DataWave Reports 19th Consecutive Quarter of Profitability; Net Income Doubles on 49% Revenue Growth.WAYNE Wayne, city (1990 pop. 19,899), Wayne co., SE Mich., a suburb of Detroit, on the Lower Rouge River; inc. as a village 1869, and with surrounding areas as a city 1960. It has automobile and aircraft industries and other varied manufactures. , N.J. -- DataWave Systems Inc. (OTCBB OTCBB See OTC Bulletin Board (OTCBB). : DWVS), a premier provider of prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. and stored value delivery systems, today reported
financial results for the first quarter ended June June: see month. 30, 2006.
Total revenue for the first quarter of fiscal 2007 increased 49% to $10.3 million from 7.0 million for the same period in fiscal 2006. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. was $266,955 versus $97,467, representing a nearly three-fold increase. Included in operating income for the first quarter of fiscal 2007 was $355,000 of non-cash stock-based compensation expense. Operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. leverage more than compensated compensated /com·pen·sat·ed/ (kom´pen-sa?tid) counterbalanced; offset. for the decline in gross margin which fell as pre-paid long distance margins compressed partially offset by product mix shift in favor of upon the side of; favorable to; for the advantage of. See also: favor pre-paid cellular and fees and services. Net income for the first quarter of fiscal 2007 was $288,380, or $0.01 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, double the $138,000, or $0.00 per diluted share, reported for the same period last year. "DataWave turned in another quarter of organic revenue growth of at least 20 percent compared to last year's fourth quarter and profitability, leveraging our retail network to distribute products from our diverse portfolio of pre-paid products as planned," said Josh JOSH Joshua JOSH Job Scheduling Hierarchically Emanuel Besides being a common first name, Emanuel (sometimes spelled Emmanuel or Immanuel) may refer to:
1. the process of becoming mature. 2. attainment of emotional and intellectual maturity. 3. of our legacy pre-paid long distance business. As we move forward into the second quarter, a seasonally strong quarter, we plan to stay sharply focused on optimizing our retail network in both Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of and the U.S., launching new products and adding new retail partners." As of June 30, 2006, the Company had 4,991 terminals installed, and 858 host-to-host or distributor locations. Daily transactions processed for the quarter averaged more than 45,000 compared with 34,000 a year ago. About DataWave DataWave has been an innovator and developer of prepaid and stored-value programs and merchandising merchandising Element of marketing concerned especially with the sale of goods and services to customers. One aspect of merchandising is advertising, which aims to capture the interest of the segment of the population most likely to buy the product. solutions since it was founded in 1994. DataWave pioneered systems that allow for point-of-sale point of sale n. pl. points of sale A business or place where a product or service can be purchased. Also called point of purchase. point activation activation /ac·ti·va·tion/ (ak?ti-va´shun) 1. the act or process of rendering active. 2. the transformation of a proenzyme into an active enzyme by the action of a kinase or another enzyme. 3. of high value, high shrinkage Shrinkage The amount by which inventory on hand is shorter than the amount of inventory recorded. Notes: The missing inventory could be due to theft, damage, or book keeping errors. products, such as cash cards, prepaid phone cards and prepaid wireless time. These systems work equally well over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the , through intelligent freestanding free·stand·ing adj. Standing or operating independently of anything else: a freestanding bell tower; a freestanding maternity clinic. vending machines vending machine, coin-operated, automatic device for selling goods. Many vending machines are capable of making change, and some of the more sophisticated ones accept paper money or credit cards. and POSA POSA Public Order and Security Act POSA Pattern Oriented Software Architecture POSA Passive Optical Sample Assembly POSA Parks and Open Space Advocates (Seattle, WA) PoSA Pomona College Student Art Gallery terminals, or with various card activation devices, including cash registers. This press release contains "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " as defined by the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Words such as "expect", "believe", "anticipate", "may", "will", "plan", "intend", "estimate", "could", and other similar expressions are intended to identify these forward-looking statements. In particular, statements in this release regarding optimizing our retail network in both Canada and the U.S., launching new products and adding new retail partners are forward looking. Statements in this press release, and elsewhere , that look forward in time or include anything other than historical information involve risks and uncertainties that may affect the Company's actual results of operations. These statements by the Company are subject to certain risks, including, among others, future demand for its products and brand, competition from other businesses providing similar products, the ability to maintain profitability and control expenses and the Company's ability to successfully execute To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution its business strategy. These and other risks and uncertainties are discussed in more detail in the Company's periodic reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , which are available at the SEC website at www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. . "DataWave" is a registered trademark of the Company. All other trademarks and trade names referred to are the property of their respective owners.
DATAWAVE SYSTEMS INC.
