Infowave reorganization results in infusion of cash, greater stability going forward

A corporate reorganization at Infowave Software Inc. has resulted in a $5.45-million-cash injection to the Vancouver-based mobile application provider’s treasury, providing it with greater stability going forward, according to company executives. They say current operations will carry on as they had prior to the windfall from the reorganization. Under the reorganization, all of Infowave’s technology assets will be transferred into a new company (Newco), while redundant assets will remain with the old company. Newco, which is expected to retain the Infowave name once the transaction is completed, will apply to the Toronto Stock Exchange to retain its current listing, and Infowave (the old company) is expected to apply to the TSX Venture Exchange for a new public listing. Concord Pacific Group Inc. is purchasing the redundant assets. Infowave COO and CFO George Reznik says nothing will change in terms of business operations for Newco. "We had an opportunity through this reorg to leverage our shareholder base to create a shell that the other company could use for financing purposes and (gain) a listing for its business purposes. "(The investor) was interested in having that kind of reach to go (for) a listing right away and to use it as a financing vehicle for their real estate property and as such we were able to negotiate a good price for them to invest. And so the good news is our shareholders get a minority interest in the old company and they maintain the same ownership percentage in (Newco)," he tells Report on Wireless. The money, says Reznik, will be used primarily for long-term product development. "It’s really insurance money to get us to 2006 in the event that we have any bumpiness in our business plan. It gives our customers more comfort on our financial stability and allows us frankly to turn the dial up a little bit on the product development," he states. Making noise in the market, comes after key purchases The company has been quietly going about its business in the last couple of years since the telecom and wireless meltdown, and only recently has seen the market turn around. By narrowing its focus to high-value sectors, acquiring key technological expertise and preparing for when capital expenditures began to rise again, Infowave has readied itself for a renewed interest in enterprise wireless data. The last 24 months have also seen Infowave make several key acquisitions. Two of the most important are that of HiddenMind (RoW, June 23/03) and Telispark (RoW, Jan. 13/04). Reznik says they are the building blocks of the new solutions-based model the company is now employing. "We always tried to do horizontal through indirect distribution with a middleware technology offering – and we built some great middleware – but at the end of the day the channels weren’t coming to fruition. We had to really enhance the value and become more solution oriented and add value," he explains. Expertise gained through the Telispark acquisition allows Infowave to now build applications on top of its middleware, and the new strategy appears to be paying off. Not only has the company gained some impressive clients such as Shell Oil and Hyrdo One, but revenue has also improved dramatically. For the third quarter ended September 30, the company posted sequential revenue growth of 77%, increasing to $1.5 million from $845,000 for the quarter ended June 30. Year-over-year quarterly growth jumped nearly 300% from the $381,000 recorded in the third quarter of 2003. "We had as much revenue in the last quarter as we did in the prior two fiscal years, and we’re looking to triple this year," says Reznik, adding the company almost broke even on an operational cash flow basis. Success comes from right vertical focusMuch of the company’s success, notes Reznik, can be attributed to the decision to focus on vertical market segments with large mobile workforces, such as the oil and gas, utilities, and telecommunications. With these types of companies, it’s easier to demonstrate the benefits of using mobile data applications, he adds. "One of the advantages of going from a product sell to a solution sell is it’s not just about access to data, it’s what data do I need, when, to do my job more productively," Reznik says. He adds that the return on investment comes from more than simple wireless access to data and email making someone more productive.

Infowave reorganization results in infusion of cash, greater stability going forward

News | December 2, 2004

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