UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934

~~February 4~~March 22, 2005

OFFSHORE SYSTEMS INTERNATIONAL LTD.

(Translation of registrant’s name into English)

107-930 West 1^st Street.
North Vancouver, BC V7P 3N4, Canada

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F þ Form 40-F o

Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o No þ

~~OSI~~OFFSHORE ~~reports~~SYSTEMS ~~financial~~INTERNATIONAL ~~results for Q4 and 2004 fiscal year-end~~LTD.

~~Vancouver,~~NOTICE ~~Canada, February 1,~~OF ~~2005~~ANNUAL —AND ~~Offshore~~SPECIAL ~~Systems~~GENERAL ~~International~~MEETING ~~Ltd.~~OF ~~(TSX: OSI/ OTCBB:~~SHAREHOLDERS ~~OFSYF) today reported earnings of $114,741, or $0.00 per diluted share for the fiscal year ended~~ ~~November 30, 2004, compared to earnings of $385,369, or $0.01 per diluted share for fiscal 2003.~~

~~The~~NOTICE ~~Company~~IS ~~also~~HEREBY ~~announced~~GIVEN athat ~~loss~~the 2005 Annual and Special General Meeting (the “Meeting”) of ~~$251,851,~~the shareholders orof $0OFFSHORE SYSTEMS INTERNATIONAL LTD.01 ~~per~~(the ~~diluted~~“Company”) ~~share~~will ~~for~~be ~~the~~held ~~three~~at ~~months~~The Fairmont ~~ended~~Waterfront ~~November 30~~Hotel, ~~2004~~900 Canada Place, ~~compared~~Vancouver, toBritish ~~earnings~~Columbia, ofon ~~$323~~Friday,~~756~~ April 8, or2005 $0at 1:30 p.01m. ~~per~~(Pacific ~~diluted~~Time) ~~share~~ for the ~~fourth~~ ~~quarter~~following ~~the previous year.~~purposes:

~~OSI~~1. ~~President~~To ~~and~~receive ~~CEO, John Jacobson, said the Company’s results for fiscal 2004 were buoyed by major contract wins,~~ and ~~reflect~~consider ~~significant investment in~~ the ~~development~~report of ~~new~~the ~~products and~~directors; ~~markets, a decline in Geomatics revenues and profits, and an uptrend to higher regulatory~~ ~~compliance and governance costs.~~

~~For~~2. ~~fiscal~~To ~~2004,~~receive ~~revenue~~and ~~increased~~consider ~~17%~~the toaudited ~~$13.5 million~~financial ~~versus~~statements ~~$11.5 million~~of ~~for~~the ~~fiscal~~Company ~~2003. Fourth~~for ~~quarter~~the ~~revenue~~financial ~~increased~~year ~~36%~~ended toNovember ~~$3.7 million~~30, ~~versus~~2004 ~~$2.7 million~~and ~~for~~ the ~~same~~report ~~quarter~~of ~~last year.~~ the auditor thereon;

In3. ~~2004,~~To ~~significant~~appoint ~~revenues~~an ~~were~~auditor ~~derived~~for ~~from key contracts with~~ the ~~Royal~~Company ~~Navy~~for of the UKensuing ~~through partner~~year ~~Lockheed~~and ~~Martin~~to ~~UK,~~authorize the ~~Royal~~board ~~Australian~~of ~~Navy~~directors ~~through~~to ~~partner~~fix ~~Nautronix Ltd.,~~ the USremuneration ~~Coast Guard,~~to ~~the~~be ~~Royal~~paid ~~New~~to ~~Zealand Navy and~~ the ~~Portuguese Navy through partner SICOM (Sistemas de Comunições, Lda).~~ auditor;

~~While~~4. ~~the~~To ~~major~~elect ~~investment~~directors ~~in new products and markets and commitment to best-practice governance impacted the bottom line~~ for the ~~year,~~ensuing ~~Jacobson said they were “important steps for the Company’s~~year; ~~future and building shareholder value.”~~

He5. ~~added~~To ~~the~~consider ~~results~~and, ~~really~~if ~~don’t~~thought ~~reflect~~fit, ~~that~~pass ~~“this~~a ~~was~~special ~~the~~resolution ~~best~~altering ~~year in~~ the ~~Company’s~~Notice ~~history~~of ~~for winning~~Articles ~~new~~to ~~contracts.~~remove Wethe ~~secured~~application ~~our~~of ~~two~~certain ~~biggest~~provisions ~~orders~~prescribed ~~ever,~~in ~~with~~the ~~fleet~~British ~~wins~~Columbia ~~for~~Business ~~both~~Corporations ~~the~~Act ~~Royal Navy~~called ~~and~~ the ~~Royal~~“Pre-existing ~~Australian~~Company ~~Navy~~Provisions”, ~~bringing~~particulars ~~our~~of ~~total~~which ~~fleet~~are ~~contracts~~as toset ~~six~~out ~~and~~in ~~increasing our backlog to record levels. We’ve been very successful and consistently proven our ability to land significant positions with~~ the ~~leading~~Information ~~navies~~Circular ofdelivered ~~the world.”~~ herewith;

~~Jacobson~~6. ~~said~~To ~~that~~consider ~~“for~~and, if thought fit, pass a ~~new~~special ~~entrant~~resolution todeleting the ~~defence~~existing ~~industry~~Articles toof ~~establish~~the ~~such~~Company ain ~~strong~~their ~~customer list~~entirety isand areplacing ~~great~~them ~~achievement.~~with ~~The~~new ~~key~~form ~~contract~~of ~~wins~~Articles, with such new form of Articles being consistent with the terminology and ~~expanded~~provisions ~~naval~~of ~~customer~~the ~~list~~newly ~~position~~enacted ~~OSI~~ British Columbia Business Corporations Act, particulars of which are as set out in the ~~leader~~Information ~~for~~ Circular delivered herewith;

~~naval~~7. ~~electronic~~To ~~chart navigation~~consider ~~systems~~and, inif ~~2004.~~thought ~~The~~fit, pass a special resolution altering the authorized share capital of the Company’s ~~flagship ECPINS®~~by ~~(Electronic~~increasing ~~Chart Precise~~the ~~Integrated~~authorized ~~Navigation~~number ~~System)~~of ~~product~~voting iscommon ~~installed~~shares orwithout ~~contracted~~par value from 100,000,000 to bean ~~installed~~unlimited ~~on approximately~~number, ~~342~~and ~~naval~~by ~~vessels.”~~ creating a new class of shares, being an unlimited number of Class C Preference shares without par value issuable in series, particulars of which are as set out in the Information Circular delivered herewith;

~~The~~8. ~~strong~~To ~~growth~~consider inand, ~~new~~if ~~contract~~thought ~~bookings~~fit, inpass ~~2004~~an isordinary ~~reflected~~resolution inapproving the ~~year~~Company’s ~~over~~private ~~year~~placement ~~revenue~~of up to 19,500 units consisting of Class B Series 2 Preference shares and ~~total~~ backlog*common ~~increase~~share purchase warrants for gross proceeds of up to CDN$19,500,000, ~~with~~and ~~total~~the backlog*issuance ~~reaching~~of ~~record~~common ~~levels~~share ~~during~~purchase warrants to institutions which assist in placing the ~~year~~private placement and to Mr. Brinton Coxe, a director of the Company, particulars of which are described in the Information Circular delivered herewith; and

~~At November 30, 2004, the Company’s total backlog* was $21~~9.~~1 million,~~ ~~including~~To ~~option~~transact backlog*such ~~of $12.7 million,~~other ~~compared~~business toas ~~$3.3 million~~may ~~— $2.4 million~~properly income ~~option~~before ~~backlog* — at~~ the ~~same~~Meeting, ~~time~~or ~~last year.~~any ~~The~~adjournment ~~increased~~or ~~total~~adjournments ~~backlog* resulted from OSI and its partners securing contracts with the Royal Navy and Royal Australian Navy in fiscal 2004~~thereof.

~~Current~~The ~~assets~~text ~~totalled~~of ~~$11.0 million~~the ~~and~~proposed ~~current~~special ~~liabilities~~resolutions ~~$2.7 million~~respecting atthe ~~year-end.~~matters ~~The~~referred to above, and the ~~resulting~~ordinary ~~working~~resolution capital*respecting ~~position~~the ofCompany’s ~~$8.3 million~~private isplacement, upare ~~from~~set ~~$8.1 million~~out atin ~~November 30,~~the ~~2003.~~accompanying ~~Cash~~Information ~~and~~Circular ~~cash~~in ~~equivalents~~the ~~were~~section ~~$251,000~~entitled at“Particulars ~~November 30,~~of ~~2004,~~Matters ~~compared~~ to ~~$3.8 million~~be inActed ~~fiscal 2003~~Upon”.

~~“Our focus for the year was to continue to build the business for future growth,” said Jacobson.~~2 “While investing more than $1 million in research and new product rollouts and absorbing the substantial increases in regulatory compliance and governance costs, we still reported a profit for fiscal 2004.

~~“We~~The ~~are~~accompanying ~~solidly~~Information ~~positioned~~Circular provides additional information relating to ~~continue~~the matters to ~~expand~~be dealt ~~our~~with ~~opportunities~~at inthe ~~2005~~Meeting and ~~deliver~~is ~~long-term~~deemed to form part of this Notice. Copies of any documents to be ~~value~~considered, approved, ratified and adopted or authorized at the Meeting will be available for inspection at the registered and records office of the Company at Suite 1020 – 510 Burrard Street, Vancouver, British Columbia, V6C 3A8, during normal business hours up to ~~shareholders~~the date of the Meeting, and at the Meeting.”

~~Conference~~The ~~Call:~~directors of the Company have fixed March 7, 2005 as the record date for the determination of the shareholders entitled to receive this Notice.

AsA ~~previously~~shareholder ~~announced,~~who ~~the~~is ~~Company~~entitled ~~will~~to ~~host~~attend aand ~~live~~vote ~~conference~~at ~~call~~the onMeeting, ~~Wednesday~~or ~~February 2,~~an ~~2005~~intermediary holding shares aton ~~11:00 a.m.~~behalf ~~Eastern~~of ~~Daylight~~an ~~Time~~unregistered ~~(8:00~~shareholder, ~~a.m.~~is ~~Pacific~~entitled ~~Daylight~~to ~~Time)~~appoint bya ~~calling~~proxy ~~416-850-1243~~to attend and vote in his, ~~Toronto~~her or ~~1-800-814-4861~~its stead. AIf ~~taped~~you ~~replay~~are ofunable to attend the ~~conference~~Meeting ~~call~~in ~~will~~person, beplease ~~available~~complete, ~~until~~sign ~~February~~and 9date atthe ~~11:59 p.m.~~enclosed ~~Eastern~~form ~~Daylight~~of ~~Time~~proxy byand ~~calling~~return ~~416-640-1917~~the same within the time and to the location in ~~Toronto~~accordance with orthe ~~1-877-289-8525,~~instructions ~~pass~~set ~~code~~out in the form of proxy and Information Circular accompanying this ~~21111340#~~Notice.

AAccompanying ~~live~~this ~~audio~~Notice ~~webcast~~are ofan ~~the~~Information ~~conference~~Circular, ~~call~~form ~~will~~of ~~also~~proxy, beReturn ~~available~~Card, atand ~~OSI~~the Company’s Annual ~~website~~Report, atwhich includes the Letter to Shareholders and other corporate information, the ~~www.osil.com.~~consolidated ~~Following~~financial statements for the ~~meeting~~years ended November 30, 2004 and 2003 with the ~~webcast~~auditor’s report ~~will~~thereon, beand ~~archived~~Management’s atDiscussion ~~www~~& Analysis.~~osil.com~~ ~~for~~The Information Circular contains ~~approximately~~information ~~90 days~~relating to the matters to be addressed at the Meeting.

~~About~~A ~~Offshore~~shareholder ~~Systems~~who ~~International~~is ~~Ltd~~entitled to attend and vote at the Meeting, or an intermediary holding shares on behalf of an unregistered member, is entitled to appoint a proxy to attend and vote in his or her stead.: Any shareholders who do not expect to attend the Annual General Meeting in person are requested to complete, sign and date the enclosed form of proxy or other form of proxy and return same within the time and to the location in accordance with the instructions set out in the form of proxy and Information Circular accompanying this Notice.

~~Offshore~~DATED ~~Systems~~at ~~International~~North ~~Ltd.~~Vancouver, ~~(OSI) is~~British the pioneer in geo-spatial intelligence and the world leading fleet supplier of electronic chart systems for navigation and situational awareness in NATO and allied markets. The Company’s core competency is electronic geography and the productionColumbia, ~~management~~ ~~and~~this ~~display~~11th ofday ~~many forms~~ of ~~geographic data. The Company provides display systems and data for several defense~~March, government and commercial customers, and conducts its operations through three business units: OSI Navigation Systems (moving map display systems and software), OSI Applications (situational awareness products and services for command and control systems) and OSI Geomatics (digital map and electronic chart data production services: land and marine)2005. ~~OSI’s~~ ~~common shares are listed for trading on the Toronto Stock Exchange (TSX: OSI) and the OTC Bulletin~~ ~~Board (OTCBB: OFSYF).~~

~~Please~~ON ~~visit~~BEHALF ~~OSI’s~~OF ~~website~~THE atBOARD ~~www~~OF DIRECTORS OF OFFSHORE SYSTEMS INTERNATIONAL LTD.~~osil~~ “John A.~~com~~ ~~for~~Jacobson” ~~more~~JOHN ~~information~~A. ~~and~~JACOBSON ~~the~~President ~~latest~~and ~~Company~~Chief ~~updates.~~ Executive Officer

*Non-GAAP Definitions:3

~~Total~~OFFSHORE ~~backlog,~~SYSTEMS ~~firm~~INTERNATIONAL ~~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~~LTD. ~~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. Working capital is defined as current assets less current liabilities.

~~Forward-Looking~~INFORMATION ~~Statements:~~CIRCULAR

~~This~~THIS ~~news~~INFORMATION ~~release~~CIRCULAR ~~contains~~CONTAINS ~~discussion~~INFORMATION ofAS ~~items~~AT ~~that~~MARCH ~~may constitute forward-looking statements within the meaning of securities laws including Section 27a of the Securities Act of 1933~~11, as2005 ~~amended, and Section 21e of the Securities Exchange Act of 1934, as amended, with respect to~~ ~~achieving corporate objectives, developing additional project interests, OSI’s analysis of~~ ~~opportunities in the acquisition and development~~ of various project interests and other matters. 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~~PERSONS ~~risks~~MAKING ~~and~~THIS ~~uncertainties~~SOLICITATION ~~and~~OF ~~other factors that may cause the actual results to be~~PROXIES ~~materially different from the results implied herein. Although Offshore Systems International~~ ~~believes the expectations reflected in such forward-looking statements are based on reasonable~~ ~~assumptions, it can give no assurances that its expectations will be achieved. Factors that could~~ cause actual results to differ from expectations include the effects of general economic conditions, changing foreign exchange rates, actions by government authorities, uncertainties associated with contract negotiations, and industry supply.

~~For~~THIS ~~more~~INFORMATION ~~information~~CIRCULAR IS FURNISHED TO YOU IN CONNECTION WITH THE SOLICITATION OF PROXIES BY THE MANAGEMENT OF OFFSHORE SYSTEMS INTERNATIONAL LTD. (“WE”, ~~please~~“US” ~~contact:~~OR THE “COMPANY”) FOR USE AT THE ANNUAL AND SPECIAL GENERAL MEETING OF SHAREHOLDERS OF THE COMPANY (AND ANY ADJOURNMENT THEREOF) (THE “MEETING”) TO BE HELD ON FRIDAY, APRIL 8, 2005 AT THE TIME AND PLACE AND FOR THE PURPOSES SET OUT IN THE ACCOMPANYING NOTICE OF MEETING. While it is expected that the solicitation will be primarily by mail, proxies may be solicited personally or by telephone by the regular employees of the Company at nominal cost. All costs of solicitation by management will be borne by the Company.

~~Offshore~~THE ~~Systems~~CONTENTS ~~International~~AND ~~Ltd. Deborah~~THE ~~Somerville Director,~~SENDING ~~Corporate~~OF ~~Communications Phone:~~THIS ~~(604) 904-4627~~INFORMATION orCIRCULAR ~~1-888-880-9797~~HAVE BEEN APPROVED BY THE DIRECTORS OF ~~E-mail:~~THE ~~ir@osl~~COMPANY.~~com~~ ~~www.osil.com~~

~~Offshore~~APPOINTMENT ~~Systems~~AND ~~International~~REVOCATION ~~Ltd. Selected~~OF ~~Consolidated Financial Information~~PROXIES ~~(Canadian dollars — Canadian GAAP)~~

Statement of Earnings Information	Three months ended					Year ended
	November 30					November 30
	2004			2003		2004		2003
Revenue		3,696,137			2,724,439		13,451,303		11,520,793
Earnings (loss) for the period		(251,851	)		323,756		114,741		385,369
Basic earnings (loss) per share		(0.01	)		0.01		0.00		0.01
Fully diluted earnings (loss) per share		(0.01	)		0.01		0.00		0.01

The individuals named in the accompanying form of proxy are directors and/or officers of the Company. A SHAREHOLDER WISHING TO APPOINT SOME OTHER PERSON (WHO NEED NOT BE A SHAREHOLDER) TO REPRESENT HIM AT THE MEETING HAS THE RIGHT TO DO SO, EITHER BY STRIKING OUT THE NAMES OF THOSE PERSONS NAMED IN THE ACCOMPANYING FORM OF PROXY AND INSERTING THE DESIRED PERSON’S NAME IN THE BLANK SPACE PROVIDED IN THE FORM OF PROXY OR BY COMPLETING ANOTHER FORM OF PROXY. A proxy will not be valid unless the completed form of proxy is received by Computershare Trust Company of Canada, Attention: Proxy Department, 9th Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y1, or by fax at 1-866-249-7775, (the “Transfer Agent”) not less than 48 hours (excluding Saturdays, Sundays and holidays) before the time for holding the Meeting or any adjournment thereof, or delivered to the Chairman of the Meeting prior to the commencement of the Meeting.

Balance Sheet Information	November 30		November 30
	2004		2003
Cash		251,037		3,837,555
Working capital		8,287,798		8,071,926
Current assets		10,964,025		10,377,836
Total assets		12,310,738		11,728,257
Current liabilities		2,676,227		2,305,910
Long term debt		—		187,384
Total liabilities		2,676,227		2,493,294
Shareholders’ equity		9,634,511		9,234,963

A shareholder who has given a proxy may revoke it by an instrument in writing executed by the shareholder or by his attorney authorized in writing or, where the shareholder is a corporation, by a duly authorized officer or attorney of the corporation, and delivered to the registered and records office of the Company, at Suite 1020 — 510 Burrard Street, Vancouver, British Columbia, V6C 3A8, at any time up to and including the last business day preceding the day of the Meeting or if adjourned, any reconvening thereof, or to the Chairman of the Meeting on the day of the Meeting or, if adjourned, any reconvening thereof or in any other manner provided by law. A revocation of a proxy does not affect any matter on which a vote has been taken prior to the revocation.

~~Offshore Systems International Ltd.~~4

~~Consolidated~~ADVICE ~~Financial~~TO ~~Statements (Prepared~~NON-REGISTERED ~~in accordance with Canadian Generally~~SHAREHOLDERS ~~Accepted Accounting Principles)~~ ~~November 30, 2004 and 2003~~ ~~(expressed in Canadian dollars)~~

~~AUDITORS’~~ONLY ~~REPORT~~REGISTERED SHAREHOLDERS OR DULY APPOINTED PROXYHOLDERS ARE PERMITTED TO VOTE AT THE MEETING. SHAREHOLDERS WHO DO NOT HOLD THEIR SHARES IN THEIR OWN NAME (REFERRED TO HEREIN AS “BENEFICIAL SHAREHOLDERS”) ARE ADVISED THAT ONLY PROXIES FROM SHAREHOLDERS OF RECORD CAN BE RECOGNIZED AND VOTED AT THE MEETING. Beneficial shareholders who complete and return a form of proxy must indicate thereon the person (usually a brokerage house) who holds their shares as a registered Shareholder.

ToIf common shares are listed in an account statement provided to a shareholder by a broker, then in almost all cases those shares will not be registered in such shareholder’s name on the ~~Shareholders~~records of ~~Offshore~~the ~~Systems~~Company. ~~International~~Such ~~Ltd~~shares will more likely be registered under the name of the shareholder’s broker or an agent of that broker. In Canada, the vast majority of such shares are registered under the name of CDS & Co. (the registration name for The Canadian Depository for Securities, which company acts as nominee for many Canadian brokerage firms). Common shares held by brokers or their nominees can only be voted (for or against resolutions) upon the instructions of the beneficial shareholder. Without specific instructions, brokers/nominees are prohibited from voting shares for their clients. The directors and officers of the Company do not know for whose benefit the common shares registered in the name of CDS & Co. are held.

WeIn ~~have~~accordance ~~audited~~with ~~the~~National ~~consolidated~~Instrument ~~balance~~54-101 ~~sheets~~— ofCommunication ~~Offshore~~with ~~Systems~~Beneficial ~~International~~Owners ~~Ltd.~~of ~~as at~~Securities ~~November 30~~of a Reporting Issuer, ~~2004~~the ~~and~~Company ~~2003~~has ~~and~~distributed ~~the~~copies ~~consolidated~~of ~~statements~~the Notice of ~~earnings~~Meeting, this Information Circular and ~~deficit~~the Proxy to the clearing agencies and ~~cash~~intermediaries ~~flows~~ for onward distribution to beneficial shareholders. Applicable regulatory policy requires intermediaries/brokers to seek voting instructions from beneficial shareholders in advance of shareholders’ meetings unless the ~~years~~beneficial ~~then~~shareholders ~~ended~~have waived the right to receive Meeting materials. ~~These~~Every ~~financial~~intermediary/broker ~~statements~~has its own mailing procedures and provides its own return instructions, which should be carefully followed by beneficial shareholders in order to ensure that their common shares are voted at the ~~responsibility~~Meeting. Often the form of proxy supplied to a beneficial shareholder by its broker is identical to the form of proxy provided by the Company’s to the ~~management~~registered shareholders. ~~Our~~However, ~~responsibility~~its purpose is limited to ~~express~~instructing anthe ~~opinion~~registered Shareholder how to vote on ~~these~~behalf ~~financial~~of ~~statements~~the ~~based~~beneficial onshareholder. ~~our~~Should a beneficial shareholder receiving such ~~audit~~a form wish to vote at the Meeting, the beneficial shareholder should strike out the names of the Management Proxyholders named in the form and insert the beneficial shareholder’s name in the blank provided and return the materials to the broker as directed.

WeThe ~~conducted~~majority ~~our~~of ~~audits~~brokers innow ~~accordance~~delegate ~~with~~responsibility ~~Canadian~~for ~~generally~~obtaining ~~accepted~~instructions ~~auditing~~from ~~standards~~clients to independent ADP Investor Communications Services (“ADP”). ~~Those~~ADP typically applies a special sticker ~~standards~~to ~~require~~the ~~that~~proxy weforms, ~~plan~~mails those forms to the beneficial shareholders and ~~perform~~asks anbeneficial shareholders ~~audit~~to return the proxy forms to ~~obtain~~ADP. ~~reasonable~~ADP ~~assurance~~then ~~whether~~tabulates the results of all instructions ~~financial~~received ~~statements~~and ~~are~~provides ~~free~~appropriate instructions respecting the voting of ~~material~~common ~~misstatement~~shares to be represented at the Meeting. AnA ~~audit~~BENEFICIAL ~~includes~~SHAREHOLDER ~~examining,~~RECEIVING onA aPROXY ~~test~~WITH AN ADP STICKER ON IT ~~basis,~~CANNOT ~~evidence~~USE ~~supporting~~THAT ~~the~~PROXY ~~amounts~~TO ~~and~~VOTE ~~disclosures~~COMMON inSHARES ~~the~~DIRECTLY ~~financial~~AT ~~statements.~~THE AnMEETING ~~audit~~– ~~also~~THE PROXY MUST BE RETURNED TO ~~includes~~ADP ~~assessing~~WELL ~~the~~IN ~~accounting~~ADVANCE ~~principles~~OF ~~used~~THE ~~and~~MEETING ~~significant~~IN ~~estimates~~ORDER ~~made~~TO byHAVE ~~management,~~THE asCOMMON SHARES VOTED. All references to ~~well~~shareholders asin ~~evaluating~~this Information Circular and the ~~overall~~accompanying ~~financial~~Instrument ~~statement~~of ~~presentation~~Proxy and Notice of Meeting are to Shareholders of record unless specifically stated otherwise.

In ~~our opinion~~addition, ~~these~~there ~~consolidated~~are ~~financial~~two ~~statements~~kinds ~~present~~of ~~fairly,~~beneficial inshareholders ~~all~~— ~~material~~those ~~respects, the~~who ~~financial~~object ~~position~~to oftheir ~~the~~names ~~Company~~being made asknown atto ~~November 30, 2004 and 2003 and~~ the ~~results~~issuers of ~~its operations~~securities ~~and~~which ~~its~~they ~~cash~~own ~~flows~~called ~~for~~Objecting ~~the~~Beneficial ~~years~~Owners ~~then ended in accordance with Canadian generally~~(“OBOs”), ~~accepted accounting principles.~~and

~~Vancouver, Canada, January 24, 2005. Chartered Accountants~~5

~~Offshore~~those ~~Systems~~who ~~International~~do ~~Ltd~~not object to the issuers of the securities they own knowing who they are, called Non-Objecting Beneficial Owners (“NOBOs”). ~~Canadian~~NOBOs ~~GAAP~~can expect to receive a scannable Voting Instruction Form (VIF) prepared by our transfer agent, Computershare Trust Company of Canada (or Computershare Investor Services Inc. as the case may be). These VIFs are to be completed and returned to Computershare in the envelope provided or by fax. In addition, Computershare provides both telephone voting and internet voting as described on the VIF itself, which contains complete instructions. Computershare will tabulate the results of the VIFs received from NOBOs and will provide appropriate instructions at the Meeting with respect to the shares represented by the VIFs they receive.

~~(Incorporated~~VOTING ~~under~~OF ~~the laws of the Province of British Columbia, Canada)~~PROXIES ~~Consolidated Balance Sheets~~ ~~As at November 30, 2004 and 2003~~ ~~(expressed in Canadian dollars)~~

	2004			2003
	$			$
Assets
Current assets
Cash		251,037			3,837,555
Accounts receivable (note 4)		9,140,478			4,621,836
Inventory (note 5)		649,427			665,503
Prepaid expenses and deposits		142,752			430,419
Future tax assets (note 12)		780,331			822,523
		10,964,025			10,377,836
Property, plant, and equipment (note 6)		1,346,713			1,350,421
		12,310,738			11,728,257
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable and accrued liabilities (note 7)		2,596,362			2,126,061
Billing in excess of revenues		79,865			45,907
Rent payable		—			133,942
		2,676,227			2,305,910
Accrued long term royalties		—			187,384
		2,676,227			2,493,294
Commitments and contingencies (notes 10 and 11)
Capital stock
Authorized
100,000,000 Class A preference shares with no par value, issuable in series, of which 10,000,000 shares are designated Series A voting non-cumulative retractable convertible at a ratio of 1:1, 1% preference shares
100,000,000 Class B preference shares with a par value of $50 each, issuable in series of which 10,000,000 are designated Series 1 voting cumulative convertible shares at a ratio of 1:45.5, 6% preference shares
100,000,000 common shares without par value
Issued and outstanding
30,262 Class A preference shares — Series A (2003 — 30,262) (note 9(b))		—			—
57,711 Class B preference shares — Series 1 (2003 — 61,244) (note 9(c))		1,926,157			2,065,420
27,488,074 Common shares (2003 — 26,807,475) (note 9(a))		19,026,125			18,508,498
		20,952,282			20,573,918
Warrants (note 9(c))		661,575			661,575
Additional Paid in Capital		214,492			43,050
Deficit		(12,193,838	)		(12,043,580	)
		9,634,511			9,234,963
		12,310,738			11,728,257

SHARES REPRESENTED BY PROPERLY EXECUTED PROXIES IN FAVOUR OF PERSONS DESIGNATED IN THE ENCLOSED FORM OF PROXY WILL BE VOTED FOR ALL MATTERS TO BE VOTED ON AT THE MEETING AS SET OUT IN THIS INFORMATION CIRCULAR OR WITHHELD FROM VOTING IF SO INDICATED ON THE FORM OF PROXY.

~~Approved~~The shares represented by proxies will, on any poll where a choice with respect to any matter to be acted upon has been specified in the ~~Board~~form of ~~Directors~~proxy, be voted in accordance with the specification made. SUCH SHARES WILL, ON A POLL, BE VOTED IN FAVOUR OF EACH MATTER FOR WHICH NO CHOICE HAS BEEN SPECIFIED BY THE SHAREHOLDER.

~~“Helmut~~The ~~Lobmeier”(signed)~~enclosed ~~Director~~form ~~“Tony~~of ~~Pezzotti”(signed)~~proxy, ~~Director~~when properly completed and delivered and not revoked, confers discretionary authority upon the person appointed proxy under it to vote with respect to amendments or variations of matters identified in the Notice of Meeting, and with respect to other matters which may properly come before the Meeting. If amendments or variations to matters identified in the Notice of Meeting are properly brought before the Meeting or any further or other business is properly brought before the Meeting, it is the intention of the persons designated in the enclosed form of proxy to vote in accordance with their best judgment on such matters or business. At the time of the printing of this Information Circular, management of the Company knows of no such amendment, variation or other matter which may be presented to the Meeting.

~~See~~VOTING ~~accompanying~~IN ~~notes to consolidated financial statements~~PERSON

~~Offshore~~Any ~~Systems~~shareholder ~~International~~attending ~~Ltd.~~the ~~Canadian~~Meeting ~~GAAP~~to vote personally or as proxyholder for another shareholder shall be required to produce identification satisfactory to the Chairman of the Meeting establishing his or her identity.

~~Consolidated~~INTEREST ~~Statement~~OF ofCERTAIN ~~Earnings~~PERSONS ~~and~~OR ~~Deficit For~~COMPANIES ~~the~~IN ~~years~~MATTERS ~~ended~~TO ~~November 30,~~BE ~~2004~~ACTED ~~and 2003~~UPON ~~(expressed in Canadian dollars)~~

	2004			2003
	$			$
Revenue
Software		5,576,540			1,036,417
Systems and system components		4,328,740			6,208,464
Geomatics		2,979,728			3,560,440
Other		566,295			715,472
		13,451,303			11,520,793
Cost of sales		5,669,324			5,159,068
Gross profit		7,781,979			6,361,725
Expenses
General and administrative		3,435,688			2,498,021
Research and development		2,104,806			1,548,523
Sales and marketing		3,160,359			2,000,238
Amortization		231,033			241,295
Interest		2,045			2,824
Foreign exchange loss		38,338			151,961
Technology Partnerships Canada royalty (note 10)		124,425			50,473
Technology Partnerships Canada contribution (note 10)		(1,471,414	)		(376,880	)
		7,625,280			6,116,455
Earnings before income taxes		156,699			245,270
Income tax expense (recovery) (note 12)
Future income tax recovery		(479,446	)		(363,484	)
Current income tax expense		521,404			223,385
		41,958			(140,099	)
Earnings for the year		114,741			385,369
Deficit — Beginning of year		(12,043,580	)		(12,188,284	)
Class B preference share dividends		(264,999	)		(53,484	)
Premium on purchase and cancellation of common shares (note 9(f))		—			(187,181	)
Deficit — End of year		(12,193,838	)		(12,043,580	)
Basic earnings per share (note 9(e))		0.00			0.01
Diluted earnings per share (note 9(e))		0.00			0.01
Weighted average number of common shares outstanding — basic (note 9(e))		27,230,561			25,977,123
Weighted average number of common shares outstanding — diluted (note 9(e))		27,230,561			27,142,492

None of the directors or senior officers of the Company, nor any person who has held such a position since the beginning of the last completed financial year of the Company, nor any proposed nominee for election as a director of the Company, nor any associate or affiliate of the foregoing persons, has any substantial or material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted on at the Meeting other than the election of directors.

