UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2003
[ ] Transition report pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934.
For the Transition Period From ______ to ______
COMMISSION FILE NUMBER 000-26867
INFOWAVE SOFTWARE, INC.
(exact name of registrant as specified in its charter)
BRITISH COLUMBIA, CANADA 98 0183915
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
200 - 4664 Lougheed Hwy.
Burnaby, British Columbia
Canada, V5C 5T5
(Address of principal executive offices)
Telephone (604) 473-3600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days.
Yes X No
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes No X
Common shares outstanding at August 14, 2003: 141,791,410
INFOWAVE SOFTWARE, INC.
INDEX to the FORM 10-Q
For the Three Months Ended March 31, 2003
Part I. Financial Information
Item 1. Financial Statements
a) Consolidated Balance Sheets
June 30, 2003 and December 31, 2002..............................1
b) Consolidated Statements of Operations and Deficit
For the three and six months ended
June 30, 2003 and 2002...........................................2
c) Condensed Consolidated Statements of Cash Flows
For the three and six months ended
June 30, 2003 and 2002...........................................3
d) Notes to Consolidated Financial Statements.......................4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................9
Item 3. Quantitative and Qualitative Disclosures About Market Risk.........14
Item 4. Controls and Procedures............................................15
Part II. Other Information
Item 1. Legal Proceedings..................................................15
Item 2. Changes in Securities and Use of Proceeds..........................15
Item 3. Defaults upon Senior Securities....................................16
Item 4. Submission of Matters to a Vote of Security Holders................16
Item 5. Other Information..................................................18
Item 6. Exhibits and Reports on Form 8-K...................................19
Part III. Signatures and Certifications
Part I. Financial Information
Item 1 Financial Statements
INFOWAVE SOFTWARE, INC.
Consolidated Balance Sheets
(expressed in U.S. dollars)
============================================================================================================
June 30, 2003 Dec. 31, 2002
(unaudited)
- ------------------------------------------------------------------------------------------------------------
Assets
Current Assets:
Cash and cash equivalents $1,529,924 $2,755,929
Short term investments 363,353 355,614
Accounts receivable 521,799 394,712
Finished goods inventory 1,113 951
Prepaid expenses 57,374 135,402
- ------------------------------------------------------------------------------------------------------------
2,473,563 3,642,608
Capital assets 476,724 490,783
Other assets 393,649 25,366
- ------------------------------------------------------------------------------------------------------------
$3,343,936 $4,158,757
============================================================================================================
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable and accrued liabilities $1,121,204 $463,096
Deferred revenue 322,312 364,847
- ------------------------------------------------------------------------------------------------------------
1,443,516 827,943
Shareholders' equity
Share capital
Authorized: unlimited voting common shares
Issued: 66,659,578 (December 31, 2002: 66,439,578) 56,564,963 56,539,360
Additional paid-in capital 15,941 15,941
Other equity instruments 1,613,096 1,613,096
Deficit (56,217,572) (54,342,142)
Cumulative translation account (76,008)
(495,441)
- ------------------------------------------------------------------------------------------------------------
1,900,420 3,330,814
- ------------------------------------------------------------------------------------------------------------
$3,343,936 $4,158,757
============================================================================================================
See accompanying notes to interim consolidated financial statements
1
INFOWAVE SOFTWARE, INC.
Consolidated Statements of Operations and Deficit
(expressed in U.S. dollars)
Three months ended Six months ended
June 30, 2003 June 30, 2002 June 30, 2003 June 30, 2002
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
- ---------------------------------------------------------------------------------------------------------------------
Sales $505,397 $517,977 $917,253 $843,238
Cost of goods sold 61,855 111,574 118,694 148,741
- ---------------------------------------------------------------------------------------------------------------------
443,542 406,403 798,559 694,497
Expenses:
Research and Development 466,252 815,492 956,055 1,717,471
Sales and Marketing 380,455 1,179,481 736,729 2,803,705
General and Administrative 372,901 592,640 690,688 1,308,633
Restructuring - 1,415,380 - 1,415,380
Depreciation and Amortization 99,972 461,664 208,282 944,068
- ---------------------------------------------------------------------------------------------------------------------
1,319,580 4,464,657 2,591,754 8,189,257
- ---------------------------------------------------------------------------------------------------------------------
Loss from Operations 876,038 4,058,254 1,793,195 7,494,760
Other expenses (income):
Interest and other income (11,987) (9,650) (26,774) (37,495)
Foreign exchange 55,919 185,910 109,009 153,274
- ---------------------------------------------------------------------------------------------------------------------
Net loss for the period 919,970 4,234,514 1,875,430 7,610,539
Deficit, beginning of period 55,297,602 48,002,102 54,342,142 44,626,077
- ---------------------------------------------------------------------------------------------------------------------
Deficit, end of period $56,217,572 $52,236,616 $56,217,572 $52,236,616
- ---------------------------------------------------------------------------------------------------------------------
Net loss per share $0.01 $0.07 $0.03 $0.16
- ---------------------------------------------------------------------------------------------------------------------
Weighted average number of shares outstanding 66,659,578 57,686,701 66,643,777 46,920,880
See accompanying notes to interim consolidated financial statements
2
INFOWAVE SOFTWARE, INC.
Condensed Consolidated Statements of Cash Flows
(expressed in U.S. dollars)
- --------------------------------------------------------------------------------------------------------------------------
Three months ended Six months ended
June 30, 2003 June 30, 2002 June 30, 2003 June 30, 2002
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
- --------------------------------------------------------------------------------------------------------------------------
Net cash used in operations ($523,609) ($3,190,436) ($1,137,748) ($5,411,749)
Cash flows from investing activities:
Change in short term investments - 7,953 1,326 12,565
Purchase of capital assets (385,103) (13,142) (466,991) (93,866)
- --------------------------------------------------------------------------------------------------------------------------
(385,103) (5,189) (465,665) (81,301)
Cash flows from financing activities:
Issuance of shares and warrants for cash,
net of issue costs - 2,576 25,603 72,561
Foreign exchange gain (loss) on cash and cash
equivalents held in a foreign currency 173,950 221,239 351,805 198,293
- --------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents
(734,762) (2,971,810) (1,226,005) (5,222,196)
Cash and cash equivalents, beginning of period
2,264,686 6,837,344 2,755,929 9,087,730
- --------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $1,529,924 $3,865,534 $1,529,924 $3,685,534
- --------------------------------------------------------------------------------------------------------------------------
See accompanying notes to interim consolidated financial statements
3
INFOWAVE SOFTWARE, INC.
Notes to Consolidated Financial Statements
(Dollar amounts expressed in U.S. dollars)
(Unaudited)
1. Basis of presentation
The accompanying unaudited consolidated financial statements do not include all
information and footnote disclosures required for an annual set of financial
statements under Canadian or United States generally accepted accounting
principles. In the opinion of management, all adjustments (consisting solely of
normal recurring accruals) considered necessary for a fair presentation of the
financial position, results of operations and cash flows as at June 30, 2003 and
for all periods presented, have been included. Interim results for the three and
six-month periods ended June 30, 2003 are not necessarily indicative of the
results that may be expected for the fiscal year as a whole or for any interim
period.
