EXHIBIT 99.1
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 - SAFE HARBOR FOR
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a safe harbor
for forward-looking statements made by public companies. This safe harbor
protects a company from securities law liability in connection with
forward-looking statements if the company complies with the requirements of the
safe harbor. As a public company, Infowave has relied and will continue to rely
on the protection of the safe harbor in connection with its written and oral
forward-looking statements.
When evaluating Infowave's business, you should consider:
o all of the information in this quarterly report on Form 10-Q;
o the risk factors described in Infowave's Annual Report for the
year ended December 31, 1999 filed with the Securities and
Exchange Commission on March 30, 2000; and
o the risk factors described below.
RISK FACTORS
General
History of Losses
The Corporation is not currently profitable and incurred losses of $10,112,794
for the nine months ended September 30, 2000 and $3,288,251 and $1,206,266 for
the years ended December 31, 1999 and 1998, respectively. The Corporation
expects to continue to incur losses in the near future and possibly longer. The
Corporation anticipates that its expenses will increase substantially in the
foreseeable future as it expands the Wireless Division and the Corporation
continues to increase its research and development, sales and marketing and
general and administrative expenses. The Corporation cannot predict if it will
ever achieve profitability and, if it does, it may not be able to sustain or
increase profitability.
Divestiture of Imaging Division
Effective August 31, 2000, the Corporation completed the sale of the net assets
and business operations of its Imaging Division. Substantially all of the
historical revenue of the Corporation has been from the Imaging Division. In the
year ended December 31, 1999, the Imaging Division had revenue of $7,175,330 and
the Wireless Division had revenue of $355,001. Now that the Corporation has
divested itself of the
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Imaging Division, it will be entirely reliant upon possible increased revenues
from the Wireless Division. There is no assurance that increased revenues from
the Wireless Division will materialize.
Reliance on New Technologies
The Corporation is focused upon growth from its Wireless Division. The wireless
data communications market is characterized by rapidly changing technology and
evolving industry standards. Therefore, it is difficult to predict the rate at
which the market for the Corporation's wireless software products will grow, if
at all. If the market fails to grow, or grows more slowly than anticipated, the
Corporation will be materially adversely affected. Even if the market does grow,
there can be no assurance that the Corporation's products will achieve
commercial success. The Corporation may find itself competing in the market for
wireless mobile computing software against other companies with significantly
greater financial, marketing and other resources. Such competitors may be able
to institute and sustain price wars, or imitate the features of the
Corporation's wireless mobile computing software, reducing prices and the
Corporation's revenues and share of the market.
In addition, the Corporation's competitors may develop alternative technologies
that gain broader market acceptance than the Corporation's software solutions.
As a result, the life cycle of the Corporation's software solutions is difficult
to estimate. The Corporation may need to develop and introduce new products and
enhancements to its existing solutions on a timely basis to keep pace with
technological developments, evolving industry standards, changing customer
requirements and competitive technologies that may render its solution obsolete.
These research and development efforts may require the Corporation to expend
significant capital and other resources. In addition, as a result of the
complexities inherent in the Corporation's solutions, major enhancements or
improvements will require long development and testing periods. If the
Corporation fails to develop products and services in a timely fashion, or if it
does not enhance its products to meet evolving customer needs and industry
standards, including security technology, it may not remain competitive or sell
its solutions.
Product Improvements
The Corporation will be at risk if it is unable to continually upgrade and
improve its software products, or to develop new software products. The software
industry is characterized by a constant flow of new or improved products, which
quickly render existing software products obsolete. The Corporation's
competitors may develop technically superior and comparably priced or lower
priced software that would have a material adverse effect on the Corporation.
Additional Financing
The Corporation may not have sufficient capital to fund its operations. In
particular, additional financing may be required in the near term to develop,
commercialize and market the Corporation's wireless mobile computing software
products and services. No assurance can be given that any additional financing
required will be available, or that additional financing will be available on
terms that may be advantageous to existing shareholders. Such financings, to the
extent they are available may result in substantial dilution to shareholders. To
the extent such financing is not available, the Corporation may not be able to
or may be delayed in being able to commercialize its software products and
services.
