Victoria, BC, May 27, 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 quarter ending March 31, 2008.

In the first quarter of 2008, Municipal Software realized the benefits of its restructurings in 2007 and posted its smallest quarterly loss and loss per share in the last eight quarters despite the strength in the Canadian dollar which resulted in revenues that were essentially unchanged from the same quarter in 2007.

Total revenue for the three months ended March 31, 2008 was $1,170,516 as compared to $1,138,977 in the three months ended March 31, 2007, an increase of 3%. The increase in the first quarter was predominantly related to Services revenue and revenue from the Company’s new SaaS product, Local Government Manager.

The Company’s operating expenses for the three months ended March 31, 2008 were $1,252,385, a decrease of $366,339 or 23% over the three months ended March 31, 2007. The decrease was mainly the result of reductions in non-revenue generating staff as a result of restructurings that occurred in 2007.

In the first quarter of 2008, Other Costs totaled $52,439, a decrease of $93,394 over the first quarter in 2007. The decrease related largely to a decrease in the effect of foreign exchange which changed from a foreign exchange loss of $58,022 in the first quarter of 2007 to a foreign exchange gain of $46,008 in the first quarter of 2008. This decrease was offset by an increase in interest and accreted interest costs.

The net loss for the quarter was $134,308 or $(0.01)/share compared to a loss for the prior quarter of $625,580 or $(0.04)/share.

Dennis Asbury, President and Chief Executive Officer of Municipal Solutions commented, “We are pleased to see the effect of our Q4 2007 restructuring paying off in Q1. The market remains strong, and we continue to be rewarded with new deals which puts us in a good position to achieve our 2008 objectives.” The Company’s overall backlog (defined as the amount of services and license revenue contracted for but not yet recognized as revenue) exceeded US$4.7M at March 31, 2008.

The following is the Consolidated Statements of Operations and Deficit (unaudited) for the three months ended March 31, 2008 and March 31, 2007. A complete set of financial statements and analysis is available at www.MunicipalSoftware.com.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 (unaudited)

Three months ended March 31, 2008 and 2007                    

	March 31, 2007	March 31, 2006
Reveue	$  1,170,516	$  1,138,977
Expenses: Customer service Sales and marketing Research and development General and administrative	392,542 167,166 343,871 348,806	431,387 269,056 540,831 377,450
	1,252,385	1,618,724
Loss before the following Amortization Interest Loss (gain) on foreign exchange Accreted interest	(81,869) 44,084 49,412 (46,008) 4,951	(479,747) 64,912 22,899 58,022 -
Net loss and comprehensive loss for the period Deficit, beginning of period	(134,308) (9,873,673)	(625,580) (7,157,971)
Deficit, end of period	(10,007,981)	(7,783,551)
Loss per share: Basic and fully diluted	$         (0.01)	$         (0.04)
Weighted average number of shares outstanding: Basic and fully diluted	18,584,646	16,045,823

 

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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