Exhibit 99.2
Dataradio Inc.
Consolidated Balance Sheets (Unaudited)
(in Canadian Dollars)
January 31, July 31,
2006 2005
----------- -----------
ASSETS
Current
Cash $ 6,197,143 $ 6,217,804
Accounts receivable 3,235,135 4,811,410
Unbilled receivables 1,616,744 1,616,744
Inventories 6,552,286 5,748,465
Prepaid expenses and other current assets 1,666,053 276,448
Future income taxes 615,362 722,640
Derivative instruments - 12,610
----------- -----------
Total current assets 19,882,723 19,406,121
Future income taxes 668,962 684,031
Property, plant and equipment 1,294,935 1,365,447
----------- -----------
$21,846,620 $21,455,599
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities $ 3,451,719 $ 2,811,129
Deferred revenues 404,798 297,724
Income and other taxes payable - 186,252
Future income taxes 287,219 287,219
----------- -----------
Total current liabilities 4,143,736 3,582,324
Long term deferred revenues 359,089 316,841
Future income taxes 226,328 226,567
----------- -----------
4,729,153 4,125,732
SHAREHOLDERS' EQUITY
Capital stock 11,008,166 11,008,166
Retained earnings 6,109,301 6,321,701
------------ -----------
Total shareholders' equity 17,117,467 17,329,867
----------- -----------
$21,846,620 $21,455,599
=========== ===========
See notes to unaudited consolidated financial statements.
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Dataradio Inc.
Consolidated Statements of Income and Retained Earnings (Unaudited)
(in Canadian Dollars)
Six Months Ended January 31,
----------------------------
2006 2005
----------- -----------
Revenues $16,670,648 $17,890,883
Cost of goods sold 7,501,025 8,347,204
----------- -----------
Gross profit 9,169,623 9,543,679
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Expenses
Sales and marketing 2,880,864 3,188,544
Administration 1,706,790 1,812,569
Research and development 2,581,223 2,519,281
Interest (income) expense, net (32,901) 5,891
Foreign exchange loss 598,406 453,616
Amortization and write-off of property,
plant and equipment 223,548 279,125
----------- -----------
7,957,930 8,259,026
----------- -----------
Income before income taxes 1,211,693 1,284,653
Income tax provision 424,093 451,504
----------- -----------
Net income $ 787,600 $ 833,149
=========== ===========
Retained earnings
Beginning of period $ 6,321,701 $ 4,399,721
Net income 787,600 833,149
Dividends (1,000,000) (1,000,000)
----------- -----------
End of period $ 6,109,301 $ 4,232,870
=========== ===========
See notes to unaudited consolidated financial statements.
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Dataradio Inc.
Consolidated Statements of Cash Flows (Unaudited)
(in Canadian Dollars)
Six Months Ended January 31,
----------------------------
2006 2005
----------- -----------
OPERATING ACTIVITIES
Net income $ 787,600 $ 833,149
Add (deduct) items not affecting cash
Amortization and write-off of property,
plant and equipment 223,548 279,125
Future income tax provision (recovery) 122,108 32,002
Increase (decrease) in deferred revenues 149,322 (589,725)
Changes in fair value of derivative
instruments 12,610 9,450
----------- -----------
1,295,188 564,001
Net change in non-cash working capital
balances relating to operations (162,813) 1,166,961
----------- -----------
Cash flows related to operating activities 1,132,375 1,730,962
----------- -----------
INVESTING ACTIVITIES
Additions to property, plant and equipment (153,036) (232,773)
----------- -----------
Cash flows related to investing activities (153,036) (232,773)
----------- -----------
FINANCING ACTIVITIES
Repayment of due to shareholders and
affiliated companies - (1,808,108)
Dividends (1,000,000) (1,000,000)
----------- -----------
Cash flows related to financing activities (1,000,000) (2,808,108)
----------- -----------
Decrease in cash (20,661) (1,309,919)
Cash, beginning of year 6,217,804 8,498,692
----------- -----------
Cash, end of year $ 6,197,143 $ 7,188,773
=========== ===========
Supplemental cash flow information
Cash paid during the year for:
Interest $ 696 $ 25,818
Income taxes $ 1,563,673 $ 716,772
See notes to unaudited consolidated financial statements.
