08/18/2014 07:39 EDT | Updated 10/18/2014 05:59 EDT

Webtech Wireless posts $1.6-million loss amid cost-saving restructuring

VANCOUVER - Webtech Wireless Inc. (TSX:WEW) says a $1.1-million restructuring expense related to its research and development operations contributed to a second-quarter net loss at the Vancouver-based telematics company, which assists companies with tracking their fleets.

Webtech also said sales didn't reflect their potential and that the company continues to investigate a previously announced diversion of funds from its U.K. operations over a period from 2009 to 2012.

The company also confirmed it had an $800,000 tax liability as of June 30 related to its now-closed U.K. operations, which closed in 2012. Webtech said it will attempt to recover the diverted funds through its insurance policy or other means.

The net loss for the three months ended June 30 was $1.6 million or eight cents per share, compared with $1 million of net income or five cents per share in the three months ended June 30.

On an adjusted basis, Webtech lost $49,000 (before interest, taxes, depreciation and amortization), compared with year-earlier EBITDA of $576,000.

Revenue from continuing operations was down 13.5 per cent, dropping to $7 million from $8.1 million in the second quarter of 2013, when Webtech booked non-recurring revenue from sales to a corporate customer.

However, Webtech chief executive Scott Edmonds also said that second-quarter sales hadn't reflected the company's potential, given several new products and technologies that have been brought out, as well as new pricing.

He said that a reorganization of Webtech's sales group that began earlier this year is now complete and its sales force is at full strength. In addition, he said that cost-savings initiatives had improved EBITDA compared with the first quarter of 2014.

"We are very focused on building a healthy and profitable business, and with these goals in mind we undertook a significant restructuring during the quarter to optimize our cost structure, such as the consolidation of technology development operations in Canada," Edmonds said in a statement.

He added that Webtech's external auditors hadn't had time to review the financial statements in time for the Monday announcement, which had been delayed from Aug. 14 because of the U.K. funds issue.

Its subscriber base at the end of June was 79,900, up from 78,600 a year earlier but down from 80,000 as of Dec. 31.