INFOWAVE REPORTS FINANCIAL RESULTS FOR THE FOURTH QUARTER AND YEAR ENDED
DECEMBER 31, 1999
Commencing with the release of its financial results for
the fourth quarter and year ended December 31, 1999,
Infowave has adopted the United States dollar as its
reporting currency. All currency contained in this report is
expressed in United States dollars, unless otherwise
stated. Prior financial results were reported in Canadian
dollars.
Burnaby, British Columbia, March 23, 2000 -Infowave
Software, Inc. (TSE: IW) today reported financial results
for the fourth quarter and year ended December 31, 1999.
Wireless Division revenue for the year increased 108% to
$0.36 million. Imaging Division revenue for 1999 decreased
23% to $7.18 million while gross margins increased to 63%
from 53%.
"1999 was a milestone year for Infowave's wireless business
during which we achieved tangible business development
results. First, our R&D team completed a suite of wireless
software solutions that we believe provides Infowave with
significant product and technology advantage in the
marketplace. Second, we focused on building out our sales
force and developing the distribution channels to bring
these products to market. We signed RAM Mobile Data and GE
Capital as tier one resellers. We also announced bundling
agreements with Nokia and Sierra Wireless and strategic
marketing agreements with leading wireless network
providers such as AT&T and Bell Atlantic Mobile. A
development agreement with Glenayre delivered our desktop
Symmetry(tm) software and we are currently working with
Pivotal to wirelessly extend their eRelationship 2000
product suite," said Jim McIntosh, Infowave's president and
CEO. "The Imaging Division recorded another profitable
year. As in previous years OEM sales fluctuated
considerably and 1999 OEM sales were lower than in 1998.
However this decline was partially offset by the strong
growth of our flagship product, PowerPrint©. Executive
management resources in 1999 were committed to developing
the opportunities in the Wireless Division and we have since
appointed a General Manager of the Imaging Division to
provide more focus to this business. And finally, Infowave
accomplished its three public market objectives set out for
1999; a TSE listing, US reporting status and the
appointment of a new chairman."
Financial Analysis
The Wireless Division continued to make progress with
revenue doubling year-over-year to $0.36 million. About
65% of 1999 Wireless revenue was derived from software
license fees and approximately 25% was derived from
technical services and engineering fees.
Imaging Division revenue decreased by 23% and 64% for the
year and the quarter respectively due to decreases in OEM
sales and StyleScript retail sales. Although Infowave
attracted new OEM partners during the year -- Brother,
Samsung, New Motion and Canon -- and continued to do
business with existing OEM partners including Ricoh,
Lexmark and Hewlett-Packard, the average value of OEM
agreements in 1999 was less than the single OEM
agreement that fuelled sales in 1998.
Additionally, the structure of OEM agreements is migrating
from higher value private-label printing solutions (with
cable) to lower value royalty-based solutions. 1999
StyleScript unit shipments declined throughout the year as
no new versions of the product were released and the
printers that the current version supports lost market
share. A new version of StyleScript is currently scheduled
for release in the first half of 2000. The flagship
retail product PowerPrint was the highlight of the year
with unit shipments increasing 36% -- PowerPrint
represented 65% of total Imaging revenue in
1999 versus 36% of total revenue in 1998. Retail sales were
down in the fourth quarter from $1.5 million to $1.1
million reflecting the delayed release of PowerPrint 5.0
which did not reach the reseller channel until mid-December.
Gross margins improved from 53% to 64% for the year and
from 53% to 72% for the quarter, reflecting the increase in
the proportion of higher margin PowerPrint retail sales as
well as the migration in structure of OEM sales
toward higher margin royalties versus package sales.
The Company is also recognizing the benefit of decreased
component costs for PowerPrint due to cable changes
implemented in the fourth quarter of 1998.
Total operating expenses increased 28% from to $8.16
million for the year and increased 29% from to $2.75
million for the fourth quarter of 1999. R&D spending
increased 35% for the year and 57% in the fourth quarter.
In the latter part of the year, the emphasis of new R&D
spending was shifted to the Wireless Division, with the
entire fourth quarter increase in spending attributable to
the Wireless Division. Administration costs increased 52%
for the year to $2.11 million due to higher staff levels to
support the growth of the Corporation as well as due to
finance-related projects pursued during the year. This
included the Company's migration to the TSE; completion of
a $4.9 million special warrant financing and ongoing
Canadian and United States reporting issuer requirements.
These finance-related costs have been allocated to the
Wireless Division, which drove our requirement for a public
stock listing. Sales and marketing expenses increased 12%
for the year as the Company began to develop the Wireless
Division sales force and distribution channels. The 6%
increase in sales and marketing expenditures in the fourth
quarter reflects a 78% increase in Wireless Division
spending with an offsetting decrease in Imaging.
The combination of the decline in Imaging sales and higher
operating costs resulted in a loss of $3.29 million, or
$0.21 per share for the year ended December 31, 1999 and a
loss of $1.43 million or $0.08 per share for the fourth
quarter of 1999.
