TSX-Venture: Tier 1 SEC Exemption No.82-3378 RICHMOND, BC, Oct. 18 /CNW/ - CON-SPACE Communications Ltd. (CCB - TSX Venture), (http://www.con-space.com), a world leader in specialized voice communication products, today announced fourth quarter and full-year financial results for the period ended June 30, 2006. "We ended the 2006 fiscal year on a strong up note," said Jim Swanson, Chairman of CON-SPACE. "Our new products and dynamic distribution network helped us achieve significant sequential growth in fourth quarter results, and we ended the year with a strengthening order backlog. Although results for the quarter and the fiscal year were below 2005 levels due to funding diversions in the US emergency response market and the negative impact of a stronger Canadian dollar, we continued to outperform our industry peers and ended the year with a profit." "Moving into 2007, we are seeing early signs of an improvement in our core market for emergency response kits, and we are continuing our push into new markets and segments. We have achieved an excellent response to our innovative voice amplifier units designed for hospital emergency decontamination tents or rooms for processing patients with SARS, Bird Flu, or Bio-chemical contamination. As the year progresses, we will be launching additional new products including specialized headsets designed for police, swat team, and military applications. We believe this combination of new products, focused marketing efforts and improving market conditions will put us on the path to a sustained business recovery." Fourth Quarter Results For the three months ended June 30, 2006, the company achieved sales of $1.5 million, up 32.2% from the third quarter of 2006, but 36.4% below Q4 2006. Gross margin was $817,468 or 54.6% of sales, compared to $1,531,386 or 65.2% of sales in the Q4 2005 period. Fourth quarter operating expenses declined to $0.84 million from $0.94 million in Q4 2005, however as a percentage of sales, operating expenses increased to 57.5% from 40.9%. This reflects the change in allocation and estimate for overhead application between expense categories and cost of goods sold due to a facility expansion completed in September 2005. Net income for the fourth quarter of 2006 was $0.01 million, or $0.00 per share. This compares to net earnings of $0.56 million or $0.06 per share during the same quarter in 2005. Full-Year Results For the twelve months ended June 30, 2006, the company recorded sales of $5.49 million, compared to $7.09 million in fiscal 2005. The change in revenue primarily reflects the diversion of U.S. government funding away from new equipment purchases and towards relief efforts in the aftermath of Hurricane Katrina. Foreign exchange also had a negative impact on results with the Canadian dollar continuing to strengthen throughout the year. Had the value of the Canadian dollar held steady at Q1 2006 levels, sales for the year would have exceeded $6.0 million. Year-to-date operating expenses were $2.22 million (40.4% of sales), compared to $2.47 million (34.8% of sales), reflecting the impact of lower sales. The Company recorded a 2006 net profit of $0.19 million, or $0.02 per share, compared to earnings of $1.14 million or $0.11 per share, in 2005. Outlook Although first quarter is a seasonally slower period for Con-Space, the company anticipates that fiscal 2007 will present important opportunities for profitable growth. Said Swanson, "An increasing order backlog supports our outlook for improved sales, During the last number of months we have been working very hard on the development of several new products, one of which we plan to launch once its patent application is in place. We have invested in new sales personnel and have opened a new office in Lincoln, Nebraska to focus on new markets in the communications industry for our existing and planned products. Further, we have relocated our UK office to Nottinghamshire and added another sales specialist. We are tightening our focus on our military and private label customers in these markets." "Our search for an appropriate acquisition opportunity also continues, but is expected to take time given our strict criteria. Any potential acquisition must provide significant benefits to both the company and our shareholders before we will pursue it." "With no long-term or short term debt and over $1.06 million in cash, we are moving forward in a strong financial position. We remain committed to returning CON-SPACE to higher profitable growth." concluded Swanson. This press release has been submitted to http://www.TOP10PressReleases.com for investors to vote on and help move into the TOP 10 of the day. Investors can locate the release by using the industry filter or searching by company name and/or stock symbol About CON-SPACE CON-SPACE is recognized worldwide as the leading designer and manufacturer of specialized voice communication equipment used by Police, Fire, Rescue, Government Agencies, Militaries, Municipalities and general industry. The Company has distribution throughout North America, Great Britain, Australia, and parts of Asia, South America, and Europe. The Company also supplies many other manufacturers with Private Labeled products. This press release is available on the company's official on-line investor relations site for investor commentary, feedback and questions. Investors are asked to visit http://www.agoracom.com and view the CON-SPACE Investor Contact & Information Centre. Alternatively, investors are asked to e-mail all questions and correspondence to CCB(at)Agoracom.com. "Forward-looking" statements in this release involve risks and uncertainties associated with, among others, economic, industry conditions, technological development, and competition and should not be relied upon as actual results may differ materially from those projected. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.