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RICHMOND, BRITISH COLUMBIA--(Marketwire - May 10, 2012) - DDS Wireless International Inc. (TSX:DD) a world leader in providing wireless data solutions for fleet management for more than 20 years, today reported financial results for the quarter ended March 31, 2012 and announced that the Company's Board of Directors has approved a cash dividend on the Company's common shares ("Shares"). All financial information is expressed in Canadian ("CDN") dollars and has been prepared in accordance with International Financial Reporting Standards ("IFRS"), except as otherwise noted.

"Clearly revenues in the quarter were lower and we did not see the growth of recent quarters. Having said that, I am pleased with the developments in a couple of key areas; that of TaxiBook(TM) and the completion of two key enhancements to our product lines and I see an improvement in our 2012 outlook," stated Vari Ghai, CEO of DDS Wireless.

Mr. Ghai further stated that, "The first quarter's performance was affected by the completion of two key enhancements to our product lines; the Vector 800 and the Vector 9000. The development of certain software for the Vector 800 had been delayed and this led to delays in the shipment of product in the quarter. The completion of the software has permitted the commencement of shipment of units in the second quarter. We also refined the design of our very popular Vector 9000 product to improve the customer's experience with the user interface. To ensure proper testing and product roll-out, production was suspended for one month in February and also in April. As this has been one of our most successful products, this had an impact on revenue in the first quarter. These were important developments to maintain our extremely high standard for the customer experience."

"I am particularly pleased with the continued growth of the TaxiBook(TM) subscriptions in North America. This area is a key growth strategy for us, and subscriptions grew from 1,142 at the beginning of the year to 1,729 to date. To put this in context, the growth in the year to date has now outpaced the increase in subscriptions in all of fiscal 2011. It is this type of accelerated growth that will deliver a sustained SaaS revenue base in future years. Obviously the in year 2012 revenue of these 4-5 year contracts is moderated. The penetration of a SaaS model into the mid-market taxi companies is a cornerstone of our growth strategy."

First Quarter 2012 Financial Results

Revenue for the first quarter of 2012 was $8.7 million, a decline of 9% or $0.9 million compared to the first quarter of 2011 and declined by 30% compared to the immediately preceding fourth quarter. The decline from the immediately preceding quarter is not unexpected as the first quarter of the year is seasonally the slowest with revenues typically increasing in magnitude as the year progresses and also due to the production suspension. Revenues have declined compared to the first quarter of 2011 largely as a result of lower enterprise solutions revenues and a pause in maintenance revenues for 2011 deliveries still under warranty in the Taxi business unit (a combined decrease of $1.0 million). This decline was offset in part by higher small hardware orders associated with TaxiBook(TM) sales in Finland (an increase of $0.2 million). Revenues in the Transit and New Markets business units were stable.

Gross margin decreased by $1.0 million or 23% to $3.3 million from the first quarter of 2011 due in part to the lower revenues and lower margins earned on enterprise solutions revenues in both the Taxi and Transit business units, including a lower margin phase of deliveries on our MTA New York City Transit project. The combination of the above has led to a lower yield of 38% compared to 45% in the first quarter of 2011.

The decrease in the gross margin of $1.0 million, offset by combined favourable variances of $0.7 million in net finance expense and tax recoveries in the period, led to an increase in net loss of $0.3 million compared to same period in the prior year. EBITDAS(1) loss was $0.4 million or 4% of revenue and net loss was $0.5 million or $0.03 per share.

Outlook

In 2011 Taxi experienced strong growth in Europe but there is now uncertainty in that market given the general economic conditions. The timing of deal flow and foreign exchange trends together with the production scheduling issues give rise to a slow first half of the year. We do see an improvement in our outlook for the second half of the year with 2012 annual revenues at least that of 2011.