The unaudited consolidated balance sheets, statements of operations and deficit
and condensed statements of cash flows include the accounts of the Company and
its wholly owned subsidiary, Infowave USA Inc. These financial statements have
been prepared in accordance with Canadian generally accepted accounting
principles for interim financial information. Except as disclosed in note 6,
these financial statements comply, in all material respects, with generally
accepted accounting principles ("GAAP") in the United States. The accounting
principles used in these financial statements are those used in the preparation
of the Company's audited financial statements for the year ended December 31,
2002. These financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's annual report
on Form 10-K for the fiscal year ended December 31, 2002.
2. Continuing Operations
These financial statements have been prepared on a going concern basis
notwithstanding the fact that the Company has experienced operating losses and
negative cash flows from operations during the three-month and six-month periods
ended June 30, 2003 and in prior periods. To date, the Company has financed its
continuing operations through the issuance of common shares and special
warrants, and more recently from a credit facility provided by the Company's
former Chief Executive Officer. Continued operations of the Company will depend
upon the attainment of profitable operations, which may require the successful
completion of external financing arrangements.
A lower cost structure, together with estimated revenue, is expected to provide
the Company with sufficient working capital to fund the Company's operations for
the balance of 2003. However, unanticipated costs and expenses or lower than
anticipated revenues could necessitate additional financing or reductions in
expenditures which may include further restructuring of the Company. There can
be no assurances that such financing, if required, will be available on a timely
or cost effective basis. To the extent that such financing is not available on
terms favorable to the Company, or at all, or reductions in expenditures are
required, the Company may not be able to, or may be delayed in being able to
commercialize its products and services and to ultimately attain profitable
operations. The Company will continue to evaluate its projected expenditures
relative to its available cash and to evaluate additional means of financing and
cost reduction strategies in order to satisfy its working capital and other cash
requirements.
4
INFOWAVE SOFTWARE, INC.
Notes to Consolidated Financial Statements
(Dollar amounts expressed in U.S. dollars)
(Unaudited)
3. Significant Accounting Policies
These interim financial statements follow the same accounting policies and
methods of application as described in Note 2 to our Annual Consolidated
Financial Statements.
4. Shareholders' equity
Authorized:
Unlimited voting common shares without par value
(a) Issued:
===========================================================================
Number
of shares Amount
---------------------------------------------------------------------------
Outstanding, March 31, 2003 66,659,578 $ 56,564,963
---------------------------------------------------------------------------
Outstanding, June 30,2003 66,659,578 $ 56,564,963
---------------------------------------------------------------------------
(b) Share purchase options:
The Company has reserved common shares, to a maximum of 20% of the total
number outstanding from time-to-time, pursuant to an Employee Stock Option
Plan ("Plan"). The purpose of the Plan is to assist eligible employees to
participate in the growth and development of the Company. Options to
purchase common shares of the Company under the Plan may be granted by the
Board of Directors to certain full-time employees of the Company. These
options are granted in Canadian dollars, vest over periods from three to
four years and expire five years from the date of grant. All stock options
granted by the Company are exercisable in Canadian dollars.
A summary of the status of the Company's stock option plan as of June 30,
2003 and December 31, 2002, and changes during the periods ended on those
dates is presented below:
5
INFOWAVE SOFTWARE, INC.
Notes to Consolidated Financial Statements
(Dollar amounts expressed in U.S. dollars)
(Unaudited)
====================================================================================
June 30, 2003 December 31, 2002
--------------- -------------------
Weighted Weighted
average average
exercise exercise
Shares price Shares price
------------------------------------------------------------------------------------
US$ / Cdn$ US$ / Cdn$
Outstanding, beginning of year 4,795,333 $1.92/2.82 6,416,689 $3.88 / 6.18
Granted 1,055,000 0.15 / 0.22 3,350,400 0.17 / 0.26
Exercised - - (193,086) 0.23 / 0.35
Cancelled (253,000) 0.43 / 0.64 (4,318,820) 3.84 / 5.99
------------------------------------------------------------------------------------
Outstanding, end of quarter 5,597,333 $1.63 / 2.44 5,255,183 $1.78 / 2.77
====================================================================================
(c) As at June 30, 2003, the Company had 5,597,333 (December 31, 2002 -
5,255,183) stock options outstanding with exercise prices ranging from Cdn
$0.15 to Cdn $64.50 and 29,343,761 (December 31, 2002 - 29,343,761)
warrants outstanding with exercise prices ranging from Cdn $0.24 to Cdn
$1.10. As at June 30, 2003, 3,189,461 (December 31, 2002 - 2,077,298) stock
options were exercisable. Of these instruments, 2,276,836 options and
29,343,761 warrants were not included in the diluted per share calculations
for the three months ended June 30, 2003 as their exercise prices were
greater than or equal to the average market value of the underlying shares
during the respective period.
(d) Under the intrinsic value method, the Company has not recognized any
compensation expense for options issued to its employees during the three
months ended June 30, 2003. Had the Company determined compensation expense
for option grants made to employees after December 31, 2001 based on the
fair values at grant dates of the stock options consistent with the fair
value method, the Company's loss and loss per share would have been
reported as the pro-forma amounts indicated below:
===========================================================================
Three months Six months
ended ended
30-Jun-03 30-Jun-03
---------------------------------------------------------------------------
Net loss - as reported $919,970 $1,875,430
Net loss - pro forma $989,344 $1,986,622
Net loss per share - as reported $0.01 $0.03
Net loss per share - pro forma $0.01 $0.03
===========================================================================
The weighted average estimated fair value at the date of grant for options
granted during the three months ended June 30, 2003 was $0.09 per share.
The fair value of each option granted was estimated on the date of grant
using the Black-Scholes option pricing model with the following
assumptions:
6
INFOWAVE SOFTWARE, INC.
Notes to Consolidated Financial Statements
(Dollar amounts expressed in U.S. dollars)
(Unaudited)
===========================================================================
Three months ended
June 30, 2003
---------------------------------------------------------------------------
Risk-free interest rate 3.20%
Dividend yield -
Volatility factor
123%
Weighted average expected life of the options 5 years
===========================================================================
For the purposes of pro-forma disclosures, the estimated fair value of the
options is amortized to expense on a straight-line basis over the vesting
period.
5. Comparative Figures
Certain prior period comparatives have been reclassified to confirm to the
current period presentation.
6. Subsequent Events
On July 4, 2003, the Company completed the acquisition of substantially all
of the business and assets of HiddenMind Technology, LLC, a wireless
software company based in Cary, North Carolina ("HiddenMind"). HiddenMind
offers a mobile application platform that enables companies to extend
existing date and applications to mobile devices. Under the terms of the
Acquisition Agreement dated July 4, 2003, the Company acquired such
business and assets in consideration for US$2,031,105. The purchase price
was paid by the Company through the issuance to HiddenMind of 14,966,034
units ("Units") of the Company at a deemed price of Cdn.$0.19 per Unit.
Each Unit consists of one common share and one half of one warrant (a
"Warrant"). Each whole Warrant entitles the holder to purchase an
additional common share of the Company at an exercise price of Cdn.$0.19
until July 4,2005. The transaction will be accounted for under the purchase
method of accounting.
On July 4, 2003, the Company issued 29,473,684 units at a price of
CDN$0.1425 per unit for gross proceeds of $3,000,000 to Gerald Trooien, the
majority shareholder of HiddenMind. Each Unit consisted of one common share
and one-half of one common share purchase warrant of the Company. Each
whole warrant entitles the holder to purchase one common share for a period
of two years from the closing date at a price of CDN$0.19 per common share.
