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Thursday, November 08, 2007

Intermap Technologies Reports Strong Third Quarter

Financial Review
All amounts in this news release are in U.S. dollars unless otherwise noted.

For the third quarter, Intermap reported a 52% increase in total revenue to $14.3 million, as compared to total revenue of $9.4 million for the third quarter of 2006. Intermap’s contract services revenue component grew 92% to $11.9 million and multi-client data licenses (MCDL) contributed $2.4 million, compared to $3.2 million for the third quarter of 2006. Approximately 90% of the MCDL revenue was associated with the Company’s NEXTMap® USA program, primarily in the states of Mississippi, Florida, Louisiana, California, Hawaii, and the Canadian border. “Significant international government projects grew our contract services revenues in the third quarter,” stated Brian Bullock, president & CEO of Intermap. “Year to date, we have received $28 million through contract service programs. Cash generated from these contracts assists in the funding of our NEXTMap® USA build which has reached record collection levels. We have now collected 54% of the U.S. and 51% of our Western European program. Germany is now commercially available and France is nearing completion with 85% of the country collected.”

At the end of the third quarter, Intermap announced a $1.3 million contract from the National Geospatial-Intelligence Agency (NGA) for NEXTMap USA data in the gulf coast areas of Alabama, Florida, Louisiana, and Mississippi. To date the NGA has licensed $6.1 million of multi-client data licenses from the NEXTMap database.

Cost of services expense for the third quarter ended September 30, 2007 was $3.1 million, compared to $2.9 million for the third quarter of 2006, reflecting the costs associated with contract services work and preparation costs associated with future mapping activities.

Sales, general, and administrative expenses for the third quarter were $6.0 million, compared to $5.2 million for the third quarter of 2006. The increase was related to expansion in the areas of sales, marketing, and business development to support the NEXTMap USA and NEXTMap Europe programs.

Amortization expense of the multi-client data library in the third quarter increased to $1.5 million, up $200 thousand from the same period a year earlier. Amortization expense was $3.4 million for the 9 month period, up from $2.4 million from the same period a year earlier as a result of an increase in amortization on the NEXTMap datasets.

For the third quarter of 2007, Intermap reported net income of $2.6 million, or $0.06 per share, compared to a net loss of $1.3 million, or ($0.03) per share, for the third quarter of 2006. Positive earnings resulted primarily from increased revenues associated with contract services programs. These contract service programs have the capability of producing substantial swings in revenue on a quarter-to-quarter basis. Management does not expect profitable quarters during the current investment in the NEXTMap build process, however revenue recognized from large contract service programs may occasionally result in a profitable quarter as is evident in the current reporting period.

Cash and cash equivalents at September 30, 2007 were $52.3 million, as compared with $48.2 million at December 31, 2006. The Company’s working capital was $64.8 million, compared with $51.0 million at December 31, 2006. During the quarter, Intermap completed a C$37.1 million common share financing issuing 6.2 million shares at C$6.00 per share.

Intermap is applying working capital toward the accelerated build of NEXTMap Europe and NEXTMap USA. The Company expects to have Western Europe completely collected near the end of Q1 2008, and the Continental U.S. and Hawaii collected by the end of 2008. Working capital is also being employed in the development of value-added products in the Company’s three most active markets for 3D maps; flood risk modeling, 3D personal navigation devices (PND), and advanced driver assistance systems (ADAS). The development of vertical market applications increases the functionality and value of the NEXTMap datasets and expedites market penetration – giving Intermap valuable first mover advantage.

The record data collection levels achieved this year have required an increase in data processing resources. The Company now has over 200 employees dedicated to processing the collected data in its Denver, Jakarta, and Ottawa offices. Plans call for the staff to continue to grow in Jakarta throughout the year and into early 2008.


NEXTMap USA is the Company’s largest project that includes terrain elevation and imagery data accurate to one-meter or better, covering nearly eight million square kilometers of the United States. During the third quarter, Intermap collected an additional 880,000 square kilometers of data for its NEXTMap USA project, bringing the total collected since the inception of the project to 4.3 million square kilometers, or 54% of the continental United States. The Company expects to have the collection portion of the NEXTMap USA project completed by the end of 2008. Processing of the NEXTMap USA map data will take an additional three to four quarters following the collection of the data.