Dividend

The cash dividend, in the amount of $0.02 per Share, will be paid on or about July 16, 2012 to holders of record of Shares as of the close of business on June 29, 2012. The Company expects to declare dividends on its Shares quarterly; however, the declaration of any future dividends, as well as the distribution date and amount of any future dividends, will be determined by the Board of Directors of the Company immediately prior to each such declaration. Unless the Company indicates otherwise, the Company's dividends are designated as eligible dividends for the purposes of the Income Tax Act (Canada).

Conference Call

The Company will host a conference call at 4:30 pm Eastern Time today to discuss the financial results. Please call 416-340-2216 / 866-226-1792 to participate in the call. A replay of this conference call will be available through May 20, 2012 by dialing 905-694-9451 / 800-408-3053 and entering access code 3225491.

Non-IFRS Measures

The following and preceding discussion of financial results includes reference to EBITDAS and Adjusted Gross Margin. EBITDAS is a non-IFRS financial measure which the Company defines as Earnings before interest, taxes, amortization and share-based compensation expenses. The measure is provided as a proxy for the cash earnings of the business as net income for the Company includes a significant amount of non-cash amortization expense primarily related to acquisitions completed in prior years. Adjusted Gross Margin excludes amortization expense and share-based compensation expenses. The measure is provided as gross margin includes significant amortization expense related to acquired intangibles which management believes may affect the comparability of gross margin. Please refer to the table attached to this press release for a reconciliation of non-IFRS measures to reported financial results.

Cautionary Note Regarding Forward-Looking Statements

This press release may contain forward-looking statements that involve risks and uncertainties. These forward-looking statements relate to, among other things, operations, anticipated financial performance, business prospects and strategies, statements about future market conditions, supply and demand conditions, revenues, gross margins, operating expenses, profits, and other expectations, intentions, and plans contained in this press release that are not historical facts. Such forward-looking statements are subject to a number of known and unknown risks, uncertainties and other factors which could cause actual results or events to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, business risks, changes in market and competition, technological and competitive developments and potential downturns in economic conditions generally. Given these risks and uncertainties DDS Wireless cannot guarantee that any forward looking statements will be realized.

About DDS Wireless International Inc.

DDS Wireless International Inc. is a global leader in providing application software for multiple vertical markets within the transportation industry. The Company specializes in transit routing and scheduling, real-time dispatching, vehicle location and tracking software applications, communications infrastructure as well as in-vehicle wireless devices. DDS Wireless operates four businesses dedicated to transit, taxi, limousines and work truck, and wireless devices and communication infrastructure. The Company supports its customers worldwide through its offices in Canada, Finland, India, Singapore, Sweden, U.K. and U.S.A.

SEE ATTACHED SUMMARY FINANCIAL STATEMENTS AND THE RECONCILIATION OF NON-IFRS MEASURES

DDS WIRELESS INTERNATIONAL INC.

Consolidated Statements of Operations (Unaudited)

(In thousands of Canadian dollars, except per share amounts)

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Three months

ended March 31

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2012 2011(1)

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Revenue $ 8,693 $ 9,584

Cost of sales 5,350 5,225

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Gross margin 3,343 4,359

Operating expenses:

Research and development 1,498 1,558

Sales and marketing 1,186 1,287

General and administrative 1,548 1,426

Other expense - 21

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4,232 4,292

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Profit (loss) operating activities (889) 67

Net finance expense 41 297

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Loss before income taxes (930) (230)

Income tax expense (recovery)

Current tax expense (recovery) (77) 258

Deferred tax expense (recovery) (390) (347)

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(467) (89)

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Net loss $ (463) $ (141)

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Net loss per common share - basic and diluted $ (0.03) $ (0.01)

Weighted average number of common shares outstanding 13,818 13,790

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(1) The Company has restated its tax expense for comparative periods

relating to the calculation of investment tax credits receivable and certain

deferred tax liabilities relating to intangible assets acquired on

acquisition of its MobiSoft OY and StrataGen Systems Inc. subsidiaries in

2007. Refer to both the 2011 annual financial statements and Q1 2012

condensed consolidated interim financial statements for commentary.

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DDS WIRELESS INTERNATIONAL INC.