The common shares and warrants comprising the units are subject to a four
month hold period.
On July 4, 2003 and July 14, 2003, the Company issued 22,785,805 units and
6,856,232 respectively for a total of 29,642,037 at a price of CDN$0.16125
per unit for gross proceeds of $3,566,999 (CDN$4,779,778). Each unit
consisted of one common share and one-half of one common share purchase
warrant of the Company. Each whole warrant entitles the holder to purchase
one common share for a period of two years from the closing date at a price
of CDN$0.215 per common share. The common shares and warrants comprising
the units are subject to a four month hold period. The agent was paid a
cash commission equal to 7.5% of the gross proceeds from the offering and
2,964,203 warrants (the "Agents' Warrants"). Each Agents' Warrant entitles
the agent to purchase one common share and one-half of one common share
purchase warrant for two years from the closing date at a price of
CDN$0.215 per common share. In addition, the Company issued 300,000 units
to the agent as a corporate finance fee.
7. United States generally accepted accounting principles
These interim financial statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") in Canada. Reference
should be made to note 15 of the Company's annual financial statements
filed with the Securities and Exchange Commission under cover of Form 10-K
for a description of material differences between Canadian and United
States GAAP. No additional reconciling items have been identified in the
period ended June 30, 2003. The following are the material measurement
differences from GAAP in the United States as they relate to the Company's
June 30, 2003 financial statements:
(a) Net loss and net loss per share:
=========================================================================================================
Three months ended Six months ended
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
(unaudited) (unaudited) (unaudited) (unaudited)
- ---------------------------------------------------------------------------------------------------------
Loss from continuing operations in accordance with
Canadian GAAP $919,970 $4,234,514 $1,875,430 $7,610,539
Adjustment for stock-based compensation relating to
stock options issued to non-employees - - - -
- ---------------------------------------------------------------------------------------------------------
Net loss in accordance with United States GAAP $919,970 $4,234,514 $1,875,430 $7,610,539
=========================================================================================================
- ---------------------------------------------------------------------------------------------------------
Weighted average number of shares outstanding in
accordance with Canadian and United States GAAP 66,659,578 57,686,701 66,643,777 46,920,880
=========================================================================================================
- ---------------------------------------------------------------------------------------------------------
Net loss per share in accordance with US GAAP $0.01 $0.07 $0.03 $0.16
=========================================================================================================
=========================================================================================================
Comprehensive loss:
Net loss in accordance with United
States GAAP $919,970 $4,234,514 $1,875,430 $7,610,539
Other comprehensive loss (income):
Foreign currency translation adjustment (205,750) (326,551) (419,433) (296,980)
- ---------------------------------------------------------------------------------------------------------
$714,220 $3,907,963 $1,455,997 $7,313,559
=========================================================================================================
7
INFOWAVE SOFTWARE, INC.
Notes to Consolidated Financial Statements
(Dollar amounts expressed in U.S. dollars)
(Unaudited)
(b) Balance sheet:
===========================================================================================================
March 30, 2003 Dec 31, 2002
(unaudited)
- -----------------------------------------------------------------------------------------------------------
Total Assets
Total assets in accordance with Canadian GAAP, which is
equivalent to total assets in accordance with United
States GAAP $3,343,936 $4,158,757
===========================================================================================================
- -----------------------------------------------------------------------------------------------------------
Shareholders' Equity
Share capital in accordance with Canadian GAAP $56,564,963 $56,539,360
Foreign exchange effect on conversion of 1998 and prior
share capital transactions 543,269 543,269
Additional paid in capital relating to stock options issued
to non-employees 520,999 520,999
Additional paid in capital related to escrow shares 107,077 107,077
- -----------------------------------------------------------------------------------------------------------
Share capital in accordance with United States GAAP 57,736,308 57,710,705
- -----------------------------------------------------------------------------------------------------------
Additional paid-in-capital in accordance with Canadian and
United States GAAP 15,941 15,941
- -----------------------------------------------------------------------------------------------------------
Other equity instruments in accordance with Canadian and United
States GAAP 1,613,096 1,613,096
- -----------------------------------------------------------------------------------------------------------
Deficit in accordance with Canadian GAAP (56,217,572) (54,342,142)
Foreign exchange effect on conversion of 1998 and prior
income statements (189,240) (189,240)
Cumulative effect of stock based compensation relating
to stock options issued to non-employees (519,411) (519,411)
Cumulative effect of stock based compensation relating
to escrow shares (101,474) (101,474)
Adjustment for impairment of long lived assets to fair value - (422,762)
- -----------------------------------------------------------------------------------------------------------
Deficit in accordance with United States GAAP (57,027,697) (55,575,029)
- -----------------------------------------------------------------------------------------------------------
Cumulative translation account in accordance with Canadian GAAP (76,008) (495,441)
Foreign exchange effect on conversion of 1998 and prior
financial statements (341,140) (341,140)
Cumulative foreign exchange effect of US GAAP
adjustments (20,080) (20,080)
- -----------------------------------------------------------------------------------------------------------
Cumulative translation account in accordance with United
States GAAP (437,228) (856,661)
- -----------------------------------------------------------------------------------------------------------
Shareholders' equity in accordance with United States GAAP $1,900,420 $2,908,052
- -----------------------------------------------------------------------------------------------------------
8
Item 2. Management's Discussion And Analysis Of Financial Condition And Results
Of Operations
Investors should read the following in conjunction with the unaudited financial
statements and notes thereto included in Part I - Item 1 of this Quarterly
Report, and the audited financial statements and notes thereto for the year
ended December 31, 2002 included in the Corporation's annual report on Form
10-K.
Forward-Looking Statements
Statements in this filing about future results, levels of activity, performance,
goals or achievements or other future events constitute forward-looking
statements. These statements involve known and unknown risks, uncertainties and
other factors that may cause actual results or events to differ materially from
those anticipated in any forward-looking statements. These factors include,
among others, those described in connection with the forward-looking statements,
and the factors listed in Exhibit 99.1 to this report, which is hereby
incorporated by reference in this report.
In some cases, forward-looking statements can be identified by the use of words
such as "may," "will," "should," "could," "expect," "plan," "intend,"
"anticipate," "believe," "estimate," "predict," "potential" or "continue" or the
negative or other variations of these words, or other comparable words or
phrases.
Although the Company believes that the expectations reflected in its
forward-looking statements are reasonable, it cannot guarantee future results,
levels of activity, performance or achievements or other future events.
Moreover, neither the Corporation nor anyone else assumes responsibility for the
accuracy and completeness of forward-looking statements. The Corporation is
under no duty to update any of its forward-looking statements after the date of
this filing. The reader should not place undue reliance on forward-looking
statements.
Critical Accounting Policies In preparing the consolidated financial statements,
estimates and judgements are applied that affect the reported amounts of assets,
liabilities, revenues and expenses and the disclosure of contingent assets and
liabilities for the reporting periods. The Company bases its estimates on
historical experience and on various other assumptions that are believed to be
reasonable in the circumstances, the results of which form the basis for making
judgements about the carrying values of assets and liabilities that are not
readily available from other sources. On an on-going basis, the Company
evaluates areas of estimate or judgement to ensure they reflect currently
available assessments and knowledge. Actual results may differ from these
estimates under different assumptions and conditions.
