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<P style="margin-top:0pt; margin-bottom:2pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>UNITED STATES</B></P>
<P style="margin-top:0pt; margin-bottom:2pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>SECURITIES AND EXCHANGE COMMISSION</B></P>
<P style="margin-top:0pt; margin-bottom:2pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>Washington, DC &nbsp;20549</B></P>
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<P style="margin-top:0pt; margin-bottom:2pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>FORM 8K</B></P>
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<P style="margin-top:0pt; margin-bottom:2pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>CURRENT REPORT</B></P>
<P style="margin-top:0pt; margin-bottom:2pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>Pursuant to Section 13 OR 15 (d) of the Securities Exchange Act of 1934</B></P>
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<P style="margin-top:0pt; margin-bottom:2pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center>Date of Report (Date of earliest event reported) &nbsp;<B>August 11, 2005</B></P>
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<P style="margin-top:0pt; margin-bottom:3pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=center><B>Unity Wireless Corporation</B></P>
<P style="margin-top:0pt; margin-bottom:2pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center>(Exact name of registrant as specified in its charter)</P>
<P style="margin-top:0pt; margin-bottom:2pt; font-family:Times New Roman; font-size:8pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:2pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>Delaware</B></P>
<P style="margin-top:0pt; margin-bottom:2pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center>(State or other jurisdiction of incorporation)</P>
<P style="margin-top:0pt; margin-bottom:2pt; font-family:Times New Roman; font-size:8pt" align=center><BR></P>
<P style="margin-top:0pt; margin-bottom:2pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>0-30620</B></P>
<P style="margin-top:0pt; margin-bottom:2pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center>Commission File Number)</P>
<P style="margin-top:0pt; margin-bottom:2pt; font-family:Times New Roman; font-size:8pt" align=center><BR></P>
<P style="margin-top:0pt; margin-bottom:2pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>91-1940650</B></P>
<P style="margin-top:0pt; margin-bottom:2pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center>(IRS Employer Identification No.)</P>
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<P style="margin-top:0pt; margin-bottom:2pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>7438 Fraser Park Drive, Burnaby, BC Canada &nbsp;V5J 5B9</B></P>
<P style="margin-top:0pt; margin-bottom:2pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center>(Address of principal executive offices and Zip Code)</P>
<P style="margin-top:0pt; margin-bottom:2pt; font-family:Times New Roman; font-size:8pt" align=center><BR></P>
<P style="margin-top:0pt; margin-bottom:2pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>(800) 337-6642</B></P>
<P style="margin-top:0pt; margin-bottom:2pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center>(Registrant&#146;s telephone number, including area code)</P>
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<P style="margin-top:0pt; margin-bottom:2pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>not applicable</B></P>
<P style="margin-top:0pt; margin-bottom:2pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center>(Former name or former address, if changed since last report)</P>
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<P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:8pt" align=justify>Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (<I>see </I>General Instruction A.2. below):</P>
<P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:8pt" align=justify>&nbsp;</P>
<P style="margin-top:0pt; margin-bottom:-15pt; text-indent:18pt; line-height:15pt; font-family:Times New Roman; font-size:8pt" align=justify><FONT FACE="Wingdings">o</FONT></P>
<P style="margin:0pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:8pt" align=justify>Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</P>
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<P style="margin-top:0pt; margin-bottom:-15pt; text-indent:18pt; line-height:15pt; font-family:Times New Roman; font-size:8pt" align=justify><FONT FACE="Wingdings">o</FONT></P>
<P style="margin:0pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:8pt" align=justify>Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</P>
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<P style="margin:0pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:8pt" align=justify>Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))</P>
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<P style="margin:0pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:8pt" align=justify>Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</P>
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<P style="margin-top:0pt; margin-bottom:2.75pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><B>Item 2.02 Results of Operations and Financial Condition</B></P>
<P style="margin-top:0pt; margin-bottom:2.75pt; font-family:Times New Roman; font-size:11pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:2.75pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">On August 11, 2005 the Registrant issued a press release announcing financial results for the second quarter ended June 30, 2005. A copy of the press release is furnished as Exhibit 99.1 to this report. </P>
<P style="margin-top:0pt; margin-bottom:2.75pt; font-family:Times New Roman; font-size:11pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:2.75pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be &#147;filed&#148; for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the &#147;Exchange Act&#148;), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.</P>
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<P style="margin-top:0pt; margin-bottom:2.75pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><B>Item 9.01</B></P>
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<P style="margin-top:0pt; margin-bottom:-13pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">(A)</P>
<P style="margin-top:0pt; margin-bottom:2.75pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Exhibits</P>
<P style="margin-top:0pt; margin-bottom:2.75pt; font-family:Times New Roman; font-size:11pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:-13pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">99.1 </P>
<P style="margin-top:0pt; margin-bottom:2pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Press release of Unity Wireless Corporation dated August 11, 2005.</P>
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<P style="margin-top:0pt; margin-bottom:2.75pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center><B>SIGNATURES</B></P>
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<P style="margin-top:0pt; margin-bottom:2.75pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.</P>
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<P style="margin-top:0pt; margin-bottom:2.75pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">UNITY WIRELESS CORPORATION</P>
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<P style="margin-top:0pt; margin-bottom:2.75pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><U>By: </U><I><U>/s/ Ilan Kenig</U></I></P>
