Mobile Computing Corporation Reports Second Quarter
Results
Toronto Stock Exchange Symbol: MBL
TORONTO, Aug. 17 /CNW/ - Mobile Computing Corporation (MCC) (MBL:TSE), a leading supplier of wireless information solutions for
mobile workers, today reported financial results for the second quarter ended June 30, 2000.
In the second quarter of fiscal 2000 Management continued to move forward on its business plan. Major milestones included strategic alliance
expansion, new product release, advances on the development of the Company's Next Generation products and the filing of a final prospectus
to complete the $10,000,000 offering of 8,000,000 Special Warrants.
On the strategic alliance front, MCC signed a key Letter of Intent with Psion Enterprise Computing to jointly enable the MCC Wireless IP
Router for use with mobile handheld computers using the Symbian operating systems. This will allow a range of Psion handheld product
offerings to take advantage of the MCC Wireless IP Router. The Company is currently reviewing potential partners to aid in the development
of this product. Upon completion of the Symbian version, the Company will have the Router available on two of the three largest handheld
computer operating systems. In addition, MJ Systems participated with Psion in a highly successful second quarter road show to promote our
joint offerings to newspapers in the United States. This road show has created a number of qualified sales opportunities for the third and
fourth quarters and fiscal 2001.
The Company's participation in April with Microsoft in the launch of their Pocket PC operating system has led to continuing talks with
hardware and software vendors for the potential marketing of the MCC Wireless IP Router. The development of the Wireless IP Router with
Mobile Computing's partner BSquare is progressing well and plans are to have the Wireless IR Router ready for testing by a Pocket PC
manufacturer in the third quarter.
In the second quarter MJ Systems completed the development of its latest software application, Perfect Delivery which is designed to enable
customers to ensure that the right products are efficiently delivered to the right locations at the right time.
"We see this as an ideal solution for order fulfillment," said David Cunningham, President & CEO of Mobile Computing Corp. "The
combination of Perfect Delivery with MCC's wireless products should create powerful e- fulfillment solutions for our clients."
Development of MCC's Next Generation wireless data solutions continues on track for delivery of various modules in the third and fourth
quarters of fiscal 2000.
"We expect to deliver the Wireless IP Router and Port Expander to field testing in the third quarter followed by further releases of additional
modules in the fourth quarter," said Cunningham. "The Company has begun its preliminary sales and marketing efforts for the new solutions
and has received initial positive feedback from the market, however, we do not expect any significant revenues from these sources until fiscal
2001."
Revenue growth continued to prove difficult the second quarter as far as the Company continues to sell its older technology to limited vertical
markets which are not expanding. For this reason, MCC has been developing its new technologies which are applicable to multiple vertical
markets. Despite the challenges being faced in the existing vertical markets, the Company expects to post stronger second half results for fiscal
2000 as a result of the aggressive sales and marketing activities in the first half of the year. By mid-August, MCC's backlog for the third quarter
was $3.7 million, which is 70- 80% of the revenue target for that quarter. The Company expects similar revenue levels in the fourth quarter as
well.
Consolidated revenues for the second quarter were $2,784,000, a 34% decrease from $4,205,000 for the corresponding period in the previous
year. For the six months ended June 30, 2000, consolidated revenues were $6,055,000 compared to $9,161,000 for the same six-month period
in 1999. For the second quarter of this year, a number of sales closed too late in the quarter to ship and install product in time to meet revenue
recognition criteria. However, MCC started the third quarter with a healthy backlog of business. In 1999, the first and second quarters were the
two strongest in the year with a number of major sales in both operating divisions.
The Company reported a net loss of $2,676,000, or ($0.08) per share, compared to a net loss of $722,000, or ($0.04) per share, reported for
the same period in 1999. The Company reported a net loss of $4,693,000, or ($0.16) per share, for the six months ended June 30, 2000, versus
a net loss of $1,259,000, or ($0.08) for the same period last year. These losses were consistent with the Company's business plan as
investment in selling and marketing and in research and development was increased during the first half of fiscal 2000 with total operating
expenses increasing 43% for the second quarter and 39% for the first half of fiscal 2000. Administration costs increased by 9% from the first
half of 1999.