~~See accompanying notes to consolidated financial statements~~6

~~Offshore~~VOTING ~~Systems~~SECURITIES ~~International~~AND ~~Ltd.~~PRINCIPAL ~~Canadian~~HOLDERS ~~GAAP~~OF VOTING SECURITIES

~~Consolidated~~As ~~Statements~~ of ~~Cash~~the ~~Flows For~~date hereof, the ~~years~~Company ~~ended~~has ~~November~~ 27,488,074 common shares without par value, 30,262 ~~2004~~Class “A” Preference shares Series A Convertible and ~~2003~~57,711 Class “B” Series 1 Convertible Preference shares ~~(expressed~~issued inand ~~Canadian~~outstanding, ~~dollars)~~for a total of 27,576,047 issued and outstanding shares entitled to vote at the Meeting.

	2004			2003
	$			$
Cash flows used in operating activities
Earnings for the year		114,741			385,369
Items not affecting cash
Amortization		362,564			359,979
Stock based compensation		171,442			43,050
Future tax assets		42,192			(168,807	)
		690,939			619,591
Changes in non-cash working capital items
Accounts receivable		(4,518,642	)		(653,197	)
Inventory		16,076			601,303
Prepaid expenses and deposits		287,667			(198,204	)
Accounts payable and accrued liabilities		383,735			(458,348	)
Billings in excess of revenues		33,958			(1,596,818	)
Rent payable		(133,942	)		—
Long term royalties		(187,384	)		(185,333	)
		(4,118,532	)		(2,490,597	)
		(3,427,593	)		(1,871,006	)
Cash flows used in investing activities
Additions to property, plant, and equipment		(358,856	)		(309,386	)
Cash flows from financing activities
Issue of Common shares		398,479			606,069
Issue of Class B preference shares — Series 1 and warrants		—			3,004,200
Class B preference share issue costs		(20,115	)		(277,205	)
Class B preference shares dividends paid		(178,433	)		(53,484	)
Share repurchases		—			(505,681	)
		199,931			2,773,899
Increase (decrease) in cash		(3,586,518	)		593,507
Cash — Beginning of year		3,837,555			3,244,048
Cash — End of year		251,037			3,837,555

The authorized capital of the Company consists of 300,000,000 shares divided into 100,000,000 common shares without par value, 100,000,000 Class “A” Preference shares without par value issuable in series, of which 10,000,000 shares are designated Class “A” Preference Series A Convertible shares, and 100,000,000 Class “B” Preference shares with a par value of $50 per share issuable in series, of which 10,000,000 are designated Class “B” Series 1 Convertible Preference shares. The holders of common shares, Class “A” Preference Series A Convertible shares and Class “B” Series 1 Convertible Preference shares are entitled to receive a notice of and to attend and vote at any meetings of the members of the Company.

~~See~~Only ~~accompanying~~shareholders ~~notes~~of record at the close of business on March 7, 2005 (the “Record Date”) who either personally attend the Meeting or who have completed and delivered a form of proxy in the manner and subject to ~~consolidated~~the ~~financial~~provisions ~~statements~~described above shall be entitled to vote or to have their shares voted at the Meeting.

~~Offshore~~Each ~~Systems~~shareholder ~~International~~is ~~Ltd.~~entitled ~~Canadian~~to ~~GAAP~~one vote for each common share, Class “A” Preference Series A Convertible share or Class “B” Series 1 Convertible Preference share registered in the shareholder’s name on the list of shareholders, which is available for inspection during normal business hours at Computershare Trust Company of Canada, 4 th Floor, 510 Burrard Street, Vancouver, British Columbia, V6C 3B9 and at the Meeting.

~~Notes~~To tothe knowledge of the ~~Consolidated~~directors ~~Financial~~and ~~Statements~~senior officers of the Company no person holds, directly or ~~November 30~~indirectly, ~~2004~~shares ~~and~~carrying ~~2003~~more than 10% of the voting rights attached to all classes of voting ~~(expressed~~shares inof ~~Canadian~~the ~~dollars~~Company other than Howson Tattersall Investment Counsel Limited (“H.T.”). To the Company’s knowledge, H.T. owns or controls approximately 2,811,200 common shares, representing approximately 10.2% of the Company’s issued and outstanding voting shares.

1		Nature of operations
		Offshore Systems International Ltd. (OSIL) develops and provides display systems and data for defense, government and commercial customers. Collectively, OSIL and its subsidiaries are referred to as the Company. OSIL conducts its operations through three business units. The Company’s Navigation Systems business unit develops and produces moving geographic information display systems and software. The Company’s Applications business unit develops situational awareness products for command and control systems. The Company’s Geomatics business unit provides digital land map and electronic nautical chart production services, and produces and distributes electronic nautical chart data.
2		Summary of significant accounting policies
		Principles of consolidation
		These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All material intercompany transactions and balances have been eliminated on consolidation.
		Foreign currency translation
		The operations of the Company’s U.S. based subsidiary are considered integrated (financially and operationally dependent on OSIL) and are translated to Canadian dollars using current rates of exchange for monetary assets and liabilities. Historical rates of exchange are used for non-monetary assets and liabilities and average rates for the period are used for revenues and expenses except for amortization, which is translated at exchange rates used in the translation of the related asset accounts. Gains or losses resulting from these translation adjustments are included in income.
		Transactions completed in foreign currencies are recorded in Canadian dollars at the rates prevailing at the time of the transactions. Monetary assets and liabilities denominated in foreign currencies are recorded in the consolidated financial statements in equivalent Canadian dollars at the rate of exchange prevailing at the balance sheet date.
		The Company purchases foreign exchange forward contracts to hedge sales to customers denominated in U.S. dollars, Australian dollars and Euros (€) and the related accounts receivable. Foreign exchange translation gains and losses on foreign currency denominated derivative financial instruments used to hedge anticipated U.S. dollar, Australian dollar, and Euro denominated sales are recognized as an adjustment of the revenues when the sale is recorded. The Company does not utilize derivative financial instruments for trading or speculative purposes.
		Use of estimates
		The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses for the years reported. Actual results could differ from these estimates.
		Cash and cash equivalents
		Cash and cash equivalents consist of cash and deposit instruments with an initial maturity of three months or less.
		Accounts Receivable
		The Company maintains an allowance for doubtful accounts against its accounts receivable for estimated losses that may arise if any of its customers are unable to make required payments. Management specifically analyzes the age of outstanding customer balances, historical bad debts, customer credit-worthiness and changes in customer payment terms when making estimates of the uncollectability of the Company’s accounts receivable. If the Company determines that the financial condition of any of its customers deteriorates, increases in the allowance may be made.

ELECTION OF DIRECTORS

Management of the Company proposes that the number of directors for the ensuing year be fixed at six. Management intends to nominate the persons named in the following table for election as directors of the Company. Each of management’s nominees currently serves as a director of the Company. Messrs. Tony Pezzotti and Peter Roberts, who currently serve as directors, have informed the Company that they will not be standing for re-1-election as directors. Each director elected will hold office until the next annual general meeting or until his successor is duly elected or appointed, unless his office is earlier vacated in accordance with the Articles of the Company or he becomes disqualified to act as a director.

~~Offshore~~The ~~Systems~~following ~~International~~information ~~Ltd.~~concerning ~~Canadian~~the ~~GAAP~~proposed nominees has been furnished by each of them:

~~Notes to the Consolidated Financial Statements~~7 ~~November 30, 2004 and 2003 (expressed in Canadian dollars)~~

Inventory Materials and components are stated at the lower of cost and replacement value as determined by the first-in first-out method. Work-in-process and manufactured parts are stated at the cost of materials and direct labour applied to the product and the applicable share of overhead. Finished goods are stated at the lower of cost and net realizable value. The Company assesses the need for inventory write-downs based on its assessment of estimated net realizable value using assumptions about future demand and market conditions. If market conditions differ from those originally estimated by the Company, an additional inventory write-down may be required Property plant and equipment Property plant and equipment are recorded at cost. Amortization is provided using the declining balance method based on the assets’ estimated useful lives as follows:



			No. of Shares
			Beneficially
Name and			Owned, Controlled
Present Position	Principal Occupation	Director	or Directed
in the Company	for the Past Five Years	Since	⁽¹⁾
JOHN A. JACOBSON ⁽³⁾⁽⁵⁾ President & Chief Executive Officer Director	President and CEO of the Company.	Mar. 19, 1998	365,000
RAYMOND W. JOHNSTON ⁽³⁾⁽⁴⁾ Chairman & Director	President of Chamber of Maritime Commerce Dec/99 to present; C.E.O., Canada Steamship Lines, May/92 to June/99.	Nov. 14, 2000 (and from Dec. 21, 1994 to Sept. 28, 1998)	54,000
HELMUT F. LOBMEIER ⁽²⁾⁽⁴⁾ Director	Independent Businessman and formerly co-owner of PSL Steel Ltd.	April 26, 1990	631,951
CAPT. WALTER P. PURIO ^(2) (4) Director	Independent Marine Consultant 2000 to Present; President, P and H Marine Associates, Inc., 1993 to 2000; Shipmaster – Oceans, General Dynamics, American Overseas Marine Corporation, 1985 to present.	Jan. 14, 1999	133,000
E. BRINTON COXE ⁽³⁾⁽⁵⁾ Director	02/99 to present: Chairman of E.B. Coxe & Co., LLC a company which specializes in finding, funding, and managing small cap companies. 02/99 to present: Strategic partner of SDS Capital Partners, LLC, which is a group of investment funds.	July 20, 2004	0
GERALD J. SHIELDS (no current position)	Lawyer engaged in private practice with the firm of Strategic Business Lawyers (formerly known as Godinho Sinclair Shields).	N/A	50,000

	%
(1)	The approximate number of shares of the Company carrying the right to vote in all circumstances beneficially owned, directly or indirectly, or over which control or direction is exercised by each proposed nominee as of the date of this Information Circular.
Equipment		20 – 25
(2)	Member of Audit Committee. The other member is Peter Roberts, who is not standing for re-election.
Computer software		33
(3)	Member of Executive Committee.
Furniture and fixtures		20
Leasehold improvements		20
Licenses and patents		10

An impairment loss is recognized when the undiscounted cash flows expected from use and eventual disposition of the asset are less than the carrying amount of the asset. An impairment charge is recorded to reduce the carrying value of the asset to its fair value. Income taxes The Company accounts for income taxes using the liability method of tax allocation. Under the liability method, future income tax assets and liabilities are determined based on differences between their financial reporting and tax bases and are measured using substantively enacted tax rates and laws expected to be in effect when the differences are expected to reverse. The Company provides a valuation allowance against future tax assets to the extent that the Company does not consider them to be more likely than not of being realized. Revenue recognition Revenue from certain projects for Navigation Systems, Applications, and Geomatics is recognized using the percentage of completion method of accounting, whereby revenue and profit in the period are based on the ratio of costs incurred to total estimated costs of the project for each segment of the project. Costs include all direct costs including material, labour and subcontracting costs and certain indirect costs related to contracts. A provision is made for the entire amount of future estimated losses, if any, on contracts in progress. Certain other Systems and system components revenue and Navigation Systems and Applications Software revenue is recognized at the time of delivery of the system to the customer or the delivery of the software and software locks to the customer if persuasive evidence exists of an agreement with the customer, the price is fixed or determinable, collection is probable, and there are no ongoing obligations of the Company to provide future services with the exception of warranties and maintenance. Navigation Systems revenue under bill-and-hold arrangements, whereby revenue has been recognized but the goods have not been shipped, is recognized when risks of ownership have been passed on to the customer, there is a signed contract with the customer, the customer has a substantial business purpose for ordering the goods on a bill-and-hold basis, a fixed delivery schedule has been established with the customer and the Company does not retain any specific performance8

-2-

(4)		Member of Human Resources and Compensation Committee.

(5)		Member of Corporate Finance and Development Committee.

~~Offshore~~All ~~Systems~~of ~~International~~the ~~Ltd~~above persons are ordinarily resident in Canada except Messrs. Purio ~~Canadian~~and ~~GAAP~~Coxe, who are residents of the United States of America.

~~Notes~~EXECUTIVE ~~to the Consolidated Financial Statements~~COMPENSATION ~~November 30, 2004 and 2003~~ ~~(expressed in Canadian dollars)~~

~~obligations~~Compensation such that the earnings process is not complete. Goods held under such arrangements are segregated, ready for shipment and not subject to being used to fill other orders. The customers are charged additional fees for storage and other associated costs until shipment occurs. Certain revenue from the sale of ~~Geomatics~~Named ~~services~~Executive is recognized as the services are provided. Revenue from the sale of Geomatics products is recorded at the time of delivery. Revenue from systems components and other revenues are recorded at the time of delivery or as the services are provided. Revenue from contracts with multiple deliverables is recognized based on the division of the multiple deliverables into separate units of accounting and arrangement consideration is allocated among separate units based on their relative fair values. Revenue from each unit is recognized in accordance with the applicable policies as described above. Maintenance and technical support revenues are recognized rateably based on the terms of their respective contract agreements, generally one to four years. Unbilled revenue Unbilled revenue is revenue that has been recognized using the percentage of completion method of accounting less amounts billed to the customer in accordance with the milestone terms of the contract. Unbilled revenue is reduced when customers are invoiced and the respective accounts receivable is recorded. Billing in excess of revenues Billings in excess of revenue are amounts that have been billed to the customer but have not been recognized in revenue. Research and development Research costs are expensed in the period incurred. Development costs are expensed in the period incurred unless, in the opinion of management, the deferral criteria are satisfied in all material respects, in which case development expenditures are capitalized and amortized over the estimated life of the related products. Government assistance Government assistance is recorded when there is reasonable assurance that the Company has complied with, and will continue to comply with, all conditions necessary to obtain the government assistance. Government assistance towards current research expenditures is recorded as a reduction of expenses in the consolidated statement of earnings. The liability to repay government assistance is recognised as an expense in the period in which conditions arise that cause the government assistance to be repayable. Earnings per share Basic earnings per share are computed using the weighted average number of common shares outstanding during the year. The treasury stock method is used for the calculation of diluted earnings per share. Under the treasury stock method, the weighted average number of common shares outstanding for the calculation of diluted earnings per share assumes that the proceeds to be received on the exercise of dilutive stock options and warrants are applied to repurchase common shares at the average market price for the period. Stock options and warrants are dilutive when the average market price of the common shares during the period exceeds the exercise price of the options and warrants.Officers

~~-3-~~The table below sets out particulars of compensation paid to the following executive officers for services to the Company during the three most recently completed financial years:

~~Offshore~~(a) ~~Systems~~the ~~International~~individual ~~Ltd.~~who ~~Canadian~~served ~~GAAP~~as the Company’s chief executive officer or acted in a similar capacity (“CEO”) during the most recently completed financial year;

~~Notes~~(b) to the ~~Consolidated~~individual ~~Financial~~who ~~Statements November 30,~~served ~~2004~~as ~~and~~our ~~2003 (expressed~~chief financial officer or acted in ~~Canadian~~a ~~dollars~~similar capacity (“CFO”) during the most recently completed financial year;

		Guarantees
		The Company warrants that its software and hardware products will operate substantially in conformity with product documentation and that the physical media will be free from defect. The specific terms and conditions of the warranties are generally one year but may vary depending on the country in which the products are sold. The Company accrues for known warranty issues if a loss is probable and can be reasonably estimated, and accrues for estimated incurred but unidentified warranty issues based on historical activity. To date, the Company has had no material warranty claims.
		Derivative Financial Instruments
		Derivative financial instruments are utilized by the Company in the management of its foreign currency exposure to reduce its exposure to fluctuations in foreign exchange on certain committed and anticipated transactions. The Company formally documents the relationships between derivative financial instruments and hedged items, as well as the risk management objective and strategy. The Company assesses, on an ongoing basis, whether the derivative financial instruments continue to be effective in offsetting changes in fair values or cash flows of the hedged transactions.
		Foreign exchange translation gains and losses on foreign currency denominated derivative financial instruments used to hedge anticipated or committed foreign currency exposures are recognized as an adjustment to the related operating costs, revenue or capital expenditures when the hedged transaction is recorded. Derivatives that are not subject to hedge accounting are recorded on the balance sheet with the changes in fair value being recorded in the statement of earnings each period. For the fiscal year 2004, all derivative financial instruments met the criteria for hedge accounting.
3		Change in accounting policy
		Effective December 1, 2003, the Company adopted the new recommendations of the Canadian Institute of Chartered Accountants (“CICA”) Handbook Section 3870 — Stock-Based Compensation and Other Stock-Based Payments (“CICA 3870”) requiring the use of the fair value method of accounting for stock-based compensation transactions. The new recommendations have been adopted prospectively. Prior to the adoption of this standard, the settlement method was used whereby any consideration received on the exercise of stock options or the purchase of stock was credited to share capital. As required by the new recommendations, the Company discloses the pro forma effects of awards granted, modified or settled prior to December 1, 2003 to the income for the period as if the fair value method had been in use at the date of grant.
4		Accounts receivable

(c)	each of our three most highly compensated executive officers, other than the CEO and CFO, who was serving as an executive officer at the end of the most recently completed financial year and whose total salary and bonus exceeded $150,000 per year; and

	2004		2003
	$		$
Trade		4,655,150		1,691,685
Unbilled revenue		4,116,828		2,854,942
Technology Partnerships Canada contribution (note 10)		257,266		—
Other		111,234		75,209
		9,140,478		4,621,836

(d)	any additional individuals for whom disclosure would have been provided under (c) except that the individual was not serving as an executive officer of the Company at the end of the most recently completed financial year,

~~-4-~~(each of whom is a “Named Executive Officer”).

~~Offshore~~Summary ~~Systems~~Compensation ~~International Ltd. Canadian GAAP~~Table

~~Notes~~The tofollowing ~~the~~sets ~~Consolidated~~forth ~~Financial~~compensation ~~Statements November 30,~~for ~~2004~~the ~~and~~Company’s ~~2003 (expressed~~Named inExecutive ~~Canadian~~Officers ~~dollars)~~for the fiscal years indicated:

5 Inventory



			Annual Compensation						Long Term Compensation
									Awards			Payout
											Restricted
									Securities Under		Shares or
							Other Annual		Options/		Restricted		All Other
			Salary		Bonus		Compensation		SARs Granted		Share Units	LTIP Payouts	Compensation
Name	Year		($)		($)		($)		(#)		($)	($)	($)

John A. Jacobson		2004	$	196,539	$	15,000	Nil			60,000	Nil	Nil	Nil
President & C.E.O.		2003	$	179,135	Nil		$	15,231		90,000	Nil	Nil	Nil
		2002	$	172,115	$	70,000	Nil			100,000	Nil	Nil	Nil

John T. Sentjens		2004	$	97,923		7,500	Nil			18,000	Nil	Nil	Nil
Corporate Controller		2003	$	86,636	Nil		Nil			27,000	Nil	Nil	Nil
		2002	$	78,077	$	12,000	Nil			30,000	Nil	Nil	Nil

	2004		2003
	$		$
Materials and components		638,127		620,429
Finished goods		11,300		45,074
		649,427		665,503

6 Property, plant, and equipment



			Annual Compensation						Long Term Compensation
									Awards			Payout
											Restricted
									Securities Under		Shares or
							Other Annual		Options/		Restricted		All Other
			Salary		Bonus		Compensation		SARs Granted		Share Units	LTIP Payouts	Compensation
Name	Year		($)		($)		($)		(#)		($)	($)	($)

Andrew A. Carniel		2004	$	138,269	$	10,000	$	1,679		45,000	Nil	Nil	Nil
V.P. Business		2003	$	129,135	Nil		Nil			67,500	Nil	Nil	Nil
Development		2002	$	122,115	$	35,000	Nil			50,000	Nil	Nil	Nil

Kenneth H. Kirkpatrick		2004	$	138,269	$	10,000	$	5,385		45,000	Nil	Nil	Nil
Chief Operating		2003	$	129,135	Nil		$	15,000		67,500	Nil	Nil	Nil
Officer		2002	$	124,038	$	35,000	Nil			50,000	Nil	Nil	Nil

Wayne Hoyle		2004	$	185,486	Nil		Nil		Nil		Nil	Nil	Nil
Director of Sales		2003	$	120,575	Nil		Nil			7,723	Nil	Nil	Nil
(1)		2002	$	155,035	Nil		Nil		Nil		Nil	Nil	Nil

	2004
			Accumulated
	Cost		Amortization		Net
	$		$		$
Equipment		3,910,980		3,038,921		872,059
Computer software		936,591		546,190		390,401
Furniture and fixtures		131,095		94,705		36,390
Leasehold improvements		222,737		193,084		29,653
Licenses and patents		57,267		39,057		18,210
		5,258,670		3,911,957		1,346,713

Note: (1)

Mr. Hoyle’s remuneration arrangement includes compensation paid under a commission arrangement tied to the closing of sales. The above figures include variable compensation paid to him under this arrangement of $96,477 (fiscal 2004), $42,575 (fiscal 2003) and $77,035 (fiscal 2002).

	2003
			Accumulated
	Cost		Amortization		Net
	$		$		$
Equipment		3,772,026		2,838,400		933,626
Computer software		721,250		401,909		319,341
Furniture and fixtures		126,534		86,378		40,156
Leasehold improvements		222,737		185,673		37,064
Licenses and patents		57,267		37,033		20,234
		4,899,814		3,549,393		1,350,421

Long-Term Incentive Plans — Awards in Financial Year Ended November 30, 2004

7The ~~Accounts~~Company ~~payable~~has ~~and~~no ~~accrued~~long-term ~~liabilities~~incentive plans in place. A “Long-Term Incentive Plan” is a plan under which awards are made based on performance over a period longer than one financial year, other than a plan for options, SARs (stock appreciation rights) or restricted share compensation.

	2004		2003
	$		$
Trade		1,343,129		1,171,353
Accrued employee costs		572,589		408,592
Accrued royalties (note 10)		311,851		183,435
Accrued liabilities		282,227		362,681
Class B preference shares dividends declared and unpaid (note 9(c))		86,566		—
		2,596,362		2,126,061

Option Grants During the
Financial Year Ended November 30, 2004

~~-5-~~The following table sets forth grants of stock options during the 2004 fiscal year to the Named Executive Officers:

Offshore Systems International Ltd. Canadian GAAP



									Market Value
									Of Securities
	Securities			% of Total					Underlying
	Under			Options/SARs					Options/SARs
	Options/SARs			Granted to			Exercise or		on the Date
	Granted			Employees in			Base price		of Grant
Name	(#)			Financial Year			($/Security)		($/Security)		Expiration Date

John A. Jacobson		20,000	⁽¹⁾				$	1.13	$	1.13	Apr. 22/07
President & C.E.O.		20,000	⁽²⁾				$	1.13	$	1.13	Apr. 22/07
		20,000	⁽³⁾		12.08	%	$	1.13	$	1.13	Apr. 22/07

John T. Sentjens		6,000	⁽¹⁾				$	1.13	$	1.13	Apr. 22/07
Corporate Controller		6,000	⁽²⁾				$	1.13	$	1.13	Apr. 22/07
		6,000	⁽³⁾		3.62	%	$	1.13	$	1.13	Apr. 22/07

Andrew A. Carniel		15,000	⁽¹⁾				$	1.13	$	1.13	Apr. 22/07
V.P. Business		15,000	⁽²⁾				$	1.13	$	1.13	Apr. 22/07
Development		15,000	⁽³⁾		9.06	%	$	1.13	$	1.13	Apr. 22/07

~~Notes to the Consolidated Financial Statements~~10 ~~November 30, 2004 and 2003 (expressed in Canadian dollars)~~

Credit facilities

Market Value

In June 2004, the Company renewed certain credit facilities with a Canadian chartered bank, which consist of an operating line, a foreign exchange forward contract facility and standby letters of credit. The operating line bears interest at the chartered bank’s prime lending rate plus 0.5% with interest payable monthly. The prime lending rate at November 30, 2004 was 4.25% (2003 — 4.50%). The standby letters of credit are denominated in U.S. dollars and bear interest at rates between 1% and 2% per annum. Funds drawn on the operating line and the standby letters of credit are repayable on demand. As of November 30, 2004, letters of credit, relating principally to customer contracts, amounting to U.S. $127,000 (2003 — U.S. $127,000) and Australian $283,886 (2003 — nil) have been issued. The Company utilizes letters of credit to back certain performance obligations with its customers.

Of Securities

The maximum amount(s) available to the Company under the operating line is $1,000,000 and under the foreign exchange forward contract facility are U.S. $2,000,000 and Australian $3,678,061. The credit facilities are collateralized by a general assignment of book debts, a general security agreement and general security agreements, from each of Offshore Systems Ltd., OSI Geomatics Ltd and OSI Geomatics Inc. In addition, the Company is required to meet certain covenants as outlined in the credit facilities agreement. As at November 30, 2004, the Company had drawn on its foreign exchange contract facility in the amount of U.S. $851,196 (2003 — U.S. $1,343,705), Australian $3,678,061 (2003 — nil), and €383,310 (2003 — nil). The Company has not drawn on the operating line facility during the fiscal years ended November 30, 2004 and 2003.

Securities

% of Total

Underlying

Capital Stock

Under

Options/SARs

Granted to

Exercise or

on the Date

Granted

Employees in

Base price

of Grant

Name

(#)

Financial Year

($/Security)

Expiration Date

Kenneth H. Kirkpatrick

15,000

(1)

1.13

Apr. 22/07

Chief Operating Officer

15,000

(2)

1.13

Apr. 22/07

15,000

(3)

9.06

1.13

Apr. 22/07

Wayne Hoyle Director of Sales

Nil

N/A

Director of Sales

(a) Issued and outstanding Common shares

(1)		These options vested on April 22, 2004

(2)		These options vest on April 22, 2005

(3)		These options vest on April 22, 2006

	2004				2003
	Number of				Number of
	Common		Amount		Common			Amount
	shares		$		shares			$
Balance — Beginning of year		26,807,475		18,508,498		26,043,243			18,220,929
Issued during the year:
Exercise of stock options		519,847		398,479		1,208,198			606,069
Class A preference shares converted		—		—		11,034			—
Class B preference shares converted		160,752		119,148		—			—
Common shares purchased and cancelled (note 9(f))		—		—		(455,000	)		(318,500	)
Balance — End of year		27,488,074		19,026,125		26,807,475			18,508,498

Aggregated Option/SAR Exercises During the Financial Year

~~(b)~~Ended ~~Class~~November 30, A2004 ~~preference~~and ~~shares~~Financial Year-End Option/SAR Values

The Company has 30,262 (November 30, 2003 — 30,262) Class A preference shares outstanding that have a nominal value for financial statement purposes. These Class A preference shares are being held in escrow but are no longer subject to any escrow restrictions and may be converted at any time into common shares of the Company, by notice in writing from the holders.

Value of

Unexercised

in-the-money

Securities

Aggregate

Options/SARs at

Acquired

Value

FY-End (#)

FY-End ($)

on Exercise

Realized

Exercisable/

Name

(#)

($)

Unexercisable

John A. Jacobson

210,000 exercisable

Nil exercisable

President & C.E.O.

Nil

40,000 unexercisable

Nil unexercisable

John T. Sentjens

63,000 exercisable

Nil exercisable

Corporate Controller

20,000

4,320

12,000 unexercisable

Nil unexercisable

Andrew A. Carniel

132,500 exercisable

Nil exercisable

V.P. Business Development

Nil

30,000 unexercisable

Nil unexercisable

Kenneth H. Kirkpatrick

132,500 exercisable

Nil exercisable

V.P. Operations

100,000

56,000

30,000 unexercisable

Nil unexercisable

Wayne Hoyle

Nil exercisable

Director of Sales

Nil

Nil unexercisable

~~-6-~~Option and SAR Repricings

~~Offshore~~During ~~Systems~~the ~~International~~most ~~Ltd.~~recently ~~Canadian~~completed ~~GAAP~~financial year, the Company did not reprice downward any options or freestanding SARs held by any Named Executive Officer.

~~Notes~~Defined toBenefit ~~the~~or ~~Consolidated~~Actuarial ~~Financial Statements~~Plan ~~November 30, 2004 and 2003~~ ~~(expressed in Canadian dollars)~~

~~(c)~~The ~~Class~~Company Bdoes ~~preference~~not ~~shares~~have a defined benefit plan or actuarial plan.

