Municipal Solutions Announces Annual Results for 2007
Victoria, BC, March 28, 2008—Municipal Solutions Group, Inc. (“Municipal Solutions”) (TSX-V: MSZ), a provider of business process automation solutions for local government, today announced its financial results for the year ending December 31, 2007.
Total revenue for the year ended December 31, 2007 was $4,813,035 as compared to $4,204,812 in the year ended December 31, 2006, an increase of 14%. Total revenue for the fourth quarter in 2007 was $1,306,649 as compared to $1,166,361 in the fourth quarter of 2006, an increase of 12%. The increase in both the twelve month period and fourth quarter was predominantly related to Services revenue offset by decreases in Software License revenue and Software Maintenance Fee revenue.
Operating expenses for the year ended December 31, 2007 were $6,847,458 as compared to $5,878,137 for the year ended December 31, 2006, an increase of 16%. The Company’s operating expenses for the three months ended December 31, 2007 were $1,676,918, a decrease of $226,094 or 12% over the three months ended December 31, 2006.
The increase in operating costs for the year related mainly to an increase in labour costs that were incurred in the first half of the year, prior to the restructurings that occurred in June and October. Restructuring costs were $500,314 or 52% of the increase in operating costs for the year.
The decrease in operating costs for the fourth quarter was largely due to a reduction of labour costs resulting from the Company’s restructuring in October. The decrease in operating costs for the fourth quarter was $409,334 or 22%, when calculated prior to the costs associated with this restructuring. Operating costs were also lower in the period due to a decrease in bad debt expense, stock compensation expense, consulting expense and net rental costs.
Other Costs totaled $681,279, an increase of $124,780 over the year ended December 31, 2006. The increase was due to an increase in the loss on foreign exchange which increased by $368,794 in the year ended December 31, 2007 compared to the year ended December 31, 2006 and an increase in amortization expense of $43,593. These increases were offset by a reduction in accreted interest of $258,513 which the Company had no expense for in 2007 as a result of the conversion of its convertible debentures in April 2006.
The net loss for the year was $2,715,702 or $(0.16)/share compared to a loss for the prior year of $2,229,824 or $(0.18)/share. The net loss for the fourth quarter was $550,215 or $(0.03)/share, an improvement compared to a loss for the same quarter in 2006 of $755,926 or $(0.05)/share. Excluding non-recurring restructuring costs, the net loss for the fourth quarter was $366,975 or $(0.02)/share.
Dennis Asbury, President and Chief Executive Officer of Municipal Solutions commented, “Our organic revenue growth and sales success remains strong, and our cost structure has been improved to help us achieve our mandate of profitable growth for 2008”. The Company’s overall sales backlog (defined as the amount of services and license revenue contracted for but not yet recognized as revenue) exceeded US$4.3M at December 31, 2007.
The following are the Consolidated Statements of Operations and Deficit for the years ended December 31, 2007 and 2006. A complete set of financial statements and analysis is available at www.MunicipalSoftware.com.
Municipal Solutions Group Inc.
Consolidated Statements of Operations, Comprehensive Loss, and Deficit
Years ended December 31, 2007 and 2006
| 2007 | 2006 | |
| Reveue | $ 4,813,035 | $ 4,204,812 |
| Expenses:
Customer service Sales and marketing Research and development General and administrative Restructuring costs |
1,664,386
1,034,028 1,954,784 1,693,946 500,314 |
1,232,344
1,036,861 1,812,982 1,795,950 - |
| 6,847,458 | 5,878,137 | |
| Loss before the following
Amortization Interest Loss (gain) on foreign exchange Loss on equipment disposal Accreted interest |
(2,034,423)
252,164 99,887 318,058 11,170 - |
(1,673,325)
208,571 140,151 (50,736) - 258,513 |
| Net loss and comprehensive loss for the year
Deficit, beginning of year Early conversion premium - convertible debentures |
(2,715,702)
(7,157,971) - |
(2,229,824)
(4,323,277) (604,870) |
| Deficit, end of year | $ (9,873,673) | $ (7,157,971) |
| Loss per share:
Basic and fully diluted |
$ (0.16) |
$ (0.18) |
| Weighted average number of shares outstanding:
Basic and fully diluted |
17,283,934 | 12,306,159 |
About Municipal Solutions Group Inc.
Municipal Solutions Group Inc was formed in January 2002 as the public financing arm for Municipal Software Corporation.
About Municipal Software Corporation
Municipal Software Corporation (TSX-V:MSZ) provides easily installed, packaged software solutions that manage the everyday business processes of local governments. The solutions are based on 24 years of experience with a product platform that easily adapts to the changing practices of clients. Branded under the CityView name, the company provides a number of out of the box solutions automating practices in Property Information, Permits and Inspections, Planning, Code Enforcement, Licensing and Cashiering. CityView Application Builder is a set of application development tools that allows the client to develop unique applications to match specific needs. Municipal Software offers a complete range of services from training and customer support of its suite of products to custom development for unique applications.
Forward-Looking Statements
Certain statements in this news release are not historical and may constitute forward-looking statements reflecting Municipal Solutions Group Inc’s current expectation in the local government sector. These statements are subject to important risks, uncertainties and assumptions concerning future conditions that may ultimately prove to be inaccurate and may differ materially from actual events or results.
Contacts
For further information about Municipal Software, please contact Dennis Asbury, at (250) 475-6600 ext. 268 or via email at Media@MunicipalSoftware.com.
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