Optimal Geomatics Inc.
TSX VENTURE : OPG

Optimal Geomatics Inc.

September 04, 2007 22:20 ET

Optimal Geomatics Reports Third Quarter 2007 Financial Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 4, 2007) - Optimal Geomatics Inc. (TSX VENTURE:OPG) ("Optimal") announces its financial results for the third quarter ending July 31, 2007.

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

Business Highlights for Q3 2007 include:

- Awarded three contracts totaling US$625,000 to provide geospatial data for a Wind Farm Developer in the United States.

- Exhibited and presented at the ASPRS (American Society for Photogrammetry and Remote Sensing) 2007 Annual Conference.

- Awarded Mid-Western US County contract totaling US$534,000.

- Awarded US$256,000 contract to conduct LiDAR survey for a major electric utility in the Southwest USA.

- Retained by Southern US utility to update the transmission line risk model for a major gas pipeline system. Contract value totaled US$297,000.

Financial Results

Revenue for the third quarter of fiscal year 2007 was $3.8 million, a 2% decrease when compared to revenue of $3.9 million for the comparable period in 2006, and a 14% decrease when compared to the prior quarter. The year-over-year decrease is primarily due to the previously reported reduction in revenue from the North American Energy market. Despite the year-over-year reduction in revenues derived from North American Energy customers, sales to these customers have been stable, at the reduced level, for the four most recent quarters. The quarter-over-quarter decrease in revenue was primarily due to a major UK customer contract nearing completion.

Gross margin for the three month period ending July 31, 2007 was 25%, a slight increase as compared to the gross margin of 24% for the second quarter of the current fiscal year and an increase as compared to the gross margin of 22% for the comparable three month period in 2006. Gross margins are determined by a number of factors including competitive pricing, per unit production costs, which in turn depend on production volume against a fixed production cost base, and the fluctuation of the US dollar, our primary revenue currency. The current quarter gross margin has remained in the range achieved in the second quarter as a result of cost reduction programs implemented in the first quarter. If the recent appreciation of the Canadian dollar, relative to the US dollar continues, margins will be negatively impacted.

Operating expenses were $1.3 million resulting in a loss from operations of $295 thousand for the third quarter of fiscal 2007. The comparable figure for 2006 operating expenses, $1.5 million, resulted in operating loss of $663 thousand for third quarter 2006. The net loss for the third quarter of 2007 was $495 thousand, ($0.01) per share, as compared to net loss of $622 thousand, $(0.01) per share, for the comparable period in 2006.

As at July 31, 2007, Optimal had cash and cash equivalents of $4.4 million with net working capital of $4.6 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 working capital was primarily due to the re-negotiation of the payment terms for the notes payable and the consequent reclassification of $1.6 million (US$1.5 million) as a non-current liability, partially offset by a net decrease in the various working capital accounts.

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 improving our operating results during the last quarter of 2007.

Quarterly Teleconference Call:

Optimal will hold its third quarter of 2007 teleconference call on Wednesday, September 5, 2007 at 8:00am PDT (11:00am EDT). 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 systems (GPS) to provide solutions for engineering and geospatial professionals.



Summary of Financial Information

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Consolidated Balance Sheets July 31, October 31,
2007 2006
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Assets
Cash $ 4,350,822 $ 4,144,999
Accounts Receivable 2,977,867 5,020,917
Inventory 13,194 12,476
Work in Progress 96,491 366,659
Prepaid Expense 330,646 246,876
Property & Equipment 1,948,723 2,548,887
Other long-term assets 26,032 43,412
Intangible assets 313,764 465,170
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Total Assets $ 10,057,539 $ 12,849,396
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Liabilities & Shareholders Equity
Current Liabilities $ 1,670,443 $ 2,067,271
Deferred Revenue 478,968 591,671
Notes payable (current) 1,066,800 3,428,803
Notes payable 1,649,188 -
Share Capital 23,231,543 23,231,543
Contributed Surplus 769,915 706,835
Accumulated other comprehensive income 197,749 99,150
Deficit (19,007,067) (17,275,877)
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Total Liabilities & Shareholders Equity $ 10,057,539 $ 12,849,396
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Consolidated Statements 3 months 3 months 9 months 9 months
of Operations ending ending ending ending
July 31, July 31, July 31, July 31,
2007 2006 2007 2006
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Revenues $ 3,770,991 $ 3,859,886 $ 11,750,777 $ 13,096,505
Cost of Sales 2,815,673 2,995,267 8,724,420 9,240,657
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Gross Profit 955,318 864,619 3,026,357 3,855,848
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Expenses
Administration 445,809 672,395 1,913,998 1,910,833
Marketing & Sales 498,195 553,939 1,612,837 1,339,826
Research &
Development 72,242 58,666 205,933 116,970
Amortization 234,368 242,919 733,973 646,817
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1,250,614 1,527,919 4,466,741 4,014,446
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Loss Before Other
Expenses (295,296) (663,300) (1,440,384) (158,598)

Other Income
(Expenses)
Foreign Exchange
(Loss) Gain (176,736) 66,848 (225,095) (161,184)
Interest Expense (54,489) (70,283) (165,956) (236,493)
Interest Income 30,180 44,753 97,475 74,968
Gain on disposal of
property and equipment 1,050 - 2,770 -
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(199,995) 41,318 (290,806) (322,709)
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Loss Before Income
Tax Expense (495,291) (621,982) (1,731,190) (481,307)

Income Tax Expense - - - 24,617

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Net Loss for the
Period $ (495,291) $ (621,982) $ (1,731,190) $ (505,924)
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Net Loss Per Share:
Basic $ (0.01) $ (0.01) $ (0.03) $ (0.01)
Diluted $ (0.01) $ (0.01) $ (0.03) $ (0.01)

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Weighted Average
Common Shares
Outstanding
Basic 61,387,398 56,372,751 61,387,398 49,521,188
Diluted 61,387,398 56,372,751 61,387,398 49,521,188
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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.

Contact Information