zed.i solutions inc.

zed.i solutions inc.

November 06, 2006 19:27 ET

zed.i solutions inc. Announces 2006 Third Quarter Financial Results

CALGARY, ALBERTA--(CCNMatthews - Nov. 6, 2006) - zed.i solutions inc. (the "Company") (TSX VENTURE:ZED) today released results for the third quarter 2006. Revenue for the third quarter was $6,793,000; an increase of 13% over the revenue of $5,986,000 in third quarter 2005, revenues for the first nine months of 2006 was $26,377,000 compared to $17,068,000 for the same period in 2005, an increase of 35%. Cash flow from operations in the quarter was $1,827,000, compared to $634,000 in Q3 2005. The quarter ended with cash on hand of $10,161,000 and working capital of $18,577,000.

A stock-based compensation expense of $1,333,000 was recognized in the third quarter. This includes a one time expense of $754,000 associated with the hiring of the Company's new CEO, Matthew Heffernan. Although these are non-cash expenses, with no actual impact on the Company's operations, generally accepted accounting principals require that they be recognized in the calculation of Net Income. The result was a net loss before tax in the third quarter of $829,000 or $0.008 per common share compared to net income of $539,000 or $0.006 per common share for Q3 2005. Earnings before interest, taxes, depreciation, amortization and stock option expense ("EBITDAS") for the quarter was $1,095,000. While EDITDAS is a non GAAP measure it is a common measure used by industry to normalize non-operating factors that are included in the net income results.

The Company tracks recurring revenue as a percentage of operating expenses. Recurring revenue in the third quarter increased to 92% of operating expenses, up from 72% in Q3 2005. The Company believes that recurring revenue as a percentage of operating expenses is a significant measure of performance. Operating expenses were up slightly in the quarter.

The lower net income performance in Q3 is related to lower than anticipated sales and reduced gross margin, while continuing our investment in ongoing development. The percentage gross margin was lower in the third quarter due to some temporary factors related to a transition of technology by TELUS, which we commented on in Q2. The Company expects this program will continue to have an impact on margins through the fourth quarter as well, although to a lesser extent.

When asked to comment on quarterly results, Mr. Heffernan, stated "zed.i continues to grow and execute on its corporate strategy. Notwithstanding a significant revision in drilling programs driven by weakened commodity prices, zed.i has continued to increase its cash position and invest in the future developments. Additionally, as we see the commodity prices rebound we are confident our customer drilling programs will stabilize, providing zed.i with more typical sales opportunities."

zed.i solutions inc. (TSX VENTURE:ZED) is the emerging leader in production intelligence management for resource industries- with a principal focus on the decentralized operations of the energy sector. The zed.i suite of automated systems and expert services enables the monitoring, measurement, analysis and management of production operations intelligence. This helps visionary companies and their people to ensure compliance and realize untapped profitability and performance potential. Quarterly financial statements and MD & A are filed on SEDAR and can be accessed at www.sedar.com or on the Company's website at www.zedisolutions.com.

The TSX Venture Exchange has neither approved nor disapproved the contents of this news release.

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