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DATARADIO INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JANUARY 31, 2006 and 2005
Note 1 - DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Dataradio Inc. (the "Company") designs, manufactures, markets, sells and
supports a broad range of wireless modems, infrastructure and supporting
software for fixed and mobile applications.
Certain notes and other information are condensed in or omitted from the
unaudited interim financial statements. These interim financial statements,
which are prepared in accordance with Canadian generally accepted accounting
principles, follow the same accounting policies and methods as the annual
audited financial statements of the Company. Therefore, these unaudited
interim financial statements should be read in conjunction with the audited
financial statements for the year ended July 31, 2005.
In the opinion of the Company's management, the accompanying
consolidated interim financial statements reflect all adjustments necessary
to present fairly the Company's financial position at January 31, 2006 and
its results of operations for the six months ended January 31, 2006 and 2005.
The results of operations for such periods are not necessarily indicative of
results to be expected for the full fiscal year.
The accompanying consolidated interim financial statements include the
accounts of Dataradio and its subsidiaries. All intercompany transactions
and accounts have been eliminated in consolidation.
Note 2 - INVENTORIES
Inventories consist of the following:
January 31, July 31,
2006 2005
--------- ---------
Raw materials $5,415,943 $4,701,283
Work in process 391,151 157,543
Finished goods 745,192 889,639
--------- ---------
$6,552,286 $5,748,465
========= =========
Note 3 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
January 31, July 31,
2006 2005
--------- ---------
Research and test equipment $3,282,389 $3,301,933
Furniture and fixtures 748,479 767,144
Computers 1,140,476 1,164,413
Tooling 706,311 730,479
Leasehold improvements 287,490 333,743
--------- ---------
6,165,145 6,297,712
Less accumulated depreciation
and amortization (4,870,210) (4,932,265)
--------- ---------
$1,294,935 $1,365,447
========= =========
Note 4 - NET CHANGE IN NON-CASH WORKING CAPITAL BALANCES
RELATING TO OPERATIONS
Six Months Ended January 31,
----------------------------
2006 2005
--------- ---------
Decrease (increase) in:
Accounts receivable $1,576,275 $ 964,242
Inventories (803,821) 310,788
Prepaid expense and
other current assets (1,389,605) (46,231)
Increase (decrease) in:
Accounts payable and accrued liabilities 640,590 190,945
Income and other taxes payable (186,252) (252,783)
--------- ---------
$ (162,813) $1,166,961
========= =========
Note 5 - RELATED PARTY TRANSACTIONS
The Company incurred occupancy costs of $286,829 and $286,399 in the six
months ended January 31, 2006 and 2005, respectively, which were paid to a
lessor controlled by certain stockholders of the Company.
Note 6 - COMMITMENTS AND CONTINGENCIES
As of January 31, 2006, minimum annual lease costs, including leases
with related parties are as follows:
Related Third
parties parties
--------- ---------
2006 (remaining through July 31, 2006) $ 158,036 $ 229,273
2007 316,072 361,141
2008 316,072 263,737
2009 263,393 175,825
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$1,053,573 $1,029,976
========= =========
Note 7 - SEGMENTED INFORMATION
Management believes the Company operates in a single business segment
consisting of design, manufacture, marketing and sale of wireless components,
software and systems primarily for private networks.
Geographic information
The following table present revenues based on the location of customers
and property, plant and equipment based on their location:
Six Months Ended January 31,
----------------------------
2006 2005
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Revenues:
Canada $ 2,219,979 $ 4,236,573
United States 11,454,545 11,894,313
Other foreign countries 2,996,124 1,759,997
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$16,670,648 $17,890,883
========== ==========
January 31, July 31,
2006 2005
---------- -----------
Property, plant and equipment, net:
Canada $ 866,808 $ 917,737
United States 428,127 447,710
---------- ----------
$ 1,294,935 $ 1,365,447
========== =========