<P style="margin-top:0pt; margin-bottom:2.75pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">ILAN KENIG</P>
<P style="margin-top:0pt; margin-bottom:2.75pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Chief Executive Officer and Principal Executive Officer</P>
<P style="margin-top:0pt; margin-bottom:2.75pt; font-family:Times New Roman; font-size:11pt"><BR></P>
<P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Date: August 15, 2005</P>
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<P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center><B>INDEX TO EXHIBITS</B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt">&nbsp;</P>
<TABLE cellspacing=0><TR><TD style="border-bottom:1pt solid #000000" valign=top width=83.933><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><B>Exhibit No.</B></P>
</TD><TD valign=top width=51.6><P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;</P>
</TD><TD style="border-bottom:1pt solid #000000" valign=top width=565.267><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center><B>Description</B></P>
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<TR><TD valign=top width=83.933><P style="margin:0pt; font-family:Times New Roman; font-size:11pt">&nbsp;</P>
</TD><TD valign=top width=51.6><P style="margin:0pt; font-family:Times New Roman; font-size:11pt">&nbsp;</P>
</TD><TD valign=top width=565.267><P style="margin:0pt; font-family:Times New Roman; font-size:11pt">&nbsp;</P>
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<TR><TD valign=top width=83.933><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">99.1</P>
</TD><TD valign=top width=51.6><P style="margin:0pt; font-family:Times New Roman; font-size:11pt">&nbsp;</P>
</TD><TD valign=top width=565.267><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Press release of Unity Wireless Corporation, dated August 11, 2005.</P>
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<P style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt">&nbsp;</P>
<P style="page-break-before:always; margin:0pt; font-family:Times New Roman; font-size:12pt">&nbsp;<BIG><BIG>Unity Wireless</BIG></BIG></P>
<P style="margin:0pt; font-family:Times New Roman"><B><I>Technology &amp; Innovation to Power a Wireless World!</I></B></P>
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<P style="margin:0pt; font-family:Times New Roman">FOR IMMEDIATE RELEASE</P>
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<P style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=center><B>Unity Wireless Reports Results for the Second Quarter 2005</B></P>
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<P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center><B>Gross Margins Reach 29% for Second Quarter; Revenue up 30% for 6-Month Period</B></P>
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<P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=justify>August 11, 2005 - BURNABY, BC &#150; Unity Wireless Corporation (OTCBB: UTYW), a developer of integrated wireless subsystems, power amplifiers and coverage enhancement solutions, reported today summary financial results for the three and six-month periods ended June 30, 2005. </P>
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<P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=justify>Revenues for the second quarter of 2005 were $1,716,888 compared to $2,063,198 in the same period in 2004. The gross margin of $492,862, or 28.7%, for the second quarter of 2005 represented an increase in gross margin from $229,224, or 11.1%, for the &nbsp;second quarter of 2004. &nbsp;Loss for the second quarter of 2005 was $1,365,404 compared to $757,823 for the same period in 2004. &nbsp;Net of stock based compensation and other non-cash items of $749,950 and $197,461, respectively, loss for the second quarter of 2005 was $615,454 compared to $560,362 for the same period in 2004. </P>
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<P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=justify>Revenues for the first six-months of 2005 were $3,684,458, up 30%, compared to $2,823,580 in the same period in 2004. The gross margin of $837,749, or 22.7% of net sales, for the first half of 2005 represented an increase from a gross margin of $496,264, or 17.6% of net sales, for the first half of 2004. &nbsp;Loss for the first six-months of 2005 was $2,543,579 compared to $1,420,725 for the same period in 2004. Net of stock based compensation and other non-cash items of $1,171,785 and $541,223, respectively, loss for the first six-months of 2005 was $1,371,794 compared to $879,502 for the same period in 2004. &nbsp;The major contributor to the increased loss was a 193% increase in research in development expenses, incurred mostly in the first quarter, as the Company accelerated new product development for time-sensitive customer opportunities. &nbsp;These expenditures raised research and development expenses above typical levels, and included costs to upgrade lab equipment and simulation tools, to increase outsourced contract engineering assignments and to purchase prototyping materials.</P>
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<P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=justify>Ilan Kenig, President and CEO of Unity Wireless, stated, &#147;We have been focusing on initiatives to reduce our costs and improve efficiencies in our manufacturing and testing processes and are proud to report that these initiatives have significantly contributed to our third sequential, quarter-over-quarter improvement in gross margins. If we are as successful at driving top line revenue growth, continue to capitalize on current product opportunities, and are able to maintain current levels of operating expenses and gross margins we will ultimately be rewarded by improved bottom line performance and profitability&#148;.</P>
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<P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=justify>The Company&#146;s Form 10Q-SB for the period ended June 30, 2005 contains additional financial information, and can be accessed at the Company&#146;s website or through the Securities and Exchange Commissions website at www.sec.gov. </P>
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<P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=justify><B>About Unity Wireless</B> www.unitywireless.com</P>
<P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=justify>Unity Wireless is an ISO 9001:2000 certified developer of RF (radio frequency) power amplifiers, components, integrated front-ends and coverage enhancement solutions for wireless communications networks. &nbsp;Our products are an integral part of the base station and repeater infrastructure that comprise the backbone of wireless communications networks around the world. &nbsp;From analog cellular to 3G mobile and fixed wireless applications from 450 MHz to 3.5 GHz, Unity Wireless products deliver enhanced efficiency and performance with field-proven quality and reliability in tens of thousands of base stations and repeaters around the world. </P>
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<P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=justify><B>Forward Looking Statements </B></P>
<P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=justify>Forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. &nbsp;The words &quot;believe,&quot; &quot;expect,&quot; &#147;feel,&#148; &quot;plan,&quot; &quot;anticipate,&quot; &#147;should&#148; and other similar expressions generally identify forward-looking statements. &nbsp;Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. &nbsp;These forward-looking statements are subject to a number of risks and uncertainties, including without limitation, inability to raise the funds necessary for the Company&#146;s continued operations, changes in external market factors including the economy and other risks and uncertainties indicated in the Company's most recent SEC filing on form SB-2. &nbsp;Actual results could differ materially from the results referred to in the forward-looking statements.</P>