The Company believes that the following critical accounting policies affect the
more significant judgements and estimates.
The consolidated financial statements reflect a full valuation allowance against
the net future income tax assets based on the Company's assessment that it is
not more likely than not that it will able to utilize certain deductions before
their expiry. The Company's assessment is based on a judgement of the ongoing
existence of estimated losses before such deductions and the inherent
uncertainties as to the timing of future income for tax purposes before loss
carry forwards, if any. Changes in the timing of the recognition and amount of
revenues and expenses in the future may impact the Company's ability to utilize
these deductions.
9
The Company recognizes revenue on the percentage-of-completion basis for
software development contracts. The Company assesses the portion of each
contract that is completed based upon estimates of time and resources incurred
and required for completion of the contract. Various factors, including
unforeseen complications in the development and availability of key resources,
could materially impact these estimates. No new software development contracts
have been signed in the three months ended June 30, 2003.
The Company prepares its financial statements in accordance with Canadian
Generally Accepted Accounting Principles ("GAAP") and subsequently reconciles
them to US GAAP. A detailed description of this reconciliation, and assumptions
therein, is included in Note 6 to the financial statements.
The Company's Significant Accounting Policies are described in Note 2 to the
Consolidated Financial Statements found in Item 8 of the Company's Form 10-K
filed on March 26, 2003.
Overview
Infowave Software, Inc. ("Infowave" or the "Company") develops, markets and
sells infrastructure software solutions that facilitate wireless computing for
individuals, workgroups, enterprises and network operators. Focused on enabling
the wireless workplace since 1993, Infowave's product solutions connect workers
wirelessly in real-time to their corporate data, enabling businesses to
communicate more easily, deliver effective customer service and conduct more
business from any location.
The Company provides a complete range of wireless solutions for corporate users,
ranging from the individual email service of Symmetry Pro, to workgroups and
enterprises served by Symmetry Pro Workgroup and Symmetry Pro Enterprise
editions. The Company also offers the Wireless Business Engine(TM), a wireless
platform for large corporations that provides access to email and collaboration
tools, corporate intranets, the Internet, Web-enabled applications and legacy
and client/server applications from a wide range of wireless devices such as
handheld computers, laptops, PDAs and emerging integrated phone devices.
The Company announced in April of 2003 a strategic partnership with Symbian in
developing and marketing solutions for mobile network operators and corporate
customers globally based on Infowave's Symmetry suite of wireless solutions.
The Company announced in May of 2003 a partnership with Dell in marketing
Infowave's Wireless Business Engine solution with Dell's GPRS wireless access
offerings to the U.K. business market.
The Company announced in June of 2003 that it would cooperate with T-Mobile on
the launch of T-Mobile's new Instant E-mail service, a wireless e-mail service
for smartphone devices powered by Infowave's Symmetry suite of mobile messaging
solutions, to the UK market.
The Company announced in July of 2003 that it had entered into an acquisition
agreement to acquire substantially all of the business and assets of HiddenMind
Technology, LLC ("HiddenMind"), a wireless software company based in Cary, North
Carolina, USA. HiddenMind offers a mobile application platform that enables
companies to extend existing data and applications to mobile devices. Under the
terms of the acquisition agreement, the Company would acquire substantially all
of the business and assets of HiddenMind and in consideration will issue to
HiddenMind 14,966,034 units of Infowave at a deemed price of CDN$0.19 per unit.
Each unit would consist of one Infowave common share and a one half of a
warrant. Each whole warrant would entitle the holder to purchase an additional
Infowave common share at a price of CDN$0.19 for a period of two years.
10
The Company entered into a subscription agreement in July of 2003 with Jerry
Trooien under which Trooien has agreed to subscribe for 29,473,684 units of
Infowave at a price of CDN $0.1425 per unit for aggregate subscription proceeds
to Infowave of US$3.0 million. Mr. Trooien is the controlling member of
HiddenMind. Each unit would consist of one Infowave common share and a one half
of a warrant. Each whole warrant would entitle the holder to purchase an
additional Infowave common share at a price of CDN$0.19 for a period of two
years.
The Company announced in July of 2003 that the Company entered into an agreement
with two agents (collectively the "Agents") for a private placement offering of
Units at a price of CDN$0.16125 per Unit for gross subscription proceeds of up
to CDN$4.8 million (approximately US$3.6 million). A Unit consists of one common
share and one half of one common share purchase warrant. Each whole warrant
entitles the holder to acquire one common share for a period of two years from
the closing date at a price of CDN$0.215 per common share (the "Warrants"). The
use of proceeds is for general working capital purposes and for incremental
investment in sales, marketing and product development to support execution of
the Company's business plan, with a focus upon the Company's telecommunications
carrier wireless software products and services.
The Company is amalgamated under the Company Act (British Columbia). The
Company's head office and development facilities are located at The Infowave
Building, Suite 200, 4664 Lougheed Highway, Burnaby, British Columbia, Canada,
V5C 5T5 (telephone 604.473.3600). The Company's registered office is at Suite
2600, Three Bentall Centre, 595 Burrard Street, PO Box 49314, Vancouver, British
Columbia, Canada, V7X 1L3. The Company's wholly owned subsidiary, Infowave USA
Inc., is incorporated under the laws of the State of Washington at Suite 500,
3535 Factoria Blvd. SE, Bellevue, Washington, 98006. The Company operates a
sales office in London, England at Cardinal Point, Park Road, Rickmansworth,
Hertfordshire WD3 1RE 4JS (telephone + 44 (1923) 432 632). The Company also has
a master reseller agreement with an agency for Continental Europe located at
Dreimuhlenstra(beta)e 27, 80476 Munchen / Munich, Germany (telephone 49 89
767368-94).
Second quarter 2003 compared to first quarter of 2003 and to second quarter of
2002.
Revenues for the second quarter of 2003 were $505,397 representing an increase
of 23% from $411,856 in the first quarter of 2003 and a decrease of 2.4% from
$517,977 in the second quarter of 2002.
Revenue mix for the three months ended June 30, 2003 was attributable to 55%
from software license fees, 20% from maintenance and support fees, and 25% from
technical service fees. This compares to 25% and 71% from software license fees,
23% and 18% from maintenance and support fees, and 52% and 11% from technical
service fees for the three month periods ended March 31, 2003 and June 30, 2002,
respectively. The increase in license revenue was due to the sale of greater
volume of software licenses in the quarter.
Gross margins for the second quarter of 2003 were 88%, compared to 86% in the
previous quarter ended March 31, 2003 and 78% in the quarter ended June 30,
2002.
Total expenses for the second quarter ended June 30, 2003 were $1,319,580 which
increased 4% from $1,272,174 in the previous quarter and decreased 70% from
$4,464,657
11
in the second quarter of 2002. This decrease over the three-month period ended
June 30, 2002 is attributable to the restructuring initiatives performed by the
Company during the year ended December 31, 2002.
Operating expenses (excluding amortization) were $1,219,608 for the second
quarter 2003, representing a 5% increase from $1,163,864 in the first quarter of
2003 and a 70% decrease from $4,002,993 in the second quarter of 2002. This
decrease over the three month period ended June 30, 2002 is attributable to the
restructuring initiatives performed by the Company during the year ended
December 31, 2002.
