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, 2000
[ ] 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.
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(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.)
Suite 200 - 4664 Lougheed Highway
Burnaby, British Columbia,
Canada V5C 5T5
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(Address of principal executive offices)
Telephone (604) 473-3600
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(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 [ ]
COMMON SHARES OUTSTANDING AT JUNE 30, 2000: 20,728,717
<PAGE>
INFOWAVE SOFTWARE, INC.
INDEX to the FORM 10-Q
For the Six Months Ended June 30, 2000
<TABLE>
<S> <C>
Part I. Financial Information........................................................................1
Item 1. Financial Statements..........................................................................1
a) Balance Sheets
June 30, 2000 and December 31, 1999.......................................................1
b) Statements of Operations and Deficit
For the three-month and six-month periods ended June 30, 2000 and 1999....................2
c) Condensed Statements of Cash Flows
For the six months ended June 30, 2000 and 1999...........................................3
d) Notes to 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...................................15
Part II. Other Information
Item 1. Legal Proceedings............................................................................16
Item 2. Changes in Securities and Use of Proceeds....................................................16
Item 3. Defaults upon Senior Securities..............................................................18
Item 4. Submission of Matters to a Vote of Security Holders..........................................18
Item 5. Other Information............................................................................19
Item 6. Exhibits and Reports on Form 8-K.............................................................20
Part III. Signatures................................................................................21
</TABLE>
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
INFOWAVE SOFTWARE, INC.
Balance Sheets
(expressed in U.S. dollars)
<TABLE>
=====================================================================================================
June 30, 2000 December 31, 1999
(Unaudited)
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $11,903,508 $4,359,090
Short term investments, at cost which
approximates fair market value 6,661,801 -
Trade receivables 1,282,483 1,916,961
Share subscription receivable 537,666 -
Inventory (note 5) 517,322 588,981
Prepaid expenses and deposits 145,169 170,662
-----------------------------------------------------------------------------------------------------
21,047,949 7,035,694
Capital assets (note 6) 2,457,655 984,698
Deferred charges 17,700 34,100
-----------------------------------------------------------------------------------------------------
$23,523,304 $8,054,492
=====================================================================================================
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $1,566,453 $1,014,673
Deferred revenue 3,020 -
-----------------------------------------------------------------------------------------------------
1,569,473 1,014,673
Shareholders' equity (note 7)
Share capital
Authorized: 100,000,000 voting common shares
Issued: 20,728,717 (1999 - 18,297,470) 34,576,792 12,526,949
Deficit (12,762,483) (5,776,773)
Cumulative translation account 139,522 289,643
-----------------------------------------------------------------------------------------------------
21,953,831 7,039,819
-----------------------------------------------------------------------------------------------------
$23,523,304 $8,054,492
=====================================================================================================
</TABLE>
1
<PAGE>
INFOWAVE SOFTWARE, INC.
Statements of Operations and Deficit
(expressed in U.S. dollars)
<TABLE>
==========================================================================================================================
Three months ended Six months ended
June 30, 2000 June 30, 1999 June 30, 2000 June 30, 1999
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Sales $132,730 $32,898 $235,164 $150,538
Cost of goods sold (note 8) 115,265 2,947 115,634 21,822
---------------------------------------------------------------------------------------------------------------
17,465 29,951 119,530 128,716
Expenses:
Research and development 852,228 300,994 1,462,565 525,019
Sales and marketing 1,568,178 290,499 2,604,583 557,746
General and administrative 646,019 212,831 1,070,099 391,206
Depreciation and amortization 169,533 36,018 257,117 73,451
--------------------------------------------------------------------------------------------------------------------------
3,235,958 840,342 5,394,364 1,547,422
--------------------------------------------------------------------------------------------------------------------------
Operating loss from continuing operations 3,218,493 810,391 5,274,834 1,418,706
Other income (expenses):
Interest and other income 231,436 15,451 278,287 26,792
Foreign exchange 15,852 (69,323) 29,634 (64,503)
---------------------------------------------------------------------------------------------------------------
247,288 (53,872) 307,921 (37,711)
--------------------------------------------------------------------------------------------------------------------------
Loss from continuing operations 2,971,205 864,263 4,966,913 1,456,417
Discontinued operations:
Loss (earnings) from operations (note 4) 744,761 (114,198) 1,231,631 (288,922)
Estimated loss on disposal (note 4) 112,166 - 787,166 -
--------------------------------------------------------------------------------------------------------------------------
856,927 (114,198) 2,018,797 (288,922)
--------------------------------------------------------------------------------------------------------------------------
Net loss for the period 3,828,132 750,065 6,985,710 1,167,495
Deficit, beginning of period 8,934,351 2,905,952 5,776,773 2,488,522
--------------------------------------------------------------------------------------------------------------------------
Deficit, end of period $12,762,483 $3,656,017 $12,762,483 $3,656,017
==========================================================================================================================
Loss (earnings) per share
Continuing operations $0.15 $0.06 $0.26 $0.10
Discontinued operations $0.05 $(0.01) $0.11 $(0.02)
--------------------------------------------------------------------------------------------------------------------------
Net loss $0.20 $0.05 $0.37 $0.08
--------------------------------------------------------------------------------------------------------------------------
Weighted average number of shares outstanding 19,237,005 15,362,764 19,036,659 15,334,907
==========================================================================================================================
</TABLE>
2
<PAGE>
INFOWAVE SOFTWARE, INC.
