Advent Wireless Inc.

Advent Wireless Inc. is an independent specialty retailer of cellular and wireless products and services. Together with its wholly-owned subsidiary Am-Call Wireless Inc., the company’s business strategy is to provide one-stop shopping for consumers to purchase voice and data enabled cellular and paging devices as well as other wireless products and accessories.

Advent has historically focused on the ethnic Asian markets in Toronto, Ontario and Vancouver, British Columbia, supported by customer service representatives who speak both English and Chinese. Management believes that its strategy of combining product selection, reasonable prices, convenient locations and knowledgeable service in the customer’s native language provides the company with a competitive advantage and results in longer term subscriptions with lower cancellation rates.

Advent currently has 17 stores in Canada, including 12 in Ontario and five in B.C. The company’s newest retail locations include its Aberdeen Centre store in Richmond, B.C. Described by management as a ‘prestigious mall’, the company expects this operation to further strengthen its presence in B.C. In addition, two stores were recently opened in Toronto in what management described as ‘mixed ethnic’ neighborhoods, with an expectation that these locations will allow Advent to diversify into other demographics.

The company earns its revenues from several sources including the sale of cellular phones, pagers and related products to customers at its retail locations. Advent also receives monthly commissions in connection with phone activations. In addition, some additional revenue is gained from pager and airtime rental services.

As one of its key suppliers, the company depends heavily on Rogers Wireless Inc., a subsidiary of Rogers Communications Inc. (RCI.MV.A:TSX) to provide new and competitive products and services to consumers. Advent also earns a significant portion of its revenue through commissions and the sale of products from the wireless service provider. Management is confident that given the track record of Rogers as the leader of innovative products in Canada, Advent will continue to stay ahead of the marketplace in terms of its wireless offerings. Rogers Wireless recently announced that it intends to launch a Voice over Internet Protocol (VoIP) service later this year. According to management, although details have not been disclosed, VoIP is expected to bring a new level of competition to the telecommunications industry while at the same time creating new opportunities for companies such as Advent.

During 2004, management stated that the company was faced with a slow down in the growth of the telecommunications industry as a whole and more aggressive pricing was required in order to maintain business volumes. As a result, Advent’s gross profit margin dropped from 45% in the first quarter of fiscal 2004 to 39% during the same period in 2005. However, the company believes that this 39% margin is more consistent with that of 2004 as a whole.

Revenues for the first quarter ended March 31, 2005, increased by 23% to approximately $3.5 million as compared to the similar time period in fiscal 2004. This growth is mainly attributed to the addition of new stores and the maturing of established locations. At the same time, general and administration expenses decreased as a result of the expiration of a consultant fee contract. Overall, net earnings for the period ending March 31, 2005, increased to $223,669 compared to only $17,538 in 2004. Supporting the company’s positive financial results was a 6% increase in the total number of paging and cellular customers from 68,246 after the third quarter of fiscal 2004 to 72,025 at March 31, 2005.