CONSOLIDATED BALANCE SHEETS
As at June 30, 2006 and March 31, 2006
(Expressed in United States dollars, except share amounts)
----------------------------------------------------------------------
June 30, March 31,
2006 2006
----------------------------------------------------------------------
Assets
Current
Cash and cash equivalents $ 7,287,439 $ 6,967,032
Restricted cash 205,629 203,807
Accounts receivable and other 9,218,544 7,472,542
Inventories 8,895,902 6,308,442
Prepaid expenses and deposits 464,961 383,332
Deferred income taxes 229,938 229,938
----------------------------------------------------------------------
Total current assets 26,302,413 21,565,093
Machinery and equipment, net 2,258,124 2,278,016
Equity investment 343,499 194,850
Goodwill 1,913,728 1,881,910
Intangible assets, net 759,103 828,764
Other assets 172,774 179,433
----------------------------------------------------------------------
Total assets $ 31,749,641 $ 26,928,066
======================================================================
Liabilities
Current
Accounts payable and accrued liabilities $ 21,710,580 $ 17,890,603
Deferred revenue 1,324,986 1,095,544
Other current liabilities 77,814 95,786
----------------------------------------------------------------------
Total current liabilities 23,113,380 19,081,933
Deferred income taxes 335,769 320,780
Deferred inducement 386,013 365,911
----------------------------------------------------------------------
Total liabilities 23,835,162 19,768,624
----------------------------------------------------------------------
Commitments
Stockholders' equity
Common shares
Authorized, 100,000,000 common shares,
$0.001 par value Issued, 54,326,834
shares issued and outstanding at
June 30, 2006 and March 31, 2006,
respectively 54,327 54,327
Additional paid-in capital 18,867,907 18,512,908
Accumulated other comprehensive income 728,033 616,375
Accumulated deficit (11,735,788) (12,024,168)
----------------------------------------------------------------------
Total stockholders' equity 7,914,479 7,159,442
----------------------------------------------------------------------
Total liabilities and stockholders' equity $ 31,749,641 $ 26,928,066
======================================================================
DATAWAVE SYSTEMS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three month period ended June 30, 2006 and 2005
(Expressed in United States dollars, except share amounts)
----------------------------------------------------------------------
Three months
ended June 30,
2006 2005
----------------------------------------------------------------------
Revenue
Sales $ 8,205,747 $5,053,588
Net agency sales 2,121,503 1,898,818
----------------------------------------------------------------------
Total revenue 10,327,250 6,952,406
----------------------------------------------------------------------
Operating costs and expenses
Cost of revenues (exclusive of
depreciation and amortization) 7,146,069 4,559,363
General and administrative 1,328,759 948,268
Selling and marketing 649,206 581,548
Product development 603,462 396,573
Depreciation and amortization 332,799 369,187
----------------------------------------------------------------------
Total operating costs and expenses 10,060,295 6,854,939
----------------------------------------------------------------------
----------------------------------------------------------------------
Operating income 266,955 97,467
----------------------------------------------------------------------
Other income 85,017 34,864
Gain on foreign exchange (4,413) (3)
----------------------------------------------------------------------
Income before income taxes 347,559 132,328
----------------------------------------------------------------------
Income taxes (207,828) (28,705))
Equity income from investee 148,649 34,248
----------------------------------------------------------------------
Net income $ 288,380 $ 137,871
-----------------------------------------------===========-===========
Net income per share $
- basic $ 0.01 $ 0.00
----------------------------------------------------------------------
- diluted $ 0.01 $ 0.00
----------------------------------------------------------------------
Weighted-average number of common shares
- basic 54,326,834 46,826,834
----------------------------------------------------------------------
- diluted 56,556,232 56,023,391
----------------------------------------------------------------------
DATAWAVE SYSTEMS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three month period ended June 30, 2006 and 2005
(Expressed in United States dollars, except share amounts)
----------------------------------------------------------------------
Three months
ended June 30,
2006 2005
----------------------------------------------------------------------
Operating activities
Net income $ 288,380 $ 137,871
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization 332,799 369,187
Equity (income) from investments (148,649) (34,248)
Stock based compensation 354,999 -
Amortization of lease inducement 2,985 7,546
Net change in non-cash operating assets
and liabilities
Accounts receivable and other (1,455,218) (176,972)
Inventories (2,285,377) (1,315,832)
Prepaid expenses and deposits (64,158) (75,278)
Accounts payable and accrued
liabilities 3,122,130 (1,264,262)
Deferred revenue 191,787 109,612
----------------------------------------------------------------------
Net cash provided by (used in) operating
activities 339,678 (2,242,376)
----------------------------------------------------------------------
Investing activities
Restricted cash (1,822) -
Purchase of machinery and equipment (153,413) (346,766)
----------------------------------------------------------------------
Net cash used in investing activities (155,235) (346,766)
----------------------------------------------------------------------
Financing activity
Repayment of capital lease obligations (22,302) (21,228)
----------------------------------------------------------------------
Net cash used in financing activity (22,302) (21,228)
----------------------------------------------------------------------
Effect of exchange rate changes on cash and
cash equivalents 158,266 -
----------------------------------------------------------------------
Increase in cash and cash equivalents 320,407 (2,610,370)
Cash and cash equivalents, beginning of
year 6,967,032 4,560,512
----------------------------------------------------------------------
Cash and cash equivalents, end of year $ 7,287,439 $ 1,950,142
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