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<P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=justify><B>Non-GAAP Financial Information</B></P>
<P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=justify>This press release contains certain non-GAAP financial information as defined by the U.S. Securities Commission Regulation G. &nbsp;Pursuant to the requirements of this regulation, a reconciliation of this financial information to our financial statements as prepared under generally &nbsp;accepted accounting principles in the United States (GAAP) is included in this press release. &nbsp;Unity&#146;s management believes that the disclosure of this non-GAAP financial information is useful to our investors and the investment community since certain non-cash charges and expenses may not be reflective of future expenses.</P>
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<P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=justify>For More Information Contact:</P>
<P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=justify>Dallas Pretty, Unity Wireless, (604) 267-2736 &nbsp;&nbsp;dallasp@unitywireless.com &nbsp;</P>
<P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=justify>Mike Mulshine, Osprey Partners, (732) 292-0982 &nbsp;&nbsp;osprey57@optonline.net</P>
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<P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=justify><BR></P>
<P style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=justify><B>UNITY WIRELESS CORPORATION</B></P>
<P style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=justify><B>CONSOLIDATED STATEMENT OF OPERATIONS</B></P>
<P style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=justify><B>RECONCILIATION OF PRO FORMA RESULTS</B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=justify><BR></P>
<TABLE cellspacing=0><TR><TD style="border-top:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=bottom width=298.667><P style="margin:0pt; font-family:Times New Roman; font-size:11pt">&nbsp;</P>
</TD><TD style="border-top:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=bottom width=302.667 colspan=4><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center><B>Three months ended</B></P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=298.667 rowspan=2>&nbsp;</TD><TD valign=bottom width=302.667 colspan=4><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>June 30,</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=302.667 colspan=4><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>2005</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>Original</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>Adjustment</P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>Pro-Forma</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Net sales</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;1,716,888 </P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- </P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;$ &nbsp;&nbsp;1,716,888 </P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Cost of goods sold</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>1,224,026</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(8,762)</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=40><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>( a )</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>1,215,264</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>492,862</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>8,762</P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>501,624</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Expenses:</P>
</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Research and development</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>530,197</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(16,959)</P>
</TD><TD valign=bottom width=40><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;( a ) </P>
</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>513,238</P>
</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Government grant</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>25,753</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>25,753</P>
</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Sales and marketing</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>187,983</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(15,609)</P>
</TD><TD valign=bottom width=40><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;( a ) </P>
</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>172,374</P>
</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Depreciation and amortization</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>53,846</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(53,846)</P>
</TD><TD valign=bottom width=40><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;( b ) </P>
</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Exchange (gain) loss</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>66,982</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>66,982</P>
</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Interest expense, excluding accretion of interest &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and debt settlement</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>76,273</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(56,070)</P>
</TD><TD valign=bottom width=40><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>( c )</P>
</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>20,203</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">General and administrative</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>463,091</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(144,563)</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=40><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;( a ) </P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>318,528</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=298.667><P style="margin:0pt; font-family:Times New Roman; font-size:11pt">&nbsp;</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>1,404,125</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(287,047)</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=40><P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>1,117,078</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Operating loss for the period</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(911,263)</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>295,809</P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(615,454)</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Accretion of interest and debt settlement </P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(454,141)</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>454,141</P>
</TD><TD valign=bottom width=40><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;( d ) </P>
