OSI Geospatial Inc. (TSX: OSI; OTCBB: OSIIF) announced today that its international systems business has now signed the prime contract with the United Kingdom Ministry of Defence (MOD) to deliver Warship Automatic Identification Systems (W-AIS). On November 2, 2006, the company announced its selection as the preferred bidder for a contract valued at approximately US$29 million, including all options. The company will begin delivery immediately and will recognize a portion of the revenue from this contract in fiscal 2006.

“In February, 2003, the Ministry of Defence selected our world leading Electronic Chart Precise Integrated Navigation System as the fleet standard for navigation software within their Warship Electronic Chart Display and Information System. This W-AIS contract award confirms that our strategy to leverage our core technology to enter new markets is working,” said Ken Kirkpatrick, president and CEO of OSI Geospatial. “The W-AIS contract is our first prime contract with the Ministry of Defence and the largest contract award for the company. It is a significant milestone, and we are confident that it will lead to substantial new business with this very important customer.”

The MOD W-AIS will be installed in platform Operations and Control Rooms and integrated into the Warship Electronic Chart Display and Information System (WECDIS) located on the bridge of the naval ship. This system will enhance maritime interdiction operations, operations room situational awareness, and contribute to the recognized maritime picture. The W-AIS will be deployed on up to 77 naval ships and could be deployed on naval aircraft in the future.

OSI’s strategy to become the world leader in the emerging WECDIS market is well underway, with eight navies and three coasts guards using its navigation products. To support their extensive training requirements, the company’s customers invest substantial resources in building infrastructure around OSI’s technology. OSI is leveraging this investment to enter adjacent markets, including the W-AIS market. The company strongly believes that the W-AIS technology will be a requirement for most navies, including ships and aircraft. OSI is well positioned to develop this market and establish a leadership position.