Condensed Statements of Cash Flows
(expressed in U.S. dollars)
<TABLE>
Six months ended
June 30, 2000 June 30, 1999
(Unaudited) (Unaudited)
==================================================================================================
<S> <C> <C>
Net cash provided by (used in) continuing operations ($3,875,760) ($589,516)
Net cash provided by (used in) discontinued operations
(1,485,182) 391,369
--------------------------------------------------------------------------------------------------
Total cash flows provided by (used in) operations (5,360,942) (198,147)
Cash flows from investing activities:
Purchase of short term investments (6,661,801) -
Purchase of capital assets (1,852,014) (223,720)
--------------------------------------------------------------------------------------
(8,513,815) (223,720)
Cash flows from financing activities:
Issuance of shares for cash, net of issue cost 2,487,848 248,599
Issuance of warrants for cash, net of issue
costs 19,027,038 2,875,870
--------------------------------------------------------------------------------------
21,514,886 3,124,469
Foreign exchange gain (loss) on cash and cash
equivalents held in a foreign currency (95,711) 117,748
--------------------------------------------------------------------------------------------------
Increase in cash and cash equivalents 7,544,418 2,820,350
Cash and cash equivalents, beginning of period 4,359,090 1,047,319
--------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $11,903,508 $3,867,669
==================================================================================================
Supplemental information:
Shares issued for share subscription $537,666 $ -
receivable
==================================================================================================
</TABLE>
3
<PAGE>
INFOWAVE SOFTWARE, INC.
Notes to Financial Statements
(Dollar amounts expressed in U.S. dollars)
(Unaudited)
1. Basis of presentation
The accompanying unaudited financial statements do not include all
information and footnote disclosures required 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, 2000 and for all periods presented,
have been included.
The unaudited balance sheet, statement of operations and deficit and
condensed statement of cash flows have been prepared in accordance with Canadian
generally accepted accounting principles for interim financial information.
Except as disclosed in note 9, these financial statements comply, in all
material respects, with generally accepted accounting principles in the United
States.
Interim results for the three-month and six-month periods ended June 30,
2000 are not necessarily indicative of the results that may be expected for the
fiscal year as a whole. 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, 1999.
2. Loss per share
Basic loss per share has been calculated using the weighted average number
of common shares outstanding including shares held in escrow. Fully diluted loss
per share amounts have not been presented, as the effect of outstanding options
and warrants is anti-dilutive.
3. Change in accounting policy
Effective January 1, 2000 the Canadian Institute of Chartered Accountants
changed the accounting standards relating to the accounting for income taxes.
Under the new standard future income tax assets and liabilities are determined
based on temporary differences between the accounting and tax basis of the
assets and liabilities, and are measured using the tax rates expected to apply
when these differences reverse. A valuation allowance is recorded against any
future income tax asset if it is more likely than not that the assets will not
be realized.
Prior to adoption of this new accounting standard, income tax was
determined using the deferral method whereby deferred income tax expense was
determined based on timing differences between the accounting and tax treatment
of items of expense or income, and was measured using tax rates in effect in the
year the differences originated. Certain deferred tax assets, such as the
benefit of tax losses carried forward were not recognized unless there was
virtual certainty that they would be realized.
4
<PAGE>
INFOWAVE SOFTWARE, INC.
Notes to Financial Statements
(Dollar amounts expressed in U.S. dollars)
(Unaudited)
The Company has adopted the new income tax accounting standard
retroactively. However, the Company has determined that there is no effect on
prior year results as a valuation allowance has been recorded against all of the
net future tax assets. The Company's future tax assets consist primarily of loss
carryforwards and scientific research and development credits.
4. Discontinued operations
On May 10, 2000 the Company signed a letter of intent to dispose of the net
assets and business operations of its Imaging Division. Under the terms of the
letter of intent, the purchase price will be approximately equal to the net book
value of the net assets of the Division on the date of closing. The anticipated
closing date is August 31, 2000.
The disposition was recognized as a discontinued operation in the three
months ended March 31, 2000. The estimated loss on disposition of $787,166 for
the six months ended June 30, 2000 is comprised of expected operating losses
from the Imaging Division of $540,000 from July 1, 2000 until the closing date,
plus other anticipated costs to exit the business, including employee severance
payments, and professional fees. The adjustment of $112,166 in the three months
ended June 30, 2000 reflects revisions to the estimated losses to the disposal
date.
As at June 30, 2000 the net assets of the Imaging Division are comprised of:
================================================================================
June 30, 2000
--------------------------------------------------------------------------------
Accounts receivable $831,299
Inventory 517,322
Prepaid expenses and deposits 100,670
Capital assets 390,693
--------------------------------------------------------------------------------
1,839,984
Accounts payable and accrued liabilities (242,691)
--------------------------------------------------------------------------------
$1,597,293
================================================================================
Results for the Imaging Division are as follows:
<TABLE>
==================================================================================================================
Three months ended Six months ended
June 30, 2000 June 30, 1999 June 30, 2000 June 30, 1999
==================================================================================================================
<S> <C> <C> <C> <C>
Sales $548,495 $1,531,339 $1,676,124 $3,138,825
Cost of Goods Sold 301,861 389,804 712,730 888,069
------------------------------------------------------------------------------------------------------------------
246,634 1,141,535 963,394 2,250,756
Research and development 355,584 373,651 742,679 682,747
Sales and marketing 382,048 351,121 894,982 715,120
Administration 205,729 256,721 458,473 461,520
Depreciation and amortization 48,034 45,844 98,891 102,447
------------------------------------------------------------------------------------------------------------------
991,395 1,027,337 2,195,025 1,961,834
------------------------------------------------------------------------------------------------------------------
Loss (earnings) from operations $744,761 ($114,198) $1,231,631 ($288,922)
==================================================================================================================
</TABLE>
5
<PAGE>
INFOWAVE SOFTWARE, INC.
