BURNABY, BRITISH COLUMBIA--(CCNMatthews - March 15, 2007) - WebTech Wireless Inc. (TSX VENTURE:WEW), a leading supplier of mobile telematics, today reported revenue of $8.6 million for the second quarter ended January 31, 2007, representing an increase of 110.5% over revenue for the prior comparable quarter of $4.1 million. Net income for the quarter was $1,036 million ($0.02 per common share) compared with net income of $0.3 million ($0.01 per common share) for the prior comparable quarter. Revenue for the quarter increased significantly due primarily to an increase in locator sales for the consumer automotive market in Brazil. Revenue for the six month period of $12.5 million represented an 88.3% increase over revenue of the prior comparable period of $6.6 million. Net income for the six month period was $1.1 million ($0.02 per common share) compared with net income of $3,000 (nil per common share) for the same six month period of last year.
The Company reported a gross profit margin of 36.5%, representing a decrease of 28% over profit margin of 51% for the prior comparable quarter. Margins for the quarter decreased significantly due to inventory costs that did not reflect volume costs savings, as the company utilized existing inventory stores. It is anticipated that once volume cost savings are realized, profit margins will strengthen. However, the Company anticipates margins will decline from historical margins due to higher volume orders. Profit margin for the six month period was 40.4% compared with 50.0% of the comparable period of last year.
The significant increase in sales to Brazil is due to the recently announced purchase order from the Company's Brazil value-added reseller ("VAR") for 490,000 locators for installation on the assembly line of a Brazil automobile manufacturers. Delivery schedules may be unpredictable and may be affected by factors outside the Company's control. Delivery schedules are controlled largely by the automobile manufacturer and the Company's VAR. As a result, quarterly results may vary from period to period.
During the quarter the Company reported a 26.1% increase in North American sales over sales of the comparable quarter, as it continues to build its commercial fleet business. The Company is in advanced stages of several trials with leading industry partners and has entered into new trials. The Company recently announced commercial availability of several new products expected to enhance its long-haul trucking and transportation business.
Expenses for the quarter increased by 86.9% over the comparable quarter, primarily due to increased hiring in sales and marketing, administration and research and development.
Inventory and prepaid expenses and deposits, which are comprised primarily of prepayments for component parts and manufacturing costs, more than tripled from year end balances, to $11.5 million to provide for anticipated delivery requirements in the third and fourth quarters. Also, the Company reported deferred revenue of $5.7 million, which represents prepayments by customers for hardware at various stages of completion. Deferred revenue was funded out of disbursements from a $12 million USD loan the Company made to its VAR in Brazil.
At January 31, 2007, the Company reported total assets of $67.9 million and working capital of $43.8 million, up from $22.3 million and $18.8 million respectively at the end of the most recently completed fiscal year. The increase in assets and working capital is primarily due to the Company's recent financing in January. On January 16, 2007, the Company issued 8,050,000 common shares for net cash proceeds of $37.5 million.
"We delivered a total of 24,000 units to Crown Telecom during our second quarter, which were comprised of 17,400 on the 490,000 unit purchase order, and 6,600 units on the previous order for trial. We have achieved the additional business based on the successful completion of the 20,000 unit trial at Volkswagen in Brazil, proving out the technical viability of this business model for the consumer safety and security market. To date we have delivered over 40,000 units on our 490,000 unit order and locators are being installed on the Volkswagen assembly line at an average rate of 1,315 units per day," comments Juliet Jones, Chief Financial Officer of WebTech Wireless Inc. "We anticipate that as our volume cost savings start to affect our results, we will see the economies of scale impact our gross profit margins and our bottom line."
The Company announces that it will hold a conference call on March 15, 2007 at 5:00 PM Eastern Time and that a recording of the conference call will be posted on the Company's website at www.webtechwireless.com within 24 hours of the call. Interested parties may participate in the call by dialing 1-888-707-2832 or 706-679-7259 (international callers). The financial statements and management's discussion and analysis will be posted on the Company's website prior to the conference call. Further information on the Company may also be viewed at www.sedar.com.
About WebTech Wireless Inc.
WebTech Wireless Inc. (TSX VENTURE:WEW) is a global Telematics, location-based services provider that develops, manufactures, and delivers turnkey wireless solutions designed to improve productivity and profitability. WebTech products include wireless hardware and software services running on cellular and satellite networks, and include Automatic Vehicle Location, Mapping, Reporting, Vehicle Maintenance, Driver Status, In-vehicle Telemetry, Messaging, In-vehicle Navigation, and wireless application and Internet connectivity. WebTech is currently providing devices and services worldwide in eight languages to over forty-one countries covering five continents. WebTech's scalable solutions are used by a broad range of small, medium, Fortune 500 companies and 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 cannot guarantee that any forward looking statements will be realized.
Trademarks are the property of their owners.
WEBTECH WIRELESS INC.
