NPLA Inplay Technologies (MM)

PHOENIX, March 16 /PRNewswire-FirstCall/ -- InPlay Technologies (NASDAQ:NPLA) today announced financial results for the three months and year ended December 31, 2005. The fourth quarter 2005 results show net income of $118,000, or $0.01 per share compared to a net loss of $924,000, or $0.10 per share, for the fourth quarter of 2004. Revenue for the fourth quarter of 2005 was $3.2 million, compared to $198,000 in the same period during 2004, which included $736,000 from Duraswitch operations and $2.5 million from FinePoint operations. For the year ended December 31, 2005, InPlay reported net income of $668,000 or $0.07 per share compared to a net loss of $1.3 million, or $0.13 per share for fiscal 2004. Revenue for the year ended December 31, 2005 was $6.5 million, including $3.4 million from Duraswitch operations and approximately $3.1 million from FinePoint operations. Revenue during 2004 was $1.8 million, generated solely from Duraswitch operations. Duraswitch revenue for the 2005 and 2004 fiscal years includes minimum royalty payments from Delphi Corp. of $2 million and $1 million, respectively. As part of the exclusive license agreement, Delphi had paid a non-refundable $4 million payment in 2000 of which $2.8 million in deferred licensing revenue was being amortized over the initial seven-year term of the agreement. Due to the cancellation of the license agreement in bankruptcy court in October 2005, InPlay recognized the $648,000 as revenue, which represented the balance of deferred revenue during the fourth quarter 2005. FinePoint revenue was generated primarily from sales to one major computer OEM. Revenues from this customer totaled approximately $2.9 million during 2005. FinePoint currently has received orders from this customer totaling $4.4 million to date. Consolidated gross profit for fiscal 2005 was 62%, including 93% for Duraswitch and 27% for FinePoint. Margins will continue to fluctuate quarter to quarter. Total operating expenses for 2005 were $3.4 million compared to $2.4 million in 2004. Operating expenses of FinePoint subsequent to the acquisition were approximately $530,000. InPlay Technologies reported cash of $4.0 million and restricted short term investments of $0.4 million at December 31, 2005 compared to $2.8 million cash at December 31, 2004. In December 2005, InPlay completed a private placement of its common stock, raising net proceeds of approximately $3.1 million. Commenting on the results, Bob Brilon, InPlay CEO, said, "The acquisition of FinePoint Innovations was significant for InPlay this year. We successfully launched the MagicPoint digital computing pen technology, bringing in approximately $3 million in revenue in the last four months of the year." "We currently estimate that the major OEM customer could account for between $5-10 million in FinePoint revenue during 2006. We have smaller OEM customers using our digital solution for tablet PCs. Our focus is to win additional projects with key high volume tablet PC OEM customers and to grow market share for the MagicPoint digital pen technology," Brilon continued. Conference Call InPlay Technologies will host a conference call today at 5:00 p.m. Eastern Time. The conference call will be webcast and may be accessed by dialing 800-803-5267, or +1-706-643-0135 for international callers, a few minutes prior to the scheduled start time. The conference ID is 6606977. The webcast is available on the InPlay Technologies website, http://www.inplaytechnologies.com/, in the investor relations section. Those unable to participate in the live call can listen to the audio replay through March 18, 2006, at 800-642-1687, or +1-706-645-9291. A webcast replay will be available on the InPlay Technologies website through March 31. About InPlay Technologies InPlay Technologies markets and licenses proprietary emerging technologies. InPlay recently expanded its portfolio of technologies with the acquisition of FinePoint Innovations, a developer of pen computing products for tablet PCs and computer peripherals. FinePoint's digital solution is the computing pen and digitizer for a major computer OEM's newly launched line of convertible notebooks. The company was founded to commercialize its internally developed Duraswitch electronic switch technologies and has executed license agreements with switch manufacturers and OEMs worldwide. Today, Duraswitch patented technologies are