Notes to Financial Statements
(Dollar amounts expressed in U.S. dollars)
(Unaudited)
5. Inventory
Inventory consists of:
<TABLE>
============================================================================================
June 30, 2000 December 31, 1999
--------------------------------------------------------------------------------------------
<S> <C> <C>
Raw materials $449,304 $503,646
Finished goods 108,542 126,907
--------------------------------------------------------------------------------------------
557,846 630,553
Less allowance for obsolete stock (40,524) (41,572)
--------------------------------------------------------------------------------------------
$517,322 $588,981
============================================================================================
</TABLE>
6. Capital assets
<TABLE>
===============================================================================================================
Accumulated Net Book
June 30, 2000 Cost Depreciation Value
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Computer equipment and software $2,588,505 $1,102,218 $1,486,287
Leasehold improvements 283,505 163,843 119,662
Office equipment 785,802 153,437 632,365
Software licenses and purchased source code 472,498 253,157 219,341
---------------------------------------------------------------------------------------------------------------
$4,130,310 $1,672,655 $2,457,655
===============================================================================================================
</TABLE>
<TABLE>
===============================================================================================================
Accumulated Net Book
December 31, 1999 Cost Depreciation Value
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Computer equipment and software $1,521,728 $870,877 $650,851
Leasehold improvements 196,522 137,727 58,795
Office equipment 261,794 124,780 137,014
Software licenses and purchased source code 365,069 227,031 138,038
---------------------------------------------------------------------------------------------------------------
$2,345,113 $1,360,415 $984,698
===============================================================================================================
</TABLE>
7. Shareholders' equity
On April 13, 2000 the Company issued 924,000 special warrants at a price of
$21.96 (Cdn.$32.50) per special warrant for net cash proceeds of $19,027,038.
Each special warrant is exercisable without payment of additional consideration
for one Common Share of the Company. In addition, the Company issued 46,200
special compensation warrants to the underwriters in connection with this
issuance. Each special compensation warrant is exercisable without additional
consideration into one compensation warrant entitling the holder to acquire one
common share at a price of $21.96 (Cdn.$32.50) per share for a two year period.
6
<PAGE>
INFOWAVE SOFTWARE, INC.
Notes to Financial Statements
(Dollar amounts expressed in U.S. dollars)
(Unaudited)
8. Cost of goods sold
Included in cost of goods sold is $104,117 related to a one-time
disposition of obsolete hardware inventory for gross proceeds of $70,040.
9. 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 13 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, 2000. The
following are the material measurement differences from GAAP in the United
States as they relate to the Company's June 30, 2000 financial statements:
(a) Net loss and net loss per share:
<TABLE>
============================================================================================================================
Three months ended Six months ended
June 30, 2000 June 30, 1999 June 30, 2000 June 30, 1999
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Loss from continuing operations in accordance with
Canadian GAAP $2,971,205 $864,263 $4,966,913 $1,456,417
Adjustment for stock-based compensation relating to
stock options issued to non-employees 1,756 5,446 3,545 10,892
Adjustment for stock-based compensation relating to
escrow shares 3,712 9,071 6,718 19,295
----------------------------------------------------------------------------------------------------------------------------
Loss from continuing operations in accordance with
United States GAAP 2,976,673 878,780 4,977,176 1,486,604
Discontinued operations:
Loss (earnings) from operations
744,761 (114,198) 1,231,631 (288,922)
Estimated loss on disposal 112,166 - 787,166 -
----------------------------------------------------------------------------------------------------------------------------
856,927 (114,198) 2,018,797 (288,922)
----------------------------------------------------------------------------------------------------------------------------
Net loss in accordance with United States GAAP $3,833,600 $764,582 $6,995,973 $1,197,682
============================================================================================================================
============================================================================================================================
Weighted average number of shares outstanding in
accordance with Canadian GAAP 19,237,005 15,362,764 19,036,659 15,334,907
Adjustment for weighted average number of
contingently issued shares pursuant to employee
incentive plan (74,875) (258,000) (87,563) (294,500)
Adjustment for weighted average number of
contingently issued shares pursuant to employment
agreement - (75,556) - (80,278)
----------------------------------------------------------------------------------------------------------------------------
Weighted average number of shares outstanding in
accordance with United States GAAP 19,162,130 15,029,208 18,949,096 14,960,129
============================================================================================================================
</TABLE>
7
<PAGE>
INFOWAVE SOFTWARE, INC.
Notes to Financial Statements
(Dollar amounts expressed in U.S. dollars)
(Unaudited)
(a) Net loss and net loss per share continued:
<TABLE>
=================================================================================================================
<S> <C> <C> <C> <C>
Loss (earnings) per share:
Continuing operations $0.16 $0.06 $0.26 $0.10
Discontinued operations $0.04 $(0.01) $0.11 $(0.02)
-----------------------------------------------------------------------------------------------------------------
Net loss $0.20 $0.05 $0.37 $0.08
=================================================================================================================
=================================================================================================================
Comprehensive loss:
Net loss in accordance with United
States GAAP $3,833,600 $764,582 $6,995,973 $1,197,682
Other comprehensive income:
Foreign currency translation
adjustment 100,742 (41,920) 150,121 (292,957)
-----------------------------------------------------------------------------------------------------------------
$3,934,342 $722,662 $7,146,094 $904,725
=================================================================================================================
</TABLE>
(b) Balance sheet:
<TABLE>
=================================================================================================================
June 30, 2000 December 31, 1999
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Total assets in accordance with Canadian GAAP $23,523,304 $8,054,492
Adjustments to US GAAP (17,700) (34,100)
-----------------------------------------------------------------------------------------------------------------
Total assets in accordance with U.S. GAAP $23,505,604 $8,020,392
=================================================================================================================
=================================================================================================================
June 30, 2000 December 31, 1999
=================================================================================================================
Shareholders' equity in accordance with Canadian GAAP $21,953,831 $7,039,819
Adjustments to US GAAP (17,700) (34,100)
-----------------------------------------------------------------------------------------------------------------
Shareholders' equity in accordance with U.S. GAAP $21,936,131 $7,005,719
=================================================================================================================
</TABLE>
8
<PAGE>
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 1 - Item 1 of this Quarterly
Report, and the audited financial statements and notes thereto for the year
ended December 31, 1999 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 Corporation 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.