	2004						2003
	Number of						Number of
	Class Bpreference			Amount			Class Bpreference		Amount
	shares			$			shares		$
Balance — Beginning of year		61,244			2,065,420			—		—
Issued during the year:
Class B preference shares issued		—			—			61,244		2,342,625
Share issue costs		—			(20,115	)		—		(277,205	)
Class B preference shares converted		(3,533	)		(119,148	)		—		—
Balance — End of year		57,711			1,926,157			61,244		2,065,420

~~The~~Employment Company completed a private placement on February 13, 2003 consisting of 61,244 units for total gross proceeds of $3,004,200. Each unit consists of one Class B Series 1 preference share and 22.75 common share purchase warrants exercisable at $1.10. The preference shares are voting convertible shares at a ratio of 1:45.5 and have a cumulative dividend of 6% per annum. Declared unpaid cumulative dividends to November 30, 2004 amount to $86,566. The Company has the right to redeem the preference shares after five years. The share purchase warrants are convertible to common shares at a ratio of 1:1 and expire five years after issue. The private placement incurred share issue costs of $297,320. The gross proceeds of $3,004,200 were allocated between the preference shares and warrants based on their relative fair value at the date of issuance. The $2,342,625 fair value of the preference shares has been estimated based on the fair value of the underlying common shares. The $661,575 fair value of the warrants has been estimated using the Black-Scholes option pricing model. Assumptions used in the pricing model included: (i) risk free interest rate of 2.7%, (ii) expected volatility of 66%, (iii) an estimated life of 5 years and (iv) an expected dividend rate of 0%.Contracts

~~(d)~~The ~~Stock~~following ~~option~~is ~~plans~~a summary of the material terms and conditions of the employment contracts between the Company and each of the Named Executive Officers:

~~The~~John ~~Company~~Jacobson ~~has~~serves ~~established~~as ~~three~~President ~~stock~~and ~~option~~Chief ~~plans~~Executive ~~under~~Officer ~~which~~of ~~options~~the toCompany ~~purchase~~pursuant ~~common~~to ~~shares~~an employment ~~may~~contract bedated ~~granted~~March 2, ~~to directors~~1998, ~~officers~~as ~~and~~amended. ~~employees~~The ofcontract ~~the~~is ~~Company~~for ~~and~~no tofixed ~~any~~term. ~~other~~The contract ~~person~~may orbe ~~Company~~terminated ~~permitted~~ by the ~~applicable~~Company ~~regulatory~~at ~~authorities~~any totime ~~purchase~~for ~~unissued~~cause, ~~common~~and ~~shares.~~at ~~The~~any ~~number~~time without cause upon payment of ~~common~~12 months’ ~~shares~~base ~~authorized~~salary. ~~for~~Mr. Jacobson’s ~~grant~~current base salary under the ~~Company’s~~contract ~~stock~~is $200,000. ~~option~~He ~~plans~~ is ~~10,930,732,~~also ofeligible ~~which~~to ~~4,375,494~~receive ~~are~~stock ~~available~~options ~~for~~as ~~granting.~~well ~~The~~as ~~exercise~~cash ~~price~~bonuses in the discretion of the ~~options~~board ~~granted~~of ~~pursuant~~directors, tobased on the ~~plans~~Company’s ~~may~~performance. ~~not~~In beaddition, ~~less~~Mr. Jacobson ~~than~~is ~~the~~eligible to ~~market~~participate ~~price~~in ofa ~~the~~plan ~~common~~offered ~~shares~~to atall employees whereby the ~~time~~Company ofwill ~~grant.~~pay ~~The~~a ~~plans~~maximum ~~provide~~of ~~that~~4% ~~options~~of his ~~may~~base besalary ~~granted~~earned ~~with~~during ~~vesting~~the ~~periods~~year ~~and~~to ~~expiry~~a ~~dates~~designated atregistered ~~the~~retirement ~~discretion~~savings ofplan ~~the~~provided that ~~board~~he ofmatches ~~directors~~such payment. ~~Options~~The ~~granted~~employment tocontract ~~directors~~includes ~~and~~provisions ~~executives~~in ~~vest~~favour ~~over~~of ~~periods~~the ~~ranging~~Company related ~~from~~to ~~immediately~~the toconfidentiality, ~~three~~proprietary ~~years~~rights and ~~options~~intellectual ~~granted~~property, toand ~~employees~~non-competition and ~~vest~~non-solicitation ~~one~~of ~~year~~employees ~~after~~and ~~the~~customers ~~date~~of ~~granted~~the Company.

Andrew Carniel serves as Vice-7President, Business Development pursuant to an employment contract dated August 18, 1998, as amended. The employment contract is for no fixed term. The contract may be terminated by the Company at any time for cause, and at any time without cause upon notice in writing of two months plus one additional month for each year of service to a maximum of twelve months, or payment of severance equal to base salary for the notice period in lieu of notice. Mr. Carniel’s current base salary under the contract is $140,000. Mr. Carniel is also eligible to receive cash commissions on the gross sales for the Applications business unit. He is also eligible to receive stock options as well as cash bonuses in the discretion of the board of directors, based on the Company’s performance. In addition, Mr. Carniel is eligible to participate in a plan offered to all employees whereby the Company will pay a maximum of 4% of his base salary earned during the year to a designated registered retirement savings plan provided that he matches such payment. The employment contract also includes provisions in favour of the Company related to the confidentiality, proprietary rights and intellectual property, and non-competition and non-solicitation of employees and customers of the Company.

~~Offshore~~Kenneth ~~Systems~~Kirkpatrick ~~International~~provides ~~Ltd~~his services as Chief Operating Officer pursuant to an employment contract dated May 3, 2001, as amended. ~~Notes~~The employment contract is for no fixed term. The contract may be terminated by the Company at any time for cause, and at any time without cause upon 12 months’ notice or payment of 12 months’ base salary in lieu of notice. Mr. Kirkpatrick’s current base salary under the contract is $140,000. He is also eligible to receive stock options as well as cash bonuses in the ~~Consolidated~~discretion ~~Financial~~of ~~Statements~~the ~~November~~board 30of directors, ~~2004~~based ~~and~~on ~~2003~~the ~~(expressed~~Company’s performance. In addition, Mr. Kirkpatrick is eligible to participate in ~~Canadian~~a ~~dollars)~~plan ~~Canadian~~offered ~~GAAP~~to all employees whereby the Company will pay a maximum of 4% of his base salary earned during the year to a designated registered retirement savings plan provided that he matches such payment. The employment contract also includes provisions in favour of the Company related to the confidentiality, proprietary rights and intellectual property, and non-competition and non-solicitation of employees and customers of the Company.

AJohn ~~summary~~Sentjens provides his services as Corporate Controller pursuant to an employment contract dated July 26, 2001, as amended. The employment contract is for no fixed term. The contract may be terminated by the Company at any time for cause, and at any time without cause upon 3 months’ notice or payment of 3 months’ base salary in lieu of notice. Mr. Sentjens’ current base salary under the ~~status~~contract is $100,000. He is also eligible to receive stock options as well as cash bonuses in the discretion of the board of directors, based on the Company’s ~~stock~~performance. ~~option~~In addition, ~~plans~~Mr. Sentjens atis ~~November~~eligible 30to isparticipate asin ~~follows:~~a plan offered to all employees whereby the Company will pay a maximum of 4% of his base salary earned during the year to a designated registered retirement savings plan provided that he matches such payment. The employment contract also includes provisions in favour of the Company

	2004						2003
				Weightedaverage						Weightedaverage
	Number ofshares			exerciseprice			Number ofshares			exerciseprice
					$						$
Outstanding — Beginning of year		2,890,046				1.02		3,130,047				0.83
Granted		496,750				1.12		1,290,601				1.07
Exercised		(519,847	)			0.42		(1,208,198	)			0.50
Forfeited		(22,725	)			0.74		(122,404	)			0.96
Expired		(590,177	)			1.06		(200,000	)			1.50
Outstanding — End of year		2,254,047				1.11		2,890,046				1.02

Arelated ~~summary~~to of the ~~Company’s~~confidentiality, ~~stock~~proprietary ~~options~~rights ~~outstanding~~and intellectual property, and ~~exercisable~~non-competition and atnon-solicitation ~~November~~of ~~30,~~employees ~~2004~~and iscustomers asof ~~follows:~~the Company.

	Options outstanding						Options exercisable
	Number		Weightedaverageremaining		Weightedaverage		Number		Weightedaverage
Range ofexercise prices	outstanding atNovember 30,		contractuallife		exerciseprice		exercisable atNovember 30,		exerciseprice
$	2004		(years)		$		2004		$
1.01 – 1.35		2,194,047		1.11		1.10		1,992,047		1.09
1.36 – 1.41		60,000		0.55		1.41		60,000		1.41
1.01 – 1.41		2,254,047		1.10		1.11		2,052,047		1.11

Wayne Hoyle serves as Director of Sales for the Navigation Systems business unit pursuant to an employment contract dated February 24, 2000, as amended. The employment contract is for no fixed term. The contract may be terminated by the Company at any time for cause, and at any time without cause upon notice in writing of three months plus one additional month for each year of service to a maximum of twelve months, or payment of severance equal to base salary for the notice period in lieu of notice. Mr. Hoyle’s current base salary under the contract is $105,000. Mr. Hoyle is also eligible to receive cash commissions on the gross sales of the Navigation Systems business unit. In addition, Mr. Hoyle is eligible to participate in a plan offered to all employees whereby the Company will pay a maximum of 4% of his base salary earned during the year to a designated registered retirement savings plan provided that he matches such payment. The employment contract also includes provisions in favour of the Company related to the confidentiality, proprietary rights and intellectual property, and non-competition and non-solicitation of employees and customers of the Company.

AComposition ~~summary~~ of the ~~Company’s~~Human ~~stock~~Resources ~~options outstanding~~ and ~~exercisable~~Compensation ~~at November 30, 2003 is as follows:~~Committee

	Options outstanding						Options exercisable
	Number		Weightedaverageremaining		Weightedaverage		Number		Weightedaverage
Range ofexercise prices	outstanding atNovember 30,		contractuallife		exerciseprice		exercisable atNovember 30,		exerciseprice
$	2003		(years)		$		2003		$
0.42 – 0.60		140,862		0.32		0.48		140,862		0.48
0.61 – 0.90		485,000		0.73		0.76		485,000		0.76
0.91 – 1.35		2,093,934		1.57		1.07		1,623,688		1.08
1.36 – 2.00		170,250		0.84		1.62		70,250		1.42
0.42 – 2.00		2,890,046		1.32		1.02		2,319,800		0.99

For the financial year ended November 30, 2004, the members of the Human Resources and Compensation Committee were Helmut Lobmeier, Walter Purio and Raymond Johnston, all of whom are unrelated directors.

~~Stock-based~~Report ~~compensation~~on ~~For~~Executive the year ended November 30, 2004, the Company incurred non-cash stock-based compensation expense of $171,442 related to stock options granted to employees and consultants (2003 expense of $43,050 related to stock options granted to consultants). The expense was included in General and administrative costs and was recorded in additional paid-in capital. The fair value of the stock options was estimated using the Black-Scholes option pricing model, using theCompensation

The Company’s compensation program for executive officers consists principally of base salary and bonuses in pre-8-set amounts payable based on the Company meeting certain performance objectives set by the board. Consistent with market practice, incentive stock options are also awarded from time to time as an effective means to align the interest of management and shareholders.

~~Offshore~~Pursuant ~~Systems~~to ~~International~~the ~~Ltd~~Company’s compensation policy, the compensation program is designed so that the annual compensation for executive officers remains reasonably competitive with the compensation offered to executive officers with comparable employment responsibilities and skills by other Canadian companies whose business endeavours and size are similar to those of the Company. ~~Notes~~During the early part of the 2002 fiscal year the Human Resources and Compensation Committee (then known as the Compensation Committee), at the request of the Board, engaged the services of an independent consulting firm to assist it in conducting a review of compensation for its executive officers and directors in comparison to other companies. The Human Resources and Compensation Committee reported its findings to the ~~Consolidated~~board. ~~Financial~~Having ~~Statements~~regard ~~November~~to 30the review and the recommendations of the independent consulting firm, ~~2004~~and the Human Resources and ~~2003~~Compensation ~~(expressed~~Committee, the board implemented a compensation policy for executive officers with cash components consisting of base salary and bonuses in ~~Canadian~~fixed ~~dollars)~~amounts ~~Canadian~~set ~~GAAP~~early in the fiscal year and payable in the discretion of the board based on the Company meeting or exceeding revenue and profit targets set by the board for the fiscal year. The board determined that 50% of the bonuses would be payable upon achieving the revenue and profit targets set by the Board, with the balance to be paid in the discretion of the board for exceptional performance. This policy remains in effect.

~~following~~In ~~assumptions:~~February, ~~dividend~~2005 ~~yield~~the ofboard 0%awarded ~~(2003~~the —following ~~0%);~~bonuses ato ~~volatility~~the ~~rate~~Named ~~between~~Executive ~~54%~~Officers ~~and~~in respect ~~58% (2003 — 26% and 114%); risk-free interest rate between 2.2% and 2.6% (2003 — 2.6% and 2.9%); and an expected average life~~ of 1the toperformance ~~3 years (2003 — 1 to 4 years). The weighted average fair value~~ of the ~~options~~Company ~~granted~~in ~~during~~ the financial year ended November 30, 2004 was $0.46 per option (November 30, 2003 — $0.45) Pro forma disclosure The following pro forma financial information presents the income for the year had the Company recognized stock-based compensation using a fair value method for all stock awards granted, modified or settled prior to December 1, 2003:

	2004			2003
Ken Kirkpatrick	$	22,500
	$			$
Andrew Carniel	$	7,500
Earnings as reported		114,741			385,369
John Sentjens	$	15,000
Add: Stock-based compensation cost		171,442			43,050
Less: Pro forma stock-based compensation cost		(196,642	)		(560,941	)
Pro forma income (loss)		89,541			(132,522	)
Pro forma basic and diluted earnings (loss) per share		0.00			(0.01	)

The fair value of the stock options was estimated using the Black-Scholes option pricing model, using the following assumptions: dividend yield of 0% (2003 — 0%); a volatility rate between 54% and 103% (2003 — 26% and 114%); risk-free interest rate between 2.2% and 2.6% (2003 — 2.6% and 2.9%); and an expected average life of 1 to 3 years (2003 — 1 to 4 years). Shareholder Rights Plan On April 18, 2001, the Board of Directors of the Company adopted a shareholder rights plan (the Rights Plan). The Rights Plan was approved by the Toronto Stock Exchange in accordance with its policies. On March 12, 2004, the Board of Directors carried a resolution regarding the continued existence of the Rights Plan, subject to receipt of shareholder approval, for an additional three year period. The continued existence of the Rights Plan was approved by the shareholders of the Company by ordinary resolution at the annual general meeting of the Company held on April 22, 2004. The objectives of the Rights Plan are to ensure, to the extent possible, that all shareholders of the Company are treated equally and fairly in connection with any take-over offer for the Company. Take-over offers may not always result in shareholders receiving equal or fair treatment or full value for their investment. In addition, current Canadian securities legislation only requires a take-over offer to remain open for 21 days. The board believes that this period may be insufficient for the shareholders to evaluate a bid, or for the board to pursue alternatives that could maximize shareholder value and to make informed recommendations to shareholders. The Rights Plan is designed to discourage discriminatory or unfair take-over offers for the Company and gives the board time, if appropriate, to pursue alternatives to maximize shareholder value in the event of an unsolicited take-over bid for the Company. The Rights Plan will encourage an offeror to proceed by way of a permitted bid or to approach the Board of Directors with a view to negotiation by creating the potential for substantial dilution of the offeror’s position. The permitted bid provisions of the Rights Plan are designed to ensure that, in any take-over bid, all shareholders are treated equally, receive the maximum value for their investment and are given adequate time to properly assess the take-over bid on a fully informed basis.13

The compensation of John Jacobson, the President and Chief Executive Officer, consists of the same elements as are included in the compensation of other executive officers as described above and is established by the board in consultation with the Human Resources and Compensation Committee based on its opinion as to a fair and reasonable compensation package, taking into account his contribution to the Company’s performance, long-9-term growth and corporate remuneration practices in Canada and abroad.

~~Offshore~~The ~~Systems~~Company’s ~~International~~executive ~~Ltd~~compensation programs are also designed to attract and retain highly qualified senior executives and recognize that long-term performance incentives are an integral part of aligning the interest of executive officers and the Company’s shareholders. ~~Notes~~Long-term incentives are principally in the form of stock options. When determining whether and how new options are to be granted, the ~~Consolidated~~Human ~~Financial~~Resources ~~Statements~~and ~~November~~Compensation 30Committee will consider a number of factors including salary, ~~2004~~level of responsibility and ~~2003~~the ~~(expressed~~amount and terms of the options. Stock options to executive officers are typically granted early in ~~Canadian~~each ~~dollars)~~fiscal ~~Canadian~~year ~~GAAP~~and are generally subject to vesting over a period of three years.

~~(e)~~During ~~Earnings~~fiscal ~~per~~2002, ~~share~~the Human Resources and Compensation Committee also conducted a review of the Company’s compensation program to employees with a view to decreasing the emphasis on stock options as a component of long-term compensation and increasing the emphasis on other forms of compensation. In January of 2003, the board of directors, on the recommendation of the Human Resources and Compensation Committee, implemented a new plan for all employees, including the Named Executive Officers, whereby the Company will pay a maximum percentage of an employee’s base salary earned during the year to a designated registered retirement savings plan, provided that the employee matches such payment. The percentage of base salary was initially set at 3% in fiscal 2003 and 2004, and was increased to 4% for fiscal 2005. The Human Resources and Compensation Committee proposed this plan as a new benefit for employees to encourage saving while providing an incentive package which is competitive with those offered by similar companies. Concurrently with the implementation of this new plan, the Company informed its employees that, starting in the fiscal year 2004, the Company reduced the number of incentive stock options granted under the Company’s incentive stock option plans in order to reduce the dilutive effects on the Company’s shares arising from the exercise of stock options.

Basic earnings per share	2004			2003
Earnings for the year	$	114,741		$	385,369
Less: Class B preferred share dividends		173,133			145,350
Earnings (loss) available to common shareholders	$	(58,392	)	$	240,019
Weighted average number of common shares outstanding		27,230,561			25,977,123
Basic earnings per share	$	0.00		$	0.01
Diluted earnings per share
Earnings for the year	$	114,741		$	385,369
Less: Class B preferred share dividends		173,133			145,350
Earnings (loss) available to common shareholders	$	(58,392	)	$	240,019
Weighted average number of common shares outstanding		27,230,561			25,977,123
Dilutive effect of Class A preference shares — Series A (*1)		—			30,262
Dilutive effect of Class B preference shares — Series 1 (*1)		—			—
Dilutive effect of stock options (*1)		—			1,135,107
Adjusted weighted average number of common shares outstanding		27,230,561			27,142,492
Diluted earnings (loss) per share	$	0.00		$	0.01

The above report is submitted by the Human Resources and Compensation Committee for the financial year ended November 30, 2004:

		The outstanding 1,393,301 warrants were not in the money and therefore were not included in the diluted earnings per share calculation.
		(*1) The Class B preference shares — Series 1 were anti-dilutive for the purposes of calculating diluted earnings per share for fiscal 2004 and 2003. The stock options and the Class A preference shares — Series A were anti-dilutive for fiscal 2004.
		(f) Normal course issuer bid
		In January 2003, the Company received approval for a normal course issuer bid that entitles the Company to repurchase up to 1,300,000 common shares for cancellation between January 16, 2003 and January 15, 2004. The purchases are made on the open market. During the period January 16, 2003 to November 30, 2003 the Company purchased 455,000 of its common shares on the open market under the normal course issuer bid at an average cost of $1.11 per share for an aggregate consideration of $505,681. The premium on the purchase and cancellation of the common shares under the normal course issuer bid was $187,181 and was charged to the deficit. No common shares were purchased under the normal course issuer bid during the period December 1, 2003 to January 15, 2004.
10		Technology Partnerships Canada
		On April 26, 2004, the Company entered into an agreement with Technology Partnerships Canada (TPC) whereby TPC granted financial assistance to the Company for the purpose of funding research and development activities to be completed on or before March 31, 2007. The maximum eligible contribution by TPC is $3,768,391. As at November 30, 2004, the Company has claimed for $1,471,414 of assistance under the agreement. Accounts receivable at November 30, 2004 includes $257,266 of amounts receivable from TPC in connection with these claims (2003 — nil).

“Helmut Lobmeier, Walter Purio and Raymond Johnston”

~~-10-~~Performance Graph

~~Offshore~~The ~~Systems~~following ~~International~~graph ~~Ltd.~~compares ~~Notes~~the tototal cumulative shareholder return for $100 invested in the common ~~Consolidated~~shares ~~Financial~~of ~~Statements~~the ~~November~~Company ~~30,~~with ~~2004~~the ~~and~~TSX ~~2003~~Composite ~~(expressed~~Index inof ~~Canadian~~the ~~dollars)~~TSX ~~Canadian~~during ~~GAAP~~the period December 1, 1999 through November 30, 2004.

(PERFORMANCE GRAPH)

In addition, the Company is required to pay a royalty of 1.4% on annual gross Navigation Systems and Applications revenue for the period January 1, 2006 to December 31, 2008 and a royalty of 2.5% on annual gross Navigation Systems and Applications revenue for the period January 1, 2009 to December 31, 2013. Royalty payments will continue until the cumulative royalties paid or payable to December 31, 2013 are at least $6,079,176 or until December 31, 2017. No amounts for royalty payments in connection with this agreement have been recorded in the financial statements. On November 15, 1999, the Company entered into an agreement with TPC whereby TPC granted financial assistance to the Company for the purpose of funding research and development activities to be completed on or before March 31, 2003. Under the agreement with TPC, the Company was eligible to receive contributions to a maximum of $4,000,177 over the period from December 23, 1998 to March 31, 2003. As of March 31, 2003, the Company has received the maximum allowed under the agreement. There are no amounts recorded in accounts receivable with respect to these claims (2003 — nil). In addition, the Company is required to pay a royalty of 3% on annual gross Navigation Systems and Applications revenue for the period December 1, 1999 to November 30, 2008. The Company has paid royalties of $929,303 to date (2003 — $745,911) and has accrued royalties of $311,851 at November 30, 2004 (November 30, 2003 — $370,819). Royalty payments will continue until the cumulative royalties paid or payable to November 30, 2008 are at least $7,810,230 or until November 30, 2014. Although the Company believes that its submissions for TPC funding meet the terms and conditions of the TPC agreements, the final determination may be subject to audit by government authorities in the ordinary course of business. During the year ended November 30, 2004, the Company was subject to an audit by government authorities. The results of the audit have not been communicated to the Company. The Company has no reason to believe that the audit will have a material impact on the Company’s financial results. TPC royalties paid and accrued are as follows:14

	2004		2003
	$		$
Royalties paid		183,392		391,752
Accrued royalties
Short term		311,851		183,435
Long term		—		187,384
		311,851		370,819

Compensation of Directors

IfDuring the ~~Company~~early ~~causes~~part anof ~~event~~the 2002 fiscal year the Compensation Committee (now known as the Human Resources and Compensation Committee), at the request of ~~default~~the board, asengaged ~~defined~~the services of an independent consulting firm to assist it in conducting a review of compensation for both its executive officers and directors in comparison to other companies. The Compensation Committee made recommendations to the ~~agreement,~~board ~~TPC~~respecting ~~can~~director ~~suspend~~compensation orbased ~~terminate~~on ~~any~~the ~~obligation~~report of the independent consultant. The Company continues to ~~contribute~~compensate its directors with reference to that report. During the ~~costs~~financial year ended November 30, 2004, each member of the ~~project~~board orof ~~require~~directors of the Company whowas not an employee of the Company was entitled to ~~repay~~receive $1,500 for each board meeting attended in person, and $1,000 for each board meeting which was held by means of telephone conference call if of significant length or involving significant preparation. The two directors who are resident in the United States were paid in U. S. funds, while the other directors (all Canadian residents) were paid in Canadian funds. During the fiscal year the board held three face-to-face meetings and three telephone conference call meetings. All of the directors attended or ~~part~~participated in all of the ~~contributions~~meetings ~~made~~with the exception of Brian Walsh (a former director who did not stand for re-election at the 2004 annual general meeting), ~~together~~who ~~with~~missed ~~interest~~one face-to-face meeting and two conference call meetings. The directors as a group were paid an aggregate of approximately $66,350 ~~from~~for attending or participating in these meetings. In addition, the ~~date~~Chairman of ~~demand~~the board was paid an annual retainer of $30,000. Each of the remaining directors was paid an annual retainer of $15,000. The Audit Committee chair was paid an annual retainer of $5,000 and the Human Resources and Compensation Committee chair was paid an annual retainer of $3,500. Each member of the Audit Committee was entitled to receive $1,000 for each Audit Committee meeting attended and each member of the Human Resources and Compensation Committee was paid $1,000 for each Human Resources and Compensation Committee meeting attended. Members of the Audit Committee were paid a total of $17,500 for attending or participating in a total of four Audit Committee meetings. Members of the Human Resources and Compensation Committee were paid a total of $14,200 for attending or participating in a total of four Human Resources and Compensation Committee meetings.

~~-11-~~SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

~~Offshore~~The ~~Systems~~only ~~International~~compensation ~~Ltd.~~plans ~~Notes~~under towhich equity securities of the ~~Consolidated~~Company ~~Financial~~are ~~Statements~~authorized ~~November~~for issuance 30are the three Stock Option Plans of the Company, ~~2004~~all ~~and~~of ~~2003~~which ~~(expressed~~have inbeen ~~Canadian~~approved ~~dollars)~~by ~~Canadian~~the shareholders. ~~GAAP~~The following table sets out a summary of the number of securities to be issued upon the exercise of outstanding options as at the Company’s year-end of November 30, 2004.

11 Commitments and contingencies

Number of Securities

Remaining Available

Number of

for Future Issuance

Securities to be

Under Equity

Issued Upon

Weighted-Average

Compensation Plans

Exercise of

Exercise Price of

(Excluding

Outstanding

Securities

Options, Warrants

Reflected in

and Rights

Column (a))

Plan Category

(a)

(b)

(c)

Equity compensation plans approved by securityholders

2,254,047

1.11

2,121,447

Equity compensation plans not approved by securityholders

Total

2,254,047

1.11

2,121,447

~~The Company has entered into operating leases for its office premises in Canada and for certain equipment. Minimum lease payments required under the remaining terms of the leases are as follows:~~15

	$
Years ending November 30
2005		276,041
2006		265,501
2007		179,933
2008		3,665
2009		—
		725,140

Directors’ and Officers’ Liability Insurance

~~For~~During the 2003/04 fiscal year ~~ended~~the ~~November~~Company ~~30,~~carried ~~2004,~~directors’ ~~the~~and ~~Company~~officers’ ~~paid~~liability ~~basic~~insurance providing ~~rent~~coverage of ~~$256,705~~up ~~(2003~~to — $~~256~~5,~~705).~~000,000, Insubject ~~addition~~ to ~~basic~~a ~~rent,~~deductible ~~the~~of ~~Company~~$25,000, iswith ~~required~~respect to ~~pay~~its directors aand ~~portion~~officers ofas ~~certain~~a ~~costs~~group. ~~and~~The ~~property~~total ~~taxes~~annual ~~for~~premium ~~the~~in ~~above~~respect ~~commitments.~~of Insuch ~~2004,~~insurance ~~the~~was approximately ~~Company paid~~ $9075,~~229~~000. ~~(2003~~During —the ~~$77,719)~~current ~~for~~fiscal ~~these~~year, ~~costs.~~the InCompany ~~July~~carries ~~2002,~~liability ~~two~~insurance providing coverage of ~~the~~up ~~Company’s~~to ~~subsidiaries~~$5,000,000 ~~Offshore~~subject ~~Systems~~to ~~Ltd.~~a ~~and~~deductible ~~OSI~~of ~~Geomatics Ltd.~~$25,000 ~~and~~with ~~four~~respect ~~employees~~to ~~became~~its directors ~~subject~~and toofficers as a ~~lawsuit~~group. ~~for~~The antotal ~~undisclosed~~annual ~~amount~~premium byin ~~Triathlon~~respect ~~Ltd.,~~of asuch ~~subsidiary~~insurance ofis approximately ~~MacDonald~~$82,000. ~~Dettwiler~~In ~~and Associates Ltd.~~addition, ~~related~~the toCompany ~~use~~carries ofan ~~confidential~~excess ~~information~~directors’ and ~~breach~~officers’ liability ofpolicy ~~fiduciary~~providing ~~duty.~~coverage Noof ~~amount~~an ~~has~~additional ~~been~~$5,000,000 ~~accrued~~with atno ~~November~~deductible ~~30,~~at ~~2004~~an inannual premium ~~respect~~ of ~~these~~$66,000. ~~claims~~The ~~because~~premiums ~~the~~respecting ~~potential~~these ~~liability~~policies ~~for~~were ~~the claims~~ and ~~the~~are ~~amount~~paid ofby ~~damages,~~the ifCompany ~~any,~~and charged ~~cannot~~to ~~be reasonably estimated~~income.

12STATEMENT ~~Income~~OF ~~taxes~~CORPORATE GOVERNANCE PRACTICES

The ~~Company~~Toronto isStock ~~subject~~Exchange to(the ~~Canadian~~“TSX”) ~~federal~~requires ~~and~~a ~~British~~listed ~~Columbia~~company ~~provincial~~to ~~taxes~~annually indisclose ~~Canada.~~its ~~The~~approach to ~~Company~~corporate isgovernance ~~also~~with ~~subject~~specific reference to ~~federal~~a ~~income~~series ~~taxes~~of inguidelines for effective corporate governance (the U“TSX Guidelines”).S. ~~Earnings~~The ~~before~~TSX ~~income~~Guidelines ~~taxes~~address ~~consisted~~matters such as the constitution and independence of corporate boards, the ~~following:~~functions to be performed by boards and their committees and the effectiveness and education of board members.

	2004		2003
	$		$
Canadian income (loss)		10,709		(5,992	)
U.S. income		145,990		251,262
		156,699		245,270

The Company’s board of directors and senior management consider good corporate governance to be central to the effective, efficient and prudent operation of the Company. One key element of sound corporate governance emphasized by the Company is having a board of directors which is relatively independent of management. To that end, six of the Company’s seven directors are outside directors, while only one member of management (being John Jacobson, the President and CEO), serves on the Board. The Company’s approach to corporate governance is described below.

-12-


1. The board of directors should explicitly assume responsibility for the stewardship of the Company and adopt a formal mandate setting out the Board’s stewardship responsibilities		The board of directors has assumed responsibility for the stewardship of the Company by overseeing the management and operations of the business of the Company and supervising management, which is responsible for the day-to-day conduct of the business.

		The board establishes the overall policies for the Company and monitors and evaluates the Company’s strategic direction and retains plenary power for those functions not specifically delegated by it to management.

		The board has a corporate governance policy setting out, among other things, the Board’s responsibility for stewardship, including such matters as decisions requiring board approval, measures for receiving shareholder feedback and the Board’s expectation of management. The board has developed a code of business ethics which governs the behavior of directors, officers and employees.

~~Offshore Systems International Ltd. Notes to the Consolidated Financial Statements November 30, 2004 and 2003 (expressed in Canadian dollars) Canadian GAAP~~16

The Company has non-capital losses for Canadian income tax purposes of approximately $3,079,232, which are available for carry forward to reduce future years’ taxable income. These income tax losses expire as follows:


Specifically the board of directors should assume responsibility for:

(a) adoption of a strategic planning process and the approval and review of a strategic plan on at least an annual basis		Long-term goals and strategies for the Company are developed as part of an annual strategic planning process with the board. The strategic planning process also includes the preparation of a detailed one-year operating plan which takes into account, among other things, the opportunity and risks of the business. Through this process, led by the C.E.O. and senior management of the Company, the board adopts the operating plan for the coming financial year and monitors senior management’s relative progress through a regular reporting and review process. The board reviews on a quarterly basis the extent to which the Company has met the current year’s operating plan. The board has regular discussions on corporate strategies and implementation.

		In addition, in February, 2005 the board appointed a new committee, known as the Corporate Finance and Development Committee, whose mandate is to liaise with and provide guidance to management with respect to corporate finance matters, potential acquisitions and other strategic initiatives, and to provide reports and recommendations to the board from time to time with respect to such matters. The members of the Committee are John Jacobson and Brinton Coxe. Gerald Shields, corporate counsel to the Company, serves as an advisor to the committee.

(b) the identification of the principal risks and ensuring the implementation of appropriate systems to manage these risks		The board has identified the principal risks of the Company’s business, which it monitors through established systems and procedures.

		The Audit Committee reviews and monitors risk-management systems, disaster recovery plans and financial exposure and also undertakes ongoing efforts to identify risks and appropriate safeguards.

