New financing, cost-reduction plan will help Infowave weather downturn in markets

New financing potentially totaling US$15 million and cost-reduction measures should give Infowave Software Inc the necessary capital to meet its business plan during difficult financial markets, the company says. The Vancouver-based wireless software developer has secured a US$5 million credit facility and is close to landing another US$10 million private placement. Doubts about the company’s ability to survive with existing cash on hand during turbulent market conditions were raised last month when Infowave announced a restructuring plan aimed at reducing expenses and the overall cash burn rate. Those fears have been largely allayed now that CEO Thomas Koll supplied a healthy amount of cash in the credit facility, and the private placement with unnamed U.S. and Canadian investment dealers is expected to close by the fall. Infowave CFO Todd Carter says the infusion of cash combined with the restructuring program announced on July 12 enables the company to move forward without any hitches. Infowave recognized that the downturn in the markets could have had an adverse effect on the company going forward, and instituted a cost-cutting program designed to significantly reduce monthly cash burn rates. Maintaining the financial health of the company was a top priority for management. When cost-reduction measures currently being implemented are complete, Infowave’s gross monthly costs should fall to the US$1.6-million range. The new expense structure could be fully in place by September or before the end of the third quarter at the latest, says Carter. Essentially, the executive team has decided to reduce overall costs including R&D and general administration expenses while maintaining a focus on sales and marketing, explains Carter. For example, R&D expenditures will be reduced by about 40 per cent. Infowave executives anticipate that the company will be close to profitable in the latter stages of next year. Just when it began to look up While it appears that Infowave has secured sufficient funds to enable it to follow through on its business plan, it now has a big hole to fill at the top of its executive ranks. President and COO Bijan Sanii announced his intention to leave the company effective August 8. Sanii, who joined Infowave in 1997, was instrumental in Infowave’s business development strategy. He was a key driver behind the signing of long-term relationships with Compaq Computer Corp (RoW, May 16/00) and Intel. These agreements form the foundation of Infowave’s reseller and marketing arrangements with a variety of device manufacturers and service providers (RoW, June 13/00). Sanii played a key role in guiding Infowave through its initial public offering the same year he joined the company. He was appointed COO in 1998 and was responsible for the development of the company’s strategic business plan for wireless. Sanii also played a large part in restructuring the Imaging Business that was sold off in 2000 (RoW, May 30/00).

New financing, cost-reduction plan will help Infowave weather downturn in markets

News | 08/07/2001 4:00 am EDT

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