Total research and development ("R&D") expenses for the second quarter of 2003
totaled $466,252 representing an decrease of 5% from the prior quarter total of
$489,803 and 43% decrease from $815,492 in the second quarter of 2002. The
Company believes that its investment in R&D is sufficient to support its current
product line. Approximately 50% of the Company's total headcount remains in R&D.
This decrease over the three-month period ended June, 2002 is attributable to
the restructuring initiatives performed by the Company during the year ended
December 31, 2002.
Sales & marketing expenses for the quarter ended June 30, 2003 were $380,455
compared to $356,274 in the first quarter of 2003 and $1,179,481 in the second
quarter of 2002. The increase of 7% from the previous quarter was due to an
increase in headcount. This decrease over the three-month period ended June 30,
2002 is attributable to the restructuring initiatives performed by the Company
during the year ended December 31, 2002.
General and administrative ("G&A") expenses of $372,901 increased by 17% from
expenses of $317,787 in the prior quarter and decreased by 37% from expenses of
$592,640 in the comparable period in 2002. The increase over the prior quarter
was due to increased costs incurred relating to the corporate finance activities
of the Company during the quarter. The decrease over the three-month period
ended June 30, 2002 is attributable to the restructuring initiatives performed
by the Company during the year ended December 31, 2002.
Amortization expense totaled $99,972 in the quarter ended June 30, 2003 which is
8% lower than amortization expense of $108,310 in the prior quarter and 78%
lower than $461,664 in the second quarter of 2002. This decrease over the three
month ended June 30, 2002 is attributable to the restructuring initiatives
performed by the Company during the year ended December 31, 2002.
Foreign exchange loss was $55,919 for the second quarter of 2003, compared to a
loss of $53,090 in the prior quarter and a loss of $185,910 in the second
quarter of 2002. The changes are due to fluctuations in the foreign exchange
rate between the Canadian and US Dollar. The Canadian dollar strengthened
approximately 6% against the US dollar during the quarter that impacted the
Company's results as significant portions of the Company's monetary balances are
in US denomination.
Six months ended June 30, 2003 compared to six months ended June 30, 2002
Total revenues for the six months ended June 30, 2003 were $917,253, which
represented a 9% increase over revenues of $843,238 from the comparable period
in 2002. The revenue breakdown for the six-month period ending June 30, 2002
comprised of 67% in license fees, 22% in support and maintenance and 11% in
technical service fees. Gross margins were 87% for the current period compared
to 82% in the six months ended June 30, 2002 due to a write-down of obsolete
inventory in the second quarter of 2002.
12
Total operating expenses for the six months ended June 30, 2003 was $2,591,754
versus $8,189,257 for the same period in 2002. R&D expenses decreased by 44%
from $1,717,471 in the 2002 period to $956,055 in 2003 due to a lower headcount
and reduced usage of contractors. Sales and marketing expenses of $736,729
decreased by 74% from $2,803,705, largely attributed to headcount reductions and
conservative spending in marketing programs, advertising and public relations
campaigns. G&A costs decreased by 47% from $1,308,633 to $690,688 largely due to
a smaller operating structure and reduced overhead.
Amortization expense decreased from $944,068 in the first six months of 2003 to
$208,282 in the same period of 2002. The decrease of 78% is due to the
amortization of significant reduction of capital asset base in 2002 due to
restructuring. These additions in the prior year consisted primarily of
purchases of computer equipment and software.
Interest & other income for the six months ended June 30, 2003 was $26,774,
compared to $37,495 in the comparable period in 2002.
Foreign exchange loss decreased from $153,274 at the end of June 30, 2002 to
$109,009 at the end of June 30, 2003. The fluctuation is due to the movement in
the price of the US dollar as it weakened against the Canadian dollar.
Liquidity and Capital Resources
The Company's cash, cash equivalents and short-term investments at June 30, 2003
totaled $1,893,277. Included in this total amount is security of $150,000 held
in short term investments to support a lease obligation and $350,000 being held
as allocated funds for potential severance as related to previously initiated
business restructuring during the prior year.
The Company had total working capital of $1,030,047 at June 30, 2003, compared
to $2,814,665 at December 31, 2002 and $3,626,364 at June 30, 2002.
Capital assets decreased from $490,783 at December 31, 2002 to $476,724 at June
30, 2003.
As at June 30, 2003, the Company's primary sources of liquidity consisted of
cash and short-term investments, an operating loan facility, a convertible loan
agreement and proceeds from financing. The operating loan facility has a credit
limit of Cdn $100,000, secured by short-term investments. The convertible loan
agreement, signed on March 8, 2002 with HP, provides the Company with access to
funds under a convertible revolving loan of up to $2,000,000. The principal
amount outstanding under the loan may be converted into Common Shares at a price
of $1.00 per share, at any time up to March 8, 2005, subject to adjustment in
certain circumstances. The Company could draw down amounts under the loan up to
a maximum of the lesser of $2.0 million or the adjusted net working capital of
the Company. Until December 31, 2002, the Company could draw down amounts not to
exceed $2.0 million or 150% of the total amount of the Company's cash, cash
equivalents and net accounts receivable from HP. During the remainder of the
term of the HP loan, the Company may draw down amounts not to exceed the lesser
of $2.0 million or the Company's adjusted net working capital (as described in
the loan agreement). The principal amount outstanding bears interest at prime
plus 3.25%. Certain assets of the Company, excluding its intellectual property,
secure the loan. At June 30, 2003, no amounts were outstanding on the operating
line or the convertible loan.
13
In July of 2003, the Company entered into an acquisition agreement to acquire
substantially all of the business and assets of HiddenMind Technology, LLC
("HiddenMind"), a wireless software company based in Cary, North Carolina, USA.
HiddenMind offers a mobile application platform that enables companies to extend
existing data and applications to mobile devices. Under the terms of the
acquisition agreement, the Company acquired substantially all of the business
and assets of HiddenMind and in consideration will issue to HiddenMind
14,966,034 units of Infowave at a deemed price of CDN$0.19 per unit. Each unit
consists of one Infowave common share and a one half of a warrant. Each whole
warrant entitles the holder to purchase an additional Infowave common share at a
price of CDN$0.19 for a period of two years.
In July of 2003, the Company entered into a subscription agreement with Jerry
Trooien under which Trooien has subscribed for 29,473,684 units of Infowave at a
price of CDN $0.1425 per unit for aggregate subscription proceeds to Infowave of
US$3.0 million. Mr. Trooien is the controlling member of HiddenMind. Each unit
consists of one Infowave common share and a one half of a warrant. Each whole
warrant entitles the holder to purchase an additional Infowave common share at a
price of CDN$0.19 for a period of two years. All expenditures related to the
acquisition have been capitalized (see Consolidated Balance Sheets June 30, 2003
and December 31, 2002).
In July of 2003, the Company entered into an agreement with two agents
(collectively the "Agents") for a private placement offering of Units at a price
of CDN$0.16125 per Unit for gross subscription proceeds of up to CDN$4.8 million
(approximately US$3.6 million). Each Unit consists of one common share and one
half of one common share purchase warrant. Each whole warrant entitles the
holder to acquire one common share for a period of two years from the closing
date at a price of CDN$0.215 per common share (the "Warrants"). The use of
proceeds is for general working capital purposes and for incremental investment
in sales, marketing and product development to support execution of the
Company's business plan, with a focus upon the Company's telecommunications
carrier wireless software products and services.
