Wireless Matrix Corporation

Wireless Matrix Corporation

July 28, 2005 09:00 ET

Wireless Matrix Reports Year End Fiscal 2005 Results; Mobile Business Service Revenues Grew by 16%

CALGARY, ALBERTA--(CCNMatthews - July 28, 2005) - Wireless Matrix Corporation (TSX:WRX), the leader in wireless data communication solutions is pleased to provide the results for the fiscal year ended April 30, 2005.

All currency expressed in U.S. dollars, all amounts expressed in thousands except per share amounts, number of shares or unless otherwise indicated.

Wireless Matrix was successful in 2005 in completing the first phase of its strategic plan to refocus the business and establish a foundation for growth. The Company's core Mobile Business Unit achieved total revenues of $24,460, a 13.5% overall growth from the prior year. Service revenues increased by 16.4% over the previous year due primarily to an increase in monthly average revenue per unit (ARPU) from $42.34 in 2004 to $44.84 in 2005 as existing subscribers increased their data usage.

Total subscribers increased by 1,008 to 27,200 subscribers at year-end and there were 2,186 units that were shipped in the fourth quarter that will likely commence generating service revenues and become subscribers in the first two quarters of fiscal year 2006. These results firmly establish Wireless Matrix as the leading wireless data network provider of unique solutions to users requiring 100% wireless coverage and real-time data transmission.

Wireless Matrix shipped 5,143 units this fiscal year compared to 747 the previous fiscal year, with 274 units in backlog as of April 30, 2005. Subsequent to year-end the Corporation has shipped 798 units and has another 1,110 units in backlog to be shipped over the next two quarters. The improved sales were the direct result of a new strategy to invest more resources in sales and marketing over the past year, highlighted by the expansion of the frontline sales and marketing team.

As part of the strategy to focus efforts and resources on the Mobile Business Unit, the Corporation also announced the divestiture of Wireless Matrix's two smaller business units, Telemetry and Remote Telecom that together represented less than 15% of total revenue and were projected to produce losses in fiscal year 2006 and beyond. The divestitures of Telemetry and Remote Telecom in April 2005 generated a net gain on the sale of assets of $2,529 and assisted in increasing the Corporation's cash balance at year-end from $9,755 to $11,284 with an additional $1,750 of divestiture receipts received in May 2005. In addition, Wireless Matrix restructured its operations with a reduction in workforce in the Reston, Virginia facility and the closure of the Calgary office in April and movement of headquarters to the Reston. These changes are expected to generate over $1,155 in annual savings and reduced operating expenses (defined as the combination of general, administrative, research and product and market development expenses) by 1.1% from last year, despite the increase in sales and marketing expenses. The divestiture and restructuring initiatives have increased cash resources while reducing operating expenses providing Wireless Matrix resources to grow the business and bringing the Corporation closer to reporting positive results from continuing operations before other charges.

The Corporation reported a significantly lower loss before other charges of $778, a decrease of 66% over the prior year of $2,291 but experienced a significant overall net loss of $32,620 related to the a charge for goodwill impairment associated with the 2001 acquisition of Norcom Networks. Due to the divestiture of Telemetry, management determined that the synergies assumed to be gained between the Telemetry unit and the Mobile Business Unit (formerly Norcom Networks) would no longer be realized. As such, the book value goodwill associated with this acquisition exceeded its fair value and therefore was fully impaired. Wireless Matrix recorded a non-cash goodwill impairment charge of $32,553 in the fourth quarter 2005.

The Corporation has also begun to implement the second phase of growth initiatives. Wireless Matrix will launch new products and services targeting the emerging segment of small to mid sized fleets of between 50 and 500 vehicles with an end-to-end solution. Wireless Matrix will expand its addressable market by offering a total solutions menu on a bundled and a la carte basis that includes: wireless communications over terrestrial wireless networks (using networks operating on both GPRS and CDMA standards) and satellite communications as well as applications and devices utilized by fleet vehicles such as automated vehicle location. Wireless Matrix strategy is to become North America's premier mobile virtual network operator (MVNO) specializing in fleet data communications. Wireless Matrix will announce new offerings and progress throughout the fiscal year.

"We are extremely pleased with our progress during fiscal year 2005. Our strategy to improve sales is working and has led to higher subscriber counts. We divested two businesses with uncertain prospects raising growth resources and restructured our operations to get closer to profitability" said J. Richard Carlson, Wireless Matrix's Chief Executive Officer and President. "We are now poised to offer a truly complete menu of end-to-end wireless solutions that ensure that field services & transportation organizations' maximize the productivity of their field workforce and assets. This expands our addressable market and opens up even more growth opportunities for Wireless Matrix."

Financial Highlights:

Three months ended Year End
April 30 April 30
2005 2004 2005 2004
Sales $ 6,013 $ 5,573 $ 24,460 $21,538
Cost of sales 3,456 3,395 14,432 12,895
Gross margins 2,557 2,178 10,028 8,643
Loss before other
charges (355) (589) (778) (2,290)
Other charges 458 1,955 1,754 4,553
Loss from continuing
operations before
goodwill impairment (813) (2,544) (2,532) (6,844)
Goodwill impairment 32,553 -- 32,553 --
Loss before
operations (33,366) (2,544) (35,085) (6,844)
Income/(Loss) from
operations (21) 714 (64) 2,020
Gain on the sale
of discontinued
operations 2,529 -- 2,529 --
Net Loss $(30,858) $(1,830) $(32,620) $(4,824)

Forward Looking Statements:

General information regarding the Corporation set forth in this document, including management's assessment of the Corporation's future plans and operations contains forward looking statements that involve substantial known and unknown risks and uncertainties. These forward looking statements are subject to numerous risks and uncertainties, some of which are beyond the Corporation's and management's control, including but not limited to, the impact of general economic conditions, industry conditions, fluctuation of commodity prices, fluctuation of foreign exchange rates, imperfection of reserve estimates, environmental risks, industry competition, availability of qualified personnel and management, stock market volatility, timely and cost effective access to sufficient capital from internal and external sources. The Corporation's actual results, performance or achievement could differ materially from those expressed in or implied by, these forward looking statements and accordingly, no assurance can be given that any of the events anticipated to occur or transpire from the forward looking statements will provide what, if any benefits to the Corporation. All data presented herein should be read in conjunction with the Corporation's regulatory filings, with the appropriate Securities Commission and SEDAR. These filings, including the Corporation's Annual Information Form ("AIF"), are located at www.sedar.com.

About Wireless Matrix:

Wireless Matrix is a leading developer and provider of enterprise-class wireless data services for business-critical operations involving mobile workforces and remote assets. Wireless Matrix mobile services are deployed in major corporate industrial markets including oil and gas, utilities, transportation and field service. The Company delivers a data network service that provides 100% real-time wireless communications coverage to all of North America. This service is enabled by the Mobile Base Station hardware platform that provides data connectivity via cellular, satellite, and WiFi networks to enterprise back-office systems enabling field work force mobility. Wireless Matrix is headquartered in Reston, Virginia, with offices in Burnaby, British Columbia.

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

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