Corporate Summary
The second quarter of 2000 marked a number of milestones for the Corporation in
several strategic areas. The Corporation signed partnership agreements with
industry leaders Compaq Computer Corporation and Intel Corporation which
management anticipates will provide the Corporation with significant leverage in
marketing, sales and product development. The Corporation also closed the
Cdn.$30 million special warrant financing which management anticipates will
provide the Corporation with working capital sufficient to carry it through
2001. In addition, management moved forward on its commitment to divest the
Imaging Division in order to focus company resources on the development of the
wireless business.
On May 10, 2000 the Corporation entered into a letter of intent to sell the net
assets and business operations of its Imaging Division. Under the terms of the
letter of intent, the purchase price will be approximately equal to the net book
value of the Imaging Division at the date of closing. The Corporation has
estimated its loss on disposition of the net assets and business operations of
the Imaging Division at $0.79 million, which includes
9
<PAGE>
expected operating losses from the Imaging Division of $0.54 million from July
1, 2000 until the closing date, plus other ancillary costs to exit the business.
Closing is anticipated on or about August 31, 2000.
The financial statements of the Corporation have been prepared to present the
Imaging Division as discontinued operations. The results from continuing
operations represent those of the Wireless Division and general corporate
activities.
Continuing Operations
Quarter ended June 30, 2000 compared to quarter ended June 30, 1999
Revenue for the three months ended June 30, 2000 was $0.13 million compared to
$0.03 million for the three months ended June 30, 1999, representing an increase
of 304%. Second quarter revenue in 2000 included the sale of $0.07 million of
redundant hardware inventory at a loss of $0.03 million, resulting in an overall
gross margin of 13% in the second quarter of 2000 compared to 91% in the second
quarter of 1999. After excluding the sale of redundant hardware, the remaining
revenue in the second quarter of 2000 was comprised of approximately 76% from
enterprise software license fees (Infowave for Exchange and Infowave for the
Net) and 15% from third-party hardware sales. The remaining revenue in the
second quarter of 2000 related to recurring license fees from hosted service
providers and from technical services. Second quarter revenue in 1999 was
derived mainly from engineering fees, resulting in an unusually high gross
margin for the period.
Operating expenses in the second quarter of 2000 totaled $3.24 million,
representing a 285% increase over total operating expenses of $0.84 million in
the second quarter of 1999. The most significant factor accounting for the
increase in operating expenses was the increase in headcount. During the three
months ended June 30, 2000 the company hired 27 new employees in the Wireless
Division, resulting in a total of 124 Wireless Division employees at June 30,
2000 compared to a total of 42 Wireless Division employees at June 30, 1999.
Research and development expense increased 183% to $0.85 million ($0.04 per
share) for the three months ended June 30, 2000 from $0.30 million ($0.02 per
share) for the comparable 1999 period. The Corporation added several key members
to the research and development team, resulting in an increase in research and
development headcount to 53 at June 30, 2000 from 43 at March 31, 2000 and 24 at
June 30, 1999. Research and development salaries of $0.57 million represented an
increase of 43% over the first quarter of 2000 and an increase of 227% over the
second quarter of 1999. Projects in progress during the quarter included feature
enhancements and additional network support for the Corporation's enterprise and
carrier software products as well as several OEM projects. The research and
development team has also allocated resources to supporting the sales and
marketing team on major customer and partner initiatives.
Total sales and marketing expense for the second quarter of 2000 was $1.57
million ($0.08 per share), representing an increase of 440% compared to $0.29
million ($0.02 per share) in the second quarter of 1999. The majority of the
increase in sales and marketing
10
<PAGE>
spending related to new employee salaries as the company filled several senior
positions, including a Vice-President of Business Development and Director of
Strategic Marketing. Sales and marketing headcount increased to 49 at June 30,
2000 compared to 31 at March 31, 2000 and 10 at June 30, 1999. Most of the
hiring in sales and marketing occurred in the Corporation's Seattle office,
which employs 28 employees as of June 30, 2000. Sales and marketing salaries of
$0.69 million represented an increase of 64% over the first quarter of 2000 and
588% over the second quarter of 1999.
A significant portion of sales and marketing expense in the second quarter of
2000 was also attributable to travel and trade show attendance. The Corporation
participated in 19 industry and partner events during the quarter and
Corporation representatives presented at six of those events. The launch of
FirstHand(TM) in June was captured by industry analysts and trade media, and the
Corporation participated with Microsoft Corporation and Compaq Computer
Corporation at the launch of the Pocket PC / iPAQ in April. The Corporation also
added seven new regional resellers during the quarter.
General and administration costs totaled $0.65 million ($0.03 per share) in the
second quarter of 2000 versus $0.21 million ($0.01 per share) in the second
quarter of 1999. The majority of this increase is attributable to a change in
the allocation of general corporate costs to reflect the impending disposal of
the Imaging Division. The remainder of the increase is due to higher salaries
and professional fees, the latter due to Canadian and U.S. securities reporting
obligations and an increase in the number of customer and partner contracts
signed during the period.
Depreciation and amortization costs totaled $0.17 million in the second quarter
of 2000 compared to $0.04 million in the comparable 1999 period due to the
depreciation of computer and other acquisitions made during 1999 and the first
half of 2000.
