OSI Geospatial Inc Reports 2009 Third Quarter Results

OTTAWA, Oct. 15 /CNW Telbec/ - OSI Geospatial Inc (TSX: OSI) ("OSI" or the "Company") today announced its financial results for the third quarter ending August 31, 2009 reported in Canadian dollars and in accordance with Canadian Generally Accepted Accounting Principles. OSI Geospatial Inc. delivers advanced marine navigation and command and control systems that provide shared real-time situational awareness for military and security applications

For the third quarter of 2009, OSI reported consolidated revenue of $6.2 million, compared to the revenue reported in the third quarter of 2008 of $6.3 million. For the nine months ending August 31, 2009, the company reported revenue of $18.3 million compared to $18.7 million reported in the same period of 2008.

The Company reported a net loss of $293,000 before taxes and $263,000 after taxes compared with a net loss of $692,000 before taxes and $683,000 after taxes in the third quarter of 2008. The net loss attributable to common shareholders was $410,000 or $0.01 per share, compared to the net loss of $839,000 or $0.02 per share in the same quarter of 2008. For the nine months ending August 31, 2009, the company reported a net loss of $2.2 million before taxes and $2.0 million after taxes compared to a $2.8 million loss before taxes and $2.4 after taxes in the same period of 2008.

As of August 31, 2009, the Company did not meet certain covenants as outlined in the credit facilities agreement with its Canadian bank. Subsequent to the third quarter, Company was notified that its line of credit limit would be reduced to $1.35 million due to the Company's failure to remedy the covenant breaches.

    
    Third Quarter Business Highlights

    -   Announced 10th new WECDIS customer with signing of the $1.3 million
        Royal Netherlands Navy contract
    -   Secured first DC4S contract with Department of Homeland Security in
        the area of border patrol
    -   Signed first R&D contract with Canadian Department of National
        Defence
    -   Signed follow-on contract with US Navy to provide support force
        protection security exercises
    -   Signed first sub-contract with L-3 Global Security & Engineering
        Solutions (L3 GS & ES) to provide IVA services for U.S. national
        security exercises
    -   Successful completion of Increment 1 of U.S. Army GSS (Ground Soldier
        System, formerly GSE) program
    

"In the third quarter, we were successful in securing our 10th naval customer. The Dutch Navy win is further evidence of our expanding leadership position in the WECDIS market," said Ken Kirkpatrick, president and CEO. "In addition, I am pleased to report that we have successfully completed Increment 1 for the Ground Soldier System project and recently signed the contract for Increment II of this important project."

For further comment, please join our Conference Call scheduled for 5:00PM, Eastern Time. The details are listed below.

Conference Call

OSI Geospatial will present the results of the 2009 third quarter at 5:00PM Eastern Time (2:00 PM Pacific Time), Thursday, October 15, 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 followed by the number sign. The telephone replay will be available for three months. For the live webcast, please go to http://services.choruscall.com/links/osi091013.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.

    
    The Toronto Stock Exchange has neither approved nor disapproved the form
    or content of this release.
    

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, DC4S- Base, Commander & Assaulter 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 August 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)
                                                     August 31,  November 30,
    In thousands of Canadian dollars                      2009          2008
    -------------------------------------------------------------------------

    Assets
    ------

    Current assets
    Cash                                          $        528  $          -
    Accounts receivable and unbilled revenue             6,986        11,183
    Inventory                                            1,367         1,407
    Prepaid expenses and deposits                          417           388
    Income taxes recoverable                                71             -
    Current portion of future income tax asset             385           338
                                                  ---------------------------

                                                         9,754        13,316

    Deferred development costs                             615           437
    Future income tax asset                                765           823
    Equipment and furnishings                            1,557         1,735
    Intangible and other assets                            509           732
    Goodwill                                             9,030        10,269
                                                  ---------------------------

                                                  $     22,230  $     27,312
                                                  ---------------------------
                                                  ---------------------------
    Liabilities

    Current liabilities
    Bank indebtedness                             $      1,312  $      2,015
    Accounts payable and accrued liabilities             3,734         4,519
    Income taxes payable                                     -             9
    Unearned revenue                                       521           256
    Current portion of deferred rent                        41            41
    Current portion of capital lease obligations            84            88
                                                  ---------------------------

                                                         5,692         6,928

    Deferred rent                                          270           347
    Capital lease obligations                               62           156
    Unearned revenue                                       206           290
                                                  ---------------------------

                                                         6,230         7,721
                                                  ---------------------------

    Shareholders' Equity
    --------------------

    Issued and outstanding
      Class A, Series A preference shares                   30            30
      Class B, Series 2 preference shares                5,383         5,731
      Common shares                                     29,862        29,748
                                                  ---------------------------

                                                        35,275        35,509

    Warrants                                             4,545         4,898

    Contributed surplus                                  3,319         2,674

    Accumulated deficit                                (26,125)      (24,121)

    Accumulated other comprehensive (loss) income       (1,014)          631
                                                  ---------------------------

                                                        16,000        19,591
                                                  ---------------------------

                                                  $     22,230  $     27,312
                                                  ---------------------------
                                                  ---------------------------


    OSI Geospatial Inc.
    Consolidated Statements of Loss and Deficit (unaudited)