(c) succession planning, including appointing, training and monitoring senior management and C.E.O. in particular		The board reviews and approves all appointments of senior officers. The Human Resources and Compensation Committee also has responsibility for assessing the requirements and performance, on an overall basis, of the CEO and other senior officers in order to recommend salaries and incentive awards for performance. The CEO has put in place a process whereby senior managers develop objectives, review them with the CEO and are measured against them.

	2004
	$
Year ending November 30
2005		89,418
2006		2,345,461
2007		—
2008		—
2009		169,005
2010		—
2011		475,348

The Company has net operating losses for U.S. income tax purposes of approximately $315,342, which are available for carry forward to reduce future years’ taxable income of the U.S. company. These income tax losses expire as follows:


(d) communication policies		The board has implemented appropriate procedures and processes to ensure complete, timely and effective communications between the Company, its members, the public and regulatory agencies. All public financial information is reviewed and approved by the board prior to its release.

(e) integrity of internal control and management information systems		The Board, through its Audit Committee, meets with the Company’s external auditor to discuss the results. Those discussions include, in accordance with generally accepted auditing standards, a review of the Company’s financial systems and related internal controls. The Audit Committee also reviews, quarterly with management, the Company’s internal control and management information systems as part of financial risk assessment and reviews accounting policies in place.

2. A majority of the board of directors should be “unrelated directors”		The TSX Guidelines recommend that the board of every Company be constituted with a majority of individuals who qualify as unrelated directors. An unrelated director is a director who is: (i) not a member of management and is free from any interest and any business, family or other relationship which could reasonably be perceived to materially interfere with the director’s ability to act with a view to the best interests of the Company, other than interests and relationships arising solely from holdings in the Company, (ii) not currently, or has not been within the last three years, an officer, employee of or material service provider to the Company or any of its subsidiaries or affiliates; and (iii) not a director (or similarly situated individual), officer, employee or significant shareholder of an entity that has a material business relationship with the Company. The chair or a vice chair of the board of directors, if he or she is not a member of management, will not be considered to be a related director. A related director is a director who is not an unrelated director.

		On application of this definition, five of the Company’s seven directors who served during the fiscal year are unrelated.

3. Disclose whether each director is “unrelated”		The board of directors is currently comprised of Raymond Johnston (Chair), John Jacobson, Tony Pezzotti, Helmut Lobmeier, Walter Purio, Brinton Coxe and Peter Roberts. Messrs. Pezzotti and Roberts are not standing for re-election to the board at the Meeting.

	2004
	$
Year ending November 30
2018		32,506
2019		—
2020		253,625
2021		29,211

The Company also has investment tax credits for Canadian income tax purposes of approximately $977,499, which can be used to offset future income taxes otherwise payable and expire as follows:


		All of the Directors are unrelated except for John Jacobson, who is the President and Chief Executive Officer of the Company, and Brinton Coxe, who is a related director by virtue of the fact that the Company has agreed to pay him substantial compensation in consideration of the provision of advisory services in connection with a proposed private placement. See “Private Placement” under “Particulars of Matters to be Acted Upon” below.

		Additional disclosure on board members with respect to their business experience and backgrounds can be found under the section entitled “Election of Directors” in this Information Circular, as well as in the Annual Information Form and Annual Report of the Company.

4. Appoint a committee responsible for appointment/assessment of directors, composed solely of non-management directors, the majority of whom are unrelated directors		Due to the relatively small size of the board (currently 7 in number), the board as a whole assumes responsibility to assess and make recommendations regarding board effectiveness and to establish a process for identifying, recruiting, appointing, reappointing and providing ongoing education and development for directors.

5. Implement a process for assessing the effectiveness of the Board, its committees and individual directors		During the financial year ended November 30, 2004, the board engaged the services of an independent consultant to review the overall effectiveness of the board and make recommendations on how to improve board effectiveness. The board has implemented a process for assessing its effectiveness on an annual basis.

6. Provide orientation and education programs for new directors, and continuing education for all directors.		New directors are given extensive briefings by the Chairman of the board, the C.E.O. and other members of senior management with respect to the business and operations of the Company, and they make an on-site visit to the Company’s headquarters. New directors are also provided with a record of public and other pertinent information concerning the Company and a corporate manual. Directors are provided with summaries of developments and regulatory amendments to corporate governance policies on an ongoing basis. At the last board meeting of each year a proposed schedule for board meetings for the forthcoming year is presented, and the time commitment required of the board and committee members is reviewed to ensure that all directors and committee members are made aware of what is expected of them.

	2004
	$
Year ending November 30
2005		117,678
2006		130,114
2007		—
2008		—
2009		—
2010		—
2011		146,453
2012		191,931
2013		199,522
2014		191,801

The Company has capital losses for Canadian income tax purposes of approximately $354,466, which are available for carry forward to reduce future years’ income from capital gains. These capital losses carry forward indefinitely. The Company has undeducted scientific research and experimental development expenses for Canadian income tax purposes of approximately $4,775,417, which are available for carry forward to reduce future years’ income for tax purposes. These expenses carry forward indefinitely.


7. Examine the size and composition of the Board, and undertake, where appropriate, a program to establish a board comprised of members who facilitate effective decision-making		The board of directors is of the view that its size and composition are currently well suited to the circumstances of the Company and allows for the effective functioning of the board of directors.

8. A board committee comprised solely of unrelated directors should review the adequacy and form of the compensation of senior management and directors, with such compensation realistically reflecting the responsibilities of such positions		The Human Resource and Compensation Committee is mandated to review, and recommend to the board for approval, the remuneration of senior management and directors. That Committee does so not less than annually. The Human Resource and Compensation Committee and the board consider responsibilities, risks, time commitment and comparative remuneration in determining compensation.

9. Committees should generally be composed of outside directors, with a majority of unrelated directors		The board has established four standing committees consisting of the Audit Committee, the Human Resources and Compensation Committee, the Executive Committee and the Corporate Finance and Development Committee.

		The members of the Audit Committee are Peter Roberts (Chair, who is not standing for re-election at the Meeting), Walter Purio and Helmut Lobmeier, all of whom are unrelated directors. The Company has commenced a search to find an individual with financial literacy to replace Mr. Roberts as a director and a member of the Audit Committee.

		The members of the Human Resources and Compensation Committee are Helmut Lobmeier (Chair), Walter Purio and Raymond Johnston, all of whom are unrelated directors.

		The members of the Executive Committee are Raymond Johnston (Chair) and Brinton Coxe, who are unrelated directors, and John Jacobson, who is President and CEO.

		The members of the Corporate Finance and Development Committee are Brint Coxe (Chair) who is an unrelated director, and John Jacobson, who is President and C.E.O. Gerald Shields, the Company’s corporate legal counsel, serves as an advisor to that Committee.

~~-13-~~20

Offshore Systems International Ltd. Notes to the Consolidated Financial Statements November 30, 2004 and 2003 (expressed in Canadian dollars) Canadian GAAP


10. Assume responsibility for, or appoint a committee responsible for, determining the Company’s approach to corporate governance issues, including the Company’s response to TSX Governance Guidelines		The board is responsible for the Company’s approach to corporate governance issues, including the Company’s disclosure in response to TSX Guidelines, the periodic review of board and Committee composition and ensuring that the corporate governance system effectively supports the discharge of its obligations to the shareholders of the Company. The board has decided not to appoint a committee to handle these responsibilities due to the relatively small size of the Board.

11. Define limits to management’s responsibilities by developing mandates for the board and for the CEO		The board has delegated to the CEO and senior management the responsibility for day-to-day management of the business of the Company, subject to compliance with the plans approved from time to time by the board. In addition to those matters which must by law or by the Articles of the Company be approved by the board, the board has specified limits to management’s responsibility, and retains responsibility for significant changes in the Company’s affairs such as approval of major capital expenditures, debt and equity financing arrangements, significant acquisitions and dispositions and appointment of senior management.

		As part of its annual strategic planning process, the board’s expectations of senior management over the next financial year, and in the context of the longer-term strategic plan, are specified. The board also reviews and approves the annual corporate performance objectives for which the CEO is responsible. The CEO, COO, Vice-President Business Development and Corporate Controller generally review the Company’s progress at board meetings, normally held every quarter. The reports of senior management also cover strategic, operational, financial and marketing issues facing the Company.

12. Establish structures and procedures to enable the board to function independently of management		The board is responsible for putting structures and processes in place to ensure the board can function independently.

		The independence of the board is reinforced through the Executive Officer. The Chair must not be a member of management. The Chair has the responsibility to oversee the discharge by the board of its responsibilities.

~~The future tax asset consists of the following:~~21

	2004			2003
	Each of the Committees has specific authority to retain external advisors, as appropriate (at the expense of the Company) upon notice to the Chair of the Board.
	$			$
	Members of the board may request at any time, through the Chairman, that a meeting or a portion thereof be restricted to outside members of the board for the purpose of discussing matters independently of management. The board meets annually without the participation of related directors for the purpose of receiving the report of the Human Resources and Compensation Committee concerning recommendations for any adjustment to compensation of senior management. The board also excludes related directors from participation in a portion of meetings from time to time as the Board deems necessary for the proper consideration of matters involving senior management. The board adopts the same practice in cases where a director has an interest in a proposed transaction. separation of the positions of Chairman and Chief
Future tax assets
13. Establish an Audit Committee composed solely of unrelated directors, all of whom should be financially literate and at least one of whom should have accounting or related financial experience	The Audit Committee, which is composed entirely of unrelated directors, is responsible for reviewing audit functions and the preparation of financial statements, and reviewing and recommending for approval to the board all public disclosure information such as financial statements, quarterly reports, financial news releases, annual information forms, management discussion and analysis, and prospectuses. The Audit Committee held four face-to-face meetings and one telephone conference meetings during the 2004 financial year.
Non-capital loss carry-forwards and net operating losses		1,191,426			1,742,868
	The board has adopted the following definition of “financial literacy”: the ability to read and understand a balance sheet, an income statement, a cash flow statement and the notes attached thereto. The board has adopted the following definition of “accounting or related financial experience”: the ability to analyze and interpret a full set of financial statements, including the notes attached thereto, in accordance with Canadian generally accepted accounting principles. Mr. Peter Roberts joined the board in September of 2003 and accepted an appointment to the Audit Committee at that time. Mr. Roberts has informed the Company that he will not be standing for re-election as a member of the board at the Meeting.
Net capital loss carry-forwards		63,130			63,130
Scientific research and experimental development costs		1,701,004			1,543,916
Investment tax credits		680,793			569,579
Property, plant and equipment		895,457			555,339
Other		91,420			105,763
		4,623,230			4,580,595
Valuation allowance		(3,842,899	)		(3,758,072	)
Future tax asset		780,331			822,523

~~The Company increased its valuation allowance against future income tax assets to reflect the~~22 amount of the future tax benefit that was more likely than not to be realized. A valuation allowance continues to be provided against future income tax assets for which the more likely than not criteria of future realization has not been met. During the year, the future income tax expense related to the increase of the valuation allowance was $42,192 (2003 — a recovery of $168,807). Although the Company believes that its tax estimates are reasonable, the ultimate tax determination involves significant judgment that could become subject to audit by tax authorities in the ordinary course of business.

A reconciliation of the combined Canadian federal and provincial income tax rate with the Company’s effective income tax rate is as follows:


		The Company has commenced a search to find an individual with financial literacy to replace Mr. Roberts as a director and as a member of the Audit Committee.

		The Audit Committee also ensures that management has effective internal control systems and an appropriate relationship with the external auditors and meets regularly with them without management present.

14. The Audit Committee Charter should set out explicitly the role and oversight responsibility of the Audit Committee		The Audit Committee of the board of directors has reviewed the Company’s financial statements and its internal controls and audit process since the Company acquired Offshore Systems Ltd. in 1990. The board adopted a revised charter for the Audit Committee in April, 2003 which sets out its mandate and operating principles and procedures. A copy of the Audit Committee Charter is available on the Company’s website at www.osil.com.

15. Implement a system to enable an individual director to engage an external advisor, at the Company’s expense in appropriate circumstances, subject to approval of an appropriate committee of the Board		Individual directors of the Company may engage outside advisors at any time at the Company’s expense to provide advice with respect to a corporate decision or action, subject to the approval of the executive Committee.

	2004			2003
	$			$
Expected statutory rate		35.79%			37.79%
Expected provision for income taxes		56,083			92,688
Change in tax rates applied in valuation allowance		1,199			25,235
Change in valuation allowance		84,827			772,232
Foreign tax differentials		(8,453	)		9,135
Temporary differences arising during the year		(189,402	)		(1,052,335	)
Non-deductible expenses and other		97,704			12,946
Income tax expense (recovery)		41,958			(140,099	)

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

~~-14-~~Other than as set forth in this or any previous Information Circular, and other than transactions carried out in the normal course of business of the Company or any of its affiliates, none of the directors or senior officers of the Company, any member beneficially owning shares carrying more than 10% of the voting rights attached to the shares of the Company, nor an associate of affiliate of any of the foregoing persons, had since December 1, 2004, being the date of commencement of the Company’s last completed financial year, any material interest, direct or indirect in any transactions which materially affected the Company or in any proposed transaction which has or would materially affect the Company.

~~Offshore~~APPOINTMENT ~~Systems~~AND ~~International~~REMUNERATION ~~Ltd.~~OF ~~Notes to the Consolidated Financial Statements November 30, 2004 and 2003 (expressed in Canadian dollars) Canadian GAAP~~AUDITOR

13Management ~~Segmented~~of ~~information~~the ~~The~~ Company’s ~~reportable~~proposes ~~segments~~that ~~are~~Ernst as& ~~outlined~~Young ~~below.~~LLP, ~~Accounting~~Chartered ~~policies~~Accountants, ~~used~~of bySuite 1600 ~~these~~– 700 ~~segments~~West ~~are~~Georgia ~~the~~Street, ~~same~~Vancouver, asBritish ~~those~~Columbia, ~~described~~be inre-appointed ~~the significant accounting policies~~ as ~~disclosed~~auditor ~~in note 2. The Company defines reportable segments as components~~ of the Company ~~about~~to hold ~~which~~office ~~separate~~until ~~financial~~the ~~information~~next isannual ~~available~~general ~~and~~meeting ~~which~~of isthe ~~evaluated~~members. ~~regularly~~Management byfurther proposes that the ~~chief~~shareholders ~~operating~~pass ~~decision~~a ~~maker~~resolution inauthorizing ~~deciding~~the ~~how~~directors to ~~allocate~~fix ~~resources~~the ~~and~~remuneration inpayable ~~assessing~~to ~~performance~~the auditor.

	2004
	Navigation
	Systems			Applications			Geomatics			Total
	$			$			$			$
Revenue		10,232,671			191,279			3,027,353			13,451,303
Gross profit		6,561,870			171,518			1,048,591			7,781,979
Technology Partnerships Canada — net		(1,184,932	)		(162,057	)		—			(1,346,989	)
Interest expense		1,902			—			143			2,045
Income tax expense		22,760			—			19,198			41,958
Net earnings (loss)		1,105,793			(972,476	)		(18,576	)		114,741
Property, plant and equipment expenditures		137,470			20,135			201,251			358,856
Amortization		233,128			2,778			126,658			362,564

MANAGEMENT CONTRACTS

	2003
	Navigation
	Systems			Applications		Geomatics			Total
	$			$		$			$
Revenue		7,927,166			—		3,593,627			11,520,793
Gross profit		4,797,613			—		1,564,112			6,361,725
Technology Partnerships Canada — net		(326,407	)		—		—			(326,407	)
Interest expense		624			—		2,200			2,824
Income tax expense (recovery)		(2,917	)		—		(137,182	)		(140,099	)
Net earnings		124,594			—		260,775			385,369
Property, plant and equipment expenditures		201,540			—		107,846			309,386
Amortization		255,462			—		104,517			359,979

Management services for the Company are not, to any material degree, performed by persons other than the directors and senior officers of the Company.

	Navigation
Total assets employed	Systems		Applications		Geomatics		Total
	$		$		$		$
As at November 30,
2004		10,562,064		17,357		1,731,317		12,310,738
2003		10,103,117		—		1,625,140		11,728,257

~~The~~PARTICULARS ~~Applications~~OF ~~business~~MATTERS ~~unit~~TO ~~began~~BE ~~operations~~ACTED ~~effective fiscal year 2004.~~UPON

~~-15-~~NEW BUSINESS CORPORATIONS ACT (BRITISH COLUMBIA)

~~Offshore~~On ~~Systems~~March 29, ~~International~~2004, ~~Ltd~~the British Columbia legislature enacted the Business Corporations Act (the “New Act”) and repealed the Company Act (the “Former Act”) which previously governed the Company. ~~Notes~~The New toAct removes many of the ~~Consolidated~~restrictions ~~Financial~~contained ~~Statements~~in ~~November~~the 30Former Act, ~~2004~~including restrictions on the residency of directors, the place of annual general meetings and ~~2003~~limits ~~(expressed~~on inauthorized ~~Canadian~~share capital. ~~dollars)~~The ~~Canadian~~New ~~GAAP~~Act also uses new forms and terminology. In accordance with the BCA, the Company has filed a transition application with the Registrar of Companies, the principal element of which involved replacing the Company’s Memorandum with a new form designated as a Notice of Articles. The Company filed its transition application and was issued a Notice of Articles on May 14, 2004.

~~Geographically,~~The ~~revenues~~Company ~~reported~~is seeking shareholder approval to amend its Notice of Articles by removing the pre-existing company provisions (the “Pre-existing Provisions”) applying to the Company that relate to certain restrictions contained in the Former Act (and that are ~~based~~no onlonger required under the ~~location~~New Act). In addition, the Company is also seeking shareholder approval to replace the Company’s current articles (the “Existing Articles”) with new articles (the “New Articles”) which will incorporate some of the more flexible provisions of the New Act. The directors of the Company believe that amending the Company’s ~~customers~~Notice of Articles to delete the Pre-existing Provisions and then replacing the Existing Articles with the New Articles will enable the Company to be more efficient, flexible and cost-effective and will bring the Company’s charter documents into line with the New Act.

	2004		2003
	$		$
Australia/New Zealand		4,818,763		1,021,844
Europe		4,332,392		2,094,063
United States		2,872,860		5,103,062
Canada		1,427,288		3,296,257
Other		—		5,567
Total		13,451,303		11,520,793

In order to be effective, the proposed special resolutions must be approved by a three-quarter majority vote cast by those shareholders of the Company who, being entitled to do so, vote in person or by proxy at the Meeting in respect of such resolutions.

	Approximately 58% of revenue for the year ended November 30, 2004 (2003 — 65%) is derived from the three largest ultimate customers at 26%, 24% and 8%, respectively (2003 — 27%, 20%, 18%).
	The three largest customers for 2004 were the Royal Australian Navy, the Royal Navy of the United Kingdom and the U.S. Coast Guard. The three largest customers for 2003 were the U.S. Coast Guard, the Canadian Navy and the Royal Danish Navy.
	Geographically, property, plant and equipment are reported based on location. At November 30, 2004 and 2003, all of the Company’s property, plant and equipment was located in Canada.
14	Financial instruments
	Fluctuations in foreign currency exchange rates
	The Company enters into transactions denominated in U.S. dollars, Australian dollars and Euros and as such its revenue, expenses, monetary assets and liabilities will be affected by fluctuations in the various currencies relative to its functional currency, the Canadian dollar.
	The Company uses foreign exchange forward contracts to hedge transactions denominated in U.S. dollars, Australian dollars and Euros. The purpose of the Company’s hedging activities is to reduce the level of exposure to exchange rate movements. At November 30, 2004, the Company had foreign exchange forward contracts maturing in the following year to sell U.S. $851,196 (2003 — U.S. $1,343,705), Australian $3,678,061 (2003 — nil), and €383,310 (2003 — nil). The exchange rates set in the forward exchange contracts ranged between 1.1870 to 1.1942 for U.S. $1.00, 0.9005 to 0.9576 for Australian $1.00, and 1.5777 for €1.00. The contracts mature between December and May 2005.
	The fair value of derivative instruments generally reflects the estimated amounts that the Company would receive or pay to settle the contracts at November 30, 2004. The fair value of the above derivative financial instruments was an unrecorded liability of $42,303 at November 30, 2004 (2003 — $82,907).
15	Supplemental cash flow information

The directors of the Company believe that the passing of the following special resolutions is in the best interests of the Company and recommend that shareholders of the Company vote in favour of the resolutions.

	2004		2003
	$		$
Cash paid during the year for interest		2,045		2,824
Cash paid during the year for income taxes		12,916		—

Removal of Application of Pre -existing Company Provisions

Under the New Act, a company existing under the Former Act is subject to Pre-16existing Provisions reflecting certain restrictions contained in the Former Act that are required to be incorporated in its Notice of Articles. The Pre-existing Provisions remain operative until the shareholders of the company remove them by special resolution. If Pre-existing Provisions are to be removed from a company’s Notice of Articles, they must be removed in their entirety. Because the Company is a reporting issuer, the only significant Pre-existing Provision that is applicable is the requirement that a special resolution be approved by not less than three quarters (3/4) of the votes cast, as opposed to the two-thirds (?) majority applicable under the BCA. Removal of the Pre-existing Provisions will allow a special resolution of the Company to be approved by a two-thirds (?) majority vote, which will provide the Company with greater flexibility for future corporate activities and be consistent with companies in other jurisdictions.

~~MANAGEMENT’S~~Accordingly, ~~DISCUSSION~~at ~~AND~~the ~~ANALYSIS~~Meeting, the shareholders of the Company will be asked to pass the following special resolution to alter the Notice of Articles of the Company:

~~For~~“BE ~~the~~IT ~~year~~RESOLVED, ~~ended~~as ~~November 30~~a special resolution, ~~2004~~that:

~~February 1,~~(a) ~~2005~~ the Pre-existing Company Provisions (as defined in the Business Corporations Act (British Columbia) in the Notice of Articles of the Company are hereby deleted; (b) the Company’s Notice of Articles be altered accordingly;

~~Page 1~~24

~~Forward~~(c) any one director or officer of the Company be and is hereby authorized to execute and deliver all such documents and instruments, including the Notice of Alteration reflecting the removal of the Pre-~~Looking~~existing ~~Statements~~ Company Provisions, and to do such further acts as may be necessary to give full effect to this special resolution; and (d) the board of directors of the Company is hereby authorized, at any time in its sole discretion, to determine whether or not to proceed with this resolution without further approval, ratification or confirmation by the shareholders of the Company”.

~~Statements~~This inspecial ~~this~~resolution ~~Management’s~~must ~~Discussion~~be ~~And~~approved ~~Analysis, or any document filed~~ by ~~Offshore~~a ~~Systems International~~majority ~~Ltd.~~of ~~(the~~three-quarters ~~“Company”~~(3/4) ~~with~~of the ~~different~~votes ~~governing~~cast ~~authorities, or in any other~~by ~~written~~the orshareholders ~~oral communication by or on behalf~~ of the Company, ~~to the extent not directly and exclusively based on historical events~~who, ~~constitute~~being ~~forward-looking~~entitled ~~statements.~~to ~~These~~do ~~statements represent the Company’s intentions~~so, ~~plans,~~vote ~~expectations,~~in ~~and~~person ~~beliefs,~~or ~~and~~by noproxy ~~assurance~~at ~~can be given~~the ~~that~~Meeting ~~the~~in ~~results~~respect ~~described~~of in such ~~statements~~special ~~will be achieved~~resolution.

~~Forward-looking~~The ~~statements~~form ~~include,~~of ~~without limitation, statements evaluating market and general economic conditions in~~ the ~~following~~proposed ~~sections,~~resolution ~~and~~set ~~statements~~forth ~~regarding~~above ~~future-oriented~~is ~~costs~~subject ~~and expenditures. Investors are cautioned not~~ to ~~place~~such ~~undue~~amendments ~~reliance~~as onmanagement ~~these forward-looking~~may ~~statements,~~propose ~~which~~at ~~reflect management’s analysis only as of~~ the ~~date~~Meeting ~~thereof.~~but ~~These~~which ~~forward-looking statements~~do ~~are~~not ~~subject to certain risks and uncertainties that could cause actual results to differ~~ materially. ~~Such~~affect ~~risks and uncertainties with respect to~~ the ~~Company~~substance ~~include the effects~~ of general economic conditions, changing foreign exchange rates and actions by government authorities, uncertainties associated with legal proceedings and negotiations, industry supply levels, competitive pricing pressures and misjudgements in the ~~course~~proposed ~~of preparing forward-looking statements~~resolution.

The Company’s ~~disclaims~~board ~~any~~of ~~intention~~directors orrecommends ~~obligation~~that toshareholders ~~update~~vote orin ~~revise~~favour ~~any~~of ~~forward-looking~~the foregoing ~~statements,~~special ~~whether~~resolution. asProxies areceived ~~result~~in favour of ~~new~~management ~~information~~will be voted in favour of such special resolution, ~~future~~unless ~~events~~the orshareholder ~~otherwise~~has specified in the proxy that the shares are to be voted against such resolution.

~~Overview~~Adoption of New Articles

The Company’s ~~financial~~proposes ~~statements~~to ~~are~~replace ~~prepared~~its inExisting ~~accordance~~Articles with ~~Canadian~~New ~~generally~~Articles ~~accepted accounting~~so ~~principles~~that ~~(“Cdn~~its ~~GAAP”)~~articles ~~and~~will reflect ~~are~~the ~~presented~~more inflexible ~~Canadian~~provisions ~~dollars~~of ~~unless~~the ~~otherwise indicated.~~New ~~All~~Act ~~references~~and innew ~~this~~terminology ~~report~~contained toin ~~financial information concerning~~ the ~~Company~~New ~~refer~~Act. toA ~~such~~summary ~~information~~of inthe ~~accordance~~main ~~with~~differences ~~Cdn~~between ~~GAAP~~the ~~and~~Company’s ~~all~~Existing ~~dollar~~Articles ~~amounts~~and inthe ~~this~~New ~~Management’s~~Articles ~~Discussion~~is ~~And~~contained ~~Analysis are~~ in ~~Canadian~~Appendix A ~~dollars~~attached ~~unless~~to ~~otherwise~~this ~~indicated~~Information Circular.

~~The~~A ~~following~~copy ~~discussion~~of ~~and~~the ~~analysis~~proposed ~~provides~~form aof ~~review~~New ofArticles ~~activities,~~is ~~results~~available offor ~~operations~~inspection ~~and~~by shareholders during ~~financial~~normal ~~condition~~business ofhours ~~the~~at ~~Company~~any ~~for~~time up to the ~~fiscal~~Meeting ~~year~~at ~~ended~~the ~~November 30,~~Company’s ~~2004~~registered inoffice ~~comparison~~located ~~with~~at ~~those~~Suite 1020, ~~for~~510 ~~the~~Burrard ~~fiscal~~Street, ~~year~~Vancouver, ~~ended~~British ~~November 30~~Columbia, ~~2003~~Canada V6C 3A8 and ~~for~~will ~~the~~be ~~three~~available at ~~months~~the ~~ended~~Meeting. ~~November 30~~Additionally, ~~2004 in~~a ~~comparison~~copy ~~with~~of ~~those~~the ~~for~~proposed ~~the~~New ~~three~~Articles ~~months~~will ~~ended~~be ~~November 30~~mailed, ~~2003.~~free ~~This~~of ~~discussion~~charge, to ~~should~~any ~~be read~~shareholder who requests, in ~~conjunction~~writing, ~~with~~a copy from the Company’s ~~2004~~at ~~Audited~~the ~~Consolidated~~above ~~Financial Statements~~mentioned address.

~~Founded~~At ~~in 1977,~~ the ~~Company designs~~Meeting, ~~develops and markets~~ the ~~proprietary~~shareholders ~~ECPINS® line~~ of ~~electronic~~ ~~chart navigation systems for commercial and military customers. ECPINS® helps to reduce~~ the risk of navigation-related incidents by giving bridge crews a precise, real-time display of their position, course and speed, against a background of fixed obstacles and other navigational hazards. The Company ~~has~~will ~~developed~~be aasked ~~strong~~to ~~market~~pass ~~position in military navigation, and has ECPINS® systems deployed with~~ the ~~Canadian~~following ~~and United States Coast Guards, the Canadian Navy,~~special ~~the~~resolution ~~Royal New Zealand Navy, the Royal Danish Navy, and the United States Navy. In fiscal 2004, the Company delivered software and system products~~ to ~~the~~adopt ~~Royal Navy of~~ the ~~United Kingdom, the Royal Australian Navy, the Royal~~ New ~~Zealand~~Articles ~~Navy~~for ~~and~~ the ~~Portuguese Navy.~~Company:

In“BE ~~2002~~IT RESOLVED, ~~the~~as ~~Company~~a ~~expanded~~special ~~the~~resolution, ~~business scope of its wholly-owned subsidiary Offshore Charts~~that: ~~Ltd. beyond production of electronic navigation charts to include production of land-based mapping~~ ~~products. The Offshore Charts Ltd. subsidiary was also renamed OSI Geomatics Ltd. to better reflect~~ ~~its business expansion. The Company’s U.S. subsidiary — Offshore Systems~~

~~Page~~(a) 2 the Articles of the Company be altered by deleting and canceling the existing Articles and that the form of Articles presented to the meeting, and initialed for identification by the President of the Company on the first and last pages thereof, be adopted as the Articles of the Company in substitution for, and to the exclusion of, the existing Articles of the Company; (b) any one director or officer of the Company be and is hereby authorized to execute and deliver all such documents and instruments, including any required Notice of Alteration, and to do such further acts as may be necessary to give full effect to the foregoing; and (c) the board of directors of the Company is hereby authorized, at any time in its absolute discretion, to determine whether or not to proceed with the foregoing without further approval, ratification or confirmation by the shareholders of the Company.”

~~International Inc. was renamed OSI Geomatics Inc. and reactivated to enter the U.S. mapping market.~~25 ~~Collectively, the two subsidiaries form the Company’s business unit — OSI Geomatics.~~

InThis ~~February 2003,~~special ~~the~~resolution ~~Company~~must ~~announced~~be ~~the~~approved ~~launch~~by of a ~~new~~majority ~~product,~~of ~~Common Operational Picture~~ three- ~~Image~~quarters ~~Display Server~~ (~~“COP-IDSÔ”~~3/4), aof ~~client server application that allows customers to integrate~~ the ~~Company’s~~votes ~~mapping~~cast ~~and imagery display technology into existing Command~~by ~~and Control (“C2”) systems rapidly and cost effectively. COP-IDSÔ facilitates~~ the ~~integration~~ ofshareholders information from multiple geo-spatial sources — such as land maps, nautical charts, aerial and space photo imagery and special military information — into a single fused display. COP-IDSÔ is designed to meet the emerging requirements of ~~international fleets to be able to operate from and share common tactical data in~~ the ~~field.~~Company ~~COP-IDSÔ allows~~who, ~~the~~being ~~Company’s~~entitle ~~customers~~d to ~~share~~do ~~data across C2 systems~~so, ~~regardless~~vote ~~of which C2 applications systems are~~ in ~~use.~~person ~~COP-IDSÔ~~or isby aproxy C2at ~~product that addresses~~ the ~~needs of not only~~ ~~Navy~~Meeting ~~applications~~in ~~but~~respect ~~also~~of ~~Army,~~such ~~Air~~special ~~Force, Special Forces and coalition forces operations~~resolution.