The Company's balance sheet remained strong and at June 30, 2000 the Company had a net cash position of $6,149,000 and working capital of
$6,427,000. It is anticipated that the Company will be seeking additional financing by the end of this year to fund its development and growth
plans.
MCC is organized into two distinct operating divisions. Segmented financial results for the six months ended June 30, 2000 for the divisions
were as follows:
Mobile Computing Systems (Mobile)
In fiscal 2000 the primary markets for Mobile's existing products continue to be the fuel and waste industries neither of which is experiencing
significant growth. This continues to limit Mobile's short-term sales activities. Second quarter 2000 sales for the Mobile division decreased
49% to $1,096,000 from sales of $2,151,000 in the second quarter of 1999. For the six months ended June 30, 2000, the division posted sales
of $2,726,000 compared to sales of $3,589,000 for the same period in the previous year.
The division's total operating expenses were higher for the quarter at $1,871,000 versus $1,187,000. Expense increases were associated with
increased levels of research and development expenditures related to the Company's Next Generation products and sales and marketing. This,
combined with the lower revenues for the 2000 second quarter, resulted in a net loss of $1,729,000 compared to a net loss of $556,000 for the
same period in 1999. For the six months ended June 30, 2000, the division reported a net loss of $2,901,000 compared to net loss of
$1,496,000 for the same period in 1999.
MJ Systems (MJ)
The MJ Systems division reported revenues for the 2000 second quarter of $1,688,000, 18% below sales of $2,054,000 for the same period in
1999. For the six months ended June 30, 2000, the division's revenues were $3,329,000 compared to $5,572,000 for the same period last year.
The first quarter of 1999 was unusually strong due to the shipment of some large orders.
MJ produced a net loss of $947,000 for the second quarter of fiscal 2000, compared to a net loss of $166,000 for the same quarter in 1999.
The difference can primarily be attributed to the decrease in gross margins. Expenditures have not varied significantly in the first half of fiscal
2000 compared to 1999.
During the quarter MJ obtained a major order at the St. Paul Pioneer Press to install Route Max® as a result of the MJ-Psion road show. This
is significant as this is the second Knight Ridder newspaper to select Route Max. MJ also entered into agreements to install two Perfect PIC®
pick, pack and verify systems during the third quarter, one of which is the largest Perfect PIC installation to date.
The Company is also pleased to announce the addition of Tim Lang as Vice President of Sales for MJ Systems. Tim's background includes
over 12 years of sales and marketing experience at companies such as Xerox and Moore Corporation. "We welcome Tim to the team and look
forward to his contribution," said Cunningham.
Mobile Computing Corporation (MCC) (www.mobilecom.com) is a leading supplier of wireless on-board information solutions to diverse
mobile worker industries. These systems enable companies to communicate with, monitor and manage the activities of their vehicles and field
people. MCC solutions enable improved management of the movement and delivery of goods and services, improving productivity and
profitability. MCC specializes in delivering fully integrated solutions that link mobile workers with corporate information systems utilizing
wireless data communications services. Through its US-based MJ Systems Division (www.mjsi.com), MCC provides leading technology
solutions for industries with time-sensitive delivery schedules. A market leader in designing distribution systems for magazines, newspapers
and books, MJ Systems now develops Perfect Distribution solutions that are tailored to each client's needs - from portable hand-held units to
automated pick lines to office-based business intelligence systems.
Mobile Computing Corporation trades on the Toronto Stock Exchange under the symbol "MBL" and has approximately 36.6 million shares
outstanding.
