Optimal Geomatics Inc.

Optimal Geomatics Inc.

March 06, 2007 20:57 ET

Optimal Geomatics Reports First Quarter 2007 Financial Results

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - March 6, 2007) - Optimal Geomatics Inc. (TSX VENTURE:OPG) ("Optimal") announces its financial results for the first quarter ending January 31, 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 Q1 2007 include:

- Re-engineered business practices to reduce overhead costs and improve overall company performance.

- Retained by a nationwide data provider to supply aerial acquisition mapping services. The contract, in concert with existing customer contracts, has fully utilized our flight acquisition capability resulting in the sub-contracting of certain acquisition activities to third party operators.

- Invested in research and development to enhance our value-added software solution, optimizing data quality for current and future Energy projects.

Financial Results

Revenue for the first quarter of our fiscal year 2007 was $3.6 million, a 10% decrease when compared to revenue of $4.0 million for the comparable period in 2006, and a 6% increase when compared to the fourth quarter of last year. Revenue attributable to the Energy market in North America was $2.0 million for the current quarter, a decrease of $1.1 million or 36% from $3.1 million for the same period last year. The Civil Infrastructure market generated revenue of $1.5 million during the first quarter of the current fiscal year a 119% increase compared to the comparable period in 2006 and a decrease of 5% over the fourth quarter of 2006. All amounts exclude inter-company revenue generated supporting energy contracts. Revenues recognized in Europe were $47 thousand for the three months ended January 31, 2007, a decrease from $151 thousand in the same period of 2006 primarily due to delays in the signing of customer contracts.

Gross margin for the three month period ending January 31, 2007 was 29%, an increase as compared to a gross margin of 22% for the fourth quarter of fiscal 2006 and a decrease as compared to the gross margin of 35% for the comparable three month period in 2006. The year-over-year reduction in gross margin was attributable to a combination of factors including margin compression due to competitive pricing on certain contracts and the weakness of the US dollar, our primary revenue currency, partially offset by a decrease in indirect operating costs. The quarter-over-quarter increase in gross margin was primarily attributable to the strength of the US dollar and a decrease in indirect operating costs.

Operating expenses were $1.8 million resulting in a loss from operations of $729 thousand for the first quarter of fiscal 2007. The comparable figure for 2006 operating expenses, $1.1 million, resulted in operating income of $314 thousand for the first quarter 2006. The net loss for the first quarter of 2007 was $532 thousand, ($0.01) per share, as compared to net earnings of $86 thousand, $0.00 per share, for the comparable period in 2006.

The Company negotiated a revision to the repayment and interest terms of the note payable to MDA. The original note was repayable in full at February 28, 2007 and bore interest at 6% per annum. The revised terms require a US $500,000 payment at each of February 28 and October 31, 2007, a further US $500,000 repayment at February 28, 2008 with the balance due October 31, 2008. Interest at 8% will apply to all balances outstanding from time-to-time after February 28, 2007.

As at January 31, 2007, Optimal had cash and cash equivalents of $4.5 million with net working capital of $5.7 million, compared to cash and cash equivalents of $4.1 million with net working capital of $3.7 million as at October 31, 2006. The increase in cash position was attributable to cash inflow of $516 thousand from operations less cash outflow in investing activities of $38 thousand and foreign exchange effect of $103 thousand during the first quarter ended January 31, 2007.

Financial Outlook

The market for our products continues to provide us with strong growth opportunities. In 2007, we will focus our attention on progressively rolling back our operating loss and balancing our cash book. Our attention will also be directed to selling our enhanced product offering across our key vertical markets.

Quarterly Teleconference Call:

Optimal will hold its first quarter of 2007 teleconference call on Wednesday, March 7, 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 66491#. 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 January 31, October 31,
2007 2006
Cash $ 4,520,343 $ 4,144,999
Accounts Receivable 4,122,512 5,020,917
Inventory 7,249 12,476
Work in Progress 81,117 366,659
Prepaid Expense 479,590 246,876
Property & Equipment 2,476,077 2,548,887
Other long-term assets - 43,412
Intangible assets 440,389 465,170

Total Assets $ 12,127,277 $ 12,849,396

Liabilities & Shareholders Equity
Current Liabilities $ 2,012,698 $ 2,067,271
Deferred Revenue 345,529 591,671
Notes payable (current) 1,177,000 -
Notes payable 2,416,358 3,428,803
Share Capital 23,231,543 23,231,543
Contributed Surplus 745,333 706,835
Cumulative Translation Adjustment 6,217 99,150
Deficit (17,807,401) (17,275,877)

Total Liabilities & Shareholders
Equity $ 12,127,277 $ 12,849,396

Consolidated Statements of 3 months ending 3 months ending
Operations Jan 31, 2007 Jan 31, 2006

Revenues $ 3,602,863 $ 3,990,591
Cost of Sales 2,572,301 2,584,959

Gross Profit 1,030,562 1,405,632

Administration 895,331 562,907
Marketing & Sales 549,719 335,476
Research & Development 64,888 26,881
Amortization 249,638 166,553
1,759,576 1,091,817

Operating (Loss) Income (729,014) 313,815

Other Income (Expenses)
Foreign Exchange Gain (Loss) 210,841 (171,155)
Interest Expense (13,351) (56,989)
197,490 (228,144)

Net (Loss) Income for the Period $ (531,524) $ 85,671

Net Earnings Per Share:
Basic $ (0.01) $ 0.00
Diluted $ (0.01) $ 0.00

Weighted Average Common Shares
Basic 61,387,398 46,043,794
Diluted 61,387,398 47,487,020

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

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

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