Currently, Intermap has data available off-the-shelf for 667 counties in the U.S. The Company expects a continued increase in license revenues in 2007 as marketing activities generate interest from new NEXTMap USA customers. Through September 30, 2007, total cumulative license revenue to date for NEXTMap USA data has grown to approximately $11.3 million.

The California High-Speed Rail Authority (CHSRA) chose NEXTMap as the preferred GIS mapping datasets to assist in the design of the high-speed rail system linking northern and southern California supporting preliminary environmental planning and engineering work on the project. Operating at speeds up to 220 mph, the state-of-the-art high-speed train system will stretch from San Francisco, Oakland, and Sacramento in the north, through the Central Valley, to Los Angeles and San Diego in the south. The planning stage requires the use of mapping data from the California portion of NEXTMap USA that is more current, accurate, and reliable than existing USGS data, and considerably less expensive than a custom survey project. Additionally, NEXTMap data easily exports into existing CAD applications which provide additional value for the CHSRA

NEXTMap Europe
NEXTMap Europe calls for the mapping of 17 European countries including Austria, Belgium, Czech Republic, Denmark, England, France, Germany, Irish Republic, Italy, Luxembourg, Netherlands, Northern Ireland, Portugal, Scotland, Spain, Switzerland, and Wales. Once completed, these datasets will be the most accurate 3D digital maps of Europe in existence.

Data collection for the NEXTMap Europe project in Q3 was 0.3 million km², bringing the total data collected since the inception of the project to approximately 1.1 million square kilometers or 51% of the total project. NEXTMap Europe now includes the entire countries of England, Scotland, Wales, Germany, and Denmark. Final production of Germany has now been completed and the entire dataset is available for sale. “As individual countries are completed in Europe, we expect additional revenue opportunities to close,” stated Mr. Bullock.

The NEXTMap Europe project is expected to be fully collected near the end of Q1 2008. Spain and Italy were saved for winter collection as operations in the northern part of the U.S. will cease in Q4 due to snow cover. Final processing of the NEXTMap Europe data is expected to take until the end of Q1 2009.

In Germany, Intermap signed an agreement to allow GAF AG, an international geo-information technology company located in Munich, to distribute NEXTMap throughout Germany and the rest of Europe. Part of the Telespazio group of companies, GAF offers a broad range of geospatial applications, including geodata procurement, image processing, software development, and consulting services. GAF is one of the most important one-stop-shops in Germany for commercial remote sensing data and a variety of geospatial products.

Insurance Market
Intermap is developing a version of its successful flood modeling application pioneered in Great Britain for other European countries. During the third quarter, Intermap reached an agreement with SwissRe for use of their flood modeling algorithms within the application and for SwissRe quality assurance support for all of Europe.

Intermap is marketing its easy-to-use 3D visualization tool that’s currently being used for flood risk applications in the Czech and Slovak Republics. The Company is completing a demonstration model of certain sections of Germany for the German insurance market and estimates that the German flood market is the largest in Europe, potentially valued at tens of millions of dollars per annum.

Insurance companies can use NEXTMap’s superior flood risk information to better define possible risks, and thus can better manage portfolios and their own purchase of reinsurance coverage. The combined knowledge can result in a net reduction of annual costs and much better management of risk. Intermap is also in discussions with U.S. insurers for commercial insurance applications.

Personal Navigation Devices (PNDs)
Within the handheld GPS personal navigation device (PND) market, Intermap is aggregating multiple recreational data sets for the U.S. The evolution of PNDs to 3D addresses users of off-road vehicles, hikers, hunters, fisherman, skiers, and mountaineers. Today’s 2D maps generally end at the pavement, leaving a large market demand served only by GPS devices with digitized topographic maps. Intermap estimates that approximately 3 million 2D PND/GPS units will be shipped to this recreational segment in 2007, at a growth rate of more than 70% per annum. Intermap has installed portions of its 3D database of U.S. national parks onto handheld PND devices from leading manufacturers for prototype trials. The results have been impressive and the Company is working towards formalizing agreements with a leading manufacturer for product development.

The state of California is now complete with all data layers required for effective recreational PND navigation and safety. Significant market interest has been generated by Intermap’s marketing and business development efforts for this product.

Mr. Bullock commented, “We believe that adding 3D visualization and safety to the recreational market applications will drive consumer demand and exceed market expectations. Safety applications will also migrate to the on-road applications as well, and is expected to fuel the need for accurate 3D descriptions of the road, which we are pursuing through our ADAS initiative.”