The Company believes that the total amount of cash, cash equivalents and
short-term investments from the above capitalization initiatives will be
sufficient to ensure that the Company remains funded through the majority of
2004. Thereafter, the Company may need to raise additional capital for working
capital or expenses. The Company may also encounter opportunities for
acquisitions or other business initiatives that require significant cash
commitments, or unanticipated problems or expenses that could result in a
requirement for additional cash before that time. There can be no assurance that
additional financing will be available on terms favorable to the Company or its
shareholders, or on any terms at all. The inability to obtain such financing
would have a material adverse impact on the Corporation's operations. To the
extent that such financing is available, it may result in substantial dilution
to existing shareholders.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company conducts the majority of its transactions in Canadian dollars and,
therefore, uses the Canadian dollar as its base currency of measurement.
However, most of the Company's revenues and some of its expenses are denominated
in United States dollars which results in an exposure to foreign currency gains
and losses on the resulting US dollar denominated cash, accounts receivable, and
accounts payable balances. As of June 30, 2003, the Company has not engaged in
derivative hedging activities on foreign currency transactions and/or balances.
Although realized foreign currency gains and losses have not historically been
material, fluctuations in exchange rates between the United States dollar and
other foreign currencies and the Canadian dollar could materially affect the
Company's results of operations. To the extent that the Company
14
implements hedging activities in the future with respect to foreign currency
exchange transactions, there can be no assurance that the Company will be
successful in such hedging activities.
While the Company believes that inflation has not had a material adverse effect
on its results of operations, there can be no assurance that inflation will not
have a material adverse effect on the Company's results of operations in the
future.
Item 4. Controls and Procedures
(a) Evaluation of disclosure controls and procedures
Under the supervision and with the participation of our management, including
the Office of the President and Chief Financial Officer, we evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of
1934 (the "Exchange Act")). Based upon that evaluation, the Office of the
President and Chief Financial Officer concluded that, as of the end of the
period covered by this report, our disclosure controls and procedures were
effective in timely alerting them to the material information relating to us (or
our consolidated subsidiaries) required to be included in the reports we file or
submit under the Exchange Act.
(b) Changes in internal controls
During the fiscal quarter ended June 30, 2003, there has been no change in our
internal control over financial reporting (as defined in Rule 13a-15(f) under
the Exchange Act) that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
Part II. Other Information
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
a) On July 4, 2003, the Company issued 29,473,684 units at a price of
CDN$0.1425 per unit for gross proceeds of $3,000,000 to Gerald
Trooien, the majority shareholder of HiddenMind. Each Unit consisted
of one common share and one-half of one common share purchase warrant
of the Company. Each whole warrant entitles the holder to purchase one
common share for a period of two years from the closing date at a
price of CDN$0.19 per common share. The common shares and warrants
comprising the units are subject to a four month hold period.
b) On July 4, 2003, the Company completed the acquisition of
substantially all of the business and assets of HiddenMind Technology,
LLC, a wireless software company based in Cary, North Carolina
("HiddenMind"). HiddenMind offers a mobile application platform that
enables companies to extend existing date and applications to mobile
devices. Under the terms of the Acquisition Agreement dated July 4,
2003, the Company acquired such business and assets in consideration
for US$2,031,105. The purchase price was paid by the Company through
the issuance to HiddenMind of 14,966,034 units ("Units") of the
Company at a deemed price of Cdn.$0.19 per Unit. Each Unit consists of
one common share and
15
one half of one warrant (a "Warrant"). Each whole Warrant entitles the
holder to purchase an additional common share of the Company at an
exercise price of Cdn.$0.19 until July 4,2005. The transaction will be
accounted for under the purchase method of accounting.
c) On July 4, 2003 and July 14, 2003, the Company issued 22,785,882 units
and 6,856,232 respectively for a total of 29,642,114 at a price of
CDN$0.16125 per unit for gross proceeds of $3,567,007 (CDN$4,779,790).
Each unit consisted of one common share and one-half of one common
share purchase warrant of the Company. Each whole warrant entitles the
holder to purchase one common share for a period of two years from the
closing date at a price of CDN$0.215 per common share. The common
shares and warrants comprising the units are subject to a four month
hold period. The agent was paid a cash commission equal to 7.5% of the
gross proceeds from the offering and 2,964,203 warrants (the "Agents'
Warrants"). Each Agents' Warrant entitle the agent to purchase one
common share and one-half of one common share purchase warrant for two
years from the closing date at a price of CDN$0.215 per common share.
In addition, the Company issued 300,000 units to the agent as a
corporate finance fee.
The sales and issuances of the shares and warrants described in Item 2(a) and
2(b) were exempt from Securities Act registration pursuant to Rule 506 under
Regulation D under the Securities Act, as all investors were "accredited
investors", as such term in defined in Rule 501(a) of Regulation D. The sales
and issuances of the securities described in Item 2(c) were excluded from
Securities Act registration pursuant to Rule 903(b)(1) of Regulation S under the
Securities Act. The Company was a "foreign issuer", as such term is defined in
Regulation S, and it issued such securities outside the United States and not
for the account or benefit of any "U.S. Person", as such term is defined in
Regulation S.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Shareholders was held on June 30,
2003, where the shareholders:
(i) appointed KPMG LLP, Chartered Accountants, as the Company's
independent auditors for the ensuing year and authorized the Company's
board of directors to fix the remuneration for such auditors;
(ii) approved setting the size of the Company's board of directors at six,
subject to increase as may be permitted under the Company Act (British
Columbia);
(iii) approved the special resolution authorizing the continuance of the
Company from British Columbia to the federal jurisdiction of Canada;
(iv) elected Thomas Koll, Jim McIntosh, Lew Turnquist, Stephen Wu, Jerry
Meerkatz and Jean-Francoise Heitz as directors of the Company;
(v) the ordinary resolution to approve the purchase of substantially all
of the assets of Hiddenmind Technology LLC;
(vi) the ordinary resolution to approve the brokered private placement of
US$3,00,000 of units to Gerald Trooien at a price of CDN$0.1425 per
unit;
(vii) the ordinary resolution to approve the brokered private placement of
up to CDN$5,600,000 of units at a price of CDN$0.16125 per unit;
(viii) the ordinary resolution to confirm and approve the stock option
component of the stock option and stock bonus plan of the company;
(ix) the ordinary resolution to confirm the stock bonus component of the
stock option and stock bonus plan of the company;
(x) to transact such other business as may properly com before the meeting
The shareholders voted in the following manner:
PROPOSAL 1: To appoint KPMG LLP, Chartered Accountants, as the
Company's independent auditors for the ensuing year and authorized the
Company's board of directors to fix the remuneration for such
auditors. There were 15,605,190 votes
16
cast for the proposal, 201,700 against with 18,125 votes withheld and
400 abstained votes and 0 broker non-votes.
PROPOSAL 2: To approve setting the size of the Company's board of
directors at six, subject to increase as may be permitted under the
Company Act (British Columbia). There were 15,690,885 votes cast for
the proposal, 133,130 votes cast against with 1,400 abstained votes
and 0 broker non-votes.