</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Other income</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;- </P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=40><P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=89.333><P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Loss for the period</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>$ &nbsp;&nbsp;(1,365,404) </P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;$ &nbsp;&nbsp;749,950 </P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>$ &nbsp;&nbsp;&nbsp;(615,454) </P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">( a ) - This represents stock-based compensation.</P>
</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=601.333 colspan=5><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">( b ) - This represents costs related to the amortization of equipment and intangible assets.</P>
</TD></TR>
<TR><TD valign=bottom width=472 colspan=3><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">( c ) - This represents shares issued in settlement of interest expense.</P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=601.333 colspan=5><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">( d ) - This represents accretion of interest and debt settlement related to convertible debentures.</P>
</TD></TR>
</TABLE>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=justify><BR></P>
<TABLE cellspacing=0><TR><TD style="border-top:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=bottom width=298.667><P style="margin:0pt; font-family:Times New Roman; font-size:11pt">&nbsp;</P>
</TD><TD style="border-top:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=bottom width=302.667 colspan=4><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center><B>Three months ended</B></P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=298.667 rowspan=2>&nbsp;</TD><TD valign=bottom width=302.667 colspan=4><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>June 30,</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=302.667 colspan=4><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>2004</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>Original</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>Adjustment</P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>Pro-Forma</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Net sales</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;2,063,198 </P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- </P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;$ &nbsp;&nbsp;2,063,198 </P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Cost of goods sold</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>1,833,974</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(8,201)</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=40><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;( a ) </P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>1,825,773</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>229,224</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>8,201</P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>237,425</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Expenses:</P>
</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Research and development</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>395,732</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(14,769)</P>
</TD><TD valign=bottom width=40><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;( a ) </P>
</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>380,963</P>
</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Government grant</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>30,948</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>30,948</P>
</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Sales and marketing</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>144,456</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(21,862)</P>
</TD><TD valign=bottom width=40><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;( a ) </P>
</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>122,594</P>
</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Depreciation and amortization</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>14,216</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(14,216)</P>
</TD><TD valign=bottom width=40><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;( b ) </P>
</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Exchange (gain) loss</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(15,682)</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(15,682)</P>
</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Interest expense, excluding accretion of interest and debt settlement</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>3,345</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>3,345</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">General and administrative</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>414,032</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(138,413)</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=40><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;( a ) </P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>275,619</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=298.667><P style="margin:0pt; font-family:Times New Roman; font-size:11pt">&nbsp;</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>987,047</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(189,260)</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=40><P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>797,787</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Operating loss for the period</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(757,823)</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>197,461</P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(560,362)</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Accretion of interest and debt settlement </P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;- </P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Other income</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;- </P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=40><P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Loss for the period</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(757,823) </P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;$ &nbsp;&nbsp;197,461 </P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>$ &nbsp;&nbsp;&nbsp;(560,362) </P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">( a ) - This represents stock-based compensation.</P>
</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=601.333 colspan=5><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">( b ) - This represents costs related to the amortization of equipment and intangible assets.</P>
</TD></TR>
<TR><TD valign=bottom width=472 colspan=3><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">( c ) - This represents shares issued in settlement of interest expense.</P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=601.333 colspan=5><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">( d ) - This represents accretion of interest and debt settlement related to convertible debentures.</P>
</TD></TR>
</TABLE>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=justify><BR></P>
<P style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=justify><B>UNITY WIRELESS CORPORATION</B></P>
<P style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=justify><B>CONSOLIDATED STATEMENT OF OPERATIONS</B></P>
<P style="margin:0pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=justify><B>RECONCILIATION OF PRO FORMA RESULTS</B></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=justify><BR></P>
