NPLA Inplay Technologies (MM)

PHOENIX, Aug. 10 /PRNewswire-FirstCall/ -- InPlay Technologies (NASDAQ:NPLA) today announced financial results for the second quarter ended June 30, 2006. Total revenue for the second quarter of 2006 was $2.55 million, up 48 percent from $1.72 million in the first quarter of 2006. Second quarter 2006 revenue includes $2.37 million from FinePoint operations and $180,000 from Duraswitch operations, increases of 51 percent and 18 percent, respectively, compared with the immediately preceding quarter. Net loss for the second quarter of 2006 was $684,000, or $0.06 per share, compared with net loss of $532,000, or $0.05 per share, for the first quarter of 2006. The company believes that a sequential comparison is more meaningful to investors than a year-over-year comparison. Consolidated gross margin for the three-month period ended June 30, 2006 was 14 percent, including 11 percent for FinePoint and 59 percent for Duraswitch. InPlay expects that gross profit will continue to fluctuate quarter to quarter. Bob Brilon, InPlay Technologies' Chief Executive Officer, stated, "Both of our business lines delivered strong sequential revenue growth in the second quarter and we are pleased with the continued sales momentum for FinePoint. The decrease in gross margins for this segment reflects short-term challenges associated with an accelerated demand ramp from our key customer during the period. However, we expect margins to rebound in the third quarter as we have addressed these issues and are also proactively working to ensure our ongoing ability to seamlessly ramp with current and new customers." "For the first half of the year, FinePoint sales for our first major OEM customer totaled $3.7 million, reflecting strong demand for their convertible notebook product line. Based on this performance, we believe we are on track to achieve the upper end of the $5-10 million revenue range we predicted for this project for fiscal 2006," concluded Mr. Brilon. InPlay Technologies reported cash of $1.62 million and $0.4 million of restricted short term investments at June 30, 2006. The company has no debt. Conference Call InPlay Technologies will host a conference call today at 5:00 p.m. Eastern Time. To participate on the live call, analysts and investors should dial 800-240-4186 at least ten minutes prior to the call. To participate on the live call from outside the U.S., dial 303-262-2050. InPlay Technologies will also offer a live and archived webcast of the conference call, accessible from the "Investor" section of the company's Web site (http://www.inplaytechnologies.com/). A telephonic replay of the conference call will also be available for 48 hours by dialing 800-405-2236 and entering passcode 11065239#. About InPlay Technologies InPlay Technologies markets and licenses proprietary emerging technologies through two divisions: FinePoint and Duraswitch. FinePoint Innovations is 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 award-winning 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 statements regarding our predictions for revenue ranges and timing of revenue from FinePoint customers, potential production from new customers and our estimations for gross margins. Risks and uncertainties that could cause results to differ materially from those projected include changes in orders or timing from our OEM customers, general changes in demand in the personal computing industry, pricing pressures, component shortages 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 Annual Report on Form 10-KSB for the year ended December 31, 2005 as filed with the Securities and Exchange Commission on March 17, 2006. These forward-looking statements represent our beliefs as of the date of this press release and we disclaim any intent or obligation to update these forward-looking statements. INPLAY TECHNOLOGIES, INC CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2006 2005 2006 2005 NET REVENUE: FinePoint $2,370,694 $-- $3,936,063 $-- Duraswitch: Related party - Delphi -- 2,102,243 -- 2,204,588 Non-related parties 180,456 134,301 333,082 238,605 Total net revenue 2,551,150 2,236,544 4,269,145 2,443,193 COST OF GOODS SOLD: FinePoint 2,110,291 -- 3,300,307 -- Duraswitch 74,080 63,157 135,848 108,854 Total cost of goods sold 2,184,371 63,157 3,436,155 108,854 Gross profit 366,779 2,173,387 832,990 2,334,339 OPERATING EXPENSES: Selling, general and administrative 743,490 703,584 1,460,268 1,165,915 Research, development and commerical application engineering 325,279 111,271 637,178 235,770 Total operating expenses 1,068,769 814,855 2,097,446 1,401,685 INCOME (LOSS) FROM OPERATIONS (701,990) 1,358,532 (1,264,456) 932,654 OTHER INCOME - Net 18,344 13,661 48,419 27,764 NET INCOME (LOSS) $(683,646) $1,372,193 $(1,216,037) $960,418 NET INCOME (LOSS) PER COMMON SHARE BASIC AND DILUTED $(0.06) $0.14 $(0.11) $0.10 WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC 11,491,896 9,614,673 11,486,733 9,614,673 DILUTED 11,491,896 9,665,367 11,486,733 9,684,120 INPLAY TECHNOLOGIES, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) June 30, 2006 December 31, 2005 ASSETS CURRENT ASSETS: Cash and cash equivalents $1,624,029 $4,022,734 Restricted short-term investment 400,000 400,000 Accounts receivable 1,655,698 1,460,169 Inventory 1,785,698 1,311,077 Prepaid expenses and other current assets 88,436 87,071 Total current assets 5,553,861 7,281,051 PROPERTY AND EQUIPMENT - Net 631,534 557,145 GOODWILL 1,321,240 1,321,240 PATENTS - Net 1,346,969 1,389,153 OTHER ASSETS 19,299 19,299 TOTAL ASSETS $8,872,903 $10,567,888 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $1,664,158 $1,496,780 Accrued salaries and benefits 280,736 510,794 Other accrued expenses and other current liabilities 326,221 539,786 Deferred revenue - other 34,370 82,879 Current portion notes payable and capital leases 4,014 165,914 Total current liabilities 2,309,499 2,796,153 LONG-TERM LIABILITIES: Other non-current liabilities 6,816 11,465 Total liabilities 2,316,315 2,807,618 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock, no par value, 10,000,000 shares authorized, no shares issued and outstanding in 2006 and 2005 -- -- Common stock, $.001 par value, 40,000,000 shares authorized in 2006 and 2005, 11,498,473 and 11,481,512 shares issued and outstanding in 2006 and 2005, respectively 11,499 11,482 Additional paid-in capital 31,385,630 31,373,292 Accumulated deficit (24,840,541) (23,624,504) Total stockholders' equity 6,556,588 7,760,270 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $8,872,903 $10,567,888 DATASOURCE: InPlay Technologies 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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