PROPOSAL 3: To approve the special resolution authorizing the
continuance of the Company from British Columbia to the federal
jurisdiction of Canada. There were 12,161,274 votes cast for the
proposal, 231,650 votes cast against with 1,600 abstained votes and
3,430,891 broker non-votes.
PROPOSAL 4: To elect the following individuals to the Company's board
of directors:
Name Votes For Votes Withheld Abstained Votes Broker non-votes
Thomas Koll 14,781,100 44,315 0 0
Jim McIntosh 15,763,575 61,840 0 0
Lew Turnquist 15,789,550 35,865 0 0
Stephen Wu 15,789,830 35,585 0 0
Jerry Meerkatz 15,789,930 35,485 0 0
Jean-Francois Heitz 15,772,515 52,900 0 0
PROPOSAL 5: The ordinary resolution to approve the purchase of
substantially all of the assets of Hiddenmind Technology LLC. There
were 12,271,411 votes cast for the proposal, 121,305 votes cast
against with 1,800 abstained votes and 3,430,899 broker non-votes.
PROPOSAL 6: The ordinary resolution to approve the brokered private
placement of US$3,00,000 of units to Gerald Trooien at a price of
CDN$0.1425 per unit. There were 10,999,806 votes cast for the
proposal, 1,393,610 votes cast against with 1,100 abstained votes and
3,430,899 broker non-votes.
PROPOSAL 7: The ordinary resolution to approve the brokered private
placement of up to CDN$5,600,000 of units at a price of CDN$0.16125
per unit. There were 11,075,121 votes cast for the proposal, 1,318,495
votes cast against with 900 abstained votes and 3,430,899 broker
non-votes.
PROPOSAL 8: The ordinary resolution to confirm and approve the stock
option component of the stock option and stock bonus plan of the
company. There were 11,98,064 votes cast for the proposal, 595,752
votes cast against with 700 abstained votes and 3,430,899 broker
non-votes.
PROPOSAL 9: The ordinary resolution to confirm the stock bonus
component of the stock option and stock bonus plan of the company.
There were 11,761,244 votes cast for the proposal, 632,572 votes cast
against with 700 abstained votes and 3,430,899 broker non-votes.
17
PROPOSAL 10: To transact such other business as may properly come
before the meeting. There were 15,678,280 votes cast for the proposal,
138,035 votes cast against with 9,100 abstained votes and 0 broker
non-votes.
Item 5. Other Information
a) On June 18, 2003, Mr. William "Butch" Winters was appointed the
Company's Executive Vice President of Enterprise Solutions and
member of the Office of the President.
b) On July 2, 2003, the Company elected of two new members to its
board of directors: Jean-Francois Heitz, Deputy Chief Financial
Officer at Microsoft and Jerry Meerkatz, former Vice President
and General Manager of Enterprise Mobility Solutions at Hewlett
Packard Company to its board.
c) On July 4, 2003, the Company completed the acquisition of
substantially all of the business and assets of HiddenMind
Technology, LLC, a wireless software company based in Cary, North
Carolina ("HiddenMind"). HiddenMind offers a mobile application
platform that enables companies to extend existing date and
applications to mobile devices. Under the terms of the
Acquisition Agreement dated July 4, 2003, the Company acquired
such business and assets in consideration for US$2,031,105. The
purchase price was paid by the Company through the issuance to
HiddenMind of 14,966,034 units ("Units") of the Company at a
deemed price of Cdn.$0.19 per Unit. Each Unit consists of one
common share and one half of one warrant (a "Warrant"). Each
whole Warrant entitles the holder to purchase an additional
common share of the Company at an exercise price of Cdn.$0.19
until July 4,2005. The transaction will be accounted for under
the purchase method of accounting.
d) On July 4, 2003, the Company issued 29,473,684 units at a price
of CDN$0.1425 per unit for gross proceeds of $3,000,000 to Gerald
Trooien, the majority shareholder of HiddenMind. Each Unit
consisted of one common share and one-half of one common share
purchase warrant of the Company. Each whole warrant entitles the
holder to purchase one common share for a period of two years
from the closing date at a price of CDN$0.19 per common share.
The common shares and warrants comprising the units are subject
to a four month hold period.
e) On July 4, 2003 and July 14, 2003, the Company issued 22,785,805
units and 6,856,232 respectively for a total of 29,642,037 at a
price of CDN$0.16125 per unit for gross proceeds of $3,566,999
(CDN$4,779,778). Each unit consisted of one common share and
one-half of one common share purchase warrant of the Company.
Each whole warrant entitles the holder to purchase one common
share for a period of two years from the closing date at a price
of CDN$0.215 per common share. The common shares and warrants
comprising the units are subject to a four month hold period. The
agent was paid a cash commission equal to 7.5% of the gross
proceeds from the offering and 2,964,203 warrants (the "Agents'
Warrants"). Each Agents' Warrant entitles the agent to purchase
one common share and one-half of one common share purchase
warrant for two years from the closing date at a price of
CDN$0.215 per common share. In addition, the Company issued
300,000 units to the agent as a corporate finance fee.
18
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
2.1(1) Asset Purchase Agreement dated September 8, 2000 between the
Corporation and Strydent Software Inc.
2.2 (1) Asset Purchase Agreement with HiddenMind Technology LLC dated May
28, 2003.
3.1(2) Memorandum and Articles of registrant
*4.1(2) Employee Incentive Plan dated April 28, 1997, as supplemented
September 25, 1997
4.2(2) Special Warrant Indenture dated April 20, 1998 between the
Corporation and Montreal Trust Company of Canada
4.3(3) Special Warrant Indenture dated June 30, 1999 between the
Corporation and Montreal Trust Company of Canada
4.4(4) Special Warrant Indenture dated April 13, 2000 between the
Corporation and Montreal Trust Company
*4.5(5) Stock Option Plan, as amended
4.6(6) Form of Shareholders Rights Plan Agreement dated as of June 5, 2000
between the Corporation and Montreal Trust Company of Canada
4.7(10) Warrant Certificate dated July 24, 2001 issued to Thomas Koll
10.1(2) Investor Relations Agreement dated September 1, 1998 between the
Corporation and IRG Investor Relations Group Ltd.
10.2(2) Investor Relations Agreement dated September 1, 1998 between the
Corporation and Staff Financial Group Ltd. and 549452 BC Ltd.
10.3(2) Loan Facility dated October 29, 1998 with a Canadian chartered bank
10.4(3) Lease Agreement dated February 12, 1998 between Riocan Holdings
Inc. and the Corporation
10.5(3) Lease Agreement dated November 23, 1999 between Bedford Property
Investors, Inc. and the Corporation
*10.6(2) Corporate Development Agreement dated October 26, 1998 between the
Corporation and Capital Ridge Communications Inc. (formerly "Channel One
Systems Corp.")
10.7(2) Strategic Partnership Agreement dated March 6, 1998 between the
Corporation and BellSouth Wireless Data
19
10.8(2) Development Agreement dated March 4, 1998 between the Corporation
and Hewlett-Packard
10.9(2) Source Code License Agreement dated March 31, 1998 between the
Corporation and DTS
10.10(2) Source Code License Agreement dated June 9, 1998 between the
Corporation and Wynd Communications Corporation
10.11(2) Source Code License Agreement dated November 13, 1997 between the
Corporation and Apple Computers
10.12(2) OEM License Agreement dated December 5, 1997 between the
Corporation and Certicom Corp.
