Municipal Solutions Announces Results for Second Quarter 2006
Victoria, B.C., August 30, 2006-Municipal Solutions Group, Inc. ("Municipal Solutions") (TSX Venture: MSZ), a provider of business process automation solutions for local government, today announced its unaudited financial results for the quarter ending June 30th, 2006.
Revenue during the second quarter of 2006 was $817,009 as compared to $1,097,811 in the second quarter of 2005, a decrease of 26%, while year-to-date revenue was $1,970,134, an increase of 6% over the corresponding six-month period in 2005.
Operating expenses in the second quarter increased by $310,567 when compared to the second quarter of 2005. The increase in operating costs was largely the result of costs related to the acquiring of new staff and the exit of some legacy staff. These staff changes have been made by the Company to allow it to enhance its performance on current customer commitments, to invest and develop its product offering to capitalize on future growth opportunities and to strengthen its management team in key areas. Additional costs were incurred on an initiative to expand the Company's product offering and these costs were expensed as incurred, instead of being deferred as had been the case in previous years.
Other expenses totaled $214,274 in the quarter compared to $170,373 for the second quarter in 2005. These expenses included Foreign Exchange Losses of $47,342 and Accreted and Non-cash Interest Expense of $91,790. The Accreted and Non-cash Interest was related to convertible debentures which were converted to equity as part of the Company's financing in April 2006.
Iain McLean, Chief Executive Officer of Municipal Solutions, commented, "The second quarter saw continued progress and investment in the Company. The financing announced in April positioned the Company to move forward with a growth plan and the realignment of the business. The Company is actively pursuing opportunities within the Local Government market and continues to secure sales from its target client base as evidenced by the recently announced sale to the City of Reedley, CA.
The following is the Consolidated Statements of Operations and Deficit (unaudited) for the three and six months ended June 30, 2006 and June 30, 2005. A complete set of financial statements and analysis is available at www.MunicipalSoftware.com.
| Three months ended | Six months ended | |||
| June 30, 2006 | June 30, 2005 | June 30, 2006 | June 30, 2005 | |
| Revenue | $ 817,009 | $ 1,097,811 | $ 1,970,134 | $ 1,868,000 |
| Expenses: | ||||
| Customer service | 303,185 | 274,435 | 599,478 | 483,198 |
| Sales and marketing | 188,265 | 270,342 | 413,156 | 495,295 |
| Research and development | 403,961 | 169,199 | 683,639 | 322,403 |
| General and administrative | 462,402 | 298,420 | 810,109 | 630,387 |
| Income (loss) before the following | (540,804) | 85,415 | (536,248) | (63,283) |
| Amortization | 52,967 | 53,614 | 103,491 | 108,725 |
| Interest | 22,175 | 51,091 | 54,241 | 93,828 |
| Loss (gain) on foreign exchange | 47,342 | (38,248) | 24,715 | (28,294) |
| Non-cash interest | 91,790 | 103,916 | 295,277 | 114,988 |
| Loss before income taxes | (755,078) | (84,958) | (1,013,972) | (352,530) |
| Income taxes: | ||||
| Current | - | 3 | 840 | 488 |
| Loss for the period | (755,078) | (84,961) | (1,014,812) | (353,018) |
| Deficit, beginning of period | (4,284,149) | (1,789,155) | (4,024,415) | (1,521,098) |
| Early conversion premium-convertible debentures | (604,870) | (604,870) | ||
| Deficit, end of period | $ (5,644,097) | $ (1,874,116) | $ (5,644,097) | $ (1,874,116) |
| Loss per share: | ||||
| Basic and fully diluted | $ (0) | $ (0) | $ (0) | $ (0) |
| Weighted average number of shares outstanding: | ||||
| Basic and fully diluted | 12,594,932 | 4,309,399 | 8,503,995 | 4,116,476 |
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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
If you would like to be included on our regular distribution please email us at Press@MunicipalSoftware.com. For further information please visit www.MunicipalSoftware.com or contact Iain McLean at 1-800-665-5647 or IMcLean@MunicipalSoftware.com.
