Eskay Mining Corp. press release

Offshore Systems International announces Q3 2005 financial results

2005-10-14

TSXV - TSX Venture Exchange · Gold · Silver · Copper · Lead · Zinc · Bismuth · Canada

VANCOUVER, Oct. 14 /CNW/ - Offshore Systems International Ltd. (TSX: OSI/ OTCBB: OFSYF) today announced third quarter financial results for the three months ended August 31, 2005. Revenues were $3.2 million, compared to $3.0 million for the same quarter last year. Consolidated revenues for the first nine months were $7.3 million, compared with $9.8 million for the same period ended August 31, 2004. Revenues are typically affected by the timing of contract awards and existing contract delivery schedules. The company reported a loss of $438,996 for Q3 2005, compared to a loss of $455,922 for the same period last year. For the three months ended August 31, 2005, the loss per share was $0.05 cents on a basic basis and a loss of $0.10 cents on a fully diluted basis. This compares to a loss of $0.02 cents per share on a basic basis and $0.03 cents per share on a fully diluted basis for the third quarter in 2004. Loss available to common shareholders for the quarter reflect accrued dividends to Class B Preference Shares Series 2 holders. For the nine months ended August 31, 2005, the company reported a loss of $2.4 million, compared to earnings of $475,957 for the first nine months of 2004. The loss per share for the first nine months of 2005 was $0.31 cents on a basic and diluted basis. This reflects a $4.7 million one-time accretion of a beneficial conversion feature on the Class B Preference Shares Series 2, reported in Q2. For the first nine months of 2004 earnings were $0.01 cent per share on a basic basis and $0.00 cents per share on a diluted basis. Total backlog(x) was $20.4 million at the end of the third quarter ($11.7 million in firm; $8.7 million in option backlog(x)) for fiscal 2005, compared to $22.6 million ($9.0 million in firm; $12.8 million in option backlog(x)) for Q3 last year.

Conference Call:

A conference call to review Q3 results will occur on Friday October 14, 2005 at 8:30 a.m. (EST). To participate, please call 416-640-4127 or 800-814-3911. A taped replay of the call will be available until October 21, 2005 by calling 416-640-1917 or 877-289-8525, passcode 21156653 followed by the number sign. The webcast will be archived at www.osil.com for approximately 90 days.

About Offshore Systems International Ltd.:

Offshore Systems International Ltd. (OSI) makes computer-based geospatial intelligence software, systems and data products mainly for large government and civilian customers. The company has three business units: OSI Navigation Systems (moving map display systems and software for naval surface ships and submarines); OSI Applications (network-based map and target display software and services for national defence) and Mapcon Mapping (digital map data production services for civilian customers).

(x)Non-GAAP Definitions:

The company reports in accordance with U.S. GAAP. Total backlog, firm backlog, option backlog and working capital are non-GAAP measures that do not have a standardized meaning and are likely not comparable to similar measures presented by other issuers. These measures also do not have a comparable GAAP measure. Total backlog is the total of the firm and option backlogs. Firm backlog consists of firm, fixed, signed orders issued to the company and executable by the company subsequent to the balance sheet date. Option backlog consists of unexercised contract options at the balance sheet date and indefinite-quantity contracts executable by the company subsequent to the balance sheet date. Should our customers elect to exercise contract options or place orders against indefinite-quantity contracts, the option backlog converts to firm backlog.

Forward-Looking Statements:

This news release contains items that constitute forward-looking statements within the meaning of securities laws including Section 27a of the Securities Act of 1933, as amended, and Section 21e of the Securities Exchange Act of 1934, as amended. These statements are made under the 'safe harbour' provisions of the Private Securities Litigation Reform Act of 1995 and, as such, involve known and unknown risks and uncertainties and other factors that may cause the actual results to be materially different from the results implied herein. Offshore Systems International can give no assurances that its representations will be achieved or that it will update them at any time in the future.

