivalents, beginning of year 22,344 10,640
----------- -----------

Cash and cash equivalents, end of year $ 7,246 $ 22,344
----------- -----------
----------- -----------

Cash and cash equivalents consist of:
Cash $ 7,246 $ 22,344

----------- -----------
$ 7,246 $ 22,344
----------- -----------
----------- -----------

Supplemental cash flow information
Interest paid $ 3 $ 9
Income taxes paid - -

Non-cash Transactions
Transfer of property under development
to property and equipment $ 448 $ -
Conversion of accounts receivable
to loan receivable - 2,875

The accompanying notes form an integral part of these financial statements.

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

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