<TABLE cellspacing=0><TR><TD style="border-top:0.5pt solid #000000" valign=bottom width=298.667><P style="margin:0pt; font-family:Times New Roman; font-size:11pt">&nbsp;</P>
</TD><TD style="border-top:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=bottom width=302.667 colspan=4><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center><B>Six months ended</B></P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=298.667 rowspan=2>&nbsp;</TD><TD valign=bottom width=302.667 colspan=4><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>June 30,</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=302.667 colspan=4><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>2005</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>Original</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>Adjustment</P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>Pro-Forma</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Net sales</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;3,684,458 </P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- </P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;$ &nbsp;&nbsp;3,684,458 </P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Cost of goods sold</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>2,846,709</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(11,988)</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=40><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;( a ) </P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>2,834,721</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>837,749</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>11,988</P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>849,737</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Expenses:</P>
</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Research and development</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>1,248,449</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(37,284)</P>
</TD><TD valign=bottom width=40><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;( a ) </P>
</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>1,211,165</P>
</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Government grant</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>55,267</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>55,267</P>
</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Sales and marketing</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>262,274</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>39,459</P>
</TD><TD valign=bottom width=40><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;( a ) </P>
</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>301,733</P>
</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Depreciation and amortization</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>93,912</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(93,912)</P>
</TD><TD valign=bottom width=40><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;( b ) </P>
</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Exchange (gain) loss</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>42,038</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>42,038</P>
</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Interest expense, excluding accretion of interest and debt settlement</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>131,039</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(79,527)</P>
</TD><TD valign=bottom width=40><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;( c ) </P>
</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>51,512</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">General and administrative</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>953,128</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(393,312)</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=40><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;( a ) </P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>559,816</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=298.667><P style="margin:0pt; font-family:Times New Roman; font-size:11pt">&nbsp;</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>2,786,107</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(564,576)</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=40><P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>2,221,531</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96><P style="margin:0pt; font-family:Times New Roman; font-size:11pt">&nbsp;</P>
</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Operating loss for the period</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(1,948,358)</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>576,564</P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(1,371,794)</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Accretion of interest and debt settlement </P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(595,221)</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>595,221</P>
</TD><TD valign=bottom width=40><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;( d ) </P>
</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Other income</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=40><P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96><P style="margin:0pt; font-family:Times New Roman; font-size:11pt">&nbsp;</P>
</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Loss for the period</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">$ &nbsp;&nbsp;(2,543,579) </P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">&nbsp;$1,171,785 </P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>$ &nbsp;(1,371,794) </P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=601.333 colspan=5><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">( a ) - This represents stock-based compensation.</P>
</TD></TR>
<TR><TD valign=bottom width=601.333 colspan=5><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">( b ) - This represents costs related to the amortization of equipment and intangible assets.</P>
</TD></TR>
<TR><TD valign=bottom width=601.333 colspan=5><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">( c ) - This represents shares issued in settlement of interest expense.</P>
</TD></TR>
<TR><TD valign=bottom width=601.333 colspan=5><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">( d ) - This represents accretion of interest and debt settlement related to convertible debentures.</P>
</TD></TR>
</TABLE>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=justify><BR></P>
<TABLE cellspacing=0><TR><TD style="border-top:0.5pt solid #000000" valign=bottom width=298.667><P style="margin:0pt; font-family:Times New Roman; font-size:11pt">&nbsp;</P>
</TD><TD style="border-top:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=bottom width=302.667 colspan=4><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center><B>Six months ended</B></P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=298.667 rowspan=2>&nbsp;</TD><TD valign=bottom width=302.667 colspan=4><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>June 30,</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=302.667 colspan=4><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>2004</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>Original</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>Adjustment</P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>Pro-Forma</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Net sales</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;2,823,580 </P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- </P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;$ &nbsp;&nbsp;2,823,580 </P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Cost of goods sold</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>2,327,316</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(9,120)</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=40><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;( a ) </P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>2,318,196</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>496,264</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>9,120</P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>505,384</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Expenses:</P>
