Grey Island Systems International Inc.

Grey Island Systems International Inc.

March 02, 2005 08:00 ET

Grey Island Reports Results for the First Quarter Ended December 31, 2004


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: GREY ISLAND SYSTEMS INTERNATIONAL INC.

TSX VENTURE SYMBOL: GIS

MARCH 2, 2005 - 08:00 ET

Grey Island Reports Results for the First Quarter
Ended December 31, 2004

TORONTO, ONTARIO--(CCNMatthews - March 2, 2005) -

Posts Revenue Growth of 60% - Improves Bottom Line

Grey Island Systems International Inc. (TSX VENTURE:GIS) a leading
supplier of real-time vehicle tracking and telematic applications,
reported revenue growth of 60% for the first quarter ended December 31,
2004 relative to the first quarter ended December 31, 2003.
Concurrently, the company improved the bottom line by approximately 17%
relative to the same quarter in the previous year and increased the
portion of US revenues to approximately 23%.

"The first quarter results were indicative of the company's commitment
to sustainable growth both in Canada and the United States," said Andrew
Moore, CEO Grey Island. "The company's ability to simultaneously
increase revenues, improve the bottom line and increase US penetration
in the face of a rising Canadian Dollar are among the many
accomplishments in the first quarter".

Accomplishments in the First Quarter

The following are significant highlights related thereto.

- Revenue for the first quarter increased to $1.4 M, an increase of 60%
over Q1 of fiscal 2004

- Revenue to United States, ("US"), customers increased to $0.33M
compared to $0.02M in Q1 of fiscal 2004

- The Company officially opened the New York office in October 2004

- Mr. Jerry Dellacorte was appointed Vice President Operations,
responsible for US operations and is based in our New York office.

- Announced Grey Island and Aliant partnership to provide AVL to Dexter
Construction

- Announced Provincial contract with Alberta Transportation

- Announced 14 new Emergency Service fleets in Ontario

Results of Operations

Revenue

Revenue for the quarter ended December 31, 2004 increased by 60% to
$1,405,896 from $878,546 for the quarter ended December 31, 2003. The
increase in revenue for the quarter ended December 31, 2004, compared
with the previous quarter ended, December 31, 2003 was due to the
organic growth of the Company and the overall growth of the industry.
The major portion of the Company's revenue is generated in Canada.
However, revenues from our US customer base have increased to $329,078
for the quarter ended December 31, 2004, compared with $20,953 for the
quarter ended December 31, 2003. The Company continues to increase its
revenue by generating new customer hardware sales, thereby increasing
its monthly subscriber base in Canada and in the United States.

Gross Profit

Gross profit for the quarter ended December 31, 2004, increased by 54.2%
to $638,328 from $414,042 for the quarter ended December 31, 2003. This
was attributable mainly to the increase in new customer unit sales and
an increase in the Company's monthly service customer base. The gross
margin for the current quarter was 45.4%%, down from 47.2%.

Loss from operations

The net loss for the quarter ended December 31, 2004, was $388,322 or
$0.009 per share, compared to a loss of $468,987 or $0.012 per share in
the quarter ended December 31, 2003. This reduction in year over year
quarters is a result of substantially increased revenue. Total expenses
for the quarter increased to $1,008,961 from $942,912 an increase of
only 7% when compared to the quarter ended September 30, 2004, despite
having opened an office in New York in October 2004. The Company
anticipates marginal increases in expenditure levels in future on a
quarter-by-quarter basis when compared to expected revenue increases.

Liquidity and Capital Resources

At December 31, 2004, Grey Island had cash and cash equivalents of $0.07
million plus a GIC amounting $1.0 million, respectively. The Company's
working capital was $2.3 million as at December 31, 2004. This still
reflects the addition of cash and short-term investments following the
exercise of options and warrants for approximately $2.1 million during
June 2004.

About Grey Island
Grey Island Systems develops markets and hosts Internet-based Automated
Vehicle Location and Telematic systems for public and private
organizations with customers in Canada and the United States.
InterFleet® has been used continuously since 1998 to track Public
Works and other fleets. To find out more about Grey Island Systems
International Inc. (TSX-V: GIS), visit our website at www.interfleet.com.

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Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Grey Island Systems Inc.
    Owen Moore
    (416) 348-9991
    (416) 348-9993 (FAX)
    information@interfleet.com
    www.interfleet.com
    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this release.