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Management of Growth
The Corporation has been expanding, and intends to continue to expand, its
Wireless Division. This growth has placed, and any further growth is likely to
continue to place, a significant strain on the Corporation's resources. The
Corporation's ability to achieve and maintain profitability will depend on its
ability to manage growth effectively, to implement and expand operational and
customer support systems, and to hire additional personnel. The Corporation may
not be able to augment or improve existing systems and controls or implement new
systems and controls to respond to any future growth. In addition, future growth
may result in increased responsibilities for management personnel, which may
limit their ability to effectively manage the Corporation's business.
Reliance on Key Personnel and Consultants
The Corporation is currently dependent upon its senior management, board of
directors, consultants, and strategic alliances, the loss of any of which may
significantly affect the performance of the Corporation and its ability to carry
out the successful development and commercialization of its software products
and services. Failure to retain management, directors and consultants or to
attract and retain additional key employees with necessary skills could have a
material adverse impact upon the Corporation's growth and profitability. The
Corporation is expecting significant growth in both revenue and employees as a
result of the commercialization of its wireless mobile computing software
products. This growth will place substantial demands on the Corporation. The
Corporation's ability to assimilate new personnel will be critical to its
performance. The Corporation will be required to recruit additional software
development personnel, expand its direct sales force, expand its customer
support functions and train, motivate and manage its employees. Competition for
qualified software development personnel is intense and expected to increase.
There can be no assurance that the Corporation will be able to recruit the
personnel required to execute its programs or to manage these changes
successfully.
Reliance on Key Third-Party Relationships
The Corporation relies on key third-party relationships, including its
relationships with VARs, resellers and OEMs, for marketing and sales of its
software products. These third parties are not within the control of the
Corporation, are not obligated to purchase software products from the
Corporation and may also represent and sell competing software products. The
loss of any of these third-party relationships, the failure of such parties to
perform under agreements with the Corporation or the inability of the
Corporation to attract and retain new VARs, resellers or OEMs with the
technical, industry and application experience required to market and sell the
Corporation's software products successfully could have a material adverse
effect on the Corporation.
Competition
The Corporation experiences competition in the markets for both its wireless
mobile computing software and printer driver software. As the market for the
Corporation's software products continues to develop, additional competitors
with substantially greater financial, technical and marketing resources than the
Corporation may enter the market and competition may intensify.
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Current or future competitors may develop software products that are superior to
the Corporation's software products or achieve greater market acceptance.
Product Defects
Software products as complex as those offered by the Corporation may contain
undetected errors or defects when first introduced or as new versions are
released. There can be no assurance that, despite testing by the Corporation and
by current and potential customers, errors will not be found in new software
products after commencement of commercial shipments resulting in product recalls
and market rejection of the Corporation's software products and resulting in
damage to the Corporation's reputation, as well as lost revenue, diverted
development resources and increased support costs.
Intellectual Property Protection
The Corporation considers its software products and trademarks to be of value
and important to its business. The Corporation relies principally upon a
combination of copyright, trademark and trade secret laws, non-disclosure
agreements and other contractual provisions to establish and maintain its
rights. The Corporation does not have any patents or patent applications
pending. Despite the Corporation's efforts to protect its proprietary rights,
unauthorized parties may attempt to copy or obtain and use information that the
Corporation regards as proprietary. There can be no assurance that the steps
taken by the Corporation to protect its proprietary information will prevent
misappropriation of such information. The cost of litigation necessary to
enforce the Corporation's proprietary rights may be prohibitive. Such steps may
not preclude competitors from developing confusingly similar brand names or
promotional materials or developing software products and services similar to
those of the Corporation.
Although the Corporation believes that it has the right to use all of the
intellectual property incorporated in its software products, third parties may
claim that the Corporation's software products violate their proprietary rights,
including copyrights and patents. If any such claims are made and found to be
valid, the Corporation may have to reengineer its software products or obtain
licenses from third parties to continue offering its software products. Any
efforts to reengineer its software products or obtain licenses from third
parties may not be successful and could substantially increase the Corporation's
costs and have a material adverse effect on the business, financial condition
and results of operations of the Corporation.