</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Research and development</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>648,105</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(21,573)</P>
</TD><TD valign=bottom width=40><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;( a ) </P>
</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>626,532</P>
</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Government grant</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>42,354</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>42,354</P>
</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Sales and marketing</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>278,863</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(47,446)</P>
</TD><TD valign=bottom width=40><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;( a ) </P>
</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>231,417</P>
</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Depreciation and amortization</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>26,562</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(26,562)</P>
</TD><TD valign=bottom width=40><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;( b ) </P>
</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Exchange (gain) loss</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(1,349)</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(1,349)</P>
</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Interest expense, excluding accretion of interest &nbsp;and debt settlement</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>14,523</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>14,523</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">General and administrative</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>884,671</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(399,129)</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=40><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>( a )&nbsp;</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>485,542</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=298.667><P style="margin:0pt; font-family:Times New Roman; font-size:11pt">&nbsp;</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>1,893,729</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(494,710)</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=40><P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>1,399,019</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Operating loss for the period</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(1,397,465)</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>503,830</P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(893,635)</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Accretion of interest and debt settlement </P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>(37,393)</P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>37,393</P>
</TD><TD valign=bottom width=40><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;( d ) </P>
</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Other income</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>14,133</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>&nbsp;- &nbsp;&nbsp;</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=40><P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=center>&nbsp;</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>14,133</P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=298.667><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Loss for the period</P>
</TD><TD valign=bottom width=96><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">$ &nbsp;&nbsp;(1,420,725) </P>
</TD><TD valign=bottom width=77.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">&nbsp;$ &nbsp;&nbsp;541,223 </P>
</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align=right>$ &nbsp;&nbsp;&nbsp;(879,502) </P>
</TD></TR>
<TR><TD valign=bottom width=298.667>&nbsp;</TD><TD valign=bottom width=96>&nbsp;</TD><TD valign=bottom width=77.333>&nbsp;</TD><TD valign=bottom width=40>&nbsp;</TD><TD valign=bottom width=89.333>&nbsp;</TD></TR>
<TR><TD valign=bottom width=601.333 colspan=5><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">( a ) - This represents stock-based compensation.</P>
</TD></TR>
<TR><TD valign=bottom width=601.333 colspan=5><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">( b ) - This represents costs related to the amortization of equipment and intangible assets.</P>
</TD></TR>
<TR><TD valign=bottom width=601.333 colspan=5><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">( c ) - This represents shares issued in settlement of interest expense.</P>
</TD></TR>
<TR><TD valign=bottom width=601.333 colspan=5><P style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">( d ) - This represents accretion of interest and debt settlement related to convertible debentures.</P>
</TD></TR>
</TABLE>
<P style="margin:0pt; font-family:Times New Roman; font-size:11pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=center><BR></P>
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<B>FOR IMMEDIATE RELEASE
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC  20549
FORM 8K
CURRENT REPORT
Pursuant to Section 13 OR 15 (d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
August 11, 2005
Unity Wireless Corporation
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-30620
Commission File Number)
91-1940650
(IRS Employer Identification No.)
7438 Fraser Park Drive, Burnaby, BC Canada  V5J 5B9
(Address of principal executive offices and Zip Code)
(800) 337-6642
(Registrant's telephone number, including area code)
not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (
see
General Instruction A.2. below):
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition
On August 11, 2005 the Registrant issued a press release announcing financial results for the second quarter ended June 30, 2005. A copy of the press release is furnished as Exhibit 99.1 to this report.
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01
(A)
Exhibits
99.1
Press release of Unity Wireless Corporation dated August 11, 2005.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
UNITY WIRELESS CORPORATION
By:
/s/ Ilan Kenig
ILAN KENIG
Chief Executive Officer and Principal Executive Officer
Date: August 15, 2005
INDEX TO EXHIBITS
Exhibit No.
Description
99.1
Press release of Unity Wireless Corporation, dated August 11, 2005.
Unity Wireless
Technology & Innovation to Power a Wireless World!
FOR IMMEDIATE RELEASE
Unity Wireless Reports Results for the Second Quarter 2005
Gross Margins Reach 29% for Second Quarter; Revenue up 30% for 6-Month Period
August 11, 2005 - BURNABY, BC – Unity Wireless Corporation (OTCBB: UTYW), a developer of integrated wireless subsystems, power amplifiers and coverage enhancement solutions, reported today summary financial results for the three and six-month periods ended June 30, 2005.