Interest income increased to $0.23 million in the second quarter of 2000 from
$0.02 million in the comparable 1999 period due to investment income earned on
higher cash and short term investment balances. The higher balances are the
result of the closing of the special warrant financing in April 2000. The
Corporation incurred a foreign exchange gain of $0.02 million in the second
quarter of 2000 due to the effect of the depreciation of the Canadian dollar on
the Corporation's net U.S. dollar asset exposure.
Six months ended June 30, 2000 compared to six months ended June 30, 1999
Revenue for the six months ended June 30, 2000 was $0.24 million compared to
$0.15 million for the six months ended June 30, 1999, representing an increase
of 56%. The sale of redundant hardware inventory in the second quarter of 2000
resulted in an overall gross margin of 51% in the first six months of 2000
compared to 86% in the comparable 1999 period. After excluding the second
quarter one-time sale of redundant hardware inventory, gross margins were 93%
for the six months ended June 30, 2000, and approximately 48% of revenue was
derived from enterprise software license fees; 31% was derived from Symmetry
carrier sales; and 12% was derived from third-party hardware sales. The
remaining revenue in the first six months of 2000 related to recurring license
fees from hosted service providers and from technical services.
11
<PAGE>
Operating expenses in the first six months of 2000 totaled $5.39 million,
representing a 249% increase over total operating expenses of $1.55 million in
the first six months of 1999. The majority of the increase in spending is due to
the increase in head count, as previously described. Research and development
expenses increased 179% to $1.46 million ($0.08 per share) for the six months
ended June 30, 2000 from $0.53 million ($0.03 per share) for the comparable 1999
period. Total sales and marketing expense for the first six months of 2000 was
$2.60 million ($0.14 per share) compared to $0.56 million ($0.04 per share) in
the comparable 1999 period, representing an increase of 367%. The majority of
the increase in sales and marketing spending related to new employee salaries,
travel and trade show attendance. General and administration costs in the first
six months of 2000 totaled $1.07 million ($0.06 per share) versus $0.39 million
($0.03 per share) in the comparable period in 1999. This increase in general and
administration costs is attributable to the revision in the allocation of
general corporate costs between divisions and to an increase in salaries and
professional fees. Professional fees increased due to Canadian and U.S.
securities reporting obligations; an increase in the number of customer and
partner contracts signed during the period; and the registration of patents and
trademarks.
Depreciation and amortization costs totaled $0.26 million in the first six
months of 2000 compared to $0.07 million in the comparable 1999 period due to
the depreciation of computer and other acquisitions made during 1999 and the
first half of 2000.
Interest income increased to $0.28 million in the first six months of 2000
compared to $0.03 million in the first six months of 1999. As a result of the
special warrant financing in April 2000, the Corporation earned interest income
on higher cash and short term investment balances. The Corporation incurred a
foreign exchange gain of $0.03 million due to the effect of the depreciation of
the Canadian dollar on the Corporations net asset exposure to U.S. dollars.
Discontinued Operations
Quarter ended June 30, 2000 compared to quarter ended June 30, 1999
Imaging Division sales of $0.55 million in the second quarter of 2000 declined
64% from $1.5 million in the second quarter of 1999. This decline was primarily
attributable to the continued decrease in PowerPrint sales, offset slightly by
increased StyleScript and Original Equipment Manufacturers ("OEM") sales.
The number of PowerPrint units shipped declined 70% from the comparable three
month period in 1999. The decline in sales of PowerPrint is due to the growth in
the number of inexpensive Macintosh compatible printers available in the retail
market. This growth has led to a decrease in demand for PowerPrint as an
inexpensive alternative printing solution. Late in the quarter the Corporation
shipped a mobile version of the PowerPrint product that represented 6% of
PowerPrint revenues for the quarter.
StyleScript total units shipped increased 8% from the second quarter of 1999 as
a result of a late quarter release of a new version of the product which
supports a wider range of
12
<PAGE>
printers currently on the market. The Corporation anticipates that StyleScript
sales will increase with the new version of the product.
Imaging Division gross margins for the second quarter of 2000 were 45% compared
with 75% in the second quarter of 1999. The significant decrease is attributable
to returns of obsolete products following the release of the new StyleScript
product and a change in the sales mix in comparison to the second quarter of
1999. PowerPrint, Stylescript and OEM sales represented 46%, 12% and 42%,
respectively, in the quarter compared to 72%, 7%, 19%, respectively, in the
comparable 1999 period. OEM gross margins declined to 68% for the second quarter
of 2000 in comparison to 99% in the second quarter of 1999. The decrease is the
result of a greater proportion of lower margin OEM sales in the quarter.
StyleScript has traditionally had lower absolute gross margins than PowerPrint
products as a result of a royalty paid on each unit that the Division sells.
PowerPrint absolute gross margins remained consistent with the comparable
quarter in 1999.
Total Imaging Division expenses in the second quarter of 2000 declined 3% to
$1.0 million compared to $1.03 million for the second quarter of 1999. In an
effort to streamline the division's operations, divisional management reduced
total headcount to 32 as compared to 47 in the second quarter of 1999. The full
impact of the restructuring is not expected to result in significant cost
reductions until the third quarter of 2000.
Sales and marketing expenditures for the three months ended June 30, 2000
increased 9% over the comparable prior year period to $0.38 million due to an
increase in advertising to support the launch of the newest version of
StyleScript and the new PowerPrint Mobile Edition product.
Research and development spending of $0.36 million in the second quarter of 2000
decreased 5% compared to the second quarter of 1999 due to a reduction in
contract development required for completion of projects. During the quarter the
development team completed and released the updated version of the StyleScript
product and completed work on a customized OEM product.