Lack of Backlog
Because the Corporation generally ships software products within a short period
after receipt of an order, the Corporation typically does not have a material
backlog of unfilled orders, and revenues in any quarter are substantially
dependent on orders booked in that quarter. The Corporation's expense levels are
based in part on its expectations as to future revenues. Therefore, the
Corporation may be unable to adjust spending in a timely manner to compensate
for any unexpected revenue shortfall. Accordingly, any significant shortfall of
demand in relation to the Corporation's expectations or any material delay of
customer orders would have an almost immediate adverse impact on the
Corporation's results of operations.
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Reliance on Export Sales
The Corporation's export sales to the United States and Europe represented 97%
of its total sales in the year ended December 31, 1999. There can be no
assurance that the Corporation will be able to maintain or increase
international demand for the Corporation's software products or that the
Corporation's distributors will be able to effectively meet that demand.
Additional risks inherent in the Corporation's international business activities
generally include unexpected changes in regulatory requirements, tariffs and
other trade barriers, costs and risks of localizing software products for
foreign countries, longer accounts receivable payment cycles, difficulties in
managing international distributors, potentially adverse tax consequences,
repatriation of earnings, the burdens of complying with a wide variety of
foreign laws and changes in demand resulting from fluctuations in exchange
rates. In addition, the laws of certain foreign countries do not provide
protection for the Corporation's intellectual property to the same extent as do
the laws of Canada and the United States.
Foreign Exchange Rate Exposure
The majority of the Corporation's revenue is denominated in U.S. dollars (the
currency in which the Corporation's financial statements are stated) or
currencies other than Canadian dollars and in the future may be denominated in
currencies other than Canadian or U.S. dollars. The Corporation does not engage
in currency hedging activities to limit the risks of exchange rate fluctuations.
As a result, changes in the relative value of the U.S. dollar to the Canadian
dollar and other foreign currencies will affect the Corporation's revenues and
operating margins. The impact of future exchange rate fluctuations between the
U.S. dollar and the Canadian dollar or other foreign currencies on revenues and
operating margins cannot be accurately predicted and could have a material
adverse effect on the Corporation.
Enforcement of Civil Liabilities
The Corporation is a corporation incorporated under the laws of British
Columbia, Canada. Certain of the directors and the Corporation's professional
advisors are residents of Canada or otherwise reside outside of the U.S. All or
a substantial portion of the assets of such persons are or may be located
outside of the U.S. It may be difficult to effect service of process within the
United States upon the Corporation or upon such directors or professional
advisors or to realize in the U.S. upon judgments of U.S. courts predicated upon
civil liability of the Corporation or such persons under U.S. federal securities
laws. The Corporation has been advised that there is doubt as to whether
Canadian courts would (i) enforce judgments of U.S. courts obtained against the
Corporation or such directors or professional advisors predicated solely upon
the civil liabilities provisions of U.S. federal securities laws, or (ii) impose
liabilities in original actions against the Corporation or such directors and
professional advisors predicated solely upon such U.S. laws. However, a judgment
against the Corporation predicated solely upon civil liabilities provisions of
such U.S. federal securities laws may be enforceable in Canada if the U.S. court
in which such judgment was obtained has a basis for jurisdiction in that matter
that would be recognized by a Canadian court.
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Wireless Division
Wireless Industry Growth
The overall market for wireless data communications devices has experienced
significant growth in recent years. There can be no assurance that the market
for the Corporation's existing or proposed wireless software products will
continue to grow, that firms within the industry will adopt the Corporation's
software products for integration with their wireless data communications
solutions, or that the Corporation will be successful in independently
establishing product markets for its wireless software products. If the various
markets in which the Corporation's software products compete fail to grow, or
grow more slowly than the Corporation currently anticipates, or if the
Corporation were unable to establish product markets for its new software
products, the Corporation's business, results of operation and financial
condition would be materially adversely affected.
Reliance on Microsoft
Some of the Corporation's wireless software products wirelessly enable the
functionality of Microsoft Exchange. The Corporation is aware that Microsoft has
developed its own wireless functionality for Microsoft Exchange that may compete
with software products of the Corporation. Also, United States federal and state
regulatory authorities have initiated broad antitrust actions against Microsoft.
The Corporation cannot predict to what extent these antitrust actions may affect
Microsoft or the Corporation's relationship with Microsoft.
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