Revenues for the second quarter of 2005 were $1,716,888 compared to $2,063,198 in the same period in 2004. The gross margin of $492,862, or 28.7%, for the second quarter of 2005 represented an increase in gross margin from $229,224, or 11.1%, for the  second quarter of 2004.  Loss for the second quarter of 2005 was $1,365,404 compared to $757,823 for the same period in 2004.  Net of stock based compensation and other non-cash items of $749,950 and $197,461, respectively, loss for the second quarter of 2005 was $615,454 compared to $560,362 for the same period in 2004.
Revenues for the first six-months of 2005 were $3,684,458, up 30%, compared to $2,823,580 in the same period in 2004. The gross margin of $837,749, or 22.7% of net sales, for the first half of 2005 represented an increase from a gross margin of $496,264, or 17.6% of net sales, for the first half of 2004.  Loss for the first six-months of 2005 was $2,543,579 compared to $1,420,725 for the same period in 2004. Net of stock based compensation and other non-cash items of $1,171,785 and $541,223, respectively, loss for the first six-months of 2005 was $1,371,794 compared to $879,502 for the same period in 2004.  The major contributor to the increased loss was a 193% increase in research in development expenses, incurred mostly in the first quarter, as the Company accelerated new product development for time-sensitive customer opportunities.  These expenditures raised research and development expenses above typical levels, and included costs to upgrade lab equipment and simulation tools, to increase outsourced contract engineering assignments and to purchase prototyping materials.
Ilan Kenig, President and CEO of Unity Wireless, stated, "We have been focusing on initiatives to reduce our costs and improve efficiencies in our manufacturing and testing processes and are proud to report that these initiatives have significantly contributed to our third sequential, quarter-over-quarter improvement in gross margins. If we are as successful at driving top line revenue growth, continue to capitalize on current product opportunities, and are able to maintain current levels of operating expenses and gross margins we will ultimately be rewarded by improved bottom line performance and profitability".
The Company's Form 10Q-SB for the period ended June 30, 2005 contains additional financial information, and can be accessed at the Company's website or through the Securities and Exchange Commissions website at www.sec.gov.
About Unity Wireless
www.unitywireless.com
Unity Wireless is an ISO 9001:2000 certified developer of RF (radio frequency) power amplifiers, components, integrated front-ends and coverage enhancement solutions for wireless communications networks.  Our products are an integral part of the base station and repeater infrastructure that comprise the backbone of wireless communications networks around the world.  From analog cellular to 3G mobile and fixed wireless applications from 450 MHz to 3.5 GHz, Unity Wireless products deliver enhanced efficiency and performance with field-proven quality and reliability in tens of thousands of base stations and repeaters around the world.
Forward Looking Statements
Forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  The words "believe," "expect," "feel," "plan," "anticipate," "should" and other similar expressions generally identify forward-looking statements.  Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.  These forward-looking statements are subject to a number of risks and uncertainties, including without limitation, inability to raise the funds necessary for the Company's continued operations, changes in external market factors including the economy and other risks and uncertainties indicated in the Company's most recent SEC filing on form SB-2.  Actual results could differ materially from the results referred to in the forward-looking statements.
Non-GAAP Financial Information
This press release contains certain non-GAAP financial information as defined by the U.S. Securities Commission Regulation G.  Pursuant to the requirements of this regulation, a reconciliation of this financial information to our financial statements as prepared under generally  accepted accounting principles in the United States (GAAP) is included in this press release.  Unity's management believes that the disclosure of this non-GAAP financial information is useful to our investors and the investment community since certain non-cash charges and expenses may not be reflective of future expenses.
For More Information Contact:
Dallas Pretty, Unity Wireless, (604) 267-2736   dallasp@unitywireless.com
Mike Mulshine, Osprey Partners, (732) 292-0982   osprey57@optonline.net
UNITY WIRELESS CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
RECONCILIATION OF PRO FORMA RESULTS
Three months ended
June 30,
2005
Original
Adjustment
Pro-Forma
Net sales
$     1,716,888
$             -
$   1,716,888
Cost of goods sold
1,224,026
(8,762)
( a )
1,215,264
492,862
8,762
501,624
Expenses:
Research and development
530,197
(16,959)
( a )
513,238
Government grant
25,753
-
25,753
Sales and marketing
187,983
(15,609)
( a )
172,374
Depreciation and amortization
53,846
(53,846)
( b )
-
Exchange (gain) loss
66,982
-
66,982
Interest expense, excluding accretion of interest              and debt settlement
76,273
(56,070)
( c )
20,203
General and administrative
463,091
(144,563)
( a )
318,528
1,404,125
(287,047)
1,117,078
Operating loss for the period
(911,263)
295,809
(615,454)
Accretion of interest and debt settlement
(454,141)
454,141
( d )
-
Other income
-
-
Loss for the period
$   (1,365,404)
$   749,950
$    (615,454)
( a ) - This represents stock-based compensation.