Imaging Division administrative costs decreased 20% to $0.2 million largely due
to a decrease in professional fees and a revision of the allocation of corporate
administrative costs due to the anticipated disposal of the Division.
Six months ended June 30, 2000 compared to six months ended June 30, 1999
Imaging Division sales of $1.7 million for the six months ended June 30, 2000
declined 47% from $3.1 million for the six months ended June 30,1999. This
decline was primarily attributable to a decrease in PowerPrint and StyleScript
sales and offset slightly by increased Original Equipment Manufacturers ("OEM")
sales.
The number of PowerPrint units shipped during the six months ended June 30, 2000
declined 50% from the comparable period in 1999. As previously discussed, this
decline is due to the growth in the number of Macintosh compatible printers
available in the retail market. StyleScript total units shipped in the first six
months of 2000 declined 54% from the comparable six month period in 1999 as a
result of market maturity of supported
13
<PAGE>
printers. The decline was offset slightly by the second quarter release of the
new version of StyleScript.
Imaging Division gross margins for the six months ended June 30, 2000 were 58%
compared with 72% for the six months ended June 30, 1999. The decrease is
attributable to returns of obsolete products following the release of new
StyleScript and PowerPrint products; inventory write downs that have been
charged against cost of sales; and a change in the sales mix to lower margin
products in comparison to the period ended June 30, 1999.
Total Imaging Division expenses for the six months ended June 30, 2000 increased
12% to $2.2 million compared to $1.9 million for the six months ended June 30,
1999. Sales and marketing expenditures for the first six months of 2000
increased 25% in comparison to the same period in 1999 to $0.9 million due to
increased advertising in support of the release of new versions of the
StyleScript and PowerPrint products and the launch of the new PowerPrint Mobile
Edition product. Research and development spending grew 9% to $0.7 million for
the six months ended June 30, 2000 in comparison to the same period in 1999.
This growth is attributable to an increase in development employee headcount.
General and administrative costs for the first six months of 2000 decreased 1%
in comparison to the same period in 1999 to $0.5 million due to decreased
professional fees offset by increased salaries associated with growth in
management head count.
Liquidity and Capital Resources
Infowave's cash and short-term investment position was $18.56 million at June
30, 2000. Working capital increased to $19.33 million at June 30, 2000 from
$5.85 million at December 31, 1999. This increase was the result of $19.0
million raised on the issue of special warrants in April as well as from $3.0
million raised through the exercise of previously issued stock purchase warrants
and employee stock options. The Corporation used $5.36 million in operations
during the first six months of 2000, primarily due to the loss for the period.
The effect of the loss on cash flows was offset partially by a $0.55 million
increase in accounts payable and accrued liabilities and a $0.63 million
decrease in trade accounts receivable. The decrease in accounts receivable is
attributable to the decrease in sales within the Imaging Division, while the
increase in accounts payable and accrued liabilities is due to continuing
increased expenditures in the Wireless Division as well as the accrual of the
estimated loss on disposal of the Imaging Division.
Net cash used in investing activities during the six months ended June 30, 2000
was $8.5 million, which consisted of $6.66 million used in the purchase of
short term investments and $1.85 million of capital acquisitions, including the
purchase of $1.07 million in computer equipment and $0.52 million in office
equipment. The majority of these capital acquisitions are attributable to staff
increases in the Wireless Division; the relocation of the Vancouver office to
new premises within the existing building; and the move of the Corporation's
Seattle office to a permanent location.
At June 30, 2000 the Corporation's primary sources of liquidity consisted of
cash and short term investments and an uncommitted line of credit of Cdn$2.0
million, which is secured against the short term investments.
14
<PAGE>
The Corporation intends to continue to increase its headcount in 2000 in order
to continue its growth in the Wireless Division. Additional resources will be
allocated to sales and marketing and research and development in the Wireless
Division. These additional resources will be used to pursue existing and new
market development opportunities and to continue to enhance and expand the
current product range.
The Corporation believes that the total amount of cash and short-term
investments will be sufficient to meet its anticipated cash needs for working
capital and capital expenditures through 2001. Thereafter, depending on the
development of the business, the Corporation may need to raise additional
capital for working capital or other expenses. The Corporation 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 Corporation 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 Corporation 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 Corporation'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, 2000, the Corporation
has not engaged in any derivative hedging activities on foreign currency
transactions and/or balances. Although 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 Corporation's results of operations. To the extent that
the Corporation implements hedging activities in the future with respect to
foreign currency exchange transactions, there can be no assurance that the
Corporation will be successful in such hedging activities.
While the Corporation 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 Corporation's results of
operations in the future.
15
<PAGE>
Part II. Other Information
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
(a) On June 5, 2000, the Company adopted a shareholder rights plan (the
"Plan") to ensure the fair and equal treatment of all of its shareholders in the
event of a Take-over Bid, in which a person, group of affiliated or associated
persons, or entity (a "Person") offers to acquire Voting Shares of the Company
resulting in that Person possessing 20% or more of the outstanding voting Shares
of the Company, and to allow the board of directors of the Company and its
shareholders adequate time to assess and respond to such a bid.
In order to implement the Plan, upon adoption of the Plan, the Company
issued to each shareholder of record at the close of business on June 5, 2000
(the "Record Time") one right (a "Right") in respect of each outstanding Common
Share to holders of record at the Record Time. In addition, one Right will be
issued in respect of each Common Share issued after the Record Time and prior to
the earlier of the separation date and the expiration date. The Company has
entered into a Shareholder Rights Plan Agreement dated as of June 5, 2000 with
Montreal Trust Company of Canada, as Rights Agent, regarding the exercise of the
Rights, the issuance of certificates evidencing the Rights as well as other
related matters.