10.13(2) Letter Agreement dated April 20, 1998 between the Corporation and
Lexmark International, Inc.
*10.14(2) Employment Agreement dated May 2, 1991 between the Corporation
and Jim McIntosh
*10.15(2) Employment Agreement dated May 23, 1997 between the Corporation
and Bijan Sanii
*10.16(3) Employment Agreement dated September 16, 1999 between the
Corporation and Todd Carter
10.17(2) Agency Agreement dated March 31, 1998 between the Corporation,
Canaccord Capital Corporation and Yorkton Securities Inc.
10.18(2) Consulting Agreement dated July 4, 1997 between the Corporation
and GWM Enterprises Ltd.
10.19(3) Agency Agreement dated June 18, 1999 between the Corporation,
Canaccord Capital Corporation, Yorkton Securities , Inc., Sprott Securities
Limited and Taurus Capital Markets Ltd.
10.20(4) Letter of Intent dated May 8, 2000 among the Corporation, Kevin
Jampole and Robert Heath
10.21(7) Lease Agreement dated April 26, 2000 between the Corporation and
Tonko-Novam Management Ltd.
*10.22(8) Employment Agreement dated December 14, 2000 between the
Corporation and Thomas Koll
10.23(8) Lease dated December 7, 2000 between the Corporation and Principal
Development Investors, L.L.C.
10.24(9) Employment Agreement dated April 16, 2001 between the Corporation
and Jeff Feinstein
10.25(9) Lease Agreement between the Corporation and Sterling Realty
Organization Co.
10.26(9) Lease Termination Agreement dated May 24, 2001 between the
Corporation and Principal Development Investors, LLC
20
10.27(10) Loan Agreement dated July 24, 2001 between the Corporation and
Thomas Koll
10.28(10) Security Agreement dated July 24, 2001 made by the Corporation in
favor of Thomas Koll
10.29(10) Intellectual Property Security Agreement dated July 24, 2001 made
by the Corporation in favor of Thomas Koll
10.30(10) Loan Agreement dated August 10, 2001 between the Corporation and
Sal Visca
10.31(10) Promissory Note dated August 10, 2001 between the Corporation and
Sal Visca
10.32(10) Employment letter dated August 10, 2001 between the Corporation
and Sal Visca
*10.33(11) Employment letter dated March 8, 2002 between the Corporation
and George Reznik
10.34(11) Convertible loan agreement dated March 8, 2002 between the
Corporation and Compaq
10.35(12) Lease Termination Agreement dated May 25, 2002 between the
Corporation and Sterling Realty Organization Co.
10.36(12) Lease Agreement dated June 18, 2002 between the Corporation and
Tonko Realty Advisors (B.C.) Ltd.
10.37(12) Surrender of Lease Agreement dated June 18, 2002 between the
Corporation and Tonko Realty Advisors (B.C.) Ltd.
10.38(12) Surrender of Lease Agreement dated June 18, 2002 between the
Corporation and Tonko Realty Advisors (B.C.) Ltd.
10.39(12) Modification and Partial Surrender of Lease Agreement dated June
18, 2002 between the Corporation and Tonko Realty Advisors (B.C.) Ltd.
*10.40(13) Employment Agreement between the Corporation and Sal Visca dated
November 26, 1999
*10.41(13) Amendment to Employment Agreement between the Corporation and
Sal Visca dated February 1, 2002
*10.42(13) Amendment to Employment Agreement between the Corporation and
Sal Visca dated July 9, 2002
*10.43(13) Amendment to Employment Agreement between the Corporation and
Sal Visca dated September 5, 2002
*10.44(13) Employment Agreement between the Corporation and Thomas Koll
dated April 23, 2002
*10.45(13) Employment Agreement between the Corporation and Ron Jasper
dated October 10, 1997
21
*10,46(13) Amendment to Employment Agreement between the Corporation and
Ron Jasper dated July 9, 2002
*10.47(13) Employment Agreement between the Corporation and Bill Tam dated
July 9, 2002
*10.48(13) Employment Agreement between the Corporation and George Reznik
dated July 9, 2002
*10.49 (13) Employment Agreement between the Corporation and William
"Butch" Winters dated June 18, 2003.
31.1 Section 302 Certifications
32.1 Section 906 Certifications
99.1 Private Securities Litigation Reform Act of 1995 - Safe Harbor for
Forward- Looking Statement
* Indicates management contract or compensatory plan or arrangement.
(1) Incorporated by reference to the Corporation's Form 8-K filed on
September 25, 2000.
(2) Incorporated by reference to the Corporation's Registration Statement
on Form 20-F (No. 0-29944).
(3) Incorporated by reference to the Corporation's Annual Report on Form
10-K for the year ended December 31, 1999.
(4) Incorporated by reference to the Corporation's Annual Report on Form
10-Q for the period ended March 31, 2000.
(5) Incorporated by reference to the Corporation's Registration Statement
on Form S-8 (Registration No. 333-39582) filed on June 19, 2000
(6) Incorporated by reference to the Corporation's Registration Statement
on Form 8-A filed on July 13, 2000
(7) Incorporated by reference to the Corporation's Quarterly Report on Form
10-Q for the period ended June 30, 2000.
(8) Incorporated by reference to the Corporation's Annual Report on Form
10-K for the year ended December 31, 2000.
(9) Incorporated by reference to the Corporation's Quarterly Report on Form
10-Q for the period ended June 30, 2001.
(10) Incorporated by reference to the Corporation's Quarterly Report on
Form 10-Q for the period ended September 30, 2001.
(11) Incorporated by reference to the Corporation's Annual Report on Form
10-K for the year ended December 31, 2001.
(12) Incorporated by reference to the Corporation's Quarterly Report on
Form 10-Q for the period ended June 30, 2002.
(13) Incorporated by reference to the Corporation's Form 8-K filed on
September 26, 2002.
(b) Reports on Form 8-K
On May 28, 2003, the Company filed a for 8-K with a press release
attached thereto announcing that the Company had entered into an
acquisition agreement to acquire substantially all of the business and
assets of HiddenMind Technology, LLC ("HiddenMind"), a wireless
software company based in Cary, North Carolina, USA. As well, Infowave
has entered into a subscription agreement with Jerry Trooien under
which Trooien has agreed to subscribe for 29,473,684 units of Infowave
at a price of CDN $0.1425 per unit for aggregate subscription proceeds
to Infowave of US$3.0 million. Mr. Trooien is the controlling member
of HiddenMind. Each unit will consist of one Infowave common share and
a one half of a warrant.
22
On June 2, 2003, the company filed a form 8-K with a press release
attached thereto announcing that the Company has entered into an
agreement with two agents for a private placement offering of Units
(the "Units") at a price of CDN$0.16125 per Unit for gross
subscription proceeds of up to CDN$5,600,000 or approximately
US$4,000,000. Each Unit shall consist of one common share and one half
of one common share purchase warrant.
23
Part III. Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 14, 2003
INFOWAVE SOFTWARE, INC.
/s/ George Reznik
-------------------------------------------
George Reznik
Chief Financial Officer
(Principal Financial and Accounting Officer
and Duly Authorized Officer)