Consolidated Balance Sheets (Unaudited)

(In thousands of Canadian dollars)

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March 31, December 31,

2012 2011

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Assets

Current assets:

Cash and cash equivalents $ 6,209 $ 6,778

Trade and other receivables 4,445 7,145

Contract work-in-progress 6,440 5,468

Income taxes receivable 167 59

Inventory 3,323 2,718

Prepaid expenses 575 494

Investments 1,131 1,053

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22,290 23,715

Plant and equipment 949 1,022

Long-term receivables 650 740

Investment tax credit receivable 5,490 3,276

Deferred tax assets 824 2,326

Intangible assets 2,978 3,341

Goodwill 3,008 2,992

Investments 103 103

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$ 36,292 $ 37,515

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Liabilities and Shareholders' Equity

Current liabilities:

Trade payables and accrued liabilities $ 5,914 $ 6,392

Income taxes payable 113 79

Deferred revenue 1,743 2,103

Provisions 129 135

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7,899 8,709

Deferred tax liabilities 1,838 1,722

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9,737 10,431

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Shareholders' equity:

Share capital 24,686 24,611

Share-based payments reserve 1,852 1,816

Retained earnings 716 1,455

Accumulated other comprehensive loss (699) (798)

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26,555 27,084

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$ 36,292 $ 37,515

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DDS WIRELESS INTERNATIONAL INC.

Reconciliation of Non-IFRS Measures

(In thousands of Canadian dollars)

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For the three months ended 2012 2011

(CAD in thousands except %) Mar Dec Sep Jun Mar

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EBITDAS (1)

EBITDAS $ (354) $ 1,759 $ 3,036 $ 1,464 $ 490

As % of revenue (4%) 14% 24% 13% 5%

Amortization of plant &

equipment (119) (106) (95) (84) (89)

Amortization of intangibles (382) (427) (437) (438) (433)

Amortization of sales related

assets (49) (45) (51) (81) (100)

Share-based compensation (46) (87) (59) (111) (97)

Interest 20 45 (1) - (1)

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Income (loss) before income

taxes $ (930) $ 1,139 $ 2,393 $ 750 $ (230)

Adjusted Gross Margin (2)

Revenues $ 8,693 $12,455 $12,508 $11,144 $ 9,584

Adjusted gross margin 3,784 6,437 6,605 5,716 4,902

Less:

Amortization of plant &

equipment 7 38 - - -

Share-based compensation 3 (66) 22 36 31

Amortization of sales related

assets 49 45 51 81 101

Amortization of intangibles 382 415 417 418 412

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Gross margin per financial

statements $ 3,343 $ 6,005 $ 6,115 $ 5,181 $ 4,358

For the three months ended 2010

(CAD in thousands except %) Dec Sep Jun Mar

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EBITDAS (1)

EBITDAS $ 2,312 $ 1,034 $ 1,594 $ (82)

As % of revenue 17% 11% 17% (1%)

Amortization of plant &

equipment (94) (111) (130) (101)

Amortization of intangibles (459) (461) (433) (473)

Amortization of sales related

assets (295) (244) (191) (192)

Share-based compensation (82) (113) (72) (102)

Interest (14) (6) (13) (9)

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Income (loss) before income

taxes $ 1,368 $ 99 $ 755 $ (959)

Adjusted Gross Margin (2)

Revenues $13,326 $ 9,723 $ 9,383 $ 8,915

Adjusted gross margin 7,062 5,321 4,817 4,161

Less:

Amortization of plant &

equipment - - - -

Share-based compensation 28 35 20 32

Amortization of sales related

assets 295 244 191 192

Amortization of intangibles 440 441 433 453

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Gross margin per financial

statements $ 6,299 $ 4,601 $ 4,173 $ 3,484

(1)Non-IFRS measure. Defined as earnings before interest, taxes,

amortization and share-based compensation.

(2)Non-IFRS measure. Defined as gross margin before amortization, and share-

based compensation

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