TORONTO, Jan. 31 /CNW Telbec/ - Grey Island Systems International Inc.
(TSX VENTURE: GIS) a leading supplier of real-time vehicle tracking, telematic
applications and predictive arrival systems, reported record revenues of
$3.84 million for the quarter ended December 31, 2006. Concurrently, the
company generated $305,135 net cash from operations during the quarter.
Financial highlights for the quarter
During the quarter the Company has achieved significant growth in its
revenue while generating net income. The following are significant highlights
- Revenue for the first quarter increased to $3,838,876, an increase of
55.8% over the comparable period a year ago.
- Gross profit for the first quarter increased by 79.5% to $2,147,668
from $1,196,375 for the comparable period a year ago.
- Gross margin for the current quarter was 55.9%, up from 48.5% for the
- The Company achieved net income of $52,785 for the first quarter
compared to a loss of $604,606 for comparable quarter a year ago.
Excluding non-cashed based expenses (i.e. amortization and stock-based
compensation), the company generated $363,712 in earnings or
approximately $0.005 per share.
- Net cash provided by operating activities increased to $305,135
compared to cash used by operating activities of $413,412 for the
comparable period a year ago.
- Revenue arising from US customers for the first quarter increased by
122.3% to $2,362,726 compared to $1,062,730 for the comparable period a
- U.S. revenues now account for 61.5% of total Company revenue for the
current quarter compared to 43.1% for the comparable period.
During the past quarter, the Company has been successful in expanding its
sales and marketing efforts in both the Canadian and United States ("US")
markets. The Company has an office in the State of New York in the USA,
operating under the name of Interfleet, providing sales and services for our
Interfleet products to our US customers. NextBus Inc., ("NextBus"), an
information technology company located in Alameda, California, USA, provides
sales and services for our Nextbus products.
Results of Operations
Revenue for the quarter ended December 31, 2006 increased by 55.8% to
$3,838,876 from $2,464,699 for the quarter ended December 31, 2005.
The increase in revenues recorded in the past quarter was due to the
organic growth of the Company's Interfleet and Nextbus products, and the
overall growth of the industry. Nextbus contributed revenues of approximately
$1,456,632 for the quarter ended December 31, 2006 from $848,000 for the
quarter ended December 31, 2005. Revenues from its US customer base have
increased to $2,362,726 for the quarter ended December 31, 2006, compared with
$1,062,730 for the quarter ended December 31, 2005. The Company continues to
increase its revenue through new customer hardware sales, thereby increasing
its monthly subscriber base in both Canada and the United States. It has also
endeavoured to provide more comprehensive services to existing customers.
Gross profit for the quarter ended December 31, 2006, increased by 79.5%
to $2,147,668 from $1,196,375 for the quarter ended December 31, 2005 due
mainly to the growth in Interfleet product sales in the U.S. market, where the
Company has been concentrating its efforts in recent quarters. Gross margin
for the quarter was 55.9%, up from 48.5% for the comparative period. The
improved quarterly margin can be attributed to an increased proportion of
engineering related income as compared to equipment revenue.
Operating expenses include general and administrative, sales and
marketing, engineering, development and research and data centre operations
costs. The Company's operating expenses have increased by 20% to $1,783,956
from $1,486,521 for the quarter ended December 31, 2006. The main reason for
this increase is the increased staff levels, particularly in engineering and
development, where the Company requires additional support for its increased
number of contracts and to enhance product capabilities. While revenues for
the period rose by 55.8% the lower than proportionate increases in operating
expenses attest to the ability of the Company to normalize its outlays after
the period of rapid expansion of activities across Canada and the United
Income/loss from operations
The net income for the quarter ended December 31, 2006 was $52,785 or
$0.001 per share, compared to a loss of $604,606 or $0.01 per share in the
quarter ended December 31, 2005. While gross profits increased by 79.5%,
operating expenses increased by only 20%, resulting in operating income of
$315,954 versus a loss of $313,409 in the comparable quarter of 2005. However,
additional costs were recorded through the substantial amortization expense of
$229,034, which contributed to an overall increase in expenses of 16.1% when
compared to the quarter ended December 31, 2005. The Company's future goal is
to maintain only moderate increases in operating expenses on a
quarter-by-quarter basis when compared to expected revenue increases.
Liquidity and Capital Resources
At December 31, 2006, Grey Island had cash and cash equivalents of
$2,508,302. The Company's working capital was $4,150,199 as at December 31,
2006. The Company intends to use these funds for expanding its marketing
efforts in both Canada and the U.S., and for general working capital. As with
most growth enterprises, depending on the pace of the anticipated expansion of
the Company's operations additional financing may be contemplated in the
The Company also maintains a $2 million revolving credit facility with a
Canadian chartered bank secured by a cash guarantee of $950,000. This facility
can be used for direct advances or through letters of guarantee. The balance
of advances outstanding at December 31, 2006 was $nil, while letters of
guarantee amounting to $1,556,033 were outstanding against the facility.
The Company's consolidated financial statements, accompanying notes and
Management's Discussion and Analysis will be available on the System for
Electronic Document Analysis and Retrieval ("SEDAR") website (www.sedar.com)
on or before January 31, 2007.
Additionally the company announces that NextBus Information Systems Inc.
("NextBus"), the holder of a subordinate non-interest bearing convertible
promissory note in the amount of $2,250,000 (CDN), which promissory note was
issued on June 30, 2005 as partial consideration for the acquisition of the
business of NextBus, has been surrendered for conversion into 6,923,076 common
shares of Grey Island. The sale or transfer of the shares issued on the
conversion is restricted as to one-third after three months from the date of
conversion, one-third after six months from the date of conversion and
one-third after nine months from the date of conversion.
About Grey Island
Grey Island Systems International Inc. (TSX-V: GIS), through its
subsidiaries NextBus Inc. in Alameda, California, InterFleet, Inc. in New
York, New York and Grey Island Systems, Inc in Toronto, Canada, is a leading
provider of custom real-time GPS/AVL, security and Telematics solutions as
well as real-time passenger information systems to government and related
fleets. To find out more about our products and services, visit our websites
at www.interfleet.com or www.nextbus.com.
Forward Looking Statements
This news release contains forward-looking information based on
management's best estimates and the current operating environment. These
forward-looking statements are related to, but not limited to, Grey Island's
operations, anticipated financial performance, business prospects and
strategies. Such forward-looking statements are subject to a number of known
and unknown risks, uncertainties and other factors which could cause actual
results or events to differ materially from those expressed or implied by such
forward-looking statements. These risks and uncertainties include, among other
things, business risks, changes in market and competition, technological and
competitive developments and potential downturns in economic conditions
generally. Therefore, there can be no assurance that the expectations of the
management of Grey Island will prove to be correct.
THE TSX VENTURE EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY
OR ACCURACY OF THIS RELEASE.
For further information:
For further information: Owen Moore, Grey Island Systems Inc., (416)
348-9991, (416) 348-9993 (FAX), email@example.com,
www.interfleet.com; Renmark Financial Communications Inc., Tina Cameron,
firstname.lastname@example.org; John Boidman, email@example.com,
(514) 939-3989, Fax: (514) 939-3717; www.renmarkfinancial.com