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Message: NEWS: WebTech Wireless Reports 31% Revenue Growth for the Five Month Transition
Mar 09, 2009 16:00 ET
WebTech Wireless Reports 31% Revenue Growth for the Five Month Transition Period Ended December 31, 2008
VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 9, 2009) - WebTech Wireless Inc. (TSX:WEW), a leading supplier of location-based and fleet Telematics services, today reported revenue of $11.4 million for the five month transition period and fiscal year ended December 31, 2008 representing a 31% increase over a pro-rated share (5/12ths) of revenues of $20.8 million reported for its twelve month fiscal year ended July 31, 2008.
WebTech Wireless is reporting results for the five months ended December 31, 2008, as it has changed its fiscal year end from July 31 to December 31.
Profit margins at 43% were affected by one-time non-cash obsolescence charge to inventory and a high dollar value of low margin accessory sales which will attract future services revenue. Were it not for the obsolescence charge and the effect of the accessory sale, gross margins would have been reported at the Company's target of 50%.
Net loss for the five month year was $5.6 million ($0.10 per common share) primarily as the result of non-cash one time charges totaling $3.7 million related to stock option cancellation ($2.0 million), a further write down of the Company's ABCP ($0.7 million), the above noted obsolescence charge, an increase in the allowance for doubtful accounts and restructuring charges ($1 million combined). The loss for the year compares with a loss of $7.8 million ($0.13 per common share) for the year ended July 31, 2008.
For the two months ended December 31, 2008, WebTech reported revenues of $3.6 million representing growth of 3% over the pro-rata share (2/12ths) of the prior year revenues. Net of one time charges, expenses for the five month period of $8.7 million were approximately equal to the prior year pro-rata figures.
As of December 31, 2008, the Company reported total assets of $25.4 million (July 31, 2008: $28.2 million) and working capital of $17.1 million (July 31, 2008: $19.2 million). The decrease in working capital was largely a result of cash used to fund operations.
"We are pleased with our revenue growth in this shortened fiscal period, particularly as we closed our manufacturing facility for the final two weeks of December in anticipation of a move to a new, larger (and less expensive) facility that is better able to accommodate our increased volumes," said Scott Edmonds, Chief Financial Officer, WebTech Wireless Inc. "We have taken a number of one-time non-cash charges and have made a prudent provision for bad debts to tighten up our balance sheet as we enter 2009. We are confident that our revenue growth will continue and that our cost control measures, and enhanced credit and collections activities will assist us in achieving our goals for the coming year."
A reminder that the Financial Results Conference Call will be held today, March 9th, at 5:00 pm Eastern Time (2:00 pm Pacific Time). Interested parties may participate in the call by dialing 1-800-909-5034 or (212) 231-2901 (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 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 Wireless cannot guarantee that any forward looking statements will be realized.
Trademarks are the property of their owners.
WebTech Wireless is reporting results for the five months ended December 31, 2008, as it has changed its fiscal year end from July 31 to December 31.
Profit margins at 43% were affected by one-time non-cash obsolescence charge to inventory and a high dollar value of low margin accessory sales which will attract future services revenue. Were it not for the obsolescence charge and the effect of the accessory sale, gross margins would have been reported at the Company's target of 50%.
Net loss for the five month year was $5.6 million ($0.10 per common share) primarily as the result of non-cash one time charges totaling $3.7 million related to stock option cancellation ($2.0 million), a further write down of the Company's ABCP ($0.7 million), the above noted obsolescence charge, an increase in the allowance for doubtful accounts and restructuring charges ($1 million combined). The loss for the year compares with a loss of $7.8 million ($0.13 per common share) for the year ended July 31, 2008.
For the two months ended December 31, 2008, WebTech reported revenues of $3.6 million representing growth of 3% over the pro-rata share (2/12ths) of the prior year revenues. Net of one time charges, expenses for the five month period of $8.7 million were approximately equal to the prior year pro-rata figures.
As of December 31, 2008, the Company reported total assets of $25.4 million (July 31, 2008: $28.2 million) and working capital of $17.1 million (July 31, 2008: $19.2 million). The decrease in working capital was largely a result of cash used to fund operations.
"We are pleased with our revenue growth in this shortened fiscal period, particularly as we closed our manufacturing facility for the final two weeks of December in anticipation of a move to a new, larger (and less expensive) facility that is better able to accommodate our increased volumes," said Scott Edmonds, Chief Financial Officer, WebTech Wireless Inc. "We have taken a number of one-time non-cash charges and have made a prudent provision for bad debts to tighten up our balance sheet as we enter 2009. We are confident that our revenue growth will continue and that our cost control measures, and enhanced credit and collections activities will assist us in achieving our goals for the coming year."
