RICHMOND, BRITISH COLUMBIA--(Marketwire - Aug. 14, 2012) - DDS Wireless International Inc. (TSX:DD) -

DDS Wireless International Inc., a world leader in providing wireless data solutions for fleet management for more than 20 years, today reported financial results for the three and six months ended June 30, 2012 and announced that the Company's Board of Directors has approved a cash dividend on the Company's common shares ("Shares"). All financial information is expressed in Canadian ("CDN") dollars and has been prepared in accordance with International Financial Reporting Standards ("IFRS"), except as otherwise noted.

"The second quarter of fiscal 2012 showed marked improvement from the first quarter of 2012 in terms of revenue and profitability with revenues of $10.6 million and net income of $0.2 million," stated Vari Ghai, CEO of DDS Wireless.

"Slower demand in Europe continues to characterize sales in the Taxi business unit, with enterprise solutions revenues lower than that of 2011. However, our Transit business unit shows growth due to the significant contracts we signed with MTA New York City Transit ("NYC Transit") late last year and increasing sales of MDT's through our partners from a rising adoption of our hardware in the transit market," continued Mr. Ghai.

⁽¹⁾Non-IFRS measure. Defined as earnings before interest, taxes, amortization and share-based compensation.Please refer to the reconciliation of reported financial results to Non-IFRS measures attached to this press release.

"We remain particularly pleased with the continued growth in subscriptions for our SaaS offerings to the North American small and mid-size taxi, limousine and work fleets, both currently underserved markets. TaxiBook™ subscriptions in North America continued to increase apace with growth of 54% in the year to date. eFleet, our SaaS offering to the limousine and work fleet markets, also met a milestone of 1,000 subscriptions."

Second Quarter 2012 Financial Results

Revenue declined 5% or $0.6 million compared to the three months ended June 30, 2011 and increased by 22% compared to the immediately preceding quarter. Revenues are lower compared to the same period last year due to lower revenues from the Taxi business unit (a decrease of $1.8 million), arising from declines in European enterprise solutions revenue, offset in part by growth through the unit's TaxiBook™ subscriptions. The Transit unit experienced an increase of $1.0 million in revenue from its continued activities under its NYC Transit project and through the additional sale of mobile data terminals ("MDT") to our partners.

The increase in revenue from the immediately preceding quarter of $1.8 million was the result of $0.8 million from higher TaxiBook™ and eFleet subscriptions (including the related MDT sales), some increases in Taxi and Transit enterprise solutions delivery and the above noted increase in the sale of MDT units in the Transit unit ($0.4 million).

Gross margin decreased by $1.1 million or 20% to $4.1 million from the same quarter last year due to a combination of both lower revenues and lower average margins earned on enterprise solutions projects in both the Transit and Taxi business units. The gross margin yield in the quarter was 39% compared to 46% in the same quarter last year and 38% in the immediately preceding quarter.

The decrease in the gross margin of $1.1 million, offset by combined favourable variances of $0.8 million in operating expenses and tax recoveries in the period, led to a decrease in net income of $0.3 million compared to the same period in the prior year. EBITDAS⁽¹⁾ was $0.7 million or 6% of revenue and net income was $0.2 million or $0.01 per share.

Year-to-Date 2012 Financial Results

Revenue declined 7% or $1.5 million compared to the six months ended June 30, 2011 arising from lower revenues from the Taxi business unit of $2.6 million; a result of declines in enterprise solutions, offset by growth in its worldwide TaxiBook™ sales and transaction based revenues. The decline in Taxi revenues was offset, in part, by increases in Transit revenue (through increases in enterprise solutions and MDT sales) and New Markets.

Gross margin decreased by $2.1 million or 22% to $7.5 million from the same period last year due to a combination of both lower revenues and lower average margins earned on enterprise solutions projects in both the Transit and Taxi business units, resulting from changing sales mix as well as the NYC Transit project continuing to be in a lower margin phase of the project.

