OSI Geospatial Inc.
TSX : OSI
OTC Bulletin Board : OSIIF

OSI Geospatial Inc.

July 09, 2008 16:08 ET

OSI Geospatial Reports 2008 Second Quarter Results and Declares Partial Preferred Share Dividend Payment

OTTAWA, ONTARIO--(Marketwire - July 9, 2008) - OSI Geospatial Inc. (TSX:OSI)(OTCBB:OSIIF) today announced its financial results for the quarter and six months ending May 31, 2008, reported in US dollars and in accordance with Canadian Generally Accepted Accounting Principles (GAAP).

For the second quarter of 2008, OSI Geospatial Inc. reported revenue of $6.5 million, an increase of 6.4% from the $6.1 million reported in the second quarter of 2007. Specifically, land and air systems revenue increased 9.3% to $2.5 million compared with $2.3 million, marine systems revenue decreased slightly to $2.3 million from $2.5 million. Mapping revenue increased 26.5% to $1.7 million from $1.4 million reported in Q2 2007. For the six months ending May 31, 2008, the company reported revenue of $12.3 million, an increase of 27% from the $9.7 million reported in the same period of 2007.

For the second quarter of 2008, the Company reported a net loss of $1.4 million before taxes and $1.1 million after taxes compared with a net loss of $446,000 before taxes and a $366,000 after taxes in the same quarter of 2007. The net loss attributable to common shareholders was $1.5 million or $0.03 per share, compared to the net loss of $748,000 or $0.02 per share in 2007. For the six months ending May 31, 2008, the company reported a net loss of $2.0 million before taxes and a $1.7 million loss after taxes compared to a $2.4 million loss before and after taxes in the same period of 2007.

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, 2008.The payment of future dividends will be evaluated on a semi-annual basis by the Company.

Second Quarter Highlights

- Announced a $10 Million Contract with U.S. Army to provide land C2 technology and services

- Signed contracts with the U.S. Army valued at $1.5 million

- Announced a contract valued at $1.6 million to provide U.S. military advanced training technology

- Signed a $925,000 Simulation Based Training Contract with U.S. Army

- Closed contracts with the Australian Navy valued at more than $1.3 million

- Awarded first Defense Research and Development Canada (DRDC) contract to develop Counter-IED technology

"In the second quarter we continued to experience delays in closing key contracts, but we are optimistic that we will achieve solid progress in our third and fourth quarter," said Ken Kirkpatrick, president and CEO of OSI Geospatial. "The company was successful in closing more than $16 million in new contracts in the second quarter; including a $10 million contract with the US Army to provide our land-based command and control technology. We are confident that this win will lead to significant future business for the company in the U.S. and around the world."

Conference Call

OSI Geospatial will present the results from the 2008 first quarter at 5:00PM Eastern Time (2:00 PM Pacific Time), Wednesday, July 9, 2008. 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 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#. A live and replay version of the webcast can be accessed on the company's investor website at www.osigeospatial.com.

About OSI Geospatial

OSI Geospatial Inc. delivers advanced 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 and the Over the Counter Bulletin Board. For additional information please visit www.osigeospatial.com.

Forward-Looking Statements

Certain statements made in this news release that are not based on historical information are forward-looking statements which are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934 and Section 138.4(9) of the Ontario Securities Act. These forward-looking statements are subject to risks and uncertainties. Actual results may differ from these projections. The risks associated with the Company's business include risks related to its reliance on international government contracts; the number of large-customer transactions and the related lengthy sales cycles in executing those opportunities; uncertainties associated with competitive bidding processes and contract negotiations; actions by government authorities; the effects of general economic and political conditions; changing foreign exchange rates; and challenges related to the company's ability to introduce, develop and implement new products and enhancements to existing products that respond to customer requirements in a changing, complex, technological market. A complete discussion of the company's risk factors is presented in the company's most recent annual reports, filed with the United States Securities and Exchange Commission ("SEC") and the Canadian Securities Administrators ("CSA"), as well as other periodic reports filed with the SEC and the CSA. The Company does not undertake any obligation to update the forward-looking statements.

Copyright (C) 2008 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.
(Incorporated under the laws of the Province of British Columbia, Canada)
Consolidated Balance Sheets (unaudited)


May 31, November 30,
In thousands of U.S. dollars 2008 2007
-----------------------------------------------------------------------

Assets

Current assets
Accounts receivable and unbilled revenue $9,367 $13,055
Income taxes receivable 110 -
Inventory 1,479 1,216
Prepaid expenses and deposits 630 502
Current portion of future income tax asset 136 132

11,722 14,905

Deferred development costs 344 97
Future income tax asset 234 271
Equipment and furnishings 1,816 1,914
Intangible and other assets 772 861
Goodwill 8,300 8,300
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$23,188 $26,348
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Liabilities

Current liabilities
Bank indebtedness $1,324 $822
Accounts payable and accrued liabilities 4,529 5,585
Income taxes payable - 179
Unearned revenue 104 392
Current portion of deferred rent 37 38
Current portion of future income tax liability - 25
Current portion of capital lease obligations 68 46
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6,062 7,087

Deferred rent 327 347
Capital lease obligation 162 200
Future income tax liability 55 100
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6,606 7,734
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Shareholders' Equity