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Offshore Systems International Ltd. U.S. GAAP Condensed Balance Sheets (unaudited) (Incorporated under the laws of the Province of British Columbia, Canada) (expressed in Canadian dollars)

As at

August 31, November 30, 2005 2004 $ $ Assets Current assets Cash 11,504,630 251,037 Restricted cash 220,000 - Accounts receivable 7,490,486 9,140,478 Inventory 979,295 649,427 Prepaid expenses and deposits 641,006 142,752 Deferred income taxes 868,132 780,331

21,703,549 10,964,025

Plant and equipment 1,036,614 938,102 Intangible and other assets 809,468 408,611 Goodwill 531,976 -

24,081,607 12,310,738 Liabilities Current liabilities Accounts payable and accrued liabilities 1,974,111 2,596,362 Income taxes payable 186,440 - Unearned revenue 396,185 79,865

2,556,736 2,676,227

Deferred income taxes 312,766 -

2,869,502 2,676,227 Stockholders' Equity Capital stock

Issued and outstanding 30,262 Class A preference shares - Series A (2004 - 30,262) 30,262 30,262 368,640 Class B preference shares - Series 2 (2004 - nil) 12,118,306 - nil Class B preference shares - Series 1 (2004 - 57,711) - 2,163,621 28,745,536 common shares (2004 - 27,488,074) 21,330,449 20,047,731

33,479,017 22,241,614

Warrants 5,206,844 661,575

Additional paid in capital 4,838,380 928,169

Accumulated deficit (22,326,083) (14,196,847)

Accumulated other comprehensive income 13,947 -

21,212,105 9,634,511

24,081,607 12,310,738

Offshore Systems International Ltd. U.S. GAAP Condensed Statement of Earnings (unaudited) (expressed in Canadian dollars)

Three Months Ended Nine Months Ended August 31, August 31, 2005 2004 2005 2004 $ $ $ $

Revenue Software 919,594 279,060 2,692,283 4,669,839 Geomatics 1,029,606 507,196 2,243,196 2,224,899 Systems and system components 1,192,482 1,987,301 2,153,296 2,401,539 Other 53,354 178,014 247,803 458,889

3,195,036 2,951,571 7,336,578 9,755,166

Cost of sales 1,431,770 1,482,017 3,970,852 3,941,836

Gross profit 1,763,266 1,469,554 3,365,726 5,813,330

Expenses General and administrative 982,226 814,202 3,018,187 2,469,319 Research and development 501,560 562,024 1,282,718 1,608,599 Sales and marketing 696,371 761,311 1,923,189 2,290,129 Depreciation and amortization 96,950 58,613 229,667 166,657 Interest 3,950 862 25,353 1,233 Foreign exchange loss 144,609 48,331 122,377 31,691 Technology Partnerships Canada royalty 68,886 25,126 161,444 81,760 Technology Partnerships Canada contribution (363,420) (373,997) (1,099,565) (1,225,539)

2,131,132 1,896,472 5,663,370 5,423,849 Net earnings (loss) before income taxes (367,866) (426,918) (2,297,644) 389,481

Income tax expense (recovery) Deferred income tax expense (recovery) 87,639 115,160 (7,537) (381,106) Current income tax expense (recovery) (16,509) (86,156) 66,247 294,630

71,130 29,004 58,710 (86,476)

Net earnings (loss) (438,996) (455,922) (2,356,354) 475,957

Other comprehensive income (loss) Foreign currency translation adjustment 13,103 - (13,947) -

Comprehensive income (loss) (425,893) - (2,370,301) -

Net earnings (loss) available to common shareholders (1,316,207) (532,644) (8,449,372) 245,790

Earnings (loss) per share Basic earnings (loss) per share (0.05) (0.02) (0.31) 0.01 Diluted earnings (loss) per share (0.10) (0.03) (0.31) 0.00

Weighted average number of common shares outstanding Basic 27,556,109 27,394,151 27,510,254 27,147,246 Diluted 49,240,815 30,020,002 27,510,254 29,773,097

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