STATEMENTS OF OPERATIONS
Three months ended December 31
1999 1998
Sales $1,766,609 $4,573,150
Cost of Goods Sold 490,251 2,148,879
--------- ---------
Gross Profit 1,276,358 2,424,271
Research and Development 995,821 633,003
Sales and Marketing 1,034,648 979,898
Administrative and Finance 724,059 516,991
--------- ---------
Total Operating Expenses 2,754,528 2,129,892
Operating Profit (Loss) 1,478,171 (294,379)
Other Income (Expenses) 46,793 12,670
--------- ---------
Net Income (Loss) (1,431,378) (307,049)
Earnings (Loss) per Share $(0.08) $(0.02)
STATEMENTS OF OPERATIONS
Years ended December 31
1999 1998
Sales $7,530,331 $9,546,808
Cost of Goods Sold 2,692,462 4,503,994
--------- ---------
Gross Profit 4,837,869 5,042,814
Research and Development 2,918,572 2,163,614
Sales and Marketing 3,125,635 2,794,226
Administrative and Finance 2,112,587 1,391,723
--------- ---------
Total Operating Expenses 8,156,794 6,349,563
Operating Profit (Loss) (3,318,925) (1,306,749)
Other Income (Expenses) 30,674 100,483
--------- ---------
Net Income (Loss) (3,228,251) (1,206,266)
Earnings (Loss) per Share $(0.21) $(0.09)
STATEMENTS OF CASH FLOWS
Years ended December 31
1999 1998
Operations:
Net Income (Loss) $(3,288,251) $(1,206,266)
Items not Involving Cash 403,317 274,677
Non-cash Working Capital 956,843 (2,281,480)
--------- ---------
(1,928,091) (3,213,069)
Investments (635,454) (387,837)
Financing 5,760,720 4,351,350
--------- ---------
Foreign Exchange 114,596 -
Increase (Decrease) in Cash 3,311,771 750,444
Cash, Beginning of Period 1,047,319 296,875
--------- ---------
Cash, End of Period $4,359,090 $1,047,319
BALANCE SHEETS
As at December 31
1999 1998
ASSETS
Current Assets:
Cash $4,359,090 $1,047,319
Accounts Receivable 1,916,961 3,343,031
Inventory 588,981 1,315,061
Prepaid Expenses 170,662 215,564
--------- ---------
7,035,694 5,920,975
Capital Assets 984,698 625,621
Deferred Charges 34,100 141,345
--------- ---------
Total Assets $8,054,492 $6,687,941
LIABILITIES AND SHAREHOLDERS EQUITY
Current Liabilities $1,014,673 $2,377,756
--------- ---------
Total Liabilities 1,014,673 2,377,756
Share Capital 12,526,949 6,798,707
Retained Earnings (Deficit) (5,776,773) (2,488,522)
--------- ---------
Cumulative Translation Adj. 289,643 -
Shareholders Equity 7,039,819 4,310,185
--------- ---------
$8,054,492 $6,687,941
SEGREGATED FINANCIAL DATA
WIRELESS DIVISION
Three months ended December 31
1999 1998
Sales $106,145 $37,233
Cost of Goods Sold 6,881 13,837
--------- ---------
Gross Profit 99,264 23,396
Research and Development 476,830 178,594
Sales and Marketing 559,650 313,720
Administrative and Finance 453,618 219,189
--------- ---------
Total Operating Expenses 1,490,097 711,504
--------- ---------
EBITDA (1,390,833) (688,108)
WIRELESS DIVISION
Years ended December 31
1999 1998
Sales $355,001 $170,911
Cost of Goods Sold 28,703 48,536
--------- ---------
Gross Profit 326,297 122,375
Research and Development 1,231,868 909,527
Sales and Marketing 1,495,202 1,158,598
Administrative and Finance 1,286,883 633,615
--------- ---------
Total Operating Expenses 4,013,953 2,701,739
--------- ---------
EBITDA (3,687,655) (2,579,364)
IMAGING DIVISION
Three months ended December 31
1999 1998
Sales $1,660,464 $4,535,918
Cost of Goods Sold 483,369 2,135,042
--------- ---------
Gross Profit 1,177,095 2,400,876
Research and Development 441,513 409,713
Sales and Marketing 436,394 642,512
Administrative and Finance 250,506 280,499
--------- ---------
Total Operating Expenses 1,128,413 1,332,725
--------- ---------
EBITDA 48,682 1,068,151
IMAGING DIVISION
Years ended December 31
1999 1998
Sales $7,175,330 $9,375,897
Cost of Goods Sold 2,663,757 4,455,458
--------- ---------
Gross Profit 4,511,573 4,920,439
Research and Development 1,459,758 1,111,151
Sales and Marketing 1,509,984 1,553,058
Administrative and Finance 769,779 708,935
--------- ---------
Total Operating Expenses 3,739,521 3,373,144
--------- ---------
EBITDA 772,052 1,547,295 |
