Municipal Solutions Group, Inc.
TSX VENTURE : MSZ

Municipal Solutions Group, Inc.

November 27, 2007 16:00 ET

Municipal Solutions Announces Results for Third Quarter 2007

VICTORIA, BRITISH COLUMBIA--(Marketwire - Nov. 27, 2007) - Municipal Solutions Group, Inc. ("Municipal Solutions") (TSX VENTURE:MSZ), a provider of business process automation solutions for local government, today announced its unaudited financial results for the quarter ending September 30th, 2007.

Total revenue for the third quarter in 2007 was $1,108,651 as compared to $1,068,317 in the third quarter of 2006, an increase of 4%. Total revenue for the nine months ended September 30, 2007 was $3,506,383 as compared to $3,038,451 in the nine months ended September 30, 2006, an increase of 15%. The increase in the third quarter and the nine month period was predominantly related to higher Services revenue offset by slight decreases in Software License revenue and Software Maintenance Fee revenue. The Company's overall sales backlog (defined as the amount of services and license revenue contracted for but not yet recognized as revenue) exceeded US$4.5M at September 30, 2007.

The Company's operating expenses for the three months ended September 30, 2007 were $1,574,159, an increase of $106,256 or 7% over the three months ended September 30, 2006. Operating expenses for the nine months ended September 30, 2007 were $5,170,540 as compared to $3,975,125 for the nine months ended September 30, 2006, an increase of 30%.

The increase in operating costs for the third quarter and the nine month period was largely the result of i) additional costs for staff and travel related to the implementation of customer projects and ii) various general and administrative expenses. In addition, for the nine month period, costs were higher due to i) labour and marketing costs related to the Company's SaaS (software as a service) product offering ii) non-recurring severance costs associated with the rationalization of staff in June as part of an on-going effort to keep operating costs at an efficient level and iii) stock compensation expense related to options granted to officers and directors of the Company in June 2007.

Other Costs totaled $212,104, an increase of $152,606 over the third quarter in 2006. The increase related largely to an increase in the foreign exchange loss.

The net loss for the quarter was $677,612 or $(0.04)/share compared to a loss for the same quarter in 2006 of $459,084 or $(0.03)/share.

Dennis Asbury, President and Chief Executive Officer of Municipal Solutions commented, "We enter fiscal 2008 with a solid backlog of business, and committed customers for both our CityView product and our new SaaS offering. Our focus is now on implementing these customers in a timely and cost effective way."

The following is the Consolidated Statements of Operations and Deficit (unaudited) for the three and nine months ended September 30, 2007 and September 30, 2006. A complete set of financial statements and analysis is available at www.MunicipalSoftware.com.



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Three months ended Nine months ended
Sept 30 Sept 30 Sept 30 Sept 30
2007 2006 2007 2006
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Revenue $ 1,108,651 $ 1,068,317 $ 3,506,383 $ 3,038,451
Expenses:
Customer service 407,325 287,638 1,319,067 887,116
Sales and marketing 289,651 258,503 781,942 671,659
Research and
development 463,096 509,343 1,533,591 1,192,982
General and
administrative 414,087 412,419 1,218,866 1,223,368
Restructuring costs - - 317,074 -
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1,574,159 1,467,903 5,170,540 3,975,125
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Loss before the
following (465,508) (399,586) (1,664,157) (936,674)

Amortization 63,697 51,892 194,529 155,383
Interest 29,198 23,451 82,459 77,692
Loss on foreign
exchange 119,209 (15,845) 224,342 8,870
Non-cash interest - - - 295,277
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Net loss and
comprehensive loss
for the period (677,612) (459,084) (2,165,487) (1,473,896)

Deficit, beginning
of period (8,645,846) (5,644,097) (7,157,971) (4,024,415)
Early conversion
premium -
convertible
debentures - - - (604,870)

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Deficit, end of
period $ (9,323,458) $ (6,103,181) $ (9,323,458) $ (6,103,181)
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Loss per share:
Basic and diluted $ (0.04) $ (0.03) $ (0.13) $ (0.13)
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Weighted average
number of shares
outstanding:
Basic and diluted 18,446,666 16,046,838 16,854,898 11,045,905
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About Municipal Solutions Group, Inc.

Municipal Solutions Group, Inc was formed in January 2002 as the public financing arm for Municipal Software Corporation.

About Municipal Software Corporation

Municipal Software Corporation (TSX VENTURE:MSZ) provides easily installed, packaged software solutions that manage the everyday business processes of local governments. The solutions are based on 24 years of experience with a product platform that easily adapts to the changing practices of clients. Branded under the CityView name, the company provides a number of out of the box solutions automating practices in Property Information, Permits and Inspections, Planning, Code Enforcement, Licensing and Cashiering. CityView Application Builder is a set of application development tools that allows the client to develop unique applications to match specific needs. Municipal Software offers a complete range of services from training and customer support of its suite of products to custom development for unique applications.

Forward-Looking Statements

Certain statements in this news release are not historical and may constitute forward-looking statements reflecting Municipal Solutions Group, Inc.'s current expectation in the local government sector. These statements are subject to important risks, uncertainties and assumptions concerning future conditions that may ultimately prove to be inaccurate and may differ materially from actual events or results.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this press release.

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