[November 12, 2009] WebTech Wireless Reports Loss for the Nine Months Ended September 30, 2009 Tweet VANCOUVER, BRITISH COLUMBIA, Nov 12, 2009 (Marketwire via COMTEX) -- WebTech Wireless Inc. (TSX:WEW), a leading supplier of vehicle location-based and fleet telematics services, today reported revenue of US $4.5 million for the three month fiscal quarter ended September 30, 2009, and US$16.1 million for the nine months then ended. Delays in customers' projects and the negative impact of a weakening US dollar resulted in a 37% decrease in revenue over the prior year's comparable quarter and 10% on a comparable year to date (YTD) basis. The Company is reporting a Net Loss of $2.0 million (3 cents per share) for the quarter and a Net Loss of $2.1 million for the nine months YTD (4 cents per share). The Company is reporting Total Comprehensive Income of $356,000 for the nine months ended September 30, 2009 after accounting for a foreign exchange gain of $2.4 million resulting from its adoption of the US dollar as its reporting currency. Comprehensive Income is a GAAP measure which is not considered when reporting Earnings per Share. WebTech Wireless is comparing its results for the quarter ended September 30, 2009 to its results for the quarter ended October 31, 2008 as it changed its fiscal year end from July 31 to December 31, and October 31, 2008 represents the nearest prior year reporting date to September 30. When the Company reports its results for the 12 months ended December 31, 2009, those results will be compared to the Company's results for the 12 months ended July 31, 2008, its last full fiscal year before its change in year end. Revenues at $4.5 million were reflected in our traditional sales in the Government and Transportation verticals. Seasonal slowdown and delays in negotiating contracts with large customers in the US and Mexico contributed to our decline in revenue for this Quarter. Profit margins at 59% for the quarter and YTD are above target and historical levels, due to continuing economies of scale, the effect of high margin recurring revenue being a higher than normal percentage of total sales, and a one-time contribution from a large, high margin enterprise license sale earlier in the year. Expenses for the quarter of $3.8 million were approximately 14% below prior year, and YTD expense of $10.8 million are approximately 19% below prior year, despite increased spending on litigation and expenses indirectly related to the Company's recent acquisition of Grey Island Systems Inc. Net loss for the three months was $2.0 million which includes several large one-time cash and non-cash charges such as a loss on the sale of its long term investment in MAV II notes, legal fees related to ongoing litigation, and a foreign exchange loss on operations related to continuing weakening of the US dollar. Combined these items account for approximately $1.5 million in expenses. For the nine months, the Company is reporting a net loss of $2.1 million. As of September 30, 2009, the Company is reporting total assets of $21 million (December 31, 2008: $20.7 million) and working capital of $17.2 million (December 31, 2008: $13.9 million) primarily due to an increase in cash on hand. "We are obviously disappointed to be reporting a slowdown in revenue growth - due primarily to delayed projects from major customers in the US and Mexico. We're pleased, however, that gross margins and our cost control measures continue to provide benefits," said Scott Edmonds, WebTech Wireless' CFO. A reminder that the Financial Results Conference Call will be held today, November 12th, at 5:00 pm Eastern Time (2:00 pm Pacific Time). Interested parties may participate in the call by dialing 1-800-915-4217 or (212) 231-2900 (for international callers). The conference call will be archived on the Company's website at: www.webtechwireless.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 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 thousands of USD) (Unaudited) 30-Sep-09 31-Dec-08 --------------------- ASSETS Current Cash and cash equivalents $ 4,853 $ 3,176 Accounts receivable, net of allowance 6,282 6,344 Inventory, net of allowance 7,714 7,046 Prepaid expenses and deposits 601 369 --------------------- 19,450 16,935 Property and equipment (Note 7) 1,335 1,326 Long term investments (Note 8) - 2,450 Deferred Charges 197 - --------------------- $ 20,982 $ 20,711 --------------------- --------------------- LIABILITIES Current Bank indebtedness $ - $ 817 Accounts payable and accrued liabilities 1,820 1,626 Current portion of deferred revenue 410 559 --------------------- 2,230 3,002 Long term Deferred lease inducement 742 524 Deferred revenue 230 224 --------------------- 972 748 3,202 3,750 --------------------- SHAREHOLDERS' EQUITY Share Capital (Note 9) 57,010 56,819 Contributed Surplus (Note 10) 3,947 3,675 Retained Deficit (39,171) (37,105) Accumulated Other Comprehensive Income (4,006) (6,428) --------------------- Total Shareholders' Equity 17,780 16,961 --------------------- $ 20,982 $ 20,711 --------------------- --------------------- Commitments (Note 12) APPROVED BY THE DIRECTORS: "Signed" "Signed" ------------------------- ------------------------- Anwar Sukkarie Peter W. Roberts WEBTECH WIRELESS INC. CONSOLIDATED STATEMENT OF OPERATIONS (Amounts in thousands of USD except Gross margin and per share amounts) (Unaudited) 3 months ended 9 months ended 30-Sep-09 31-Oct-08 30-Sep-09 31-Oct-08 ------------------------ ------------------------ Revenue $ 4,525 $ 7,133 $ 16,091 $ 17,947 Cost of goods sold 1,855 3,646 6,556 9,288 ------------------------ ------------------------ Gross profit 2,670 3,487 9,535 8,659 ------------------------ ------------------------ Gross margin 59.00% 48.89% 59.26% 48.25% Expenses Sales and marketing 1,447 2,123 4,806 6,109 Research and development 1,152 1,145 3,222 3,318 General and administrative 1,037 997 2,372 3,508 Amortization 148 120 400 366 ------------------------ ------------------------ 3,784 4,385 10,800 13,301 ------------------------ ------------------------ Loss before other items (1,114) (898) (1,265) (4,642) Other items Interest and other income 13 25 78 157 Foreign exchange gain/(loss) on operations (649) 937 (782) 1,050 Loss in the fair value of long term investments (Note 8) - - - (827) Gain on restructuring of long term investments (Note 8) - - 166 - Loss on sale of long term investments (Note 8) (263) - (263) - ------------------------ ------------------------ Net profit/(loss) $ (2,013) $ 64 $ (2,066) $ (4,262) ------------------------ ------------------------ Other comprehensive profit/(loss): Foreign exchange gain/(loss) due to translation into USD reporting currency 1,490 (3,702) 2,422 (4,941) ------------------------ ------------------------ Total comprehensive profit/(loss) for the period $ (523) $ (3,638) $ 356 $ (9,203) ------------------------ ------------------------ Basic and fully diluted earnings gain/(loss) per share $ (0.03) $ - $ (0.04) $ (0.07) Weighted average shares outstanding during the year 58,193,788 57,885,269 58,125,539 57,856,820 WEBTECH WIRELESS INC. CONSOLIDATED STATEMENT OF CASH FLOWS (Amounts in thousands of USD) (Unaudited) 3 months ended 9 months ended 30-Sep-09 31-Oct-08 30-Sep-09 31-Oct-08 ------------------------ ------------------------ Operating Activities Net gain/(loss) for the period $ (2,013) $ 64 $ (2,066) $ (4,262) Add items not affecting cash: Amortization 148 120 397 366 Stock based compensation 83 325 408 855 Amortization of leasehold inducement (26) (14) (77) (55) FX adjustment on accounts receivable 259 (918) 194 (976) FX adjustment on accounts payable (17) 3 (4) 118 Loss in the fair value of long term investments - - - 801 Loss on sale of long term investments 263 - 247 - ------------------------ ------------------------ (1,303) (420) (901) (3,153) Changes in non-cash working capital items related to operations: Accounts receivable 754 (3,212) 690 (2,941) Inventory (138) 36 306 (1,558) Prepaid expense and deposits 74 367 (164) 131 Accounts payable and accrued liabilities (197) 941 (29) (138) Deferred Revenue (206) 77 (232) 85 Deferred lease inducement - 45 209 503 ------------------------ ------------------------ (1,016) (2,166) (121) (7,071) ------------------------ ------------------------ Financing Activities Common shares issued, net of costs 38 32 65 111 Share repurchased - - - (647) Repayment of bank line of credit - - (855) - Repayment of borrowing against long term investments (1,558) - (1,462) - Borrowing - against long term investments - - 1,462 - ------------------------ ------------------------ (1,520) 32 (790) (536) ------------------------ ------------------------ Investing Activities Purchase of capital assets (75) (55) (232) (411) Increase in long term investment - - - - Proceeds from sale of long term investments 2,470 - 2,316 - Deferred Charges - GIS acquisition (192) - (180) - ------------------------ ------------------------ 2,203 (55) 1,904 (411) ------------------------ ------------------------ Effect of changes in FX rates on cash and cash equivalents 396 (897) 684 (1,003) Net increase (decrease) in cash during the period 63 (3,086) 1,677 (9,021) Cash and cash equivalents, beginning of period 4,790 7,064 3,176 12,999 ------------------------ ------------------------ Cash and cash equivalents, end of period $ 4,853 $ 3,978 $ 4,853 $ 3,978 ------------------------ ------------------------ ------------------------ ------------------------ Cash and cash equivalents consist of: Cash $ 4,853 $ 3,978 $ 4,853 $ 3,978 ------------------------ ------------------------ ------------------------ ------------------------ Supplemental cash flow information Interest paid $ 2 $ 1 $ 17 $ 2 Income taxes paid - - - - Non-cash Transactions Transfer of property under development to property and equipment $ - $ 78 $ - $ - SOURCE: WebTech Wireless Inc. WebTech Wireless Eric Wilson Press / Media Contact (+1) 778.386.2712 [email protected] WebTech Wireless R. Joe Dhami Investor Relations Contact (+1) 877.811.4518 ext. 462 [email protected] www.webtechwireless.com [ Back To TMCnet.com's Homepage ]