CONSOLIDATED BALANCE SHEETS
(amounts in 000's)
January 31, 2007 July 31, 2006
----------------- ----------------
(unaudited) (audited)
ASSETS
Current
Cash & cash equivalents $ 34,511 $ 10,640
Accounts receivable 6,478 7,015
Inventory 6,606 2,849
Prepaid expenses and deposits 4,846 800
----------------------------------
52,441 21,304
----------------------------------
Capital Assets 1,015 738
Intangible assets,
Note 2 (b) & 3 328 292
Loan Receivable, Note 4 14,150 -
----------------------------------
$ 67,934 $ 22,334
----------------------------------
----------------------------------
LIABILITIES
Current
Accounts payable and accrued
liabilities $ 2,980 $ 2,198
Deferred revenue 5,675 294
---------------------------------
8,655 2,492
---------------------------------
SHAREHOLDERS' EQUITY
Share capital, Note 6 59,460 21,105
Contributed surplus, Note 7 586 574
Deficit (767) (1,837)
----------------------------------
59,279 19,842
---------------------------------
$ 67,934 $ 22,334
---------------------------------
---------------------------------
APPROVED BY THE DIRECTORS:
"Anwar Sukkarie" "Cameron Fraser"
---------------- ----------------
WEBTECH WIRELESS INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Prepared by Management without audit)
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
31-Jan-07 31-Jan-06 31-Jan-07 31-Jan-06
------------ ------------ ---------- ----------
(000's) (000's) (000's) (000's)
Sales, Note 10 $ 8,556 $ 4,064 $ 12,463 $ 6,619
Cost of goods sold 5,432 2,002 7,425 3,309
------------ ------------ ---------- ----------
Gross profit 3,124 2,062 5,038 3,310
------------ ------------ ---------- ----------
Expenses
Administration, Note 9 782 343 1,225 731
Amortization 89 64 165 117
Marketing and sales 1,175 598 2,011 1,245
Research and development,
Note 9 875 558 1,510 961
------------ ------------ ---------- ----------
2,921 1,563 4,911 3,054
Income before other items 203 499 127 256
------------ ------------ ---------- ----------
Other items
Interest income
(expenses) 87 2 175 4
Foreign exchange gain
(loss), Note 11 746 (167) 768 (257)
------------ ------------ ---------- ----------
Net income for the period $ 1,036 $ 334 $ 1,070 $ 3
------------ ------------ ---------- ----------
Basic and fully diluted
earnings per share $ 0.02 $ 0.01 $ 0.02 $ -
Weighted average number of
common shares outstanding 49,261,516 40,126,823 45,589,543 36,146,586
Fully diluted number of
common shares outstanding 51,216,755 40,126,823 47,372,246 36,146,586
WEBTECH WIRELESS INC.
CONSOLIDATED STATEMENT OF DEFICIT
(Prepared by Management without audit)
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
31-Jan-07 31-Jan-06 31-Jan-07 31-Jan-06
------------ ------------ ---------- ----------
(000's) (000's) (000's) (000's)
Deficit, beginning of
the period $ (1,803) $ (3,272) $ (1,837) $ (2,941)
Income for the period 1,036 334 1,070 3
------------ ------------ ---------- ----------
Deficit, end of period $ (767) $ (2,938) $ (767) $ (2,938)
------------ ------------ ---------- ----------
WEBTECH WIRELESS INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Prepared by Management without audit)
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
31-Jan-07 31-Jan-06 31-Jan-07 31-Jan-06
------------ ------------- ----------- -----------
Operating Activities
Net income for the period $ 1,036 $ 334 $ 1,070 $ 3
Add items not affecting
cash:
Stock based compensation,
Note 2(d) 128 35 173 73
Amortization 89 64 165 117
------------ ------------- ----------- -----------
1,253 433 1,408 193
Changes in non-cash working
capital items related
to operations:
Accounts receivable (4,825) (1,911) (5,095) (1,603)
Inventory (1,847) (32) (3,757) (428)
Prepaid expense and
deposits (3,328) (140) (4,047) (322)
Accounts payable and
accrued liabilities 1,016 432 782 691
Deferred Revenue (837) 55 (751) 83
------------ ------------- ----------- -----------
(8,568) (1,163) (11,459) (1,386)
------------ ------------- ----------- -----------
Financing Activities
Common shares issued, net
of costs, Note 6 37,929 112 38,194 3,566
------------ ------------- ----------- -----------
37,929 112 38,194 3,566
------------ ------------- ----------- -----------
Investing Activities
Purchase of intangible
assets, Note 3 (19) (34) (54) (61)
Purchase of capital assets (352) (160) (422) (269)
Loan receivable, Note 4 (2,387) 0 (2,387) 0
------------ ------------- ----------- -----------
(2,758) (194) (2,863) (330)
------------ ------------- ----------- -----------
Net increase (decrease) in
cash during the period 26,603 (1,245) 23,872 1,851
Cash, beginning of period 7,909 4,168 10,640 1,072
------------ ------------- ----------- -----------
Cash, end of period $ 34,511 $ 2,923 $ 34,511 $ 2,923
------------ ------------- ----------- -----------
------------ ------------- ----------- -----------
Cash and cash equivalents
consist of:
Cash $ 31,511 $ 423 $ 31,511 $ 423
Term deposits 3,000 2,500 3,000 2,500
------------ ------------- ----------- -----------
$ 34,511 $ 2,923 $ 34,511 $ 2,923
------------ ------------- ----------- -----------
------------ ------------- ----------- -----------
Non-Cash Transactions
Loan Receivable 14,150 $ - $ 14,150 $ -
Customer deposits (6,132) - (6,132) -
Payout of accounts
receivable (5,631) - (5,631) -
------------ ------------- ----------- -----------
$ 2,387 $ - $ 2,387 $ -
------------ ------------- ----------- -----------
FOR FURTHER INFORMATION PLEASE CONTACT:
Magnolia Communications
Phoebe Yong
Press / Media Contact
(604) 760-3085
Email: phoebe@magnoliamc.com
Pacific Orca Capital
R. Joe Dhami
Investor Relations Contact
1-877-811-4518 ext. 236
Email: jdhami@shawcable.com