The Rights Plan will not interfere with the day-to-day operations of the
Company. The initial issuance of the Rights does not in any way alter the
financial condition of the Company, impede its business plans or alter its
financial statements. In addition, the Rights Plan is initially not dilutive and
is not expected to have any effect on the trading of common shares. However, if
a Flip-In Event occurs and the Rights separate from the common shares reported
earnings per share and reported cash flow per share on a fully-diluted basis may
be affected. In addition, holders of Rights not exercising their Rights after a
Flip-In Event may suffer substantial dilution.
(b) Not applicable
(c) The Company issued 924,000 special warrants (the "Special Warrants") at
a price of Cdn.$32.50 per Special Warrant on April 13, 2000 for gross proceeds
of Cdn.$30,030,000. Each Special Warrant entitled the holder, upon exercise and
without payment of additional consideration, to acquire one Common Share. The
Special Warrants were issued pursuant to an underwriting agreement dated April
13, 2000 between the Company and CIBC World Markets Inc. and Canaccord Capital
Corporation (collectively, the "Underwriters"). The Special Warrants were issued
in reliance upon the exemption from registration provided by Rule 506 of
Regulation D and the exclusion from registration provided by Rule 903 of
Regulation S.
In connection with this financing, the Company granted the underwriters
special compensation warrants entitling the Underwriters to acquire at any time,
without payment
16
<PAGE>
of any additional consideration, compensation warrants entitling the
Underwriters to subscribe for and purchase an aggregate of up to 46,200 Common
Shares at a price of Cdn.$32.50 per Common Share on or before April 13, 2002.
A final short form prospectus was receipted in British Columbia, Ontario
and New Brunswick on June 23, 2000 qualifying the distribution of 924,000 common
shares upon the exercise of the 924,000 previously issued Special Warrants. All
of the Special Warrants were deemed exercised for Common Shares on June 29,
2000.
The gross proceeds received by the Company from the sale of the Special
Warrants were Cdn.$30,030,000. The net proceeds were approximately
Cdn.$28,078,200 after deducting the Underwriters' fee of Cdn.$1,801,800 and the
costs of the issue estimated at Cdn.$150,000.
The names of the persons to whom the above securities were sold to are as
follows:
==============================================================================
Name of Purchaser of Securities Number of Securities Sold
------------------------------------------------------------------------------
Sunrise Partners LLC 300,000
Pogue Capital International Fund 67,100
Working Ventures Canadian Fund Inc. 30,800
Lee, Turner & Associates Inc. 3,100
Royal Canadian Small Cap Fund 28,020
Transamerica Life Insurance Co. of Canada 250,000
AIM Canada Growth Fund of AIM Canada Fund Inc. 91,400
Jay A. Smith 4,620
The Abernathy Group Long Term Capital 27,700
Partners, L.P.
Nicholas Applegate Capital Management 92,400
Dr. Christopher Levesque 5,000
CIBC World Markets Inc. 23,860
The Company also issued 2,224,647 special warrants (the "Special Warrants")
at a price of Cdn.$3.25 per Special Warrant in two tranches on June 30, 1999 and
July 8, 1999 for gross proceeds of Cdn.$7,230,102.75. The Special Warrants were
issued in reliance upon the exemption from registration provided by Rule 506 of
Regulation D and the exclusion from registration provided by Rule 903 of
Regulation S. Each Special Warrant entitled the holder, upon exercise and
without payment of additional consideration, to acquire one Common Share and
one-half of one Common Share purchase warrant (the "Purchase Warrants"). Each
Purchase Warrant entitles the holder to purchase one Common Share at a price of
Cdn.$3.75 per Common Share until expiry on June 30, 2000. In connection with
this financing, the Company issued Agents' Warrants (the "Agents' Warrants") to
Canaccord Capital Corporation, Yorkton Securities Inc., Sprott Securities
Limited and Taurus Capital Markets Ltd. (in exchange for services as agent in
connection with the Special Warrant financing) entitling the agents in the
financing to purchase an aggregate of up to 212,465 Common Shares at a price of
Cdn.$3.25 per Common Share on or before July 8, 2000.
17
<PAGE>
A final prospectus was receipted in British Columbia, Alberta and Ontario
on September 23, 1999 qualifying the distribution of 2,224,647 common shares and
1,112,324 Purchase Warrants upon the exercise of the 2,224,647 previously issued
Special Warrants. All of the Special Warrants were deemed exercised for Common
Shares and Purchase Warrants on September 28,1999.
As at June 30, 2000 all Purchase Warrants had been exercised and 39,722
Agents' Warrants remained outstanding. During the quarter ended June 30, 2000,
the following Purchase Warrants and Agents' Warrants were exercised for Common
Shares:
<TABLE>
==================================================================================================================
Date of Sale Title of Securities Number of Aggregate Name of Purchaser of Securities
Sold Securities Exercise Price
Sold (Cdn.$)
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
April 27, 2000 Purchase Warrants 2,500 9,375.00 Roytor & Co.
May 3, 2000 Purchase Warrants 15,000 56,250.00 Roytor & Co.
May 12, 2000 Purchase Warrants 15,000 56,250.00 Craft Capital Corporation
May 12, 2000 Purchase Warrants 1,500 5,625.00 Roytor & Co
June 9, 2000 Purchase Warrants 112,824 423,090.00 The Abernathy Group Long Term
Capital Partners LP
June 26, 2000 Purchase Warrants 153,846 576,922.50 Brant Investments Limited
June 30, 2000 Agents Warrants 18,590 60,417.50 Canaccord Capital Corporation
June 30, 2000 Agents Warrants 37,363 121,429.75 Yorkton Securities Inc.