This news release contains forward-looking statements that involve risks and uncertainties, which may cause actual results to differ materially
from the statements made. When used in this document, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe",
"estimate", "expect" and similar expressions are intended to identify forward-looking statements. Such statements reflect Mobile Computing
Corporation's current views with respect to future events and are subject to such risks and uncertainties. Many factors could cause our actual
results to differ materially from the statements made including those factors detailed from time to time in filings made by Mobile Computing
Corporation with Canadian securities regulatory authorities. Should one or more of these risks or uncertainties materialize, or should
assumptions underlying the forward looking statements prove incorrect, actual results may vary materially from those described herein as
intended, planned, anticipated or expected. Mobile Computing Corporation does not intend and does not assume any obligation to update
these forward-looking statements
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited - thousands For the three months For the six months
of dollars) ended June 30 ended June 30
2000 1999 2000 1999
----------------------- -----------------------
SALES $ 2,784 $ 4,205 $ 6,055 $ 9,161
Cost of goods sold 1,935 2,156 3,704 4,672
----------------------- -----------------------
Gross margin 849 2,049 2,351 4,489
EXPENSES
Research and development 914 470 1,618 950
Selling and marketing 981 581 2,077 1,156
Administration 1,191 1,112 2,387 2,269
----------------------- -----------------------
3,086 2,163 6,082 4,375
----------------------- -----------------------
Income (loss) before the
undernoted (2,237) (114) (3,731) 114
Depreciation and
amortization 364 345 728 691
Interest expense 75 163 234 368
Income tax expense - 100 - 314
----------------------- -----------------------
Loss for the period $ (2,676) $ (722) $ (4,693) $ (1,259)
----------------------- -----------------------
----------------------- -----------------------
Loss per share $ (0.08) $ (0.04) $ (0.16) $ (0.08)
----------------------- -----------------------
----------------------- -----------------------
CONSOLIDATED BALANCE SHEET
(unaudited - thousands of dollars) As at June 30,
2000 1999
--------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 6,149 $ 1,033
Accounts receivable 1,840 2,806
Inventory 1,804 2,320
Prepaid expenses 297 106
--------------------------
10,090 6,265
Capital assets (net) 1,973 1,593
Intangible assets 1,916 2,840
Other assets 217 142
--------------------------
$ 14,196 $ 10,840
--------------------------
--------------------------
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities 2,407 2,733
Deferred revenue 979 386
Current portion of capital lease obligation 277 129
Short term loans - 588
--------------------------
3,663 3,836
Long term liabilities:
Capital lease obligation 250 266
Debenture 5,918 5,891
--------------------------
9,831 9,993
SHAREHOLDERS' EQUITY
Capital stock 27,187 14,929
Contributed surplus 65 65
Share options 166 166
Cumulative translation adjustment 336 95
Deficit (23,389) (14,408)
--------------------------
4,365 847
--------------------------
14,196 10,840
--------------------------
--------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited - thousands of dollars)
Three months ended Six months ended
June 30 June 30
2000 1999 2000 1999
------------------- -------------------
CASH PROVIDED BY (USED IN):
Operations:
Loss for the period $ (2,676) $ (722) $ (4,693) $ (1,259)
Items not involving cash:
Depreciation 123 108 251 215
Amortization of intangible
and other assets 248 250 492 527
(Gain)/loss on disposal of
fixed assets - (16) - 2
Foreign exchange (1) (2) (1) (5)
Change in non-cash working
capital
Accounts receivable 1,403 (67) 618 43
Inventory (221) 94 (425) 295
Prepaid expenses (74) 7 (213) (42)
Other assets (4) (2) (17) (2)
Accounts payable and accrued
liabilities (221) (175) (265) 94
Deferred revenue (192) (274) 621 (692)
------------------- -------------------
(1,615) (799) (3,632) (824)
Financing:
Repayment of capital lease
obligation (52) (20) (103) (39)
Short term financing - 588 - 588
Issue of common shares on
exercise of employee share
options 7 - 86 -
Issue(cost) of special warrants (177) - 9,012 -
Exercise of agent's special
warrants 162 - 162 -
(60) 568 9,157 549
Investments:
Capital asset additions (198) (27) (366) (81)
------------------- -------------------
Increase (decrease) in cash
and cash equivalents (1,873) (258) 5,159 (356)
Cash and cash equivalents,
beginning of period 8,022 1,291 990 1,389
------------------- -------------------
Cash and cash equivalents,
end of period $ 6,149 $ 1,033 $ 6,149 $ 1,033
------------------- -------------------
------------------- -------------------
For further information
Cory Pala, Investor Relations, E-vestor Communications Inc., (416) 657-2400, (416) 657-2300 fax, Cpala@e-vestorcom.com
David Cunningham, President & CEO, Mobile Computing Corp., (905) 676-8900, (905) 676-9191 fax,
dcunningham@mobilecom.com
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