( b ) - This represents costs related to the amortization of equipment and intangible assets.
( c ) - This represents shares issued in settlement of interest expense.
( d ) - This represents accretion of interest and debt settlement related to convertible debentures.
Three months ended
June 30,
2004
Original
Adjustment
Pro-Forma
Net sales
$     2,063,198
$             -
$   2,063,198
Cost of goods sold
1,833,974
(8,201)
( a )
1,825,773
229,224
8,201
237,425
Expenses:
Research and development
395,732
(14,769)
( a )
380,963
Government grant
30,948
-
30,948
Sales and marketing
144,456
(21,862)
( a )
122,594
Depreciation and amortization
14,216
(14,216)
( b )
-
Exchange (gain) loss
(15,682)
-
(15,682)
Interest expense, excluding accretion of interest and debt settlement
3,345
-
3,345
General and administrative
414,032
(138,413)
( a )
275,619
987,047
(189,260)
797,787
Operating loss for the period
(757,823)
197,461
(560,362)
Accretion of interest and debt settlement
-
-
-
Other income
-
-
-
Loss for the period
$      (757,823)
$   197,461
$    (560,362)
( a ) - This represents stock-based compensation.
( b ) - This represents costs related to the amortization of equipment and intangible assets.
( c ) - This represents shares issued in settlement of interest expense.
( d ) - This represents accretion of interest and debt settlement related to convertible debentures.
UNITY WIRELESS CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
RECONCILIATION OF PRO FORMA RESULTS
Six months ended
June 30,
2005
Original
Adjustment
Pro-Forma
Net sales
$     3,684,458
$             -
$   3,684,458
Cost of goods sold
2,846,709
(11,988)
( a )
2,834,721
837,749
11,988
849,737
Expenses:
Research and development
1,248,449
(37,284)
( a )
1,211,165
Government grant
55,267
-
55,267
Sales and marketing
262,274
39,459
( a )
301,733
Depreciation and amortization
93,912
(93,912)
( b )
-
Exchange (gain) loss
42,038
-
42,038
Interest expense, excluding accretion of interest and debt settlement
131,039
(79,527)
( c )
51,512
General and administrative
953,128
(393,312)
( a )
559,816
2,786,107
(564,576)
2,221,531
Operating loss for the period
(1,948,358)
576,564
(1,371,794)
Accretion of interest and debt settlement
(595,221)
595,221
( d )
-
Other income
-
-
-
Loss for the period
$   (2,543,579)
$1,171,785
$  (1,371,794)
( a ) - This represents stock-based compensation.
( b ) - This represents costs related to the amortization of equipment and intangible assets.
( c ) - This represents shares issued in settlement of interest expense.
( d ) - This represents accretion of interest and debt settlement related to convertible debentures.
Six months ended
June 30,
2004
Original
Adjustment
Pro-Forma
Net sales
$     2,823,580
$             -
$   2,823,580
Cost of goods sold
2,327,316
(9,120)
( a )
2,318,196
496,264
9,120
505,384
Expenses:
Research and development
648,105
(21,573)
( a )
626,532
Government grant
42,354
-
42,354
Sales and marketing
278,863
(47,446)
( a )
231,417
Depreciation and amortization
26,562
(26,562)
( b )
-
Exchange (gain) loss
(1,349)
-
(1,349)
Interest expense, excluding accretion of interest  and debt settlement
14,523
-
14,523
General and administrative
884,671
(399,129)
( a )
485,542
1,893,729
(494,710)
1,399,019
Operating loss for the period
(1,397,465)
503,830
(893,635)
Accretion of interest and debt settlement
(37,393)
37,393
( d )
-
Other income
14,133
-
14,133
Loss for the period
$   (1,420,725)
$   541,223
$    (879,502)
( a ) - This represents stock-based compensation.
( b ) - This represents costs related to the amortization of equipment and intangible assets.
( c ) - This represents shares issued in settlement of interest expense.
( d ) - This represents accretion of interest and debt settlement related to convertible debentures.