ToThe ~~capitalize~~form ~~on the potential~~ of the ~~new~~proposed ~~product~~resolution ~~COP-IDSÔ,~~set ~~the~~forth ~~Company~~above ~~added~~is ~~a new~~subject ~~line~~to ofsuch ~~business~~amendments —as ~~OSI~~management ~~Applications starting in fiscal 2004. OSI Applications develops software~~may ~~applications~~propose ~~and~~at ~~tools~~the ~~for~~Meeting ~~situational~~but ~~awareness.~~which ~~OSI~~do ~~Applications~~not ismaterially aaffect ~~division~~the substance of the ~~Company’s subsidiary~~proposed ~~Offshore Systems Ltd~~resolution. ~~and provides products and services to military forces, government~~ ~~agencies and systems integrators to enable improved situational awareness.~~

The Company’s ~~plans~~board toof ~~grow~~directors ~~through~~recommends ~~internal~~that ~~growth,~~shareholders ~~focused~~vote onin ~~new~~favour ~~and~~of ~~existing~~the ~~customers~~foregoing special inresolution. ~~the military~~Proxies ~~agencies~~received ofin ~~Canada,~~favour ~~U.S.,~~of ~~European~~management ~~NATO~~will ~~and~~be ~~other~~voted ~~allies~~in favour of ~~Canada.~~such special ~~In addition~~resolution, unless the ~~Company~~ ~~may~~shareholder ~~pursue~~has ~~strategic~~specified ~~alliances,~~in ~~investments~~the ~~and~~proxy ~~acquisitions~~ that ~~are~~the ~~complimentary~~shares are to ~~its~~be ~~existing~~voted ~~lines~~against ofsuch ~~business~~resolution.

~~Overall~~ALTERATION ~~Performance~~OF SHARE CAPITAL

~~Earnings/Loss~~The authorized capital of the Company consists of 300,000,000 shares divided into 100,000,000 common shares without par value, 100,000,000 Class “A” Preference shares without par value issuable in series, (the “Class A Shares”) of which 10,000,000 shares are designated Class “A” Preference Series A Convertible shares, and 100,000,000 Class “B” Preference shares with a par value of $50 per share issuable in series (“Class B Shares”), of which 10,000,000 are designated as Class B Series 1 Convertible Preference shares. In addition, the board of directors, in accordance with powers conferred upon it by the Articles of the Company, has authorized the creation of a new series of Class B Shares, to be designated as 40,000 Class B Series 2 Convertible Preference Shares. A portion of the Class B Series 2 Convertible Preference Shares are to be issued in connection with the private placement of the Company described below under the heading “Private Placement”. As of the date hereof that series of shares has not yet been created; however, it is anticipated that such series of shares will be created prior to the Meeting.

~~For~~The Company proposes to alter its share capital by increasing the ~~fiscal~~number ~~year~~of ~~ended~~authorized ~~November 30~~voting common shares without par value from 100,000,000 ~~2004~~to an unlimited number in order to give the Company maximum flexibility to pursue its corporate objectives without incurring the expense of seeking shareholder authorization to amend its share capital further. In addition, the Company ~~had~~is proposing ~~earnings~~to create a new class of ~~$114~~shares to be known as Class “C” Preference Shares without par value (the “Class C Shares”) which will be issuable in series with such rights,~~741~~ orprivileges $0and restrictions as may be determined by the board of directors.00 ~~per~~The purpose of making this proposal is ~~share~~to ongive athe ~~basic~~Company greater flexibility in creating shares with appropriate terms for use in connection with acquisitions, financings and ~~diluted~~other ~~basis~~transactions. ~~compared~~The rights, privileges and restrictions attached to ~~earnings~~the existing Class A Shares are such that, having regard to the fact that 30,261 of ~~$385~~these shares are outstanding,~~369~~ orthe Company is restricted in its ability to issue any further series of those shares with terms that are appropriate for financings and other transactions. The existing Class B Shares have a par value of $050.0100, ~~per~~which ~~share~~par value makes such shares suitable for some transactions but unsuitable for others. Accordingly, the Company is ~~fiscal~~proposing ~~year~~to ~~ended~~create ~~November~~the Class ~~30,~~C ~~2003~~Shares to increase its flexibility to issue shares on a timely basis which have rights and restrictions tailored to specific transactions and financings.

The ~~Company’s~~proposed ~~results for fiscal 2004 were largely driven by the Company’s revenue growth~~rights, ~~increased~~ ~~sales~~privileges and ~~marketing~~restrictions ~~expenses,~~to ~~the~~be ~~increasing~~attached ~~costs~~to ofthe ~~regulatory~~Class C ~~compliance~~Shares ~~and~~are ~~financial~~described ~~assistance~~in ~~received~~Appendix B ~~from~~to ~~Technology~~this ~~Partnerships~~Information ~~Canada~~Circular.

~~The~~At ~~Company was selected for major fleet contracts with~~ the ~~Royal Navy of the United Kingdom~~Meeting, ~~as part of a teaming arrangement with Lockheed Martin UK, Kelvin Hughes Ltd. and with~~ the ~~Royal Australian~~shareholders ~~Navy, as part~~ of the teaming arrangement with Nautronix Ltd. and Scientific Management Associates. Also, the Royal New Zealand Navy had exercised contract options with delivery occurring during the third quarter. In addition, on April 26, 2004, the Company ~~signed~~will abe ~~second agreement~~asked ~~with~~to ~~Technology~~pass ~~Partnerships Canada (“TPC”) that provides~~ the ~~Company~~following ~~with financial~~special ~~assistance~~resolution to ~~fund~~amend ~~research and development activities. This assistance reduces~~ the ~~operating expenditures~~share capital of the Company~~. For a further discussion of these matters, please refer to the~~: ~~“Results of Operations” section of this document.~~

~~Backlog~~“BE IT RESOLVED, as a special resolution, that:

~~Total~~(a) ~~backlog~~The asauthorized atshare ~~November 30,~~capital ~~2004 was $21.1 million compared to $3.3 million at November 30, 2003. Total backlog is the total~~ of the ~~firm and option backlogs. Firm backlog consists of firm, fixed, signed orders issued to the~~ Company ~~and~~be ~~executable~~altered by increasing the ~~Company~~authorized ~~subsequent~~number toof ~~the~~voting ~~balance sheet~~common ~~date.~~shares ~~Firm~~without ~~backlog~~par asvalue atfrom ~~November 30~~100,000,000 ~~2004~~to ~~was~~an atunlimited ~~$8.4 million compared to $0.9~~ number;

~~Page 3~~26

~~million~~(b) atthere ~~November 30,~~be ~~2003.~~created ~~Option~~an ~~backlog~~unlimited ~~consists~~number of ~~unexercised~~Class ~~contract~~C ~~options~~Preference atshares without par value; (c) there be created and attached to the ~~balance~~ ~~sheet~~Class ~~date~~C Preference shares the special rights and ~~indefinite-quantity~~restrictions ~~contracts~~set ~~executable~~out byin Part 3 of Schedule “A” of the Articles of the Company ~~subsequent~~as toadopted by paragraph (d) of this resolution; (d) the ~~balance~~ ~~sheet~~Articles ~~date~~of the Company be altered by deleting section 2.1 ~~Option~~and ~~backlog~~substituting astherefor ata ~~November 30~~new section 2.1, ~~2004~~and ~~was~~by atadding ~~$12.7 million~~to ~~compared~~Schedule “A” attached to ~~$2.4 million~~and atforming ~~November 30~~a part of the Articles a new Part 3 thereof, ~~2003.~~both ~~There~~in isthe noform ~~guarantee~~presented orto ~~certainty~~the ~~that~~Meeting and initialed for identification by the President of the Company’s, ~~customers~~such ~~will elect~~alterations not to ~~exercise~~take ~~their~~effect ~~contract~~until ~~option~~the ~~backlog.~~Notice ~~Should~~of Articles of the Company’s ~~customers~~is ~~elect~~altered to ~~exercise contract~~reflect ~~options~~such oralteration ~~place~~to ~~orders~~the ~~against~~Articles ~~indefinite-quantity~~of ~~contracts,~~the Company; (e) the ~~option~~Notice ~~backlog~~of ~~converts~~ Articles of the Company be altered to ~~firm~~reflect ~~backlog,~~the ~~which~~alterations ~~then~~authorized ~~may~~by ~~convert~~paragraphs (a) to ~~revenue~~(d) asof ~~contract~~this ~~execution~~resolution; ~~occurs.~~(f) ~~Total~~any ~~backlog, firm~~one ~~backlog~~director or officer of the Company be and ~~option~~is ~~backlog~~hereby ~~are~~authorized ~~non~~to execute and deliver all such documents and instruments, including the Notice of Alteration reflecting the removal of the Pre-~~GAAP~~existing ~~measures~~Company ~~that~~Provisions, and to do ~~not~~such ~~have~~further aacts ~~standardized~~as ~~meaning~~may ~~and are~~be ~~likely~~necessary ~~not~~to ~~comparable~~give full effect to ~~similar~~this ~~measures~~special ~~presented~~resolution; byand ~~other~~(g) ~~issuers.~~the ~~These~~board ~~measures~~of ~~also~~directors do of the Company is hereby authorized, at any time in its sole discretion, to determine whether or not ~~have~~to aproceed ~~comparable~~with ~~GAAP~~this ~~measure~~resolution in whole or in part without further approval, ratification or confirmation by the shareholders of the Company”.

~~The~~This ~~timing~~special ofresolution ~~the~~must ~~awarding~~be ofapproved ~~major~~by ~~contracts~~a tomajority ~~the~~of ~~Company~~three-quarters ~~can~~(3/4) ~~significantly~~of ~~impact~~ the ~~Company’s total~~votes ~~backlog~~cast ~~position and revenue for the period. Historically, major contracts that have been~~by ~~awarded to~~ the ~~Company~~shareholders ~~have taken up to three years to finalize with the contracting process involving lengthy discussions and negotiations with several groups~~ of ~~people within~~ the ~~prospective customer’s organization. The~~ Company ~~has continually pursued~~who, ~~and~~being ~~will~~entitled ~~continue~~ to ~~pursue,~~do ~~major contracts with a lengthy sales cycle and~~so, asvote ~~a result, there could be large variations~~ in ~~its~~person ~~total backlog~~or ~~position~~by ~~and~~proxy ~~revenue from one fiscal quarter to another. The increased firm backlog and option balances~~ at ~~November 30, 2004 as compared to November 30, 2003 were~~ the ~~result of the~~ ~~Company~~Meeting ~~and~~in ~~its~~respect ~~partners winning the Royal Navy~~ of ~~the~~such ~~United~~special ~~Kingdom tender and additional contract awards from the Royal Australian Navy~~resolution.

~~Because~~The ~~governments~~form ~~approve~~of ~~budget~~the ~~expenditures~~proposed onresolution anset ~~annual~~forth ~~basis,~~above ~~multi-year~~is ~~contracts~~subject ~~with government~~to ~~agencies~~such ~~have~~amendments aas ~~termination-for-convenience~~management ~~clause that allows contracts to be~~may ~~terminated~~propose byat the ~~contracting~~Meeting ~~government~~but ~~agency~~which ~~should~~do ~~future budget funding~~ not bematerially ~~approved. Historically,~~affect the ~~termination-for-convenience~~substance ~~clause~~of ~~has~~the ~~not~~proposed ~~been exercised by any Company~~special ~~customer~~resolution. ~~The Company has included the full value of these government contracts in total backlog.~~

~~Risks~~The ~~and~~Company’s ~~Uncertainties~~board of directors recommends that shareholders vote in favour of the foregoing special resolution. Proxies received in favour of management will be voted in favour of such special resolution, unless the shareholder has specified in the proxy that the shares are to be voted against such resolution.

~~Certain~~PRIVATE ~~statements made in this report by the Company constitute forward-looking statements,~~PLACEMENT ~~and are subject to risks and uncertainties that may cause future results to differ materially from~~ ~~those expected. Factors that may cause such differences include, but are not limited to, the~~ ~~factors discussed below. If any of these events actually occur, they could have a materially~~ ~~adverse effect on the Company, its financial condition or results of operations.~~

~~The Company depends heavily on its government contracts, which are only partially funded, subject~~Introduction ~~to termination, heavily regulated and audited. The termination of one or more of these contracts~~ ~~could have a negative impact on the Company’s operations. The contract termination clauses are~~ ~~generally in favour of the Government Agencies. Typically the termination clause for convenience is~~ ~~30 days or less with the condition that all costs to that date are paid by the Government Agencies.~~

The ~~termination~~Company ofis ~~funding~~currently ~~for~~in athe ~~government~~process ~~program~~of ~~would~~completing ~~result~~a inprivate aplacement ~~loss~~financing of ~~anticipated~~up ~~future~~to ~~revenues~~CDN$19.5 million. ~~attributable~~The tofinancing ~~that~~is ~~program.~~being ~~That~~led ~~could~~by ~~have~~SDS aCapital ~~negative~~Group ~~impact~~SPC, onLtd. ~~the~~as ~~Company’s~~a principal ~~operations~~investor. ~~Also~~C.E. Unterberg, ~~the~~Towbin, ~~Company~~LLC ~~cannot~~is ~~give~~acting ~~assurance~~as ~~that~~agent itto ~~would~~offer bethe ~~able~~securities toon ~~procure~~a ~~new~~best ~~government~~efforts ~~contracts~~basis to ~~offset~~other ~~the~~institutions ~~revenues~~and ~~lost~~accredited asinvestors. aThe ~~result~~proceeds of ~~any~~the ~~termination~~financing ofwill ~~its~~be ~~contracts.~~used ~~As the~~to ~~Company’s~~pursue ~~revenues~~acquisitions, ~~are~~to ~~dependent~~increase onavailable ~~its~~cash ~~procurement~~for operations, ~~performance~~ and ~~payment~~to ~~under~~redeem ~~its contracts~~57,711 issued and ~~the~~outstanding ~~loss~~Class of“B” ~~one~~Series 1 orPreference ~~more~~shares ~~critical~~held ~~contracts~~by ~~could~~two ~~have~~institutional investors at a ~~negative~~cost ~~impact~~of approximately onCDN$2.9 million. ~~the~~The Company’s ~~financial~~anticipates that the private placement will be closed ~~condition~~before the date of the Meeting. The private placement will be closed in escrow pending receipt of shareholder approval.

~~In addition, sales to the governments the Company works with may be affected by:~~27

•The ~~changes~~policies inof ~~procurement~~the ~~policies;~~TSX •require ~~changes~~that inthe Company obtain shareholder approval for the ~~structure~~private placement, and ~~management~~for the issuance of ~~government~~share ~~departments;~~purchase warrants to participating institutions and to one of its directors as fees for providing advisory services in connection with the private placement. The material terms of the private placement and the matters for which the Company is seeking shareholder approval are described in detail below. The Company is seeking shareholder approval at the Meeting.

~~Page~~Summary 4of Financing Terms

•Unit ~~budget considerations; • changing concepts of national defence; • political developments domestically and abroad; and • increased protectionism.~~Structure

The ~~influence~~Company ofis ~~any~~offering up to 19,500 units, each comprised of ~~these~~20 ~~factors~~voting Class “B” Series 2 Preference shares (“preference shares”) and 588 common share purchase warrants (“warrants”). The issue price will be CDN$1,000 ~~which~~per ~~are~~unit. ~~largely~~The ~~beyond~~preference shares will entitle the ~~Company’s~~holders ~~control~~to receive a fixed preferential cumulative 7% dividend payable semi-annually. Each preference share will be convertible at the option of the holder at any time into 58.82 common shares, ~~could~~calculated ~~also~~by ~~negatively~~dividing ~~impact~~the ~~its~~issue ~~financial~~price ~~condition~~of CDN$50.00 for each preference share by the conversion price of CDN$0.85. Each warrant will entitle the holder to purchase one common share of the Company at the exercise price of CDN$0.85 for a period of five years.

~~The~~Shareholder ~~Company derives a significant amount of revenue from only a few international customers. The~~Approval ~~Company depends on governments for a significant portion of its sales, and the loss of any of these~~ ~~relationships or a shift in any of these governments’ funding could have severe consequences on the~~ ~~Company’s financial condition.~~

~~Approximately~~TSX ~~69%~~policies ofrequire that the Company’s ~~revenue~~obtain ~~for~~shareholder ~~fiscal~~approval ~~2004~~for ~~was from~~ the Ufinancing.S. ~~Coast Guard~~Consequently, ~~the Royal~~ ~~Navy~~an ofescrow ~~the~~agent ~~United~~will ~~Kingdom,~~be ~~the~~appointed ~~Royal~~to ~~Australian~~hold ~~Navy,~~all ~~the~~subscription ~~Royal~~funds ~~New~~and ~~Zealand~~agreements ~~Navy~~in ~~and~~escrow ~~the~~pending ~~Portuguese~~receipt ~~Navy~~of shareholder approval. ~~For~~The ~~fiscal~~Company ~~2003~~intends ~~approximately~~to ~~65%~~seek ofshareholder approval for the ~~Company’s~~financing at ~~revenue~~the ~~was~~Meeting. ~~from~~During the ~~U.S.~~escrow ~~Coast Guard~~period, the ~~Canadian~~purchasers ~~Navy~~will ~~and~~receive interest on the ~~Royal~~subscription funds ~~Danish~~at ~~Navy.~~the ~~Approximately~~rate 87of 12% ofper ~~the~~annum. ~~Company’s~~If ~~revenue~~shareholder ~~for fiscal~~approval ~~2004~~is ~~was~~obtained, ~~from~~the ~~national~~financing will be closed promptly and ~~international~~accrued ~~governments~~interest ~~compared~~paid to ~~91%~~the ~~for~~purchasers. ~~fiscal~~If ~~2003. Therefore,~~shareholder ~~any~~approval ~~significant~~is ~~disruption~~not obtained, orthe ~~deterioration~~subscription offunds ~~any~~and ofaccrued ~~the~~interest ~~Company’s~~will ~~relationships~~be ~~with these~~paid ~~entities’~~immediately ~~governments~~by ~~would~~the ~~significantly~~escrow ~~reduce~~agent to ~~its~~the ~~revenues~~purchasers. ~~These~~All ~~governments~~payments ~~may~~of ~~choose to~~interest ~~use~~will ~~other~~be ~~competing~~net ~~corporations~~of ~~for~~applicable ~~their~~withholding ~~navigational equipment~~tax. InIf shareholder ~~addition,~~approval ais ~~shift~~not ~~in government~~obtained, ~~spending~~all tolegal, accounting and other ~~programs~~advisory inservice ~~which~~fees incurred ~~the~~will ~~Company~~be isrecorded ~~not~~as ~~involved~~a ~~could~~charge ~~have~~against ~~severe consequences~~earnings for ~~its~~the ~~results~~three ofand ~~operations~~six months ended May 30, 2005.

~~The~~ Company’s ~~product~~Right ~~lines~~of ~~are not broadly diversified.~~Redemption

The Company ~~derives~~will ~~and~~have ~~expects~~the right to ~~derive~~redeem athe ~~substantial~~preference ~~majority~~shares ofat ~~its~~any ~~revenue~~time ~~from~~after ~~navigational~~three years ~~software,~~following ~~systems~~the ~~and~~closing ~~equipment~~date, ~~sales.~~at ~~If customers do not purchase~~ the ~~Company’s~~redemption ~~products~~price ~~as a result~~ of ~~competition,~~CDN$60 ~~technological~~per ~~change,~~share ~~budget~~plus ~~constraints~~payment orof ~~other~~any ~~factors, the Company does~~accrued ~~not~~but ~~have~~unpaid ~~other~~dividends. ~~product~~A ~~categories~~holder ~~that~~will ithave ~~could~~20 days ~~rely~~after onreceipt toof ~~make~~notice upof ~~any~~redemption ~~shortfall~~from ~~in sales. As a result,~~ the Company’s ~~revenue~~within ~~could~~which ~~decrease~~to ~~and~~convert ~~its~~the ~~business~~preference ~~and~~shares ~~operating~~to ~~results~~common ~~would be adversely affected~~shares.

~~The~~Right ~~Company derives a significant portion of its revenues from international sales and is subject~~ to ~~the~~Force ~~risks of doing business in foreign countries.~~Conversion

InThe ~~the~~Company ~~fiscal~~will ~~year~~have ~~ended~~the ~~November 30,~~right ~~2004,~~to ~~approximately~~require ~~89% of~~ the ~~Company’s~~holders ~~revenues~~to ~~were~~convert ~~from international~~their ~~customers,~~preference ~~including~~shares ~~governmental~~to ~~customers: 21% from the U.S. and 68% from other~~common ~~international~~shares ~~countries.~~if: ~~For~~(i) at ~~the~~any ~~fiscal~~time ~~year~~after ~~ended November~~12 ~~30,~~months ~~2003,~~following ~~approximately 71% of~~ the ~~Company’s~~ ~~revenues~~closing ~~were from international customers~~date, ~~including~~the ~~governmental~~closing ~~customers:~~trading ~~44%~~price ~~from~~of the ~~U.S.~~Company’s ~~and~~common ~~27%~~shares ~~from~~is ~~other~~greater ~~international~~than ~~countries~~CDN$2.13 ~~The~~for ~~Company~~at ~~has~~least ~~focussed~~20 ~~its~~consecutive ~~expansion~~trading ~~efforts~~days, or ~~for~~(ii) at ~~the~~any ~~future~~time on the ~~American,~~Company ~~European~~completes ~~and~~a ~~Australasian~~firm ~~markets.~~commitment Aspublic aunderwritten ~~result,~~offering ~~the~~of ~~Company~~its ~~expects~~common ~~that~~shares ~~international~~of ~~sales~~at ~~will~~least ~~continue~~CDN$40 million toat ~~account~~an ~~for~~offering aprice ~~significant portion~~ of ~~its~~more ~~revenues~~than ~~for the foreseeable future~~CDN$1. ~~As a result~~70, and the ~~Company~~common isshares into ~~subject~~which to the ~~risks~~preference ofshares ~~doing~~are ~~business internationally,~~convertible ~~including~~are ~~those~~freely ~~risks related to:~~tradable.

• changes in regulatory requirements; • domestic and foreign government policies, including requirements to expend a portion of program funds locally and governmental industrial co-operation requirements; • fluctuations in foreign currency exchange rates; • the complexity and necessity of dealing with foreign representatives and consultants; • imposition of tariffs or embargoes, export controls and other trade restrictions; and • compliance with a variety of foreign laws.28

~~While the presence of these factors and the impact of these factors are difficult to predict, any~~Warrants ~~one or more of them could adversely affect the Company’s operations in the future.~~

~~Page~~Each 5common share purchase warrant will entitle the holder to purchase one common share of the Company at the exercise price of CDN$0.85 for a period of five years from the date of issuance. The Company has the right to redeem the warrants for CDN$0.10 each upon 20 days notice, provided the closing trading price of the Company’s common shares is greater than CDN$2.55 for a period of 20 consecutive trading days, and provided the common shares underlying the warrants are freely tradable. Any warrants which are the subject of a redemption notice may be exercised by the holders within the 20 day notice period.

~~The~~Dilution ~~Company’s revenues~~ and ~~costs~~Exclusion ~~are affected by fluctuations in the rate~~ of ~~exchange~~Control ~~between the~~Blocks ~~Canadian dollar, which is its reporting currency, the U.S. dollar, the Australian Dollar and the~~ ~~Euro.~~

~~Exposure~~The ~~to exchange rate fluctuations exists because a significant portion of the~~ Company’s ~~trade receivable~~currently ~~and~~has ~~revenue transactions are in U.S. dollars~~27, ~~Australian dollars and Euros. In addition~~488, ~~certain~~074 ofcommon ~~the~~shares ~~Company’s~~outstanding ~~subcontract~~on ~~payable~~an ~~and~~undiluted ~~direct cost transactions are in U~~basis.S. ~~dollars.~~If ~~For~~ the financing ~~fiscal~~is ~~year~~fully ~~ended November 30~~subscribed, ~~2004~~390,000 ~~approximately~~preference ~~25%~~shares ofwill ~~the~~be ~~Company’s~~issued ~~revenue~~which ~~and~~would, ~~10% of its~~upon ~~expenses~~conversion ~~were~~at ~~transacted in U.S. dollars. During~~ the ~~same~~proposed ~~period,~~fixed ~~approximately~~price ~~11% and 5%~~ of ~~the Company’s revenue was transacted in Australian dollars and Euros respectively~~CDN$0. ~~For the fiscal year ended November 30~~85, ~~2003,~~result ~~approximately~~in ~~63% of~~ the ~~Company’s~~issuance ~~revenues and 12%~~ of ~~its~~an ~~expenses were~~additional ~~transacted in U.S. dollars. During the same period~~22,939,800 ~~the Company did not have material transactions in Australian dollars or Euros~~shares. ~~The~~In ~~Company expects that U.S. dollar~~addition, ~~Australian dollar and Euro sales will continue to account for~~ a ~~material~~total ~~portion~~ of ~~its revenues for the foreseeable future. As a result~~11, ~~exchange rate fluctuations may affect the Company’s revenue and earnings growth materially in the future. In order to reduce the impact of U.S. to Canadian dollar~~466,000 ~~Australian~~warrants ~~to Canadian~~will ~~dollar~~be ~~and~~issued ~~Euro to Canadian Dollar exchange rate fluctuations~~which, ~~the~~upon ~~Company utilizes its~~exercise ~~foreign exchange forward contract facility. As~~ at ~~November 30, 2004,~~ the ~~Company~~price ~~has entered into foreign exchange forward contracts in the amount~~ of ~~U.S.~~ CDN$~~851,196, Australian $3,678,061 and €383,310~~0. ~~As at November 30~~85, ~~2003,~~would ~~the~~result ~~Company had entered into foreign exchange forward contracts~~ in the ~~amount~~issuance of ~~U.S.~~a $1further 11,~~343~~466,~~705,~~000 ~~Australian~~common ~~$0, and €0~~shares.

The Company has ~~established~~the ~~teaming~~right ~~relationships~~to ~~and~~accept ~~strategic~~or ~~partnerships~~reject ~~with~~subscriptions ~~international~~from prospective purchasers. The ~~corporations~~Company intends to ~~pursue~~allot ~~major~~the ~~international~~financing ~~government~~such ~~procurements,~~that ~~and~~no ~~the~~subscriber ~~Company’s~~will ~~reputation and~~purchase ~~results~~a sufficient number of preference ~~operations~~shares ~~could~~that bewould, ~~adversely~~if ~~affected~~converted, byresult ~~the~~in ~~Company’s~~that ~~inability~~purchaser toacquiring a control ~~their~~position ~~operations~~in the Company as a consequence of that conversion.

~~The~~Other ~~Company~~Rights ~~relies~~of ~~on agreements with international corporations to assist it in pursuing contracts for major government procurements. These international corporations often assist~~ the ~~Company with~~Purchasers ~~systems integration, complimentary products and services, and local domain knowledge necessary to~~ ~~successfully pursue major government procurements. The Company does not have assurance that these~~ ~~third parties will:~~

•The ~~remain~~purchasers of the preference shares will have a right of first offer to participate on a pro-rata basis in ~~business;~~any •equity, ~~maintain~~equity linked, or debt financing proposed by the ~~financial~~Company ~~stability~~for ~~required~~24 months after the closing date. The purchasers will have ten trading days within which to ~~fulfill~~exercise their ~~the~~right. ~~requirements~~This pre-emptive right will not apply to any proposed issuance of ~~these~~stock ~~international~~by ~~procurements;~~the Company in connection with strategic partnerships, acquisitions and •public ~~continue~~underwritten offerings. The Company has also agreed that it will not issue any securities or unsecured debt obligations senior to ~~consider~~the preference shares without the ~~Company’s~~prior ~~products~~written inapproval ~~their~~of ~~business~~the ~~priorities~~holders of a majority of the preference shares, such approval not to be unreasonably withheld.

~~There~~Liquidation ~~can be no assurance that the Company would be able to pursue and secure major international~~Preference ~~government procurements without these third parties.~~

~~The~~In ~~Company~~the ~~may~~event ~~lose~~of ~~sales~~the liquidation of the Company, orthe ~~sales~~holders ~~may~~of bethe ~~delayed,~~preference ~~because~~shares will have the right to repayment of the ~~long~~original ~~sales~~purchase ~~and~~price ~~implementation~~of the shares, plus all accrued but unpaid ~~cycles~~dividends ~~for~~thereon ~~its~~in ~~products~~priority to any payments to the holders of common shares and ~~services~~any other shares ranking junior to the preference shares.

~~The~~Trading ~~Company’s customers have typically invested substantial time, money and other resources and~~Provisions ~~have many people involved in the decision to license the Company’s software products and purchase~~ ~~its hardware products and services. As a result, the Company may wait up to two or three years~~ ~~after the first contact with a customer for that customer to enter into a purchase agreement while~~ the customer seeks internal approvals for the purchase of the Company’s products and/or services. During this long sales cycle, events may occur that affect the size or timing of the purchase or even cause the order to be cancelled.

~~Even~~The ifpreference ashares ~~purchase~~and ~~agreement~~warrants iswill ~~signed,~~not ~~the~~be ~~time~~listed ~~period~~or ~~required~~quoted tofor ~~deploy~~trading ~~the~~but ~~Company’s~~will ~~products~~be freely ~~varies~~tradable, ~~significantly~~subject ~~from~~to ~~one~~such ~~customer~~trading torestrictions ~~the~~and ~~next.~~hold ~~Implementing~~periods ~~the~~as ~~Company’s~~are ~~products~~imposed ~~can~~under applicable ~~sometimes~~securities ~~take~~regulations ~~several~~and ~~months~~by orthe ~~even~~TSX ain ~~few~~accordance ~~years~~with ~~depending~~its ~~on the customer’s~~policies.

~~Page 6~~29

~~needs. It may be difficult to deploy the Company’s products if the customer has complicated deployment requirements. If a customer utilizes a third party to deploy the Company’s products~~Fees, ~~we cannot~~Broker ~~guarantee~~Warrants ~~that~~and ~~the Company’s products will be deployed successfully.~~Expenses

AsThe aCompany ~~result~~will pay investment banking fees to participating institutions which assist in placing the financing in an amount equal to 7% of gross proceeds of the financing placed with their respective clients. In addition, the Company’s ~~revenue~~will ~~could~~issue ~~decrease~~common ~~and~~share ~~its~~purchase ~~business~~warrants ~~and~~to ~~operating~~those institutions ~~results~~which ~~would~~place the financing with their clients. The warrants will have the same terms as those issued to the purchasers of the units. The number of warrants to be issued to each ~~adversely~~institution ~~affected~~which assists in placing the financing will be determined by dividing 50% of the investment banking fee payable to it by the exercise price of CDN$0.85. The proposed issuance of those warrants is subject to shareholder approval. SDS Capital Group SPC, Ltd. is participating as a principal investor and will not be paid any fees or issued any “finder’s” warrants for participating.