June 30, 2000 Agents Warrants 4,422 14,371.50 Canaccord Capital Corporation
June 30, 2000 Agents Warrants 6,317 20,530.25 Sprott Securities Limited
June 30, 2000 Purchase Warrants 14,750 55,312.50 Roytor & Co.
June 30, 2000 Purchase Warrants 15,000 56,250.00 Dutch Nordic Insurance
June 30, 2000 Purchase Warrants 100,000 375,000.00 Paloma Strategic Fund LP
==================================================================================================================
</TABLE>
(d) Not applicable
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual and Extraordinary General Meeting on June 5,
2000.
The following matters were voted upon at the meeting:
o To appoint KPMG LLP, Chartered Accountants, as the Auditors of the
Company and to authorize the Directors to fix the Auditors'
remuneration. Votes for 6,326,595; withheld 7,650; against 800;
abstentions 2,491.
o To set the size of the board of Directors of the Company at five,
subject to increase as may be permitted under the Company Act (British
Columbia). Votes for 6,326,636; against 10,600; abstentions 300.
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<PAGE>
o To elect Jim McIntosh as a Director. Votes for 6,311,556; withheld
5,050; abstentions 22,275.
o To elect Morgan Sturdy as a Director. Votes for 6,314,506; withheld
2,100; abstentions 22,275.
o To elect Scot Land as a Director. Votes for 6,313,606; withheld 3,000;
abstentions 22,275.
o To elect David Wedge as a Director. Votes for 6,314,506; withheld
2,100; abstentions 22,275.
o To elect David Neale as a Director. Votes for 6,314,506; withheld
2,100; abstentions 22,275.
o The Ordinary Resolution to confirm and approve amendments to the Stock
Option Plan of the Company. The material amendments to the Stock
Option Plan were as follows: increase in the number of shares reserved
for issuance from 3,047,300 common shares to 4,619,578 common shares,
amendment to the determination of the exercise price of stock options
to comply with the rules and policies of The Toronto Stock Exchange
(the "TSE"), inclusion of certain restrictions in the granting of
options to insiders to comply with the rules and policies of the TSE
and the allowance of the Board of Directors to vest unvested options
in the event of a change of control of the Company. Other minor
amendments were made to bring the Stock Option Plan into compliance
with the rules and policies of the TSE. Votes for 6,250,238; against
85,548; abstentions 1,750.
o The Special Resolution to amend the Articles of the Company to grant
the Directors of the Company discretionary power to increase the size
of the board by up to one third. Votes for 6,293,034; against 42,202;
abstentions 2,300.
o The Ordinary Resolution to approve a Shareholder Rights Plan. The
Shareholder Rights Plan is designed to encourage the fair treatment of
shareholders in any takeover offer for the Company. It will provide
the Infowave board of directors and shareholders with more time to
fully consider any unsolicited take-over bid. It will also provide the
board with more time to pursue, if appropriate, alternatives to
maximize shareholder value. The Shareholder Rights Plan was not
considered in response to or in anticipation of any pending or
threatened takeover bid, nor to deter takeover bids generally.
Grandfathered Persons included: Votes for 4,511,910; against 399,117;
abstentions 1,350. Grandfathered Persons excluded: Votes for 499,535;
against 399,117; withheld 4,012,375; abstentions 1,350.
Item 5. Other Information
None.
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<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
------ -----------
4.1 Form of Shareholders Rights Plan Agreement, dated as of June
5, 2000, between Infowave Software, Inc. and Montreal Trust
Company of Canada, which includes as Exhibit A thereto the
Form of Rights Certificate (incorporated by reference from
Exhibit 1 to the Registrant's registration statement on Form
8-A under the Securities Exchange Act of 1934 filed July 13,
2000)
4.2 Stock Option Plan, as amended (incorporated by reference
from Exhibit 4.1 to the Registrant's registration statement
on Form S-8 under the Securities Act of 1933 filed June 19,
2000 (Registration No. 333-39582))
10.1 Lease agreement between Tonko-Novam Management Ltd. and the
Company dated 26th April, 2000
27.1 Financial data schedule
99.1 Private Securities Litigation Reform Act of 1995 - Safe
Harbor for Forward-Looking Statements
99.2 Notice of 2000 Annual and Extraordinary General Meeting of
Members, Information Circular and Form of Proxy
(b) Reports on Form 8-K
A Form 8-K was filed on May 17th, 2000 stating that the Company has entered
into a letter of intent for the sale of all of the assets and business of its
Imaging Division.
20
<PAGE>
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 11, 2000
INFOWAVE SOFTWARE, INC.
/s/ Bijan Sanii
------------------------------------
Bijan Sanii
Chief Operating Officer
Acting President and Chief Executive Officer
/s/ Todd Carter
------------------------------------
Todd Carter
Chief Financial Officer
21
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
4.1 Form of Shareholders Rights Plan Agreement, dated as of June
5, 2000, between Infowave Software, Inc. and Montreal Trust
Company of Canada, which includes as Exhibit A thereto the
Form of Rights Certificate (incorporated by reference from
Exhibit 1 to the Registrant's registration statement on Form
8-A under the Securities Exchange Act of 1934 filed July 13,
2000)
4.2 Stock Option Plan, as amended (incorporated by reference
from Exhibit 4.1 to the Registrant's registration statement
on Form S-8 under the Securities Act of 1933 filed June 19,
2000 (Registration No. 333-39582))
10.1 Lease agreement between Tonko-Novam Management Ltd. and the
Company dated 26th April, 2000
27.1 Financial data schedule
99.1 Private Securities Litigation Reform Act of 1995 - Safe
Harbor for Forward-Looking Statements
99.2 Notice of 2000 Annual and Extraordinary General Meeting of
Members, Information Circular and Form of Proxy