Issued and outstanding
30,262 Class A, Series A preference
shares (2007 - 30,262) 19 19
178,530 Class B, Series 2 preference
shares (2007 - 178,530) 4,542 4,542
46,956,439 common shares
(2007 - 46,956,439) 21,293 21,293
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25,854 25,854

Warrants 4,181 4,618

Contributed surplus 2,116 1,679

Accumulated deficit (18,615) (16,564)

Accumulated other comprehensive income 3,046 3,027
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16,582 18,614
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$23,188 $26,348
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OSI Geospatial Inc.
Consolidated Statements of Operations (unaudited)

In thousands of U.S. dollars, except share related data

Three months ended May 31, Six months ended May 31,
2008 2007 2008 2007
----------------------------------------------------------------------

Revenue
Marine systems $2,320 $2,504 $4,833 $3,204
Land and air systems 2,470 2,259 5,261 4,607
Mapping 1,739 1,375 2,244 1,898
----------------------------------------------------------------------
6,529 6,138 12,338 9,709

Cost of sales 4,510 3,683 8,130 6,585
----------------------------------------------------------------------

Gross profit 2,019 2,455 4,208 3,124
----------------------------------------------------------------------

Expenses (income)
General and
administrative 1,687 1,452 2,947 2,699
Engineering 308 389 569 870
Sales and marketing 1,168 815 2,075 1,595
Amortization 115 34 264 145
Interest expense 41 5 65 27
Interest income - (8) (3) (8)
Foreign exchange loss - 107 38 22
Loss on disposal of
intangible and
other assets - - 28 -
Technology Partnerships
Canada royalty 94 107 246 137
----------------------------------------------------------------------

3,413 2,901 6,229 5,487
----------------------------------------------------------------------

Net loss before
income taxes (1,394) (446) (2,021) (2,363)
----------------------------------------------------------------------

Future income
tax recovery (38) (19) (38) (50)
Current income tax
(recovery) expense (215) (61) (309) 42
----------------------------------------------------------------------

Income tax recovery (253) (80) (347) (8)
----------------------------------------------------------------------

Net loss $(1,141) $(366) $(1,674) $(2,355)
----------------------------------------------------------------------
----------------------------------------------------------------------

Accumulated deficit,
beginning of
period $(17,474) $(15,285) $(16,564) $(13,296)
Dividends on Class
B preference
shares - (382) (338) (382)
Tax expense on
dividends - (52) (39) (52)
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Accumulated deficit,
end of period $(18,615) $(16,085) $(18,615) $(16,085)
----------------------------------------------------------------------
----------------------------------------------------------------------

Net loss available
to common
shareholders
(note 4c) $(1,455) $(748) (1,988) $(2,737)
----------------------------------------------------------------------
----------------------------------------------------------------------

Loss per share
(note 4c) - basic
and diluted $(0.03) $(0.02) $(0.04) $(0.07)

Weighted average
number of common
shares outstanding
(note 4c) - basic
and diluted 46,956,439 39,251,264 46,956,439 38,248,619



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

Three months ended May 31, Six months ended May 31,
2008 2007 2008 2007
----------------------------------------------------------------------
Cash flows (used in)/
from operating
activities
Net loss for
the period $(1,141) $(366) $(1,674) $(2,355)
Items not
affecting cash
Amortization 168 84 367 248
Loss on disposal
of intangible
and other assets - - 28 -
Stock-based
compensation 5 87 10 139
Future income
taxes (38) (33) (38) (46)
----------------------------------------------------------------------
(1,006) (228) (1,307) (2,014)
----------------------------------------------------------------------

Changes in non-cash
working capital items
Accounts receivable 490 551 3,711 5,148
Inventory (221) 7 (250) (251)
Prepaid expenses
and deposits 174 383 (126) (39)
Accounts payable and
accrued liabilities 832 (464) (1,063) (1,748)
Dividends payable - 382 - 382
Income taxes
receivable/payable (269) (74) (282) (277)
Unearned revenue (253) (146) (286) (273)
Deferred rent (11) - (22) -
----------------------------------------------------------------------

742 639 1,682 2,942
----------------------------------------------------------------------

(264) 411 375 928
----------------------------------------------------------------------

Cash flows used in
investing activities
Purchase of Liddy
International Inc. - (25) - (25)
Deferred development
costs (158) - (246) -
Additions to plant
and furnishings (58) (57) (91) (84)
Additions to leaseholds - - (10) -
Additions to intangible
and other assets (4) (39) (94) (61)
----------------------------------------------------------------------

(220) (121) (441) (170)

Cash flows from/(used in)
financing activities
Advances from (repayment
of) operating line
of credit 517 121 502 (356)
Repayment of capital
lease obligation (16) - (16) -
Class B preference
share dividends - (382) (377) (382)
----------------------------------------------------------------------

501 (261) 109 (738)
----------------------------------------------------------------------

Effect of foreign
exchange on cash
balances (17) (29) (43) (20)
----------------------------------------------------------------------

Decrease in cash and
cash equivalents - - - -

Cash and cash
equivalents -
beginning of period - - - -
----------------------------------------------------------------------

Cash and cash
equivalents - end
of period $- $- $- $-
----------------------------------------------------------------------
----------------------------------------------------------------------

Contact Information

  • OSI Geospatial Inc.
    Jane Hayward
    Investor Relations
    613-287-8004 / Toll Free: 1-888-880-9797
    613-287-0466 (FAX)
    Mobile: 613-219 4762
    invest@osigeospatial.com