OSI Geospatial Inc.
TSX : OSI

OSI Geospatial Inc.

July 13, 2009 16:05 ET

OSI Geospatial Inc. Reports 2009 Second Quarter Results

OTTAWA, CANADA--(Marketwire - July 13, 2009) - OSI Geospatial Inc. (TSX:OSI) ("OSI") today announced its financial results for the second quarter ending May 31, 2009 reported in Canadian dollars and in accordance with Canadian Generally Accepted Accounting Principles.

For the second quarter of 2009, OSI reported consolidated revenue of $6.3 million, compared to the revenue reported in the second quarter of 2008 of $6.6 million. For the six months ending May 31, 2009, the company reported revenue of $12.0 million compared to $12.4 million reported in the same period of 2008.

The Company reported a net loss of $1.0 million before and after taxes compared with a net loss of $1.4 million before taxes and $1.2 million after taxes in the second quarter of 2008. The net loss attributable to common shareholders was $1.2 million or $0.02 per share, compared to the net loss of $1.3 million or $0.03 per share in 2009. For the six months ending May 31, 2009, the company reported a net loss of $1.9 million before taxes and a $1.7 million loss after taxes compared to a $2.1 million loss before taxes and $1.7 after taxes in the same period of 2008.

The Company has decided, in accordance with the Company's Articles of Incorporation and in light of current market conditions, to declare a partial dividend payment for its Class B Series 2 Preferred Shares and, thereby, preserve its financial resources. The Company will pay a dividend of $0.0175 for each preferred share for the semi-annual payment due on May 31, 2009. The payment of future dividends will be evaluated on a semi-annual basis by the Company.

Second Quarter Business Highlights

- Announced partnership agreement with the Raytheon Company to pursue soldier modernization programs

- Won the first phase of U.S. soldier modernization program contract with the Raytheon Company valued at approximately $1.5 million

- Announced the first contract with Turkish Navy to deliver navigation systems for a new build Corvette program

- Signed $3.0 million of R&D contracts with U.S. Army to continue the development of our C2 technology

- Closed our sixth U.S. Port Security risk assessment project with the Port of Cleveland

- Announced the appointment of Steve Barnett and election of Dr. Adam Chowaniec to the Board of Directors and Peter Hunter to senior management team

"In the second quarter we experienced delays in finalizing several key contracts that negatively impacted our financial results for the period. These delays are a result of complex contract negotiations and lengthy government procurement processes. We expect that the majority of these contracts will be closed in the third and fourth quarter," said Ken Kirkpatrick, president and CEO. "We made considerable progress towards moving several contracts to closure in Q2 and remain confident that this effort will lead to strong performance in second half our fiscal year."

Conference Call

OSI Geospatial will present the results of the 2009 second quarter at 5:00PM Eastern Time (2:00 PM Pacific Time), Monday, July 13, 2009. To listen to the conference call live by telephone, dial +1-800-319-4610 for participants in North America or +1-604-638-5340 for Vancouver/Lower Mainland and international participants approximately ten minutes before the call is scheduled to begin. A telephone playback will be available beginning approximately one hour after the call. Dial +1-800-319-6413 for North American callers or +1-604-638-9010 for Vancouver and international callers. Enter access code 7826#. The telephone replay will be available for three months. For the live webcast, please go to http://services.choruscall.com/links/osi081009.html. A replay version of the webcast can be accessed for three months on the company's investor website at http://www.osigeospatial.com/investors/default.htm.

About OSI Geospatial

OSI Geospatial Inc. delivers advanced marine navigation and command and control systems that provide shared real-time situational awareness for military, safety and security applications. Our products and services enable our customers to integrate and visualize live data with any combination of sensor data, imagery, maps and charts. This capability provides our customers with enhanced operational performance, safety and security through shared real-time situational awareness. OSI Geospatial systems and software are in use by military, government and commercial customers around the world. The company is publicly traded on the Toronto Stock Exchange as OSI. For additional information please visit www.osigeospatial.com

Forward-Looking Statements

This press release contains forward-looking statements and information which reflect the current view of OSI Geospatial Inc ("OSI") with respect to future events and financial performance. Any such forward-looking statements are subject to risks and uncertainties and OSI's actual results of operations could differ materially from historical results or current expectations. Additional information on these and other potential factors that could affect OSI's financial results are detailed in disclosure documents filed from time to time with the applicable Canadian securities regulatory authorities.

Copyright (C) 2009 OSI Geospatial Inc. and its affiliated or related companies. ECPINS and COP-IDS are registered trademarks of Offshore Systems Ltd., an OSI Geospatial company. iGEN and C3CORE are registered trademarks of CHI Systems Inc., an OSI Geospatial company. Other company brand, product and service names are for identification purposes only and may be either trademarks, service marks or registered trademarks of their respective owners. Data subject to change without notice.