The decrease in the gross margin of $2.1 million, offset by combined favourable variances in operating expenses, foreign exchange and tax recoveries in the period, led to a decrease in net income of $0.6 million compared to the same period in the prior year. EBITDAS⁽¹⁾ was $0.3 million or 2% of revenue and net loss was $0.3 million or $0.02 per share.

⁽¹⁾Non-IFRS measure. Defined as earnings before interest, taxes, amortization and share-based compensation. Please refer to the reconciliation of reported financial results to Non-IFRS measures attached to this press release.

Outlook

In 2011 Taxi experienced strong growth in Europe arising from the upgrade cycle of our existing customers. There is now uncertainty in that market given the general economic conditions. The timing of deal flow and foreign exchange trends together with the production scheduling issues of the first quarter have given rise to a slow first half of the year. We are maintaining our guidance of 2012 annual revenues to be at least that of 2011. However, this estimate necessarily incorporates assumptions around currency rates (particularly in our case the US dollar & Euro), general economic conditions and the timing and delivery of certain contracts.

Dividend

The cash dividend, in the amount of $0.02 per Share, will be paid on or about October 15, 2012 to holders of record of Shares as of the close of business on September 28, 2012. The Company expects to declare dividends on its Shares quarterly; however, the declaration of any future dividends, as well as the distribution date and amount of any future dividends, will be determined by the Board of Directors of the Company immediately prior to each such declaration. Unless the Company indicates otherwise, the Company's dividends are designated as eligible dividends for the purposes of the Income Tax Act (Canada).

Conference Call

The Company will host a conference call at 4:30 pm Eastern Time today to discuss the financial results. Please call 416-340-2216 / 866-226-1792 to participate in the call. A replay of this conference call will be available through August 24, 2012 by dialing 905-694-9451 / 800-408-3053 and entering access code 9491576.

Non-IFRS Measures

The following and preceding discussion of financial results includes reference to EBITDAS and Adjusted Gross Margin. EBITDAS is a non-IFRS financial measure which the Company defines as Earnings before interest, taxes, amortization and share-based compensation expenses. The measure is provided as a proxy for the cash earnings of the business as net income for the Company includes a significant amount of non-cash amortization expense primarily related to acquisitions completed in prior years. Adjusted Gross Margin excludes amortization expense and share-based compensation expenses. The measure is provided as gross margin includes significant amortization expense related to acquired intangibles which management believes may affect the comparability of gross margin. Please refer to the table attached to this press release for a reconciliation of non-IFRS measures to reported financial results.

Cautionary Note Regarding Forward-Looking Statements

This press release may contain forward-looking statements that involve risks and uncertainties. These forward-looking statements relate to, among other things, operations, anticipated financial performance, business prospects and strategies, statements about future market conditions, supply and demand conditions, revenues, gross margins, operating expenses, profits, and other expectations, intentions, and plans contained in this press release that are not historical facts. Such forward-looking statements are subject to a number of known and unknown risks, uncertainties and other factors which could cause actual results or events to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, business risks, changes in market and competition, technological and competitive developments and potential downturns in economic conditions generally. Given these risks and uncertainties DDS Wireless cannot guarantee that any forward looking statements will be realized.

About DDS Wireless International Inc.

DDS Wireless International Inc. is a global leader in providing application software for multiple vertical markets within the transportation industry. The Company specializes in transit routing and scheduling, real-time dispatching, vehicle location and tracking software applications, communications infrastructure as well as in-vehicle wireless devices. DDS Wireless operates four businesses dedicated to transit, taxi, limousines and work truck, and wireless devices and communication infrastructure. The Company supports its customers worldwide through its offices in Canada, Finland, India, Singapore, Sweden, U.K. and U.S.A.

SEE ATTACHED SUMMARY FINANCIAL STATEMENTS AND THE RECONCILIATION OF NON-GAAP MEASURES

Contributing Sources

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