Optimal Geomatics Inc.

Optimal Geomatics Inc.

June 05, 2007 19:56 ET

Optimal Geomatics Reports Second Quarter 2007 Financial Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 5, 2007) - Optimal Geomatics Inc. (TSX VENTURE:OPG) ("Optimal") announces its financial results for the second quarter ending April 30, 2007.

The results include the Civil Infrastructure operations, acquired from MD Atlantic Technologies, Inc., ("MDA") commencing December 1st, 2005. Financial information is reported in Canadian dollars.

Business Highlights for Q2 2007 include:

Sales activity increased 21% from our prior quarter reaching $4.4 million and included several notable contract wins:

- Retained by a nationwide data provider to supply aerial acquisition mapping services. Multiple orders totaled US$400 thousand to-date.

- Retained by a major electric utility in the Southwest to map and provide engineering solutions for its transmission line system with a contract value of US$1 Million.

- Awarded contract additions with a value of US$323 thousand from an electric utility in Western USA. The contract add-ons involve additional transmission line mapping services and expanded data processing tasks.

- Awarded GBP600 thousand electric transmission contract for tower inspection assessment and vegetation survey for an electric utility in the United Kingdom.

Colum Caldwell, Optimal's President and CEO, commented, "During the quarter, we made measurable progress towards increasing sales of our product offering across our key vertical markets. The execution of our realignment plan towards our corporate objectives continues to positively impact the company resulting in additional operational efficiencies and cost improvement initiatives through to the end of fiscal 2007."

Financial Results

Revenue for the second quarter of fiscal year 2007 was $4.4 million, a 17% decrease when compared to revenue of $5.2 million for the comparable period in 2006, and a 21% increase when compared to the prior quarter. The year-over-year decrease is primarily due to the reduction in revenue from the North American Energy market. Despite the year-over-year reduction in revenues, sales to this market area have been stable for the past three quarters. The quarter-over-quarter increase in revenue was primarily due to a major UK customer contract.

Gross margin for the three month period ending April 30, 2007 was 24%, a decrease as compared to gross margin of 29% for the first quarter of the current fiscal year and a decrease as compared to the gross margin of 30% for the comparable three month period in 2006. The reduction in gross margin was attributable to a combination of factors including margin compression on certain contracts, an increase in the cost per unit of production, the weakness of the US dollar, our primary revenue currency, all partially offset by a decrease in indirect operating costs. Excluding the impact of foreign exchange, margins are expected to remain in the range of those achieved in the second quarter, for the remainder of the fiscal year. If the recent appreciation of the Canadian dollar relative to the US dollar continues, margins will reduce further.

Operating expenses were $1.5 million resulting in a loss from operations of $416 thousand for the second quarter of fiscal 2007. The comparable figure for 2006 operating expenses, $1.4 million, resulted in operating income of $191 thousand for the first quarter 2006. The net loss for the second quarter of 2007 was $704 thousand, ($0.01) per share, as compared to net earnings of $30 thousand, $0.00 per share, for the comparable period in 2006.

As at April 30, 2007, Optimal had cash and cash equivalents of $3.6 million with net working capital of $4.8 million, compared to cash and cash equivalents of $4.5 million with net working capital of $5.7 million as at January 31, 2007. As anticipated, cash has declined in the current quarter primarily due to the first payment on the principal of the notes payable and the interest accrued to the payment date.

Financial Outlook

Opportunities for growth continue to exist for our products in the North American energy, transportation and government markets. Our attention will be directed to selling our product offering to these key market verticals. We will continue to focus our attention on progressively balancing our cash book during the latter half of 2007.

Quarterly Teleconference Call:

Optimal will hold its second quarter of 2007 teleconference call on Wednesday, June 6, 2007 at 8:00am PST (11:00am EST). To participate dial 604-899-1159 for Vancouver participants and 416-883-0139 outside Vancouver, then dial pass code 8358624#. Alternatively, you can listen to the playback by visiting our website after the call at www.optimalgeo.com.

About Optimal Geomatics Inc.:

Optimal Geomatics specializes in the science and technology of gathering, analyzing, interpreting, distributing and using geographic information. Optimal applies the disciplines of surveying, mapping, remote sensing, geographic information systems (GIS), and global positioning system (GPS) to provide solutions for engineering and geospatial professionals.

Summary of Financial Information

Consolidated Balance Sheets April 30, 2007 October 31, 2006
Cash $ 3,612,329 $ 4,144,999
Accounts Receivable 4,181,127 5,020,917
Inventory 16,125 12,476
Work in Progress 99,911 366,659
Prepaid Expense 441,074 246,876
Property & Equipment 2,189,020 2,548,887
Other long-term assets - 43,412
Intangible assets 370,928 465,170

Total Assets $ 10,910,514 $ 12,849,396

Liabilities & Shareholders
Current Liabilities $ 1,675,090 $ 2,067,271
Deferred Revenue 805,555 591,671
Notes payable (current) 1,110,100 3,428,803
Notes payable 1,716,127 -
Share Capital 23,231,543 23,231,543
Contributed Surplus 760,082 706,835
Cumulative Translation
Adjustment 123,793 99,150
Deficit (18,511,776) (17,275,877)

Total Liabilities &
Shareholders Equity $ 10,910,514 $ 12,849,396

Consolidated 3 months 3 months 6 months 6 months
Statements of ending ending ending ending
Operations Apr 30, 2007 Apr 30, 2006 Apr 30, 2007 Apr 30, 2006

Revenues $ 4,376,923 $ 5,246,028 $ 7,979,786 $ 9,236,619
Cost of Sales 3,336,446 3,660,431 5,908,747 6,245,390

Gross Profit 1,040,477 1,585,597 2,071,039 2,991,229

Administration 572,858 675,531 1,468,189 1,238,438
Marketing &
Sales 564,923 450,411 1,114,642 785,887
Research &
Development 68,803 31,423 133,691 58,304
Amortization 249,967 237,345 499,605 403,898
1,456,551 1,394,710 3,216,127 2,486,527

(Loss) Income
Before Other
Expenses (416,074) 190,887 (1,145,088) 504,702

Other Income
Exchange Loss (259,200) (56,877) (48,359) (228,032)
Expense (58,493) (90,869) (111,467) (166,210)
Income 27,672 11,863 67,295 30,215
Gain on
disposal of
property and
equipment 1,720 - 1,720 -
(288,301) (135,883) (90,811) (364,027)

(Loss) Income
Before Income
Tax Expense (704,375) 55,004 (1,235,899) 140,675

Income Tax
Expense - 24,617 - 24,617

Net (Loss)
Income for
the Period $ (704,375) $ 30,387 $ (1,235,899) $ 116,058

Net (Loss)
Earning Per
Basic $ (0.01) $ 0.00 $ (0.02) $ 0.00
Diluted $ (0.01) $ 0.00 $ (0.02) $ 0.00


Basic 61,387,398 46,033,283 61,387,398 46,038,626
Diluted 61,387,398 47,319,237 61,387,398 47,411,121

Forward-Looking Statements:

This document may contain forward-looking statements. These statements present management's expectations, beliefs, plans and objectives regarding future events and conditions and, as such, involve inherent risks and uncertainties. Actual results could be significantly different from those projected.

These forward-looking statements are not guarantees of future performance and actual results could differ materially as a result of changes to Optimal's plans and the impact of factors, risks and uncertainties, known and unknown, to which Optimal's business is subject. The forward-looking statements in this news release speak only as the date hereof. Readers are also referred to risk factors and uncertainties described in filings made by Optimal from time to time with securities regulators.

For additional financial information: http://www.optimalgeo.com/financials.html

Contact Information