OSI Geospatial Inc.
Consolidated Balance Sheets (unaudited)

May 31, November 30,
In thousands of Canadian dollars 2009 2008
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Assets

Current assets
Cash $513 $-
Accounts receivable and unbilled revenue 6,361 11,183
Inventory 1,091 1,407
Prepaid expenses and deposits 544 388
Income taxes recoverable 82 -
Current portion of future income tax asset 616 338
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9,207 13,316

Deferred development costs 473 437
Future income tax asset 531 823
Equipment and furnishings 1,608 1,735
Intangible and other assets 567 732
Goodwill 9,098 10,269
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$21,484 $27,312
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Liabilities

Current liabilities
Bank indebtedness $543 $2,015
Accounts payable and accrued liabilities 3,718 4,519
Income taxes payable - 9
Unearned revenue 143 256
Current portion of deferred rent 41 41
Current portion of capital lease obligations 82 88
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4,527 6,928

Deferred rent 280 347
Capital lease obligations 84 156
Unearned revenue 234 290
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5,125 7,721
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Shareholders' Equity

Issued and outstanding
Class A, Series A preference shares 30 30
Class B, Series 2 preference shares 5,651 5,731
Common shares 29,828 29,748
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35,509 35,509

Warrants 4,898 4,898

Contributed surplus 2,722 2,674

Accumulated deficit (25,859) (24,121)

Accumulated other comprehensive income (911) 631
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16,359 19,591
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$21,484 $27,312
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OSI Geospatial Inc.
Consolidated Statements of Operations (unaudited)

Three months Six months
In thousands of Canadian dollars, ended May 31, ended May 31,
except share related data 2009 2008 2009 2008
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Revenue
Marine systems $1,660 $2,333 $4,638 $4,839
Land and air systems 3,225 2,486 5,712 5,292
Mapping 1,430 1,755 1,689 2,258
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6,315 6,574 12,039 12,389

Cost of sales 4,381 4,549 8,386 8,182
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Gross profit 1,934 2,025 3,653 4,207
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Expenses (income)
General and administrative 1,575 1,704 2,785 2,949
Sales and marketing 813 1,189 1,627 2,103
Engineering 337 312 638 574
Amortization 110 115 223 265
Interest expense 20 21 50 55
Interest income - (1) (2) (4)
Foreign exchange loss (gain) (16) 18 (16) 53
Loss on disposal of intangible
and other assets - - - 28
Technology Partnerships
Canada royalty 113 94 208 246
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2,952 3,452 5,513 6,269
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Net loss before income taxes (1,018) (1,427) (1,860) (2,062)
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Future income tax
(recovery) expense 12 (38) (140) (38)
Current income tax
(recovery) expense 8 (215) 15 (309)
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Income tax (recovery) expense 20 (253) (125) (347)
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Net loss $(1,038) $(1,174) $(1,735) $(1,715)
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Accumulated deficit,
beginning of period $(24,821) $(23,332) $(24,121) $(22,420)
Dividends on Class B,
Series 2 preference shares - - (3) (332)
Tax expense on dividends - - - (39)
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Accumulated deficit,
end of period $(25,859) $(24,506) $(25,859) $(24,506)
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Net loss attributable
to common shareholders $(1,192) $(1,330) $(2,045) $(2,027)
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Loss per share - basic
and diluted $(0.02) $(0.03) $(0.04) $(0.04)

Weighted average number
of common shares
outstanding - basic
and diluted 47,010,787 46,956,439 46,983,911 46,956,439



OSI Geospatial Inc.
Consolidated Statements of Cash Flows (unaudited)

Three months Six months
In thousands of Canadian dollars, ended May 31, ended May 31,
except share related data 2009 2008 2009 2008
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Cash flows from
operating activities
Net loss for the period (1,038) (1,174) (1,735) (1,715)
Items not affecting cash
Amortization 159 169 320 369
Loss on disposal of
equipment and furnishings - - - 29
Stock-based compensation 48 5 48 10
Future income tax (recovery) 12 (38) (140) (38)
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(819) (1,038) (1,507) (1,345)
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Changes in non-cash
working capital items
Accounts receivable 2,366 520 4,380 3,660
Inventory (43) (223) 313 (255)
Prepaid expenses and deposits 34 174 (186) (126)
Accounts payable and
accrued liabilities 710 787 (621) (1,051)
Income taxes payable (97) (215) (92) (306)
Deferred rent (10) (10) (20) (22)
Unearned revenue (178) (262) (168) (295)
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2,782 771 3,606 1,605
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1,963 (267) 2,099 260
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Cash flows used in
investing activities
Deferred development costs (35) (159) (53) (246)
Additions to equipment
and furnishings (64) (61) (94) (106)
Additions to intangible
and other assets (14) (4) (16) (95)
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(113) (224) (163) (447)
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Cash flows used in
financing activities
Advances from (repayment of)
operating line of credit (1,343) 509 (1,409) 500
Repayment of capital
lease obligations (21) (14) (35) (14)
Class B preference
share dividends declared
and paid - - (3) (329)
Tax on dividends - - - (39)
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(1,364) 495 (1,447) 118
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Effect of foreign exchange
on cash balances 27 (4) 24 69
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Change in cash 513 - 513 -

Cash - beginning of period - - - -
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Cash - end of period 513 - 513 -
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The Toronto Stock Exchange has neither approved nor disapproved the form or content of this release.

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