in the controls of a wide range of commercial and industrial applications. InPlay Technologies is focused on further commercialization of these technologies and leveraging its licensing model with additional, innovative technologies. Visit http://www.inplaytechnologies.com/ for more information. This news release contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, but are not limited to, statements regarding our estimation for the potential production for FinePoint technologies, and our ability to win new OEM customers and gain market share. Risks and uncertainties that could cause results to differ materially from those projected include lack of market acceptance of our technologies, unanticipated expenses related to protecting our intellectual property, increased sales and marketing expenses, loss of purchase orders or other unforeseen difficulties related to manufacturing our technologies and other uncertainties described from time to time in our documents filed with the Securities and Exchange Commission, including our Form SB-2 as filed with the SEC on February 10, 2006 and our most recently filed Annual Report on Form 10-KSB as filed with the Securities and Exchange Commission. These forward-looking statements represent our beliefs as of the date of the press release and we disclaim any intent or obligation to update these forward-looking statements. INPLAY TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003 2005 2004 2003 NET REVENUE: Duraswitch related party - Delphi $2,955,118 $1,407,978 $409,753 Duraswitch non-related parties 469,311 349,075 350,159 FinePoint 3,031,115 -- -- Total net revenue 6,455,544 1,757,053 759,912 COST OF GOODS SOLD: Duraswitch 253,105 187,547 103,304 FinePoint 2,224,266 -- -- Total cost of goods sold 2,477,371 187,547 103,304 Gross profit 3,978,173 1,569,506 656,608 OPERATING EXPENSES: Selling, general and administrative 2,720,900 1,907,034 2,299,750 Research, development and commercial application engineering 641,047 472,485 917,610 Total operating expenses 3,361,947 2,379,519 3,217,360 INCOME (LOSS) FROM OPERATIONS 616,226 (810,013) (2,560,752) OTHER INCOME (EXPENSE): Impairment loss on note receivable -- (500,000) -- Interest and other income - net 51,424 37,935 10,191 NET INCOME (LOSS) $667,650 $(1,272,078) $(2,550,561) NET INCOME (LOSS) PER COMMON SHARE, BASIC $0.07 $(0.13) $(0.27) NET INCOME (LOSS) PER COMMON SHARE, DILUTED $0.07 $(0.13) $(0.27) WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC 9,823,637 9,603,717 9,591,090 WEIGHTED AVERAGE SHARES OUTSTANDING, DILUTED 9,903,485 9,603,717 9,591,090 INPLAY TECHNOLOGIES, INC. CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2005 AND 2004 2005 2004 ASSETS CURRENT ASSETS Cash and cash equivalents $4,022,734 $2,832,455 Restricted short-term investment 400,000 -- Accounts receivable 1,460,169 48,601 Inventory 1,311,077 217,083 Prepaid expenses and other current assets 87,071 83,470 Total current assets 7,281,051 3,181,609 PROPERTY AND EQUIPMENT - Net 557,145 198,589 GOODWILL 1,321,240 443,874 PATENTS - Net 1,389,153 777,013 OTHER ASSETS 19,299 66,297 TOTAL $10,567,888 $4,667,382 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $1,496,780 $59,674 Accrued salaries and benefits 510,794 187,289 Other accrued expenses and other current liabilities 539,786 242,045 Deferred licensing and other revenue 82,879 485,254 Current portion of notes payable and capital leases payable 165,914 -- Total current liabilities 2,796,153 974,262 LONG-TERM LIABILITIES Other non-current liabilities 11,465 18,486 Deferred licensing - long-term -- 546,257 Total long-term liabilities 11,465 564,743 Total liabilities 2,807,618 1,539,005 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred stock, no par value, 10,000,000 shares authorized, no shares issued and outstanding in 2005 and 2004 -- -- Common stock, $.001 par value, 40,000,000 shares authorized in 2005 and 2004, 11,481,512 and 9,614,673 shares issued and outstanding in 2005 and 2004, respectively 11,482 9,615 Additional paid-in capital 31,373,292 27,410,916 Accumulated deficit (23,624,504) (24,292,154) Total stockholders' equity 7,760,270 3,128,377 TOTAL $10,567,888 $4,667,382 DATASOURCE: InPlay Technologies, Inc. CONTACT: Heather Beshears, Vice President, Corporate Communications of InPlay Technologies, Inc., +1-480-586-3357, Web site: http://www.inplaytechnologies.com/

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