~~Competition~~Fees ~~within~~and ~~the~~Warrants ~~Company’s~~to ~~markets~~be ~~may~~Paid ~~reduce~~to ~~its~~Related ~~procurement~~Party ofSubject ~~future~~to ~~contracts~~Shareholder ~~and its~~Approval ~~sales.~~

~~The~~Mr. Brinton ~~defence~~Coxe, ~~industry~~a indirector ~~which~~of the Company, ~~operates~~has isbeen ~~highly~~instrumental ~~competitive.~~in ~~The~~assisting the Company’s ~~competitors~~in ~~range~~structuring ~~from~~and ~~companies,~~arranging ~~which~~the ~~are~~financing. ~~primarily~~In ~~targeting~~consideration ~~the~~for ~~pleasure~~providing ~~boat~~his ~~market~~services, tothe ~~diversified~~Company ~~corporations~~has agreed to pay Mr. Coxe an advisory services fee in the ~~radar/marine~~amount ~~equipment~~of ~~segment~~CDN$800,000. ofIn addition, the Company ~~industry~~has agreed to issue to Mr. Coxe ~~Some~~350,000 common share purchase warrants which will have the same terms and conditions as the warrants to be issued to the purchasers of the ~~Company’s~~units. The proposed ~~competitors~~issuance ~~may~~of ~~have~~350,000 ~~more~~warrants ~~extensive~~to orMr. Coxe ~~more~~is ~~specialized~~subject ~~engineering,~~to ~~manufacturing~~shareholder ~~and~~approval. ~~marketing~~In considering the ~~capabilities~~issue of compensation to Mr. Coxe, ~~There~~the ~~can~~board, bein noconsultation ~~assurance~~with ~~that~~legal counsel, reviewed carefully the ~~Company~~policies ~~can~~of ~~continue~~the toTSX ~~compete~~and ~~effectively~~securities ~~with~~regulators respecting related party transactions ~~these~~and ~~companies~~believes that it is in full compliance with such policies.

~~The~~Conditions ~~Company’s~~Respecting ~~ability~~Payment toof ~~procure~~Fees, ~~contracts~~Issuance ~~and~~of ~~gain~~Warrants, ~~sales~~and inRedemption ~~foreign~~of ~~markets~~Class B ~~may be negatively~~Series 1 ~~impacted~~Preference ~~by increasing protectionism of foreign governments.~~Shares

~~Some~~The ~~foreign~~Company’s ~~governments~~obligation ~~have~~to ~~come~~pay ~~under~~the ~~increased~~fees ~~pressure~~and issue warrants to ~~protect~~the ~~their~~institutions ~~domestic~~which ~~economy~~assist ~~and~~with ~~national~~the ~~security.~~financing ~~Economic~~ and ~~security~~to ~~concerns~~Mr. Coxe ~~have~~is ~~resulted~~subject into ~~increasing~~the ~~protectionism~~condition that the Company obtain shareholder ~~excludes~~approval ~~foreign~~for ~~market~~the ~~participants~~private ~~from~~placement, ~~successfully~~including ~~procuring~~the ~~contracts~~issuance ~~and~~of ~~gaining~~all ~~sales~~warrants into Mr. Coxe and the ~~foreign~~participating ~~markets~~institutions. AsIf ashareholder ~~result~~approval is not obtained, the ~~Company’s~~private ~~revenue~~placement ~~could~~will ~~decrease~~not close and ~~its~~no ~~business~~fees ~~and~~will ~~operating results~~be ~~would~~paid beor ~~adversely~~warrants ~~affected~~issued to the participating institutions or to Mr. Coxe.

The redemption by the Company’s ~~future~~of ~~success~~the ~~will~~outstanding ~~depend~~Class B onSeries 1 ~~its~~Preference ~~ability~~shares tois ~~develop~~also conditional ~~new~~upon ~~technologies~~the ~~that~~Company ~~achieve market~~obtaining ~~acceptance~~shareholder approval for the financing.

~~The~~Regulatory ~~defence market is characterized by rapidly changing technologies and evolving industry~~Matters ~~standards. Accordingly, the Company’s future performance depends on a number of factors, including~~ ~~its ability to:~~

•Completion ~~identify~~of ~~emerging~~the ~~technological~~financing ~~trends~~is insubject ~~the~~to ~~Company’s~~satisfaction ~~market;~~of •a ~~develop~~number of conditions precedent, including completion of legal documentation and ~~maintain~~due ~~competitive~~diligence ~~products;~~satisfactory •to ~~enhance~~both the Company’s ~~products~~and the bypurchasers, ~~adding~~and ~~innovative~~receipt ~~features~~of ~~that~~all ~~differentiate~~necessary regulatory approvals, including final TSX acceptance. The TSX has granted its ~~products~~conditional ~~from~~acceptance ~~those~~of the private placement, subject to satisfaction to a number of ~~its~~conditions ~~competitors;~~including review and •approval ~~manufacture~~of the form of the Company’s documents, receipt of shareholder approval and ~~bring~~submission ~~products~~of tofinal ~~market~~materials ~~quickly~~confirming atthe ~~cost-effective~~closing ~~prices~~of the private placement.

~~The Company believes that, in order to remain competitive in the future, it will need to continue~~30 to develop new products, which will require the investment of significant financial resources in new product development. In addition, there can be no assurance that the market for the Company’s products will develop or continue to expand as the Company currently anticipates. The failure of the Company’s technology to gain market acceptance could significantly reduce its revenues and harm its business. Furthermore, the Company cannot be sure that its competitors will not develop competing technology, which gains market acceptance in advance of the Company’s products. The possibility that the Company’s competitors might develop new technology or products might cause the Company’s existing technology and products to become obsolete. If the Company fails in its new product development efforts or its products fail to achieve market acceptance more rapidly than the Company’s competitors, its revenues will decline and its business, financial condition and results of operations will be negatively affected.

~~The~~Board ~~Company~~Review ~~depends on the recruitment~~ and ~~retention~~Approval ~~of qualified personnel, and its failure to~~Process ~~attract and retain such personnel could seriously harm its business.~~

~~Due~~The Company’s board of directors held one face to face meeting as well as four conference call meetings between January 25, 2005 and March 7, 2005 in which they reviewed the ~~specialized~~proposed ~~nature~~financing. The offirst two meetings were convened to consider the ~~Company’s~~financing ~~business,~~as ~~its~~well ~~future~~as ~~performance~~other ismatters, ~~significantly~~while the ~~dependent~~last ~~upon~~three meetings were called for the ~~continued~~sole ~~services~~purpose of ~~its~~reviewing ~~key~~the ~~engineering~~financing. ~~personnel~~Due ~~and~~to ~~executive~~the relatively ~~officers~~small size of the board, the board did not appoint a special committee to review the financing.

~~Page~~As 7noted above, the Company has agreed to pay Mr. Brinton Coxe CDN$800,000 and to issue to him 350,000 common share purchase warrants in consideration of the provision of advisory services by him to the Company in connection with the financing. Mr. Coxe is a director of the Company, and consequently has a conflict of interest in that he will be substantially rewarded if the financing is completed. Accordingly, Mr. Coxe declared his interest in the proposed financing and related transactions, and abstained from voting on all resolutions of the board respecting the financing, including resolutions approving his compensation, at all stages of the review and approval process. Mr. Coxe also excused himself from the board meetings (or the portions thereof, as applicable) at which the proposed financing was considered so that the remaining members of the board could discuss freely the proposed financing and all matters related thereto, including the proposed compensation of Mr. Coxe.

~~The~~All of the other directors of the Company’s ~~prospects~~voted ~~depend~~in ~~upon~~favour ~~its~~of ~~ability~~the toproposed ~~attract~~financing and ~~retain~~the proposed ~~qualified~~compensation ~~engineering, manufacturing,~~to ~~marketing,~~be ~~sales~~paid ~~and~~to ~~management~~Mr. Coxe, ~~personnel~~with ~~for~~the ~~its~~exception ~~operations~~of Mr. Peter ~~Competition~~Roberts. ~~for~~Mr. Roberts, ~~personnel~~who is ~~intense~~Chairman of the board’s Audit Committee, ~~and~~informed the ~~Company~~board ~~may~~that he did not beintend ~~successful~~to instand for ~~attracting~~re-election orto ~~retaining~~the ~~qualified personnel~~board at the Meeting due to other commitments. ~~The~~He informed the Company’s ~~failure~~of his decision before the proposed financing was brought to ~~compete~~the board for ~~these~~consideration. ~~personnel~~Mr. Roberts advised ~~could~~the ~~seriously~~board ~~harm~~that ~~its~~in ~~business, results~~view of ~~operations~~his imminent departure he felt it was inappropriate to vote on the resolutions respecting the proposed financing, and ~~financial~~accordingly, ~~condition~~Mr. Roberts abstained from voting on the resolutions respecting the financing.

The ~~Company~~board ~~does~~consulted ~~not~~extensively ~~have~~with ~~fixed-term~~professional ~~employment~~advisors ~~agreements~~in ~~with~~assessing ~~its~~the ~~officers~~merits and ~~key~~implications of ~~employees~~the private placement. The board examined carefully the securities regulatory issues and TSX policy requirements respecting the ~~loss~~private placement, having regard to the magnitude of ~~any~~it, ~~officer~~the potential ordilutive ~~key~~effects ~~employee~~and the fact that there is a related party component to the financing and that Mr. Brint Coxe, a director, will receive considerable compensation for providing his advisory services in connection with the financing. The board also reviewed other financings analyzed for comparative purposes, but could ~~seriously~~find ~~harm~~no financing which was reasonably comparable. In making the decision to approve the financing, the board took into account a number of risks associated with the financing, including the following: (i) the financing is highly dilutive to the current shareholders; (ii) while it is anticipated that a substantial portion of the financing will be used to fund acquisitions, to date only one acquisition agreement has been signed and therefore the Company’s ~~business~~is relying upon management to ensure that the Company actively pursues and completes strategic acquisitions (all of which will be subject to board approval); (iii) the financing is relatively large and may be riskier than pursuing a series of smaller financings staged over time; and (iv) the financing is relatively expensive. The board weighed these and other concerns against the unique opportunity for raising a financing of considerable magnitude largely through the participation of institutions and accredited investors, and the potential for rapid growth which the board believes the financing would create. The board is also of the view that having regard to the magnitude of the financing and its potential effect on the Company, it is appropriate that the Company seek shareholder approval for the financing.

~~The Company has not entered into fixed-term employment agreements with its officers and key~~31 employees. The Company’s success depends upon the abilities and experience of its officers and key employees. Competition for highly skilled management, engineering, technical and other key employees is intense. The loss of officers and key employees could seriously disrupt the Company’s operations and impair its ability to compete.

~~The~~Text ~~Company~~of ~~depends~~Proposed onResolution ~~offshore~~for ~~sub-contract~~Approval ~~labour~~by ~~in its geomatics and navigation systems~~Shareholders ~~operations to maintain a competitive position in the geomatics and navigation systems marketplaces.~~

The ~~Company’s~~following ~~geomatics~~is ~~and~~the ~~navigation~~text ~~systems~~of ~~operations are dependent upon labour resources located outside North America. While~~ the ~~Company~~proposed ~~enters~~resolution ~~into~~which ~~sub-contract~~will ~~agreements with these suppliers, it cannot~~ be ~~sure~~presented ~~that~~to the ~~labour~~shareholders for ~~resources~~consideration ~~will be available when required and~~ at the ~~levels~~ ~~required. Accordingly, maintaining the Company’s competitiveness will depend upon a number of factors, including~~Meeting:

•“RESOLVED, ~~the~~AS ~~geopolitical~~AN ~~uncertainties~~ORDINARY specific to the home country of each sub-contractor; • the cultural compatibility between Canada and the home country of each sub-contractor; • the English language proficiency of the labour resources made available to the Company; • labour pool characteristics such as work ethicRESOLUTION, ~~education,~~THAT ~~skill~~THE ~~level~~FOLLOWING ~~and~~BE ~~attrition;~~AND ~~and~~ARE •HEREBY ~~the infrastructure of both the sub-contractor’s home country and the sub-contractor.~~APPROVED:

~~While~~(a) The Company’s private placement offering (the ~~presence~~“private placement”) of ~~these~~up ~~factors~~to 19,500 units, each comprised of 20 voting Class B Series 2 Preference shares (“preference shares”) and 588 share purchase warrants (“Warrants”) at the ~~impact~~issue price of ~~these~~CDN$1,000 ~~factors~~per ~~are~~unit. ~~difficult~~The preference shares will entitle the holders to ~~predict,~~receive ~~any~~a fixed preferential cumulative 7% ~~one~~dividend orpayable ~~more~~semi-annually. Each preference share will be convertible at the option of the ~~them~~holder ~~could~~at ~~adversely~~any ~~affect~~time into 58.82 of the Company’s ~~geomatics~~common ~~and~~shares, ~~navigation~~calculated ~~systems~~by dividing the ~~operations~~issue inprice of CDN$50.00 for each preference share by the ~~future~~conversion price of CDN$0.85. Each warrant will entitle the holder to purchase one common share at the exercise price of CDN$0.85 for a period of five years;

~~The~~(b) the ~~Company~~issuance ~~may~~to beinstitutions ~~unable~~which toassist ~~adequately~~in ~~protect~~the ~~its~~Private ~~intellectual~~Placement ~~property~~of ~~rights,~~up ~~which~~to ~~could~~577,000 ~~affect~~share ~~its~~purchase ~~ability~~warrants tohaving ~~compete.~~the same terms as the Warrants; and

~~Protecting~~ (c) the ~~Company’s~~issuance ~~intellectual~~of ~~property~~up ~~rights is critical~~ to ~~its ability to compete and succeed as a company. The Company has trademark and copyright registrations~~350,000 ~~which~~warrants ~~are~~having ~~necessary and~~the ~~contribute~~same ~~significantly~~terms toas the ~~preservation~~Warrants ofto ~~its competitive position in the market~~Mr. ~~There~~ ~~can~~Brinton beCoxe, noa ~~assurance~~director ~~that any~~ of the ~~trademarks~~Company, ~~copyrights~~in ~~and~~consideration ~~other~~of ~~intellectual~~the ~~property~~provision ~~will not be challenged, invalidated or circumvented~~ by ~~third~~him ~~parties.~~of advisory Inservices ~~the~~to ~~future,~~ the Company ~~may~~in ~~not~~connection ~~be able to obtain necessary licenses on commercially reasonable terms. The Company enters into confidentiality and invention assignment agreements~~ with ~~its employees, and enters into nondisclosure agreements with its suppliers and customers, as appropriate, so as to limit access to and disclosure of~~ the ~~Company’s~~private ~~proprietary information~~placement”. ~~These measures may not suffice to deter~~ ~~misappropriation or independent third party development of similar technologies.~~

The ~~Company’s~~form ~~operations~~of ~~depend~~the onproposed ~~component~~resolution ~~availability~~set ~~and~~forth ~~its~~above ~~key~~is ~~suppliers~~subject to ~~manufacture~~such ~~and~~amendments as management may ~~deliver~~propose ~~its~~at ~~products~~the ~~and~~Meeting ~~services~~but which do not materially affect the substance of the proposed resolution.

~~The~~In ~~Company’s~~order ~~operations~~to ~~are~~be ~~highly~~effective, ~~dependent on~~ the ~~timely~~proposed ~~delivery~~resolution ofmust ~~materials~~be approved by ~~outside suppliers.~~a ~~While~~simple ~~the~~majority ~~Company~~of ~~enters~~votes cast ~~into~~by ~~purchase~~those ~~agreements~~shareholders ~~with a few~~ of ~~its suppliers,~~ the Company ~~cannot~~who, bebeing ~~sure~~entitled ~~that~~to ~~materials,~~do ~~components~~so, ~~and~~vote ~~subsystems will be available~~ in ~~the quantities~~person ~~required,~~or ifby proxy at ~~all. If any of~~ the ~~suppliers~~Meeting ~~fail~~in torespect ~~meet~~of ~~the~~such ~~Company’s needs, it may~~resolution. ~~not~~

~~Page~~The 8form of the proposed resolution set forth above is subject to such amendments as management may propose at the Meeting but which do not materially affect the substance of the proposed resolution.

~~have readily available alternatives.~~ The Company’s ~~inability~~board toof ~~fill~~directors ~~its~~recommends ~~supply~~that ~~needs~~shareholders ~~would jeopardize~~vote ~~its~~in ~~ability~~favour toof ~~satisfactorily complete~~ the ~~Company’s obligations under its contracts on~~foregoing aordinary ~~timely basis~~resolution. ~~This~~Proxies ~~might~~received ~~result~~ in ~~reduced~~favour ~~sales,~~of ~~contractually~~management ~~imposed~~will ~~penalties~~be ~~for~~voted ~~delay~~ in ~~delivery,~~ ~~termination~~favour of ~~one~~such ordinary orresolution, ~~more~~unless ofthe ~~these~~shareholder ~~contracts~~has orspecified ~~damage~~in to the ~~Company’s~~proxy ~~reputation~~that ~~and relationships~~the ~~with~~shares ~~its~~are ~~customers.~~to ~~All~~be voted ofagainst ~~these~~such ~~events could have a negative effect on the Company’s financial condition~~resolution.

~~The~~PARTICULARS ~~unpredictability~~OF ofOTHER ~~the~~MATTERS ~~Company’s~~TO ~~results~~BE ~~may~~ACTED ~~harm or contribute to the volatility of the~~UPON ~~trading price of its common stock.~~

~~The~~Management of the Company’s ~~operating~~knows ~~results~~of ~~may~~no ~~vary~~matters ~~significantly~~to ~~over~~come ~~time~~before ~~for~~the aMeeting ~~variety~~other ofthan ~~reasons,~~those ~~many~~referred to in the Notice of ~~which~~ ~~are~~Meeting ~~outside~~accompanying ~~its~~this ~~control~~Information ~~and~~Circular. However, if any ofother ~~which~~matters properly ~~may~~come ~~harm~~before ~~its~~the ~~business.~~Meeting, ~~The~~it ~~value~~is the intention of the ~~Company’s~~persons named in the form of proxy ~~common~~accompanying ~~stock~~this ~~may~~Information ~~fluctuate~~Circular asto avote ~~result~~the ofsame ~~considerations~~in ~~that~~accordance ~~are~~with ~~difficult~~their tobest ~~forecast,~~judgment of such ~~as:~~matters.

• the volume and timing of product orders received and delivered; • levels of product demand; • government and corporate spending patterns; • the timing of contract receipt and funding; • the Company’s ability and the ability of its key suppliers to respond to changes in customer orders; • the timing of the Company’s new product introductions and its competitors’ new product introductions; • the cost and availability of components and subsystems; • price erosion; • the adoption of new technologies and industry standards; • competitive factors, including pricing, availability and demand for competing products; • fluctuations in foreign currency exchange rates; and • regulatory developments.32

~~The~~ADDITIONAL ~~Company may pursue strategic relationships, investments and acquisitions. The Company may not~~INFORMATION ~~be able to successfully manage its operations if it fails to successfully integrate the acquired~~ ~~technologies and/or businesses.~~

AsAdditional ~~part~~information ofrespecting the Company’s ~~business~~is ~~strategy,~~available iton ~~may~~the ~~expand~~SEDAR ~~its~~website ~~product~~at ~~offerings to include~~www.sedar.com. ~~application~~Security ~~software~~holders ~~products~~may ~~that~~contact ~~are complementary to~~ the Company’s ~~existing~~to ~~products.~~request ~~This strategy~~copies ~~may involve technology licensing agreements, joint development agreements, investments or acquisitions~~ of ~~other businesses that offer complementary products. The risks that~~ the Company’s ~~may~~financial statements ~~encounter~~and inMD&A ~~acquiring~~at ~~or licensing technology from third parties include~~ the following address:

•OFFSHORE ~~difficulty~~SYSTEMS inINTERNATIONAL ~~integrating~~LTD. Suite 107 ~~the~~– ~~third~~930 ~~party~~West ~~product~~1 ~~with~~st ~~its~~Street North ~~products;~~Vancouver, •British ~~undiscovered~~Columbia, ~~software~~Canada V7P ~~errors~~3N4 Phone: in the third party product; • difficulties in selling the third party product; • difficulties in providing satisfactory support for the third party product; • potential infringement claims from the use of the third party product; and • discontinuation of third party product lines.604-904-4600

~~The~~Financial ~~risks~~information ~~commonly~~is ~~encountered~~provided in the ~~investment~~Company’s incomparative orfinancial ~~acquisition~~statements ofand ~~businesses~~MD&A ~~would accompany~~for ~~any future investments or acquisitions by~~ the ~~Company.~~financial ~~Such~~year ~~risks~~ended ~~may~~November 30, ~~include the following:~~2004.

•BOARD issues related to product transition (such as development, distribution and customer support); • the substantial management time devoted to such activities; • the potential disruption of the Company’s ongoing business; • undisclosed liabilities; • failure to realize anticipated benefits (such as synergies and cost savings);APPROVAL

~~Page~~The 9contents and sending of this Information Circular have been approved by the board of directors of the Company.

~~• the difficulty of integrating previously distinct businesses into one business unit; and • technological uncertainty regarding the current and future functionality of the product.~~CERTIFICATE

The ~~Company~~foregoing ~~may~~contains ~~require~~no ~~additional~~untrue ~~capital,~~statement inof ~~which~~a ~~case~~material itfact ~~may~~and ~~need~~does not omit to ~~raise~~state ~~additional~~a ~~funds~~material ~~from~~fact ~~lenders~~that ~~and~~is ~~equity~~required ~~markets~~to be stated or that is necessary to make a statement not misleading in the light ~~future~~of the circumstances in which it was made.

IfON ~~the~~BEHALF ~~Company’s~~OF ~~expenditures~~THE ~~exceed~~BOARD ~~its~~OF ~~incoming~~DIRECTORS ~~cashflows,~~Per: ~~the~~“John ~~Company may be required to raise additional capital~~A. InJacobson” ~~addition,~~JOHN ~~the Company may choose to pursue additional financing in order to capitalize on potential opportunities in the marketplace that may accelerate its growth objectives~~A. ~~The~~ ~~Company’s~~JACOBSON ~~ability~~President toand ~~arrange~~Chief ~~such~~Executive ~~financing~~Office in“John ~~the future will depend in part on the prevailing capital market conditions as well as on its business performance~~T. ~~There~~Sentjens” ~~can~~JOHN ~~be no assurance that the Company will be successful in its efforts to raise additional funds, if needed, on terms satisfactory to it~~T. IfSENTJENS ~~additional~~Corporate ~~capital is raised by the issuance of shares, shareholders may experience dilution to their equity interest in the Company.~~ Controller

~~The Company’s business could be adversely affected if it fails to manage its growth effectively.~~33

IfAPPENDIX ~~the Company fails to manage its growth effectively, the Company’s business and operating results~~“A” ~~could be adversely affected. The Company expects to continue to grow its operations domestically~~ ~~and internationally, and to hire additional employees. The growth in the Company’s operations and~~ ~~staff has placed, and will continue to place, a significant strain on its management systems and~~ resources. If the Company fails to manage its future anticipated growth, the Company may experience higher operating expenses, and it may be unable to meet the expectations of investors with respect to future operating results. To manage this growth the Company must, among other things, continue to:

•Changes ~~improve~~under ~~its~~the ~~financial~~Proposed ~~and~~New ~~management~~Articles ~~controls,~~of Offshore ~~reporting~~Systems ~~systems~~International and procedures; • add and integrate new senior management personnel; • improve its licensing models and procedures; • hire, train and retain qualified employees; • control expenses; • diversify channel sales strategies; and • invest in its internal networking infrastructure and facilitiesLtd.

~~The~~Set ~~Company~~out ~~has~~below ~~committed~~is ~~funds~~a todiscussion ~~obtaining~~of ~~additional~~changes ~~systems~~reflected ~~and~~under ~~facilities~~the toCompany’s ~~accommodate~~proposed ~~its~~New Articles, ~~current~~including ~~and~~a ~~future~~discussion ~~anticipated~~of ~~growth.~~substantive Tochanges included in the ~~extent~~New Article s and changes included that ~~this~~are ~~anticipated~~as ~~growth~~a ~~does~~result ~~not~~of ~~occur~~changes orunder the New Act. The New Articles incorporate a number of ~~occurs~~non-substantive ~~more~~changes, ~~slowly~~including ~~than~~the use of the ~~Company~~new ~~anticipates~~terminology adopted under the New Act. For example, it“members” ~~may~~are ~~not~~now be“shareholders” ~~able~~and to“register ~~reduce~~of ~~expenses~~members” tois ~~the~~now ~~same~~“central securities ~~degree.~~register” Ifunder the ~~Company~~New ~~incurs~~Act. ~~operating~~Many ~~expenses~~of ~~out~~these ofterminology ~~proportion~~and towording ~~revenue~~changes inare ~~any~~not ~~given~~discussed ~~quarter,~~in ~~its~~detail ~~operating~~here ~~results~~as ~~may~~they bereflect ~~adversely~~statutory ~~impacted~~requirements that the Company cannot alter or amend.

~~Third~~The ~~parties~~following ~~may~~is ~~claim~~a ~~that~~discussion of the ~~Company~~substantive ~~infringes~~changes ~~their~~proposed ~~proprietary~~in ~~rights~~the New Articles.

~~The~~Special ~~Company~~Majority potentially may receive claims that it has infringed the intellectual property rights of others. As the number of products in the software industry increases and the functionality of these products further overlap, the Company may become increasingly subject to infringement claims, including patent, trademark and copyright infringement claims. In addition, former employers of the Company’s former, current or future employees may assert claims that such employees have improperly disclosed to the Company the confidential or proprietary information of these former employers. Any such claim, with or without merit, could be time-consuming to defend, result in costly litigation, divert management’s attention from the Company’s core business, require it to stop selling or delay shipping, or cause the redesign of its product or products. In addition, the Company may be required to pay monetary amounts as damages, for ~~royalty or licensing arrangements, or to satisfy~~Resolutions ~~indemnification obligations that it has with some of its customers.~~

~~Page~~Under 10the Former Act and the Existing Articles, the majority of votes required to pass a special resolution at a general meeting of shareholders was not less than three-quarters (3/4) of the votes cast on a resolution. Under the New Act, the Company is authorized to determine whether a special resolution requires not less than two-thirds (2/3) or not less than three-quarters (3/4) of the votes cast on a resolution. The New Articles propose that a special resolution require a majority of not less than two-thirds (2/3) of the votes cast on a resolution.

~~The~~Resolutions ~~Company licenses and uses software from third parties in its business. These third party~~Required ~~software licenses may not continue to be available to the Company on acceptable terms. Also, these~~ ~~third parties may from time to time receive claims that they have infringed the intellectual~~ ~~property rights of others, including patent and copyright infringement claims, which may affect the~~ Company’s ability to continue licensing this software. The Company’s inability to use any of this third party software could result in shipment delays or other disruptions in its business, which could materially and adversely affect the Company’s operating results.

~~The~~Under the New Act, the Company is, subject to shareholder approval, now permitted in its New Articles to set out the type of approval required for certain corporate changes. This change in the New Act reflects an increasing need for companies to react and adapt to changing business conditions and to have a system in place that allows for quick responses. Under the New Act, a Company may ~~not~~choose different thresholds of support for specific resolutions, including changes such as alterations to share capital, the subdivision and consolidation of shares and company name changes. Changes such as the alteration of share capital and name changes were previously required under the Former Act to be ~~able~~approved by a special resolution of the shareholders of a company. Traditionally, where these changes are proposed between annual general meetings of shareholders, the Company would be required to ~~protect~~hold ~~its~~a ~~proprietary~~special ~~information~~general meeting to have the change approved. This is expensive for the Company and results in time delays and costs.

~~The~~As ~~Company relies on~~ a ~~combination of copyright~~result, ~~trademark~~the ~~and~~board ~~trade~~of ~~secret~~directors ~~laws,~~of ~~confidentiality procedures,~~the ~~contractual~~Company ~~provisions~~is ~~and~~proposing ~~other~~that ~~measures~~the toNew ~~protect~~Articles ~~its~~provide ~~proprietary information. All~~that ofthe ~~these~~Company ~~measures afford only limited protection. These measures~~ may ~~be invalidated~~, ~~circumvented or~~subject ~~challenged, and others may develop technologies or processes that are similar or superior~~ to the ~~Company’s~~ ~~technology.~~New ~~Despite~~Act, ~~the~~alter ~~Company’s~~its ~~efforts~~Notice toof ~~protect~~Articles, ~~its~~New ~~proprietary~~Articles ~~rights,~~and ~~unauthorized~~share ~~parties~~structure ~~may~~in ~~attempt to copy~~ the ~~Company’s~~following ~~products or to obtain or use information that the Company~~manner: ~~regards as proprietary.~~

~~The~~1. ~~Company~~by directors’s ~~products~~resolution ~~may~~or ~~contain~~ordinary ~~significant~~resolution ~~defects,~~(being ~~which~~a ~~may~~simple ~~result~~majority of the votes cast by shareholders on a resolution), as determined in ~~liability~~each ~~and/or decreased~~case ~~sales.~~ by the directors, to:

~~Software~~(a) ~~products~~create ~~frequently~~one ~~contain bugs, errors~~ or ~~failures,~~more ~~especially~~classes ~~when first introduced~~ or ~~when~~ ~~new~~series ~~versions~~of ~~are~~shares ~~released.~~and, ~~Despite~~if ~~the~~none ~~Company’s~~of ~~efforts to test its products,~~ the ~~Company might~~shares ~~experience~~of ~~significant~~a ~~errors~~class or ~~failures~~series inare ~~its~~allotted ~~products,~~ or ~~they~~issued, ~~might~~eliminate ~~not~~that ~~work~~class ~~with other hardware~~ or ~~software~~series ~~as expected. This could delay the development or release~~ of ~~new~~shares; ~~products~~(b) ~~or new versions of products~~establish, ~~or could adversely affect market acceptance of the Company’s products. Customers use the Company’s products for applications that are critical to their businesses~~increase, ~~and they~~reduce ~~have~~or aeliminate ~~greater sensitivity to product defects than~~ the ~~market~~maximum ~~for~~number ~~other~~of ~~software~~shares ~~products generally. The Company’s customers may claim~~ that the Company is ~~responsible~~authorized ~~for damages~~ to ~~the extent~~issue ~~they~~out ~~are harmed by the failure~~ of any ofclass ~~the Company’s products. If the Company were to experience significant delays in the release of new products~~ or ~~new~~series ~~versions~~ of ~~products,~~shares; or if customers were dissatisfied with product functionality or performance, the Company could lose revenue or be subject to liability for service or warranty costs. Should this occur, the Company’s business and ~~operating results could be adversely affected.~~

~~The~~(c) ~~Company’s~~authorize ~~products~~alterations ~~depend~~to onthe ~~third~~New ~~party~~Articles ~~software~~that ~~products~~are ~~and~~procedural ~~its~~or ~~reputation~~administrative ~~and~~in ~~results~~nature ~~of operations~~or ~~could~~are bematters ~~adversely~~that ~~affected~~pursuant byto the ~~Company’s~~New ~~inability~~Articles toare solely within the directors’ powers, control ~~their~~or ~~operations~~authority.