A reminder that the Financial Results Conference Call will be held today, March 9th, at 5:00 pm Eastern Time (2:00 pm Pacific Time). Interested parties may participate in the call by dialing 1-800-909-5034 or (212) 231-2901 (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 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 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 000's)
31-Dec-08 31-Jul-08
----------- -----------
ASSETS
Current
Cash and cash equivalents $ 3,889 $ 7,246
Accounts receivable, net of allowance 7,769 4,345
Inventory, net of allowance 8,629 10,070
Prepaid expenses and deposits 452 1,131
----------- -----------
20,739 22,792
Property and equipment (Note 6) 1,615 1,638
Property under development (Note 6) 9 86
Long-term investments (Note 7) 3,000 3,669
----------- -----------
$ 25,363 $ 28,185
----------- -----------
----------- -----------
LIABILITIES
Current
Bank indebtedness (Note 8) $ 1,000 $ -
Accounts payable and accrued liabilities 1,991 3,224
Current portion of deferred revenue 685 383
----------- -----------
3,676 3,607
Long term
Deferred lease inducement 642 534
Deferred revenue 274 93
----------- -----------
916 627
4,592 4,234
----------- -----------
SHAREHOLDERS' EQUITY
Share capital (Note 9) 59,689 59,620
Contributed surplus (Note 10) 4,131 1,791
Deficit (43,049) (37,460)
----------- -----------
20,771 23,951
----------- -----------
$ 25,363 $ 28,185
----------- -----------
----------- -----------
Commitments (Note 13)
Subsequent event (Note 15)
APPROVED BY THE DIRECTORS:
"Signed" "Signed"
-------------- ------------------
Anwar Sukkarie R.H. (Dick) Pinder
The accompanying notes form an integral part of these financial statements.
WEBTECH WIRELESS INC.
CONSOLIDATED STATEMENT OF OPERATIONS, COMPREHENSIVE LOSS AND DEFICIT
(Amounts in 000's except number of shares and per share amounts)
For the
five-month
period For the year
ended ended
31-Dec-08 31-Jul-08
------------ ------------
Revenue $ 11,401 $ 20,810
Cost of goods sold 6,496 10,610
------------ ------------
Gross profit 4,905 10,200
------------ ------------
Expenses
Sales and marketing 3,855 7,044
Research and development 2,150 3,935
General and administration 2,476 4,516
Amortization 221 523
------------ ------------
8,702 16,018
------------ ------------
Loss before other items (3,797) (5,818)
Other items
Interest income 22 466
Foreign exchange gain (loss) 875 (110)
Loss in the fair value of long-term
investments (669) (2,331)
Stock-based compensation expense - cancelled
stock options (Note 9) (2,020) -
------------ ------------
Net loss and comprehensive loss for the period $ (5,589) $ (7,793)
Deficit, beginning of the period (37,460) (28,187)
Shares repurchased - excess of purchase price
over carrying value - (1,480)
------------ ------------
Deficit, end of period $ (43,049) $ (37,460)
------------ ------------
------------ ------------
Accumulated other comprehensive earnings
Balance - beginning and end of period $ - $ -
Basic and fully diluted (loss) per share $ (0.10) $ (0.13)
Weighted average number of shares outstanding
during the period 57,908,624 58,060,842
The accompanying notes form an integral part of these financial statements.
WEBTECH WIRELESS INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Amounts in 000's)
For the
five-month
period For the year
ended ended
31-Dec-08 31-Jul-08
------------ ------------
Operating Activities
Net loss for the period $ (5,589) $ (7,793)
Add items not affecting cash:
Amortization 221 523
Stock-based compensation 341 1,024
Stock-based compensation expense - cancelled
stock options (Note 9) 2,020 -
Amortization of leasehold inducement 24 (49)
Loss in the fair value of long-term
investments 669 2,331
------------ ------------
(2,314) (3,964)
Changes in non-cash working capital items
related to operations:
Accounts receivable (3,424) (217)
Inventory 1,441 (2,430)
Prepaid expense and deposits 679 452
Accounts payable and accrued liabilities (1,233) (309)
Deferred revenue 483 216
Deferred lease inducement 84 473
------------ ------------
(4,284) (5,779)
------------ ------------
Financing Activities
Common shares issued, net of costs 48 233
Bank indebtedness 1,000 -
Shares repurchased - (2,326)
------------ ------------
1,048 (2,093)
------------ ------------
Investing Activities
Purchase of capital assets (112) (693)
Purchase of property under development (9) (533)
Purchase of long-term investment - (6,000)
------------ ------------
(121) (7,226)
------------ ------------
Net decrease in cash during the period (3,357) (15,098)
Cash and cash equivalents, beginning of period 7,246 22,344
------------ ------------
Cash and cash equivalants, end of period $ 3,889 $ 7,246
------------ ------------
------------ ------------
Cash and cash equivalents consist of:
Cash $ 3,889 $ 7,246
------------ ------------
$ 3,889 $ 7,246
------------ ------------
------------ ------------
Supplemental cash flow information
Interest paid $ 15 $ 3
Income taxes paid - -
Non-cash Transactions
Transfer of property under development to
property and equipment $ 86 $ 448
The accompanying notes form an integral part of these financial statements.
The Toronto Stock Exchange does not accept responsibility for the adequacy or accuracy of this release.
For more information, please contact
WebTech Wireless Inc.Eric Wilson
Press / Media Contact
(778) 370-9609
Email: press@webtechwireless.com
or
WebTech Wireless Inc.
R. Joe Dhami
Investor Relations Contact
1-877-811-4518 ext. 462
Email: ir@webtechwireless.com
Website: www.webtechwireless.com
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