Municipal Software Corporation

Municipal Software Corporation
Municipal Solutions Group, Inc.

Municipal Solutions Group, Inc.

April 30, 2007 19:46 ET

Municipal Solutions Announces Annual Results for 2006

VICTORIA, BRITISH COLUMBIA--(CCNMatthews - April 30, 2007) - Municipal Solutions Group, Inc. ("Municipal Solutions") (TSX VENTURE:MSZ), a provider of business process automation solutions for Local Government, announced the financial results for the year ending December 31, 2006 today. Revenue increased in 2006 to $4,204,812 from $3,545,253 in 2005, an increase of 19%; fourth quarter revenues increased by 23% over the same period in the previous year. During the year the Company secured 12 new customers with a combined contracted value of licenses and services of more than US$3.2M. The Company had a loss for the year of $2,229,824 compared to a loss of $2,802,179 in 2005 as investment in the product offerings continued.

The Annual General Meeting will take place on June 6th at Vancouver Island Technology Park at 2:00pm.

Iain McLean, Chief Executive Officer of Municipal Solutions, commented, "2006 was a year of progress on many fronts. Revenues increased from all sources - Licenses were up 17%, Services 23% and Maintenance grew by 14% year on year. The addition of key staff members in Finance and Development ensures that we now have an experienced team in place. The move to productized solutions in 2005 has continued and we undertook a major initiative to create a Software as a Service ('SaaS' or 'On-Demand') solution for Local Government. These changes created additional costs but the Company is now poised to take advantage of this investment. The Company ended the year with a backlog of sales of CityView PreBuilts totalling over $2.5M for delivery in 2007 and we recently added to that with the purchase of CityView by Collier County, Florida in an order valued at US$1.9M."

The Company has reviewed its revenue recognition for contracts where the timing of payments for license fees is coincident with the services or where milestones or customer-specific acceptance criteria affect the realizability of the software license fee. Based on this review, the Company has concluded that the revenue from license fees on certain contracts should be revised from being recorded at the inception of the contract to be recognized over the software implementation period on a percentage of completion basis based on labour input. As a result of correcting this error, the Company has restated revenue in respect of one contract for the year ended December 31, 2005. This resulted in a reduction of revenue of $298,863 in 2005 and an increase in Deferred License Revenue of the same amount at December 31, 2005. The correction increased the basic and fully diluted loss per share for 2005 by $0.07 per share to $0.66 per share. The restatement does not impact periods prior to 2005.

Presented below is the Company's calendar-based Selected Annual Information for the twelve months ended December 31, 2006 and the previous two fiscal years:

2005 As previously
2006 Restated Reported 2004
Total Revenues $ 4,204,812 $ 3,545,253 $ 3,844,116 $ 3,576,029

Net Income (Loss) $(2,229,824) $(2,802,179) $(2,503,316) $ (832,220)

Net Income(Loss)
Per share(i) $ (0.18) $ (0.66) $ (0.59) $ (0.23)

(i)Net Income (Loss) per share has been restated for prior years for
comparison purposes. Consolidation of 8 old shares for 1 new share took
place on April 6, 2005.

The following are the Consolidated Statements of Operations and Deficit for the years ended December 31, 2006 and 2005. A complete set of financial statements and analysis is available at or at

Consolidated Statements of Operations and Deficit

Years ended December 31, 2006 and 2005
2006 2005
note 12)

Revenue $ 4,204,812 $ 3,545,253
Customer service 1,232,344 1,147,861
Sales and marketing 1,036,861 1,166,148
Research and development 1,812,982 801,970
General and administrative 1,795,950 1,449,545
Loss before the following 1,673,325 1,020,271

Amortization 208,571 210,883
Interest 140,151 201,755
Loss (gain) on foreign exchange (50,736) 10,930
Accreted interest 258,513 337,822
Write-off of deferred software development costs - 1,020,518
Loss for the year (2,229,824) (2,802,179)

Deficit, beginning of year (4,323,277) (1,521,098)

Early conversion premium - convertible debentures (604,870) -

Deficit, end of year $ (7,157,971) $ (4,323,277)

Loss per share:
Basic and fully diluted $ (0.18) $ (0.66)

Weighted average number of shares outstanding:
Basic and fully diluted 12,306,159 4,242,460

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. The company recently launched web based services under the Local Government Manager™ name (available through the Application Exchange of for jurisdictions looking for the convenience and cost effectiveness of a hosted product application. 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.


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