~~The Company~~Directors’s ~~products~~Authority ~~incorporate~~to ~~and~~Set ~~use~~Auditor’s ~~software products developed by other entities. The~~Remuneration ~~Company does not have assurance that such third parties will:~~

•Under ~~remain~~the New Act, the Company is, subject to shareholder approval, permitted to include in ~~business;~~the •New Articles ~~support~~authorization for the directors to set the remuneration paid to the auditor of the Company’s. ~~product~~The ~~lines;~~Former •Act ~~maintain~~required ~~viable~~the ~~and~~shareholders ~~functional~~to ~~product~~set ~~lines;~~the ~~and~~remuneration •or ~~make~~the ~~their~~shareholders ~~product~~to authorize, ~~lines~~on ~~available~~an annual basis, the directors to set the remuneration. Historically, shareholders of the Company onhave ~~commercially~~always ~~acceptable~~authorized ~~terms~~the directors to set the auditor’s remuneration. As a result, the inclusion of the authority for directors to set the auditor’s remuneration in the New Articles merely codifies existing practice. More importantly, however, this change also codifies new corporate governance rules and regulations relating to audit committees and the appointment and remuneration of auditors.

~~Any~~Share ~~significant interruption in the supply of such third-party technology could have a materially~~Certificates ~~adverse effect on the Company’s business, results of operation, cash flows and financial condition.~~

~~The~~Under ~~Company’s~~the ~~products~~Existing ~~may~~Articles, ~~not~~a beshareholder ~~compatible~~is ~~with~~entitled ~~various~~to ~~operating~~a ~~systems~~share ~~and~~certificate ~~therefore~~representing the number of shares of the Company ~~may~~the ~~not~~shareholder beholds. ~~able~~Under the New Act, a shareholder is now entitled to ~~sell~~a ~~its~~share ~~products~~certificate representing the number of shares of the Company the shareholder holds or a written acknowledgement of the shareholder’s right to ~~potential~~obtain ~~customers~~such a share certificate. As a result, the New Articles have been amended to provide for this additional right. The addition of the ability to issue a written acknowledgement is very useful for public companies such as the Company since it permits flexibility in corporate and securities transactions.

~~The Company’s products are used in combination with various operating systems. The Company’s future~~Dividends ~~success depends on our ability to continue to support widely-used operating~~

~~Page~~Under 11the New Act, a company may pay dividends out of profits, capital or otherwise. This is a significant change from the situation as it existed under the Former Act, which was silent on the issue and did not contain rules comparable to those set out in the New Act governing the payment of dividends. As a result, payment of dividends by companies under the Former Act was governed by the common law, which provided that dividends were payable out of profits only, and not out of capital or otherwise. In order to provide greater flexibility to the Company, the New Articles contain provisions that permit the Company to pay dividends in the manner permitted under the New Act.

~~systems.~~Residency ~~The Company’s applications run on Microsoft operating systems. Therefore, the Company’s ability to increase sales depends on the continued acceptance~~ of ~~Microsoft operating system~~Directors ~~products. If the Company is unable to develop and market products that support Microsoft’s~~ ~~operating platforms or develop and market products that support other operating systems on a timely~~ ~~and cost effective basis, its business and operating results could be adversely affected.~~

~~Selected~~Under ~~Annual~~the ~~Information~~Former Act, the majority of directors of a company had to be residents of Canada with at least one director being a resident of British Columbia. The New Act no longer specifies residency requirements for directors of a company. Accordingly, the New Articles do not specify any residency requirements for the Company’s directors.

Statement of Earnings Information	For the years ended November 30
	2004		2003		2002
	$		$		$
Revenue		13,451,303		11,520,793		13,868,779
Gross profit		7,781,979		6,361,725		6,771,387
Gross profit percentage		57.9%		55.2%		48.8%
Net earnings for the year		114,741		385,369		1,635,031
Basic earnings per share		0.00		0.01		0.06
Diluted earnings per share		0.00		0.01		0.06

Disclosure of Interests of Directors and Senior Officers

Balance Sheet Information	As at November 30
	2004		2003		2002
	$		$		$
Cash and cash equivalents		251,037		3,837,555		3,244,048
Working capital *		8,287,798		8,071,926		4,449,492
Current assets		10,964,025		10,377,836		8,810,568
Total assets		12,310,738		11,728,257		10,766,438
Current liabilities		2,676,227		2,305,910		4,361,076
Long term liabilities		—		187,384		372,717
Total liabilities		2,676,227		2,493,294		4,733,793
Shareholders’ equity		9,634,511		9,234,963		6,032,645
Dividends declared per share:
Common shares		—		—		—
Class A preference shares		—		—		—
Class B preference shares		3.00		2.37		—

Under the New Act, the provisions relating to the disclosure of interests by directors have been revised and updated. Under the Former Act, a director of a company was required to disclose the nature and extent of the director’s direct or indirect interest in any proposed contract or transaction involving the company. The New Act expands the application of the disclosure requirement to include senior officers of a company, but inserts a two-fold materiality test as the threshold for disclosure by a director or senior officer: (a) the proposed contract or transaction must be material to the company; and (b) the director or

*senior ~~Working~~officer ~~Capital~~of the company must either: (i) have a material interest in such proposed contract or transaction; or (ii) if such director or senior officer is a ~~non-GAAP~~director ~~measure~~or ~~that~~senior ~~does~~officer ~~not~~of ~~have~~(or has a ~~standardized~~material ~~meaning~~interest in) an entity, and ~~may~~that ~~not~~entity behas ~~comparable~~a tomaterial ~~similar~~interest ~~measures~~in ~~presented~~the byproposed contract ~~other~~or ~~issuers~~transaction. ~~This~~All ~~measure~~directors ~~does~~and ~~not~~senior ~~have~~officers of a ~~comparable~~company ~~GAAP~~are ~~measure~~bound by these new provisions. ~~Working~~The ~~Capital~~New isArticles ~~defined~~incorporate asby ~~current~~reference ~~assets~~these ~~less~~provisions ~~current~~of ~~liabilities~~the New Act.

~~Page~~Directors’ 12Meetings

~~The~~Under ~~Company’s~~the ~~annual~~New ~~and~~Act, ~~quarterly~~the ~~results~~provisions ~~are~~relating ~~primarily~~to ~~affected~~directors’ bymeetings ~~the~~have ~~level,~~been ~~timing~~revised and ~~duration of~~updated ~~customer orders and customer product delivery requirements. The Company depends heavily on~~to ~~government~~allow ~~contracts~~directors ~~and~~to ~~derives~~participate aby ~~significant~~telephone ~~amount~~or ofother ~~revenue~~communication ~~from~~mediums aas ~~few~~long ~~customers,~~as ~~which may result in varying revenue, gross profit and earnings. Approximately 69% of~~ the ~~Company’s revenue~~directors ~~for~~are ~~the~~able ~~fiscal~~to ~~year~~communicate ~~ended~~with ~~November 30,~~each ~~2004 was from the U~~other.S. ~~Coast~~The ~~Guard,~~New ~~the~~Articles ~~Royal~~have ~~Navy~~been ofdrafted ~~the United~~to ~~Kingdom,~~broaden the ~~Royal Australian Navy, the Royal New Zealand Navy and the Portuguese Navy.~~ability ~~Approximately 65%~~ of ~~the~~directors ~~Company’s~~to ~~revenue~~participate ~~for~~in ~~the~~meetings ~~fiscal~~through ~~year~~other ~~ended~~communication ~~November 30,~~mediums ~~2003~~to ~~was~~allow ~~from~~directors ~~the~~who ~~U.S.~~may ~~Coast~~not ~~Guard,~~be ~~the~~able ~~Danish~~to ~~Navy~~attend ~~and~~in ~~the~~person ~~Canadian~~to ~~Navy.~~still ~~Approximately~~participate ~~84%~~in meetings of the ~~Company’s revenue for the fiscal year ended November 30, 2002 was from U~~directors.S. ~~Coast~~In ~~Guard~~addition, the ~~Danish~~New ~~Navy~~Articles ~~and~~have ~~the Canadian~~been ~~Navy.~~updated ~~Approximately~~to ~~87%~~allow ofdirectors ~~the~~to ~~Company’s~~receive ~~revenue~~notices ~~for~~of ~~the~~meetings ~~fiscal~~by ~~year ended November 30,~~electronic ~~2004~~means, ~~was~~which ~~from~~allows ~~national~~for quicker and ~~international~~more ~~governments~~efficient ~~compared~~communication towith ~~91%~~directors ~~and~~of ~~98% for~~ the ~~fiscal years 2003 and 2002 respectively~~Company.

~~The~~Indemnification ~~lower revenue in fiscal 2003 as compared to fiscal 2002 was largely attributable to the substantial completion in fiscal 2002~~ of ~~the~~Directors Canadian Department of National Defence contract awarded to the Company in fiscal 2001, the Marinette Marine Corp. contracts to provide ECDIS systems for the U.S. Coast Guard Juniper class buoy tenders, and ~~the substantial completion of the~~Officers ~~Danish Navy contract in early fiscal 2003. The increase in revenue in fiscal 2004 over fiscal 2003~~ ~~was the result of contracts from the Royal Navy of the United Kingdom and the Royal Australian Navy~~ ~~that were awarded to the Company in late fiscal 2003 and early fiscal 2004.~~

~~The~~Under ~~fluctuations~~the inFormer ~~gross~~Act, ~~profit~~a ~~year~~company ~~over~~could ~~year~~only ~~are~~indemnify ~~impacted~~directors ~~negatively~~where byit ~~projects~~obtained ~~that~~prior ~~include a~~court ~~large~~approval, ~~proportion~~except ofin ~~third-party~~certain ~~systems~~limited orcircumstances. ~~labour~~The ~~resulting~~Existing inArticles ~~higher~~permit ~~cost~~the ofCompany ~~sales. Certain~~to ~~contracts~~indemnify ~~awarded~~directors, subject to the ~~Company~~requirements ~~may~~of ~~require~~ the ~~Company~~Former toAct. ~~include~~Under ~~third-party~~the ~~systems~~New orAct, ~~labour.~~a company is Innow ~~order~~permitted to ~~maintain~~indemnify ~~competitiveness~~a onpast ~~these~~or ~~contracts,~~present ~~the~~director ~~Company~~or ~~may~~officer ~~elect~~without toobtaining ~~reduce~~prior ~~its usual~~court ~~margins~~approval onin ~~the~~respect ~~third~~of ~~party~~an ~~components~~“eligible proceeding”. InAn ~~addition,~~“eligible ~~the~~proceeding” ~~product~~includes ~~mix~~any legal proceeding relating to the activities of ~~Software~~the individual as a director, ~~Geomatics~~former director, ~~Systems~~officer or ~~and~~former ~~systems~~officer ~~components~~of ina ~~any~~company. ~~given~~Under ~~period~~the ~~may~~New ~~impact~~Act, ~~the~~however, ~~gross~~a ~~profit~~company ~~for~~will ~~the~~be ~~period.~~prohibited from paying an indemnity if:

~~During~~(a) the ~~first~~party ~~six~~did ~~months~~not ofact ~~fiscal~~honestly ~~2004,~~and ~~the Company’s gross profit percentage increased because of an increase~~ in ~~software~~good ~~revenue.~~faith ~~During~~with ~~the~~a ~~last~~view ~~six months of fiscal 2004, the Company’s gross profit percentage was lower when compared~~ to the ~~first~~best ~~six~~interests ~~months~~of as the ~~Software revenue decreased and Systems and systems components revenue increased.~~ company;

~~Page~~(b) 13 the proceeding was not a civil proceeding and the party did not have reasonable grounds for believing that his or her conduct was lawful; and

~~Results~~(c) the ofproceeding ~~Operations~~is brought against the party by the company or an associated corporation.

~~The~~As ~~table~~a ~~below presents~~result, ~~for~~the New Articles provide that the ~~periods~~Company ~~indicated,~~will ~~selected~~indemnify ~~financial~~past ~~data~~and present directors and officers of the Company, subject to the limits imposed under the New Act. The board of ~~expressed~~directors of the Company believes that it is in ~~dollars~~the best interests of the Company to indemnify past and aspresent adirectors ~~percentage~~and officers, subject to the limits and conditions of ~~total~~the ~~revenues:~~New Act.

	Year Ended November 30
	2004		2004		2003		2003
	$		%		$		%
Revenue
Software		5,576,540		41.5%		1,036,417		9.0%
Systems and system components		4,328,740		32.2%		6,208,464		53.9%
Geomatics		2,979,728		22.2%		3,560,440		30.9
Other		566,295		4.1%		715,472		6.2%
		13,451,303		100.0%		11,520,793		100.0%
Cost of sales		5,669,324		42.1%		5,159,068		44.8%
Gross profit		7,781,979		57.9%		6,361,725		55.2%
Expenses
General and administrative		3,435,688		25.5%		2,498,021		21.8%
Research and development		2,104,806		15.7%		1,548,523		13.4%
Sales and marketing		3,160,359		23.5		2,000,238		17.4
Amortization		231,033		1.8%		241,295		2.1%
Interest		2,045		0.0%		2,824		0.0%
Foreign exchange loss		38,338		0.3%		151,961		1.3%
Technology Partnerships Canada royalty		124,425		0.9%		50,473		0.4%
Technology Partnerships Canada contribution		(1,471,414)		(10.9%)		(376,880)		(3.3%)
		7,625,280		56.8%		6,116,455		53.1%
Earnings before income taxes		156,699		1.1%		245,270		2.1%
Income tax expense (recovery)		41,958		0.3%		(140,099)		(1.2%)
Earnings for the year		114,741		0.8%		385,369		3.3%

Delivery of Documents to Shareholders

~~Revenues~~As a result of changes under the New Act, the New Articles now permit the delivery of documents to a shareholder by facsimile transmission, email and any other method permitted under securities legislation. This change reflects recent developments under securities legislation. As part of its efforts to modernize and adopt new, less expensive methods of shareholder communication, the board of directors of the Company believes that it is in the best interests of the Company to allow for facsimile transmission, email and other permitted methods of delivery of documents to shareholders. As a result, the New Articles propose to allow the Company to deliver documents to shareholders by facsimile transmission, email and other methods permitted under securities legislation.

~~The~~Location Company’s core revenue stream is derived from four sources: Software, Systems and system components, Geomatics, and Other which includes system repairs and servicing, training and consulting. The Company’s principal developed and manufactured product, the Electronic Chart Precise Integrated Navigation System (“ECPINS®”), delivers the majority of ~~the~~Shareholder ~~revenue.~~Meetings ~~The Company~~ ~~also derives revenue from the delivery of the ECPINS® software component of its system product.~~

~~Consolidated~~Under ~~revenue~~the ~~for~~Former ~~the~~Act, ~~fiscal~~annual ~~year~~general ~~ended~~meetings ~~November 30,~~were ~~2004~~required ~~was~~to ~~$13,451,303,~~be ~~compared~~held ~~with~~in British Columbia or at ~~$11,520,793~~such ~~for~~other location as may be approved by the ~~fiscal~~Registrar ~~year~~of ~~ended~~Companies ~~November 30,~~upon ~~2003~~application by a company. Under the New Act, ~~resulting~~as inlong anas ~~increase~~it ofis ~~16.8%.~~provided ~~The Company~~for in a company’s ~~revenues~~articles, ~~are~~companies ~~primarily~~may ~~affected~~hold bytheir shareholder ~~the~~meetings ~~level,~~inside ~~timing~~or ~~and~~outside ~~duration~~ of ~~customer~~British ~~orders,~~Columbia. The New Articles specifically allow the ~~relative~~directors ~~mix~~to authorize, by directors’ resolution, the holding of ~~contracts~~the ~~and~~Company’s ~~customer~~shareholder ~~product~~meetings anywhere ~~delivery~~in ~~requirements~~North America.

~~The~~APPENDIX ~~Company depends heavily on government contracts and derives a significant amount of revenue~~B ~~from a few customers, which may result in varying revenue and margins. During the fiscal year ended~~ ~~November 30, 2004, the Company continued and expanded its business development initiatives with~~ ~~prospective and existing customers. Some of the activities did not~~

~~Page~~PROPOSED 14REVISED SECTION 2.1 OF ARTICLES

~~result~~2.1 inAuthorized ~~closing~~Share ~~orders during this period because of the long sales cycles, but may yield orders~~Structure ~~in the future.~~

The ~~main~~authorized ~~customers~~share ~~for~~structure ~~the Company’s products and services were the Royal Navy~~ of the United Kingdom through Lockheed-Martin UK, the Royal Australian Navy through Nautronix Ltd., the U.S. Coast Guard, the Royal New Zealand Navy and the Portuguese Navy through SICOM — Sistemas de Comunições, Lda, of Lisbon, Portugal. Revenue from these customers accounted for 61% of the consolidated revenue for the three months ended November 30, 2004 and for 69% of the consolidated revenue for the fiscal year ended November 30, 2004. For fiscal 2003, the main customers for the Company’s ~~products~~consists ~~and services were the U.S. Coast Guard, Canadian Coast Guard, Canadian Department~~ of ~~National Defence, Royal Danish Navy and the U.S. Navy. Revenue from these customers~~: ~~accounted for 50% of the consolidated revenue for the three months ended November 30, 2003 and for~~ ~~70% of the consolidated revenue for the fiscal year ended November 30, 2003.~~

~~A significant change in the Company’s revenue mix occurred during the last fiscal quarter of 2003 and the six months ended May~~(a) ~~31,~~an ~~2004.~~unlimited ~~Revenues~~number ~~during this period shifted to Software from Systems and system components. The revenue shift was the result~~ of acommon ~~change~~shares inwithout ~~the~~par ~~nature of contracts the~~value; ~~Company entered into during the last fiscal quarter of 2003 and the first two fiscal quarters of~~ ~~2004 where, in order to ensure its success in pursuing certain contracts, the Company elected to~~ ~~sell off-the-shelf or customized versions of its ECPINS® software. Prior to this, the Company~~ ~~focused on the delivery of ECPINS® electronic chart navigation systems which included both its ECPINS® software and specialized hardware.~~

~~During~~(b) ~~the~~100,000,000 ~~third~~Class ~~and~~“A” ~~fourth~~Preference ~~fiscal~~shares ~~quarters~~without ofpar ~~2004~~value, ~~the Company’s revenue mix returned to its historical makeup where the Company’s contracts focused on the delivery~~ of ~~ECPINS®~~which ~~electronic chart~~10,000,000 ~~navigation~~shares ~~systems which~~ are ~~reported~~designated as ~~Systems~~Class ~~and~~“A” ~~systems~~Preference ~~component~~shares ~~revenue.~~ Series A Convertible;

~~Segment~~(c) ~~Results~~ 100,000,000 Class “B” Preference shares with a par value of $50.00 each of which 10,000,000 shares are designated as Class B Series 1 Preference Shares; and

~~Revenue from the Navigation Systems business unit for fiscal 2004 was $10,232,671 compared to $7,927,166 for fiscal 2003,~~ (d) an ~~increase~~unlimited ofnumber ~~$2,305,505 or 29.1%. The increase in revenue in fiscal 2004 over fiscal 2003 is attributable to contracts from the Royal Navy~~ of ~~the~~Class C ~~United~~Preference ~~Kingdom~~share ~~and the~~without ~~Royal~~par ~~Australian Navy that were awarded to the Company in late fiscal 2003 and early fiscal 2004~~value.

~~Revenue~~The ~~from~~special ~~the~~rights ~~Geomatics~~and ~~business~~restrictions ~~unit~~attached ~~for fiscal 2004 was $3,027,353 compared~~ to ~~$3,593,627 for~~ the ~~same~~Class ~~period~~“A” ~~last~~Preference ~~year~~shares, athe ~~decrease~~Class ~~of $566,274 or 15.8%. The business unit revenue levels~~“B” ~~decreased~~Preference inshares and the ~~current~~Class ~~fiscal~~“C” ~~year~~Preference ~~compared~~Shares ~~with~~are ~~that of the previous fiscal year~~ as ~~the~~set ~~result of~~out ~~supplier delays experienced by the Company~~ in ~~receiving~~Schedule ~~the~~“A” ~~contracted services~~ to ~~satisfy~~these ~~customer needs and increased difficulty in penetrating the U~~Articles.~~S. geomatics market.~~

~~Revenue~~PROPOSED ~~from the Applications business unit was $191~~RIGHTS,~~279~~ ~~for~~PRIVILEGES ~~fiscal~~AND ~~2004.~~RESTRICTIONS ~~The~~ATTACHED ~~Applications~~TO ~~business unit~~CLASS ~~develops~~C ~~software~~PREFERENCE ~~applications~~SHARES ~~and~~TO ~~tools~~BE ~~for~~ADDED ~~situational awareness and provides products and~~AS ~~services~~PART to3 ~~military~~TO ~~forces,~~SCHEDULE ~~government~~“A” ~~agencies~~OF ~~and systems integrators to enable improved~~ARTICLES ~~situational awareness. The sales cycle into government customers for Applications products can be~~ ~~upwards of three years. The business unit’s initial product is~~ ~~Common Operational Picture — Image Display Server (COP-IDSÔ).~~

In(1) ~~all~~The ~~three~~Class ~~business~~C ~~units,~~Preference ~~the~~Shares ~~Company~~as ~~continues~~a toclass ~~invest~~shall ~~significant~~have ~~corporate,~~attached ~~sales~~to ~~and marketing~~them ~~resources~~the inspecial ~~identifying~~rights and ~~pursuing~~restrictions ~~new~~specified ~~opportunities and contracts, both~~ in ~~its existing~~this ~~customer base and with new prospective customers~~section.

~~Page~~(2) The 15Class C Preference Shares may be issued in one or more series.

~~Gross~~(3) ~~Profit~~ Subject to the Business Corporations Act, the directors may from time to time, by resolution, if none of the Class C Preference Shares of any particular series are issued, alter the Articles of the Company and authorize the alteration of the Notice of Articles of the Company, as the case may be, to do one or more of:

~~For~~(a) ~~fiscal~~determine ~~2004,~~the maximum number of shares of that series that the Company’s ~~gross~~is ~~profit~~authorized ~~increased~~to $1issue,~~420~~ determine that there is no such maximum number,~~254~~ or alter any such determination; (b) create an identifying name for the shares of that series, or alter any such identifying name; (c) attach special rights or restrictions to $7the shares of that series,~~781~~ including,~~979~~ ~~from~~but $6without limiting or restricting the generality of the foregoing,~~361~~ the rate or amount of dividends (whether cumulative,~~725~~ non-cumulative or partially cumulative), the dates and places of payment thereof, the consideration for ~~fiscal~~, ~~2003.~~and ~~Gross~~the ~~profit~~terms ~~percentage~~and ~~increased~~conditions toof, ~~57.9%~~any ~~from~~purchase ~~55.2%~~for ~~when~~cancellation ~~comparing~~or ~~fiscal~~redemption ~~2004~~thereof ~~over fiscal~~(including ~~2003.~~ redemption after a fixed term or at a premium), conversion or exchange rights, the terms and conditions of any share purchase plan or sinking fund, restrictions respecting payment of dividends on, or the

Arepayment ~~significant~~of ~~change~~capital in ~~the~~respect ~~Company’s~~of, ~~revenue~~any ~~mix~~other ~~occurred~~shares ~~during the last fiscal quarter~~ of ~~2003 and~~ the ~~six~~Company ~~months ended May 31, 2004. Revenues during this period shifted to Software from Systems~~ and ~~system~~voting ~~components~~rights and ~~resulted~~restrictions; inor ~~the~~alter ~~Company~~any ~~reporting~~such ~~higher~~special ~~gross~~rights ~~profit~~or ~~percentage.~~restrictions; ~~The revenue~~but ~~shift~~no ~~was~~such ~~the~~special ~~result~~right ofor arestriction ~~change~~shall incontravene the ~~nature~~provisions of ~~contracts~~subclause ~~the~~(4) ~~Company entered into during the last fiscal quarter~~ of ~~2003~~this ~~and the first two fiscal quarters of 2004~~section. ~~These contracts required the Company to deliver off-the-shelf or customized versions of its ECPINS® software.~~

~~During~~(4) The holders of Class C Preference Shares shall be entitled, on the ~~third~~liquidation ~~and~~or ~~fourth~~dissolution ~~fiscal~~of ~~quarters~~the Company, whether voluntary or involuntary, or on any other distribution of ~~2004~~its assets among its shareholders for the purpose of winding up its affairs, to receive, before any distribution is made to the holders of common shares or any other shares of the Company’s ~~revenue~~ranking ~~mix~~junior ~~returned~~to the Class C Preference Shares with respect to ~~its historical~~repayment ~~makeup~~of ~~where~~capital on the liquidation or dissolution of the Company’s, ~~contracts~~whether ~~focused~~voluntary or involuntary, or on any other distribution of its assets among its shareholders for the ~~delivery~~purpose of ~~ECPINS®~~winding ~~electronic chart~~up ~~navigation~~its ~~systems~~affairs, the amount paid up with respect to each Preferred share held by them, together with the fixed premium (if any) thereon, all accrued and unpaid cumulative dividends (if any and if preferential) thereon, which for such purpose shall be calculated as if such dividends were accruing on a day-to-day basis up to the date of such distribution, whether or not earned or declared, and all declared and unpaid non-cumulative dividends (if any and if preferential) thereon. After payment to the holders of Class C Preference Shares of the amounts so payable to them, they shall not, as such, be entitled to share in any further distribution of the property or assets of the Company except as specifically provided in the special rights and restrictions attached to any particular series.

~~Segment~~OFFSHORE ~~Results~~SYSTEMS INTERNATIONAL LTD. Request for Interim Financial Statements

~~Gross~~In ~~profit~~accordance ~~from~~with ~~the~~National ~~Navigation~~Instrument ~~Systems~~54-102 ~~business~~of ~~unit~~the ~~for~~Canadian ~~fiscal~~Securities ~~2004 was $6~~Administrators,~~561,870 compared to~~ ~~$4,797,613~~registered ~~for~~and ~~fiscal~~beneficial ~~2003,~~shareholders ~~an increase~~ of ~~$1,764,257~~the orsubject ~~36.8%.~~Corporation ~~Gross~~may ~~profit~~elect ~~percentage~~annually ~~increased~~ to ~~64.1%~~receive interim ~~from~~corporate ~~60.5%~~mailings, ~~period~~including ~~over~~interim ~~period.~~financial ~~The~~statements ~~increase~~of ~~was attributable to~~ the ~~increased software revenue for the six months ended May 31~~Corporation, ~~2004~~if ~~and~~they ~~resulted in the Navigation Systems business unit~~so ~~reporting~~request. ~~gross~~If ~~margin~~you ~~percentages~~wish ~~that~~to ~~were~~receive ~~higher~~such ~~than~~mailings, ~~those~~please ~~reported~~complete ~~historically. During the third~~ and ~~fourth~~return ~~fiscal~~this ~~quarters~~form ~~of 2004 the Company’s revenue mix returned~~ to ~~its historical~~: ~~makeup which has the Company’s contracts focused on the delivery~~ ~~of ECPINS® electronic chart~~ ~~navigation systems.~~

~~Gross~~Computershare ~~profit~~Trust ~~from~~Company ~~the Geomatics business unit for fiscal 2004 was $1,048,591 compared to $1,564,112 for fiscal 2003, a decrease~~ of ~~$515,521 or 33.0%. Gross profit percentage decreased to 34.6% from~~Canada ~~43.5%~~100 ~~period~~University ~~over period. The decrease is the result of the competitive nature of the geomatics~~Avenue ~~market where customers are very price sensitive and the increasing protectionism the Geomatics~~9thFloor ~~business~~Toronto, ~~unit has encountered entering the U.S. geomatics market. The Company plans to implement~~ON ~~changes~~M5J ~~in the strategies to improve its market position in the U.S.~~2Y1

~~Gross~~NAME: profit for the Company’s new business unit — Applications was $171,518 for fiscal 2004 compared to $0 for fiscal 2003. Gross profit percentage for fiscal 2004 was 89.7% and reflected the contract mix that included more applications software contracts than applications systems contracts. ADDRESS:

~~General~~POSTAL ~~and~~CODE: ~~Administrative Expenses~~___________________________

~~General~~I ~~and~~confirm ~~administrative~~that ~~(“G&A”)~~I ~~expenses~~am ~~consist~~an ~~mainly~~owner of ~~salaries~~common ~~and~~shares ~~benefits~~ of management and administrative personnel, professional fees, public company expenses, related facility costs and other general administrative expenses, net of interest and other income. For fiscal 2004, G&A increased $937,667 to $3,435,688 from $2,498,021 for fiscal 2003. As a percentage of revenue, G&A increased to 25.5% from 21.8% period over period. The increase is the result of increased professional fees, directors’ fees and directors and officers insurance, as well as charges for stock-based compensation, increased salaries and decreased interest income that resulted from lower cash reserves during the periodsCorporation. ~~The Company anticipates that as a result of recently introduced~~ ~~regulations in Canada and the U.S., the Company will continue to experience increases in costs~~ ~~primarily relating to professional fees.~~

~~Page~~SIGNATURE 16OF SHAREHOLDER: ___________________________________ DATE: _______

~~Research~~CUSIP: ~~and Development Expenses~~67627E101

~~Research~~COMPANY ~~and~~CODE: ~~development (“R&D”) expenses consist mainly of salaries and benefits of software and~~OSIQ ~~hardware engineering personnel, sub-contractor costs, facilities expenses and related expenses. The~~ ~~Company expenses research and development costs in the period incurred unless, in the opinion of~~ management, certain development costs meet the deferral criteria under Canadian GAAP, in which case development expenditures are capitalized and amortized over the estimated life of the related products. The Company has not capitalized any development costs for fiscal 2004 or for fiscal 2003.

The Company continued to invest in new product development in 2004. The Company believes that in order to maintain its technological capabilities, it must continue to develop existing products and introduce new high quality products that challenge and redefine the industry standards. For fiscal 2004, R&D costs increased $556,283 to $2,104,806 or 15.7% of revenue, compared to $1,548,523 or 13.4% of revenue for fiscal 2003. The increase in spending is the result of additional salaries and benefits for new staff to support the additional R&D activities related to the development of the recently released COP-IDSÔ product and the continuing development of the ECPINS® product. The increase in R&D costs for fiscal 2004 does not reflect approximately $282,000 that was charged to cost of sales to support the software customization required to meet the needs of specific customers. For fiscal 2003, R&D costs charged to cost of sales to support the software customization required to meet the needs of specific customers was approximately $114,000.

In November of 1999, the Company announced an agreement with Technology Partnerships Canada (“TPC”) whereby TPC granted financial assistance to the Company to fund research and development activities to March 31, 2003. As at November 30, 2003, the Company had received the maximum eligible contribution of $4,000,177. Under the terms of the agreement, the Company is required to pay TPC a royalty based on the revenue of its subsidiary Offshore Systems Ltd. To November 30, 2004, the Company has accrued for future payment or paid royalties of $1,241,154. Royalty payments will continue until the cumulative royalties paid or payable to November 30, 2008 are at least $7,810,230 or until November 30, 2014.