    In thousands of
     Canadian dollars,     Three months ended           Nine months ended
     except share              August 31,                   August 31,
     related data          2009          2008          2009          2008
    -------------------------------------------------------------------------


    Revenue
    Marine systems    $      2,003  $      3,176  $      6,642  $      8,015
                      -------------------------------------------------------
    Land and air
     systems                 2,890         2,209         8,602         7,501
    Mapping                  1,319           942         3,008         3,200
                      -------------------------------------------------------

                             6,212         6,327        18,252        18,716

    Cost of sales            3,850         4,081        12,236        12,263
                      -------------------------------------------------------

    Gross profit             2,362         2,246         6,016         6,453
                      -------------------------------------------------------

    Expenses (income)
    General and
     administrative          1,379         1,415         4,164         4,364
    Sales and marketing        867           909         2,494         3,012
    Engineering                175           300           813           874
    Amortization               106           113           329           378
    Interest expense            23            32            74            87
    Interest income              -            (4)           (3)           (8)
    Foreign exchange
     loss (gain)                 1            35           (15)           88
    Loss on disposal of
     intangible and
     other assets                -             -             -            28
    Technology Partnerships
     Canada royalty            104           138           313           384
                      -------------------------------------------------------

                             2,655         2,938         8,169         9,207

    Net loss before
     income taxes             (293)         (692)       (2,153)       (2,754)

    Future income tax
     recovery                  (11)            -          (151)          (38)
    Current income tax
     recovery                  (19)           (9)           (4)         (318)
                      -------------------------------------------------------

    Income tax recovery        (30)           (9)         (155)         (356)
                      -------------------------------------------------------

    Net loss          $       (263)         (683) $     (1,998) $     (2,398)
                      -------------------------------------------------------
                      -------------------------------------------------------

    Accumulated
     deficit,
     beginning of
     period           $    (25,859) $    (24,506) $    (24,121) $    (22,420)
    Dividends on
     Class B, Series 2
     preference shares          (3)            -            (6)         (332)
    Tax expense on
     dividends                   -            39             -             -
                      -------------------------------------------------------

    Accumulated
     deficit,
     end of period    $    (26,125) $    (25,150) $    (26,125) $    (25,150)
                      -------------------------------------------------------
                      -------------------------------------------------------

    Net loss
     attributable to
     common
     shareholders     $       (410) $       (839)       (2,455) $     (2,867)
                      -------------------------------------------------------
                      -------------------------------------------------------


    Loss per share
     - basic and
     diluted          $      (0.01) $      (0.02) $      (0.05) $      (0.06)

    Weighted average
     number of
     common shares
     outstanding
     - basic and
     diluted            47,416,118     46,956,439   47,129,032    46,956,439



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

                                Three months               Nine months
    In thousands of            ended August 31,          ended August 31,
     Canadian dollars            2009         2008         2009         2008
    -------------------------------------------------------------------------
    Cash flows from
     (used in) operating
      activities
    Net loss for the
     period               $      (263) $      (683) $    (1,998) $    (2,398)
      Items not affecting
       cash
        Amortization              157          167          477          536
        Loss on disposal
         of equipment
         and furnishings            -            -            -           28
        Stock-based
         compensation              10           24           58           34
        Future income
         tax recovery             (11)           -         (151)         (38)
                          ---------------------------------------------------
                                 (107)        (492)      (1,614)      (1,838)
                          ---------------------------------------------------

    Changes in non-cash
     working capital items
      Accounts receivable        (634)         325        3,746        3,986
      Inventory                  (276)         369           37          114
      Prepaid expenses
       and deposits               126          129          (61)           3
      Accounts payable and
       accrued liabilities         16         (582)        (606)      (1,630)
      Income taxes payable          6          (37)         (85)        (343)
      Deferred rent               (11)         (10)         (31)         (32)
      Unearned revenue            350          519          182          224
                          ---------------------------------------------------
                                 (423)         713        3,182        2,322
                          ---------------------------------------------------
                                 (530)         221        1,568          484
                          ---------------------------------------------------

    Cash flows used in
     investing activities
     Deferred development
      costs                      (143)        (140)        (196)       (386)
     Additions to
      equipment and
      furnishings                 (47)         (45)        (141)       (151)
     Additions to
      intangible and
      other assets                 (3)          (2)         (19)        (97)
                          ---------------------------------------------------
                                 (193)        (187)        (356)       (634)
                          ---------------------------------------------------

    Cash flows from
     (used in) financing
      activities
     Advances from
      (repayment of)
      operating line of
      credit                      762          (37)        (647)         463
    Repayment of capital
     lease obligations            (41)         (17)         (76)         (31)
    Class B preference
     share dividends
     declared and paid             (3)           -           (6)        (332)
    Tax on dividends                -           39            -            -
                          ---------------------------------------------------
                                  718          (15)        (729)         100
                          ---------------------------------------------------
    Effect of foreign
     exchange on cash
     balances                      20          (19)          45           50
                          ---------------------------------------------------

    Change in cash                 15            -          528            -

    Cash - beginning
     of period                    513            -            -            -
                          ---------------------------------------------------
    Cash - end of period  $       528  $         -  $       528  $         -
                          ---------------------------------------------------
                          ---------------------------------------------------
    

SOURCE OSI Geospatial Inc.

For further information: For further information: Jane Hayward, Investor Relations, Toll Free 1-888-880-9797, invest@osigeospatial.com

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