In the third quarter, Intermap launched AccuTerra™, a product that provides existing outdoor GPS and PND products with 3D maps and off-road points-of-interest (POI) – integrated with interactive 3D rendering software. AccuTerra’s 3D aerial maps with route tracking information is unique in today’s outdoor hand-held device market. The product provides the outdoor enthusiast with 3D viewing capability on a hand-held device that extends the user experience beyond what we have become accustomed to from Internet search engine providers. Users can now visualize trails and other points of interest in the context of the natural terrain where they exist – all in three dimensions.

The current version of AccuTerra has already been integrated and tested on several PNDs available in the market today. The Company has no plans to build a PND or GPS device; rather it will offer AccuTerra under license to manufacturers of these devices.

Advanced Driver Assistance Systems (ADAS)
To enable automotive safety applications, Intermap is creating road centerlines for all classes of roads in the U.S. and Europe. In the past year, Intermap has announced agreements with Visteon, Harman Becker, and Siemens VDO to support emerging Intelligent Transportation Systems (ITS) applications with Intermap's 3D road vector data. In the third quarter, Intermap signed a joint development agreement with automotive technology developer Visteon Corporation to supply 3D road geometries for the entire country of Germany. Visteon is using the data to develop advanced applications for use in future automotive systems. The initial focus is on predictive adaptive front lighting systems, which offers enhanced visibility for drivers at night by directing the headlamp lights into the road curves and hills ahead of the vehicle. The two companies are cooperating in the development of test projects and a demonstrator.

The NEXTMap database provides a reliable source of information that allows an automobile’s electronic system to anticipate the road ahead. Awareness of pending road geometry provides a tremendous input to visualization, performance, and advanced driver assistance applications. Other applications will deliver 3D maps and active safety within vehicles to reduce accidents and traffic fatalities. NEXTMap databases can help enable automotive electronics to predict what lies ahead and alert drivers of impending hazards. Advance predictions of road geometries will also be an invaluable component of visualization devices, vehicle fuel performance enhancement systems, and other advanced driver assistance systems. Intermap is in discussions with other automotive suppliers and manufacturers in Europe and North America.

Intermap has provisioned a grant to Auburn University to investigate and evaluate ways to save fuel using the 3D road geometries. The project’s initial focus is on achieving simulation results and designing a predictive cruise control and automatic gear shifting algorithm to calculate optimal vehicle speed and gear selection that improve fuel economy and operating costs. A significant amount of the fuel expense in the heavy trucking industry is attributed to changes in road slope. Eaton Corporation, one of the world’s major suppliers of heavy duty transmissions, is serving in an advisory role and sees significant efficiency opportunities in the project.

The system consists of vehicle state estimators, the road geometry, and an optimal control system. GPS technology is applied to estimate the truck position, while NEXTMap geometry is used to identify information on the road slope that lies ahead. An optimal control system is then designed to predict and achieve ideal truck velocity and/or engine speed, based on the road geometry, with the consideration of fuel consumption and travel time. The basic function of this optimal control system is to automatically gauge when best to accelerate, decelerate, or change gears going into and coming out of slopes and curves.

According to the American Trucking Association, increased fuel efficiency will help carriers reduce their fuel consumption and overall operating costs – potentially saving approximately $3 billion dollars and a billion gallons of diesel fuel per year.

Web-based 3D Visualization
Map and location related searches on the web are some of the most frequent searches requested today. This year Microsoft launched an enhanced Virtual Earth™ 3D viewing platform based on Intermap Technologies’ highly accurate and up-to-date elevation data for all of Great Britain. The resulting product delivers a more seamless and accurate 3D experience for all Internet users visiting Microsoft’s Live Search Maps for England, Scotland, and Wales.

“This is a fundamental change for the industry as Microsoft raises the bar for accuracy and realistic 3D experiences,” said Mr. Bullock. “While an accurate visualization application is important to deliver to consumers, our relationship with Microsoft begins to pave the way for the delivery of additional value-added products for the business and consumer markets within Great Britain, Europe, and the U.S.

“The astounding achievement of NEXTMap is encompassed in the realization that every feature of the landscape — be it a tree, rock, bush, stream or man made object, now has a GPS address that is known to an accuracy of 2 meters horizontally and 1 meter vertically. The number of potential applications is enormous.”

Press Release - Intermap Technologies
© 2007 Intermap Technologies