In April of 2004, TPC announced an agreement with the Company whereby TPC granted financial assistance to the Company to fund research and development activities to March 31, 2007. The maximum eligible contribution is $3,768,391. As at November 30, 2004, the Company has claimed for $1,471,414 of eligible assistance under the TPC program. The Company will receive the remaining contributions over the remaining term. Also, under the terms of the agreement, the Company is required to pay TPC a royalty based on the revenue of its subsidiary Offshore Systems Ltd. commencing January 2006. Royalty payments will continue until the cumulative royalties paid or payable to December 31, 2013 are at least $6,079,176 or until December 31, 2017. There were no royalties paid or payable in connection with this agreement for fiscal 2004.

Although the Company believes that its submissions for TPC funding meet the terms and conditions of the TPC agreements, the final determination is subject to audit by government authorities in the ordinary course of business. During the year ended November 30, 2004, the Company was subject to an audit by government authorities. The results of the audit have not been communicated to the Company however the Company has no reason to believe that the audit will have a material impact on the Company’s financial results.

Sales and Marketing Expenses

Page 17

and Australasian markets. The expansion effort targets new and existing customers in the military agencies of Canada, U.S., European NATO and other allies of Canada to increase the profile of the Company and its products through the establishment of marketing agreements with companies local to the targeted regions and to broaden the Company’s customer base thereby reducing its dependence on the current few international customers. Some of these activities may not result in closing orders during the current year but may yield orders in subsequent fiscal years. The Company expects a continued increase in S&M expenditures for the ongoing pursuit of these opportunities.

Amortization

Total amortization increased $2,585 to $362,564 for fiscal 2004 from $359,979 for fiscal 2003. The increase reflects the acquisitions in the period and mix of property, plant and equipment in the Company at November 30, 2004.

Interest

Interest expense decreased to $2,045 for fiscal 2004 from $2,824 for fiscal 2003. The Company did not utilize its operating line credit facility of $1,000,000 during fiscal 2004.

Foreign Exchange

Foreign exchange loss for fiscal 2004 decreased $113,623 to $38,338 from $151,961 for fiscal 2003. The decrease in fiscal 2004 was the result of the Company having established a policy during the first quarter of fiscal 2003 to hedge against foreign exchange exposure.

Income Taxes

Based on the information available at the time of the issue of the audited consolidated financial statements for fiscal 2004, the Company estimated that it will have sufficient taxable earnings in future years to utilize a portion of the Company’s $3,079,232 Canadian and $315,342 U.S. non-capital losses carried forward and other tax balances. As a result of this assessment, the Company has recognized a future tax recovery of $479,446 for fiscal 2004 compared to a future tax recovery of $363,484 for fiscal 2003. In accordance with Canadian GAAP, the Company provided a valuation allowance of $3,842,899 against the total future tax asset as it is not considered “more likely than not” that the remaining future tax asset will be recovered. The Company continues to evaluate its taxable position quarterly and considers factors such as estimated taxable income, the history of losses for tax purposes and the growth of the Company, among others.

For fiscal 2004, the Company recorded current tax expense of $521,404, which is the tax expense that the Company would have incurred had the Company not had available losses carried forward from prior years. This compares to a current tax expense for the prior fiscal year of $223,385.

Earnings/Loss

As a result of the above factors, earnings for fiscal 2004 was $114,741 or 0.8% of revenue, compared to earnings of $385,369 for fiscal 2003, or 3.3% of revenue.

Page 18

Summary of Quarterly Results

					Net			BasicEarnings/			DilutedEarnings/
	Revenue		Gross Profit		Earnings/(Loss)			(Loss) perShare			(Loss) perShare
For the three months ended	$		$		$			$			$
November 30, 2004		3,696,137		1,968,649		(251,851	)		(0.01	)		(0.01	)
August 31, 2004		2,951,571		1,469,554		(483,869	)		(0.02	)		(0.02	)
May 31, 2004		2,773,835		1,775,003		298,670			0.01			0.01
February 29, 2004		4,029,760		2,568,773		551,791			0.02			0.02
November 30, 2003		2,724,438		1,630,781		323,756			0.01			0.01
August 31, 2003		2,275,153		1,176,211		(338,797	)		(0.01	)		(0.01	)
May 31, 2003		2,958,027		1,694,246		152,162			0.00			0.00
February 28, 2003		3,563,175		1,860,487		248,248			0.01			0.01

For a discussion on the factors that affect the quarterly results, please refer to the section Selected Annual Information.

Liquidity and Capital Resources

The Company strives to maintain cash-contributing profitable operations that provide an adequate liquidity and capital resource base for growth. Every business endeavour the Company develops or acquires targets a positive cash flow from the outset.

The Company believes that cash flow from operating activities, together with cash on hand and borrowings available under its revolving credit facilities, will be sufficient to fund currently anticipated working capital, planned capital spending and debt service requirements for the next 12 months. There can be no assurance that these resources will be adequate or that additional financing will be available to the Company.

At November 30, 2004, the Company had current assets of $10,964,025 current liabilities of $2,676,227 and a cash position of $251,037. Working capital increased $215,872 to $8,287,798 at November 30, 2004 from $8,071,926 at November 30, 2003 primarily due to a combination of an increase in accounts receivable and a decrease in cash and cash equivalents.

The Company has credit facilities consisting of an operating line, standby letters of credit and forward exchange contract facilities. The credit facilities permit the Company to borrow funds directly for general corporate purposes (including acquisitions) at floating rates. No borrowings against the operating line were outstanding as at November 30, 2004. The Company has a $1,000,000 operating line available with a Canadian chartered bank collateralized by accounts receivable and inventory. The Company has issued standby letters of credit totalling U.S. $127,000 and Australian $283,886. The Company has utilized the standby letters of credit to support certain performance obligations to our customers. The Company has entered into foreign exchange forward contracts in the amount of U.S. $851,196, Australian $3,678,061 and

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€383,310. The Company utilizes its forward exchange contract facility to reduce its exposure to exchange rate movements.

Cash flows from operating activities before changes in non-cash working capital items for fiscal 2004, were $690,939 compared with $619,591 for fiscal 2003, an increase of $71,348. The increase in cash flow for fiscal 2004 was the result of the Company’s decreased earnings for fiscal 2004 being offset by the effect of increases to cash flow provided by the non-cash items stock based compensation and future tax assets, as compared to fiscal 2003.

Changes in non-cash working capital items for fiscal 2004 were a usage of cash of $4,118,532 compared to usage of cash of $2,490,597 for fiscal 2003. Changes occurred in most non-cash working capital items between these two periods — all within the normal business activities of the Company. The largest change was an increase in Accounts receivable, which is the result of milestone terms that exist in certain contracts.

Cash used in investing activities totalled $358,856 for fiscal 2004 compared with $309,386 for fiscal 2003. The increase is reflective of the acquisitions of property, plant and equipment commensurate with the Company’s plans to obtain additional systems and facilities to accommodate its current and future anticipated growth.

Net cash provided by financing activities for fiscal 2004 amounted to $199,931 compared to net cash provided of $2,773,899 for fiscal 2003. The issuance of common shares provided funds of $398,479 for fiscal 2004 compared to having provided $606,069 for fiscal 2003. Preferred share issue costs used funds of $20,115 for fiscal 2004 compared to the issuance of warrants and preferred shares net of issue costs having provided funds of $2,726,995 for fiscal 2003. The payment of dividends on the Class B preference shares used funds of $178,433 for fiscal 2004 compared to a usage of funds of $53,484 for fiscal 2003. During the period January 16, 2003 to January 15, 2004, the Company purchased 455,000 of its common shares under a normal course issuer bid at an average cost of $1.11 per share for an aggregate consideration of $505,681. The premium on the purchase and cancellation of the common shares under the normal course issuer bid was charged to the deficit.

As a result of the above mentioned changes, the net decrease in cash amounted to $3,586,518 for fiscal 2004 compared to an increase of $593,507 for fiscal 2003. The Company has been focussed on accounts receivable collections activities and has reduced accounts receivable by $2,400,000 as of January 25, 2005.

As at November 30, 2004, the Company estimates that a U.S. $0.01 increase in the exchange rate of the U.S. dollar relative to the Canadian dollar would have an annualized impact of reducing earnings before income taxes by approximately $25,000. As at November 30, 2004, the Company estimates that an Australian $0.01 increase in the exchange rate of the Australian dollar relative to the Canadian dollar would have an annualized impact of reducing earnings before income taxes by approximately $12,000. As at November 30, 2004, the Company estimates that an €0.01 increase in the exchange rate of the Euro relative to the Canadian dollar would have an annualized impact of reducing earnings before income taxes by approximately $10,000.

In order to reduce the impact of U.S. to Canadian dollar, Australian to Canadian dollar and Euro to Canadian Dollar exchange rate fluctuations, the Company has used the forward exchange contract facility described above. The Company used the forward exchange contract facility to set the exchange rate between the U.S. and Canadian dollar, the Australian to Canadian dollar and the Euro to Canadian dollar for specific transactions at a specific agreed upon rate, thereby mitigating any foreign exchange gain or loss that might occur on those transactions. The Company uses the forward exchange contract facility only for known or reasonably certain future U.S., Australian dollar and Euro transactions.

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Contractual Obligations

	Payments due by period
			Less than		1 to 3		4 to 5		After 5
	Total		1 year		years		years		years
Facility leases		687,203		259,361		427,842		—		—
Equipment leases		37,937		16,680		17,592		3,665		—
Total contractual obligations		725,140		276,041		445,434		3,665		—

Off-Balance Sheet Arrangements

Derivatives

The Company uses foreign exchange contracts to hedge transactions denominated in U.S. dollars. The fair value of these derivative instruments at November 30, 2004 is an unrecorded liability of $42,303. For a discussion on these contracts, please see Note 14 of the Company’s audited consolidated financial statements for fiscal 2004.

Guarantees

The Company has issued standby letters of credit totalling U.S. $127,000 and Australian $283,886. The Company has utilized the standby letters of credit to support certain performance obligations to it’s customers.

Transactions with Related Parties

During the last two years, the Company did not enter into any transactions with its management, members of its Board of Directors or major shareholders.

Proposed Transactions

The Company has not proposed any asset or business acquisition or disposition.

Fourth Quarter

Overall Performance

Earnings/Loss

For the three months ended November 30, 2004, the Company had a loss of $251,851 or loss of $0.01 per share on a basic and diluted basis compared to earnings of $323,756 or earnings of $0.01 per share for the three months ended November 30, 2003.

The Company’s results for the three months ended November 30, 2004 were largely driven by the Company’s revenue growth and financial assistance received from Technology Partnerships Canada and increased G&A, R&D and S&M expenses.

Revenue growth for the three months ended November 30, 2004 was largely attributable to revenues earned from the Royal Australian Navy, the Portuguese Navy and the Royal Navy of the United Kingdom.

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Selected Information

	For the three months ended
Statement of Earnings Information	November 30
	2004			2003
	$			$
Revenue		3,696,137			2,724,439
Gross profit		1,968,649			1,630,781
Gross profit percentage		53.3%			59.9%
Earnings (loss) for the period		(251,851	)		323,756
Basic earnings (loss) per share		(0.01	)		0.01
Diluted earnings (loss) per share		(0.01	)		0.01

Results of Operations

The table below presents, for the periods indicated, selected financial data of the Company expressed in dollars and as a percentage of total revenues:

		Three months ended November 30
		2004			2004			2003			2003
	$				%			$			%
Revenue
Software			906,701			24.5	%		607,326			22.3	%
Systems and system components			1,927,201			52.1	%		902,640			33.1	%
Geomatics			754,829			20.4	%		962,021			35.3	%
Other			107,406			3.0	%		252,452			9.3	%
			3,696,137			100.0	%		2,724,439			100.0	%
Cost of sales			1,727,488			46.7	%		1,093,658			40.1	%
Gross profit			1,968,649			53.3	%		1,630,781			59.9	%
Expenses
General and administrative			857,004			23.3	%		669,575			24.6	%
Research and development			496,207			13.4	%		267,790			9.8	%
Sales and marketing			870,230			23.5	%		490,659			18.0	%
Amortization			64,376			1.7	%		64,222			2.4	%
Interest			812			0.0	%		2,531			0.1	%
Foreign exchange loss (gain)			6,647			0.2	%		(31,581	)		(1.2	%)
Technology Partnerships Canada royalty			42,665			1.2	%		(16,072	)		(0.6	%)
Technology Partnerships Canada contribution			(245,875	)		(6.7	%)		—			0.0	%
			2,092,066			56.6	%		1,447,124			53.1	%
Earnings (loss) before income taxes			(123,417	)		(3.3	%)		183,657			6.8	%
Income tax (recovery)			128,434			3.5	%		(140,099	)		(5.1	%)
Earnings (loss) for the period			(251,851	)		(6.8	%)		323,756			11.9	%

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Revenues

Consolidated revenue for the three months ended November 30, 2004 was $3,696,137 compared with $2,724,439 for the three months ended November 30, 2003, resulting in an increase of 35.7%. The Company’s revenues are primarily affected by the level, timing and duration of customer orders, relative mix of contracts and customer product delivery requirements.

The Company depends heavily on government contracts and derives a significant amount of revenue from a few customers, which may result in varying revenue and margins. During the three months ended November 30, 2004, the Company continued and expanded its business development initiatives with prospective and existing customers. Some of the activities did not result in closing orders during this period because of the long sales cycles, but may yield orders in the future. The main customers for the Company’s products and services during the three months ended November 30, 2004 were the Royal Navy of the United Kingdom through Lockheed-Martin UK, the Royal Australian Navy through Nautronix Ltd. and the Portuguese Navy through SICOM — Sistemas de Comunições, Lda, of Lisbon, Portugal. Revenue from these customers accounted for 61% of the consolidated revenue for the three months ended November 30, 2004. The main customers for the Company’s products and services during the three months ended November 30, 2003 were the U.S. Coast Guard, the Canadian Navy and the Royal Australian Navy. Revenue from these customers accounted for 89% of the consolidated revenue for the three months ended November 30, 2003.

A significant change in the Company’s revenue mix occurred during the last fiscal quarter of 2003. Revenues during this period shifted to Software from Systems and system components. The revenue shift was the result of a change in the nature of contracts the Company entered into during the last fiscal quarter of 2003 where, in order to ensure its success in pursuing certain contracts, the Company elected to sell off-the-shelf or customized versions of its ECPINS® software. Prior to this, the Company focused on the delivery of ECPINS® electronic chart navigation systems which included both its ECPINS® software and specialised hardware. During the fourth fiscal quarter of 2004 the Company’s revenue mix returned to its historical makeup where the Company’s contracts focused on the delivery of ECPINS® electronic chart navigation systems which are reported as Systems and systems component revenue.

Segment Results

Revenue from the Navigation Systems business unit for the three months ended November 30, 2004 was $2,832,204 compared to $1,773,814 for the same period last year, an increase of $1,058,390 or 59.7%. The increase is attributable to recognition of revenue during the fourth quarter of fiscal 2004 on the Royal Navy of the United Kingdom, Royal Australian Navy, and Portuguese Navy contracts.

Revenue from the Geomatics business unit for the three months ended November 30, 2004 was $740,958 compared to $950,625 for the three months ended November 30, 2003, a decrease of $209,667 or 22.1%. The business unit revenue levels decreased in the current fiscal year compared with that of the previous fiscal year as the result of supplier delays experienced by the Company in receiving the contracted services to satisfy customer needs and increased difficulty in penetrating the U.S. geomatics market.

Revenue for the Company’s new business unit — Applications was $122,975 for the three months ended November 30, 2004. The Applications business unit develops software applications and tools for situational awareness and provides products and services to military forces, government agencies and systems integrators to enable improved situational awareness. The sales cycle into government customers for Applications products can be upwards of three years. The business unit’s initial product is Common Operational Picture — Image Display Server (COP-IDSÔ).

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Gross Profit

The Company’s gross profit increased $337,868 to $1,968,649 for the three months ended November 30, 2004 compared to gross profit of $1,630,781 for the same period last year. Gross profit percentage decreased to 53.3% for the three months ended November 30, 2004 from 59.9% for the three months ended November 30, 2003. The decrease in the Company’s gross profit percentage for the three months ended November 30, 2004 as compared to the three months ended November 30, 2003 is attributable to the mix of contracts having shifted to Systems and system components from Software. A significant change in the Company’s revenue mix occurred in the three months ended November 30, 2003. Revenues during this period shifted to Software from Systems and system components and resulted in the Company reporting higher gross margin.

Segment Results

Gross profit from the Navigation Systems business unit for the three months ended November 30, 2004 was $1,591,268 compared to $1,160,137 for the same period last year, an increase of $431,131. Gross profit percentage decreased to 56.2% from 65.4% period over period. The decrease was attributable to the decrease in software revenue for the three months ended November 30, 2004 when compared to the three months ended November 30, 2003, and resulted in the Company reporting gross margin percentages that were in line with those reported historically. For the fourth fiscal quarter of 2004 the Company’s revenue mix had returned to its historical makeup which has the Company’s contracts focused on the delivery of ECPINS® electronic chart navigation systems.

Gross profit from the Geomatics business unit for the three months ended November 30, 2004 was $254,530 compared to $470,644 for the same period last year, a decrease of $216,114 or 45.9%. Gross profit percentage decreased to 34.4% from 49.5% period over period. The decrease is the result of the competitive nature of the geomatics market where customers are very price sensitive and the increasing protectionism the Company has encountered entering the U.S. geomatics market.

Gross profit for the Company’s new business unit — Applications was $122,851 (99.9% of Revenue) for the three months ended November 30, 2004.

General and Administrative Expenses

General and administrative (“G&A”) expenses consist mainly of salaries and benefits of management and administrative personnel, professional fees, public company expenses, related facility costs and other general administrative expenses, net of interest and other income. G&A increased $187,429 for the three months ended November 30, 2004 to $857,004 compared to G&A of $669,575 in the same period last year. As a percentage of revenue, G&A decreased from 24.6% to 23.3% period over period. The increased cost is the result of increased directors’ fees and directors and officers insurance, as well as charges for stock-based compensation, increased salaries and decreased interest income that resulted from lower cash reserves during the periods. The Company anticipates G&A costs will continue to increase as a result of increasing costs associated with regulatory compliance.

Research and Development Expenses

Research and development (“R&D”) expenses consist mainly of salaries and benefits of software and hardware engineering personnel, sub-contractor costs, facilities expenses and related expenses. The Company expenses research and development costs in the period incurred unless, in the opinion of management, certain development costs meet the deferral criteria under Canadian GAAP, in which case development expenditures are capitalized and amortized over the

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estimated life of the related products. The Company has not capitalized any development costs for the three months ended November 30, 2004 and had not capitalized any development costs for the three months ended November 30, 2003.

R&D costs increased $228,417 to $496,207 or 13.4% of revenue for the three months ended November 30, 2004, compared to R&D costs of $267,790 or 9.8% of revenue in the same period last year. The increase in spending is the result of additional salaries and benefits for new staff to support the additional R&D activities related to the development of the recently released COP-IDSÔ product and the continuing development of the ECPINS® product.

The TPC contribution for the three months ended November 30, 2004 was $245,875 compared to $0 for the same period last year, an increase of $245,875. The increase is due to the Company not having a contract in place with TPC during the last quarter of fiscal 2003. A contract was signed on April 26, 2004.

The TPC royalty for the three months ended November 30, 2004 was an expense of $42,665 compared to a recovery of $16,072 for the same period last year, an increase of $58,737. The increase is due to the amount of the royalty being based on the revenue of the company which was higher for the three months ended fiscal 2004 as compared to the same period last year.

Sales and Marketing Expenses

Sales and marketing (“S&M”) expenses consist primarily of compensation of sales and marketing personnel, as well as expenses associated with advertising, trade shows, facilities and other expenses related to the sales and marketing of the Company’s products and services. S&M expenses increased $379,571 or 77.4%, for the three months ended November 30, 2004 to $870,230 (23.5% of revenue) from $490,659 (18% of revenue) for the same period last year. The increase in expenses was the result of the Company’s additional S&M staff hired to pursue new business. The Company has increased its level of business development activity relating to its expansion efforts into American, European and Australasia markets. The expansion effort targets new and existing customers in the military agencies of Canada, U.S., European NATO and other allies of Canada to increase the profile of the Company and its products through the establishment of marketing agreements with companies local to the targeted regions. The Company expects a continued increase in S&M expenditures for the ongoing pursuit of these opportunities.

Amortization

Total amortization increased to $105,085 for the three months ended November 30, 2004 from $96,808 for the three months ended November 30, 2003. The increase reflects the acquisitions in the period and mix of property, plant and equipment in the Company at November 30, 2004.

Interest

Interest expense decreased to $812 for the three months ended November 30, 2004 compared to interest expense of $2,531 for the three months ended November 30, 2003. The Company did not utilize its credit facility during fiscal 2004.

Foreign Exchange

Foreign exchange loss for the three months ended November 30, 2004 was $6,647 and was the net foreign exchange amount for unhedged foreign currency transactions. For the same period last year the Company had a foreign exchange gain of $31,581 which was as a result of certain U.S. dollar transactions that were hedged during the fourth quarter of fiscal 2003 having been hedged at forward exchange rates that were more favourable than the average rate for the fourth quarter of fiscal 2003.

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Income Taxes

The Company has recognized a increase of $98,340 in the future tax recovery for the three months ended November 30, 2004 compared to an increase of $363,484 for the same period last fiscal year. The recovery is the result of the change in the valuation allowance against the total future tax asset. The Company has provided the valuation allowance against the total future tax asset as it is not considered “more likely than not” that the remaining future tax asset will be recovered. The Company continues to evaluate its taxable position quarterly and considers factors such as estimated taxable income, the history of losses for tax purposes and the growth of the Company, among others.

For the three months ended November 30, 2004, the Company recorded current tax expense of $226,774 which is the tax expense that the Company would have incurred had the Company not had available losses carried forward from prior years. This compares to a current tax expense for the same period for the prior fiscal year of $223,385.

Earnings/Loss

Based on the factors discussed above, loss for the three months ended November 30, 2004 was $251,851 or 6.8% of revenue, compared to earnings of $323,756 or 11.9% of revenue, for the three months ended November 30, 2003.

Liquidity and Capital Resources

Cash flows provided by operating activities before changes in non-cash working capital items for the three months ended November 30, 2004, amounted to $9,036 compared with a source of $251,757 for the three months ended November 30, 2003, a decrease of $242,721. The decrease was the result of the Company’s decreased earnings for the three months ended November 30, 2004 partially offset by an increase to cash flow for the same period provided by the non-cash item future tax assets.

Changes in non-cash working capital items for the three months ended November 30, 2004 were a usage of cash of $1,553,506 compared to cash usage of $1,774,522 for the same period in 2003. Changes occurred in most non-cash working capital items between these two periods — all within the normal business activities of the Company. The largest change was an increase in Accounts receivable, which is the result of milestone terms that exist in certain contracts.

Cash used in investing activities totalled $75,392 for the three months ended November 30, 2004 compared with $73,224 for the same period in 2003. The increase is reflective of the acquisitions of property, plant and equipment commensurate with the Company’s plans to obtain additional systems and facilities to accommodate its current and future anticipated growth.

Net cash provided by financing activities for the three months ended November 30, 2004 amounted to $28,625 compared to net cash provided of $377,182 for the same period in 2003. The issuance of common shares provided funds of $28,625 for the three months ended November 30, 2004 compared to the issuance of common shares having provided funds of $500,946 for the same period in fiscal 2003. There was no use of funds for share repurchases under a normal course issuer for the three months ended November 30, 2004 compared to a use of funds of $70,280 for the same period in fiscal 2003. The payment of dividends on the Class B preference shares used funds of $0 for the three months ended November 30, 2004 compared to a usage of funds of $53,484 for the three months ended November 30, 2003.

As a result of the above mentioned changes, the net decrease in cash amounted to $1,591,237 for the three months ended November 30, 2004 compared to a decrease of $1,218,807 for the three months ended November 30, 2003.

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Critical Accounting Estimates

The Company prepares its consolidated financial statements in accordance with Canadian generally accepted accounting principles, and makes estimates and assumptions that affect its reported amounts of assets, liabilities, revenue and expenses, and the related disclosure of contingent liabilities. The Company bases its estimates on historical experience and other assumptions that it believes are reasonable in the circumstances. Actual results may differ from these estimates.

The following critical accounting policies affect the Company’s more significant estimates and assumptions used in preparing its consolidated financial statements:

Revenue

The Company is required to estimate the costs to complete certain systems and geomatics services contracts. Revenues from these contracts are recognized on the percentage-of-completion method measured by the percentage of costs incurred to total estimated costs to complete each contract. The Company may need to adjust the estimated costs to complete for these projects, if the actual results differ from the Company’s estimates. If the Company anticipates that a contract or a contract segment will generate a loss, the Company estimates that loss and records the total expected loss on the contract or contract segment. When revenues exceed amounts invoiced under a contract, the difference is recorded as unbilled revenue. The Company believes that unbilled revenue will be invoiced and collected. Billings in excess of revenues are amounts that have been billed to the customer but have not been recognized in revenue.

Income Taxes

The Company is required to estimate its income taxes in each of the jurisdictions in which it operates. This process involves estimating the Company’s actual current tax exposure, together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in future tax assets and liabilities that may be included on the Company’s consolidated balance sheet. The Company recognizes future income tax assets to the extent that their realizations are considered more likely than not and provides a valuation allowance against any remaining balance. The valuation allowance is based on the Company’s estimates of taxable income by jurisdiction in which it operates and the period over which its future tax assets will be recoverable. In the event that actual results differ from these estimates, or the Company adjusts these estimates in future periods, the Company may need to adjust the valuation allowance. Although we believe that our tax estimates are reasonable, the ultimate tax determination involves significant judgement that is subject to audit by tax authorities in the ordinary course of business.

Stock-based Compensation and Other Stock-based Payments

The Company has established three stock option plans under which options to purchase common shares may be granted to directors, officers and employees of the Company and to any other person or company permitted by the applicable regulatory authorities to purchase unissued common shares. The Company recognizes compensation as stock options, which have been granted, vest to employees and directors under stock option plans with no cash settlement feature based on the fair value method. The fair value of the stock options was estimated using the Black-Scholes option pricing model, using weighted-average assumptions for the following: dividend yield, volatility rate, risk-free interest rate and expected average life. Direct awards of stock to employees, stock option and stock awards granted to non-employees are also accounted for in accordance with the fair value method of accounting for stock-based compensation.

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Accounts Receivable

The Company maintains an allowance for doubtful accounts for estimated losses that may arise if any of its customers are unable to make required payments. Management specifically analyses the age of outstanding customer balances, historical bad debts, customer credit-worthiness and changes in customer payment terms when making estimates of the uncollectability of the Company’s accounts receivable. If the Company determines that the financial condition of any of its customers deteriorates, increases in the allowance may be made.

Inventory

Materials and components are stated at the lower of cost and replacement value as determined by the first-in first-out method. Work-in-process and manufactured parts are stated at the cost of materials and direct labour applied to the product and the applicable share of overhead. Finished goods are stated at the lower of cost and net realizable value. The Company assesses the need for inventory write-downs based on its assessment of estimated net realizable value using assumptions about future demand and market conditions. If market conditions differ from those originally estimated by the Company, an additional inventory write-down may be required.

Changes in Accounting Policies including Initial Adoption

Effective December 1, 2003, the Company adopted the new recommendations of the Canadian Institute of Chartered Accountants (“CICA”) Handbook Section 3870 — Stock-Based Compensation and Other Stock-Based Payments (“CICA 3870”) requiring the use of the fair value method of accounting for stock-based compensation transactions. The new recommendations have been adopted prospectively. Prior to the adoption of this standard, the settlement method was used whereby any consideration received on the exercise of stock options or the purchase of stock was credited to share capital. As required by the new recommendations, the Company discloses the pro forma effects of awards granted, modified or settled prior to December 1, 2003 to the income for the period as if the fair value method had been in use at the date of grant.

Financial Instruments and Other Instruments

Foreign Exchange Forward Contracts

The Company uses foreign exchange forward contracts to hedge transactions denominated in U.S. dollars, Australian dollars and Euros. The purpose of the Company’s hedging activities is to reduce the level of exposure to exchange rate movements. At November 30, 2004, the Company had foreign exchange forward contracts to sell U.S. $851,196, Australian $3,678,061 and €383,310. The exchange rates set in the foreign exchange forward contracts ranged between $1.1870 to $1.1942 for U.S. $1.00, between $0.9005 to $0.9576 for Australian $1.00 and $1.5777 for €1.00. The contracts mature between December 2004 and May 2005.

Derivative financial instruments are utilized by the Company in the management of its foreign currency exposure to reduce its exposure to fluctuations in foreign exchange on certain committed and anticipated transactions. The Company formally documents the relationships between derivative financial instruments and hedged items, as well as the risk management objective and strategy. The Company assesses, on an ongoing basis, whether the derivative financial instruments continue to be effective in offsetting changes in fair values or cash flows of the hedged transactions.

Foreign exchange translation gains and losses on foreign currency denominated derivative financial instruments used to hedge anticipated or committed foreign currency exposures are recognized as an adjustment to the related operating costs, revenue or capital expenditures when the hedged transaction is recorded. Derivatives that are not subject to hedge accounting are recorded on the balance sheet with the changes in fair value being recorded in the statement of

Page 28

earnings each period. For the fiscal year 2004, all derivative financial instruments met the criteria for hedge accounting.

Disclosure of Outstanding Share Data

As at December 31, 2004, the Company had issued and outstanding 27,488,074 common shares, and 1,695,112 outstanding stock options. As at December 31, 2004 the Company also had 30,262 issued and outstanding Class A preference shares and 57,711 issued and outstanding Class B preference shares convertible into common shares at conversion ratios of 1:1 and 1:45.5 respectively which represents 2,656,112 common shares. Also at December 31, 2004 the Company had outstanding 1,393,301 common share purchase warrants convertible to common shares at a conversion ratio of 1:1, representing 1,393,301 common shares.

Other MD&A Requirements

Additional information is also contained in the Company’s Annual Report, including the financial statements, for the financial year ended November 30, 2004 and in the Company’s Annual Information Form dated March 17, 2004. The information contained in those documents is hereby incorporated by reference. This and other additional information relating to the Company may be found on SEDAR at www.sedar.com. Also, copies of these documents will be provided to any person, on request to the Secretary of the Corporation at 107-930 West 1st Street, North Vancouver, British Columbia, Canada, V7P 3N4, telephone (604) 904-4600, fax (604) 986-4454.

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Form 52-109FT1 — Certification of Annual Filings during Transition Period

I, John A. Jacobson, President and Chief Executive Officer, Offshore Systems International Ltd., certify that:

1. I have reviewed the annual filings (as this term is defined in Multilateral Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings) of Offshore Systems International Ltd. for the period ending November 30, 2004; 2. Based on my knowledge, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the annual filings; and 3. Based on my knowledge, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date and for the periods presented in the annual filings.

February 1, 2005

/s/ John A. Jacobson

President and Chief Executive Officer Offshore Systems International Ltd.

Form 52-109FT1 — Certification of Annual Filings during Transition Period

I, John T. Sentjens, Corporate Controller, Offshore Systems International Ltd., certify that:

February 1, 2005

/s/ John T. Sentjens

Corporate Controller Offshore Systems International Ltd.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

By: “ John A. Jacobson” Title: President & CEO

Date: ~~February~~March 422, 2005

Filing Compare · OSI GEOSPATIAL INC.