Comamtech Inc.
NASDAQ : COMT

August 12, 2008 16:05 ET

Copernic Inc. Announces 2008 Second Quarter Results

MONTREAL, CANADA--(Marketwire - Aug. 12, 2008) - Copernic Inc., (the "Company"), (NASDAQ:CNIC), a leading software development company in the technology sector, specializing in internet, desktop and mobile search products, today reported its financial results for the second quarter ended June 30, 2008. Unless otherwise stated, all figures in this release are in US dollars.

Financial Highlights

- Revenue was $1.7 million for the second quarter 2008, same as first quarter 2008 compared to $2.0 million in the second quarter of 2007

- Net loss of $0.5 million ($0.04 per share) for the second quarter 2008 compared to net loss of $1.1 million ($0.07 per share) in the second quarter 2007

- Total expenses were at $1.7 million for the second quarter 2008 compared to $2.5 million for the second quarter 2007 and first quarter 2008 of $2.2 million

- Cash and cash equivalents were at $5.0 million as of June 30, 2008

Marc Ferland, President and CEO of Copernic stated that search and graphic advertising revenue at $1.3 million for the quarter were below the comparable quarter in 2007 at $1.8 million due to continued competitive pressures and general softening of the display advertising and pay per click search markets. However, the Copernic suite of desktop search products, which are part of the software revenue, at $421,000 for the quarter outperformed the comparable quarter in 2007 at $134,000. Along with previously announced cost improvement programs, the Company succeeded in significantly reducing its losses. Management continues to monitor the search market, evaluate operating plans and examine strategic alternatives in order to compensate for reduced revenues in the advertising sponsored search sector.

Financial Results for the quarter ended June 30, 2008

Revenues in the second quarter of 2008 totalled $1,720,809, down from $1,952,546 in the second quarter of 2007 mainly due to a decline in search advertising. Revenues in Q2 2008 were slightly higher than Q1 2008 by $12,000.

Gross margin in the second quarter 2008 was 63%, compared to 66% in the same quarter in 2007 mainly due to higher payouts to partners which deliver better quality traffic and usage of more bandwidth for having run our new Canadian data centers in parallel with the ones located in the United States. In April 2008, our US data centers were shut down and bandwidth costs related to these locations will be eliminated in July 2008.

Expenses in the second quarter of 2008 were at $1,670,779, compared to $2,531,151 in Q2 2007. The expense reduction is the consequence of the Company executing the action plan announced at the end of Q1 2008 which focused on a cost reduction plan for approximately $1.5 million on an annualized basis of which $1 million is related to reduced manpower.

Net loss in the second quarter 2008 was $522,000 ($0.04 per share), compared to a net loss of $1,085,000 ($0.07 per share) in the same quarter 2007.

Cash and cash equivalents totalled $4,954,000 which was a decrease of $1,225,000 from March 31, 2008. During Q2 2008, the Company paid its Directors & Officers Insurance for the current year, audit, legal fees and other costs related to 2007 year-end totalling approximately $750,000.

About Copernic Inc.

Copernic Inc. specializes in developing, marketing and selling cutting-edge search technology, providing innovative home and business software products and solutions for desktop, web and mobile users, through its online properties, including www.mamma.com and www.copernic.com.

With its award winning Copernic Desktop Search® software search engine product, the Company brings the power of a sophisticated, yet easy-to-use search engine to the user's PC. Additionally, Copernic Inc. provides both online advertising as well as pure content to its vast array of partnerships worldwide through its well established media placement channels. Copernic handles over 1 billion search requests per month and has media placement partnerships established not only in North America, but also in Europe and Australia.

More information can be found at www.copernic-inc.com.

Statements contained in this press release, which are not historical facts, are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties that can cause actual results to differ materially from estimated results. Such risks and uncertainties are detailed in the Company's filings with the Securities and Exchange Commission and the Ontario Securities Commission. The Company expressly disclaims any intent or obligation to update any description of the scope, focus or subject matter of the statements in this press release.



Copernic Inc.
Condensed Consolidated Balance Sheets

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(unaudited) (expressed in U.S. dollars and in accordance with generally
accepted accounting principles in Canada)
As at As at
June 30, December 31,
2008 2007
$ $

Assets

Current assets
Cash and cash equivalents 4,953,804 2,099,560
Restricted Cash - 807,468
Temporary investments - 3,965,384
Accounts receivable 988,609 918,033
Income taxes receivable 337,867 221,205
Prepaid expenses 369,663 208,655
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6,649,943 8,220,305

Property and equipment 364,736 459,872

Intangible assets 1,823,404 2,320,676

Goodwill 7,357,003 7,357,003
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16,195,086 18,357,856
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Liabilities

Current liabilities
Accounts payable and accrued liabilities 1,082,369 1,520,619
Deferred revenue 237,602 211,455
Deferred rent 8,903 11,016
Income tax payable 8,100 8,100
Current portion capital lease obligations 65,550 56,071
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1,402,524 1,807,261
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Capital lease obligations 83,984 99,788
Future income taxes 505,112 650,413
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Commitments

Shareholders' Equity

Capital stock
Authorized
Unlimited common shares, no par value
Issued and outstanding
14,637,531 common shares 96,556,485 96,556,485

Additional paid-in capital 5,796,164 5,784,502

Accumulated other comprehensive income 561,137 561,137

Accumulated deficit (88,710,320) (87,101,730)
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14,203,466 15,800,394
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16,195,086 18,357,856
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Copernic Inc.
Condensed Consolidated Statements of Operations
--------------------------------------------------------------------------
(unaudited) (expressed in U.S. dollars and in accordance with generally
accepted accounting principles in Canada)

For the six months For the three months
ended June 30, ended June 30,
--------------------------------------------------------------------------
2008 2007 2008 2007
$ $ $ $

Revenues 3,429,835 4,595,450 1,720,809 1,952,546
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Cost of revenues 1,322,344 1,541,615 641,724 655,901
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Gross Margin 2,107,491 3,053,835 1,079,085 1,296,645
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Expenses
Marketing, sales and
services 618,321 970,202 184,508 521,871
General and
administration 1,616,580 2,700,668 674,370 869,457
Product development and
technical support 1,115,944 1,211,259 509,522 616,150
Amortization of
property and equipment 99,861 117,634 52,688 61,292
Amortization of
intangible assets 508,433 984,371 255,380 493,254
Interest and other
income (99,869) (237,258) (21,382) (94,431)
Write-down of property
and equipment 21,531 - - -
Loss (gain) on foreign
exchange (28,041) 72,166 15,693 63,558
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3,852,760 5,819,042 1,670,779 2,531,151
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Loss from operations
before income taxes (1,745,269) (2,765,207) (591,694) (1,234,506)

Current income taxes 8,622 818 3,356 818
Recovery of future
income taxes (145,301) (299,997) (72,651) (149,998)
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(1,608,590) (2,466,028) (522,399) (1,085,326)
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Net loss for the period (1,608,590) (2,466,028) (522,399) (1,085,326)
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Basic and diluted net
loss per share (0.11) (0.17) (0.04) (0.07)
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Weighted average number
of shares outstanding
- basic and diluted 14,637,531 14,491,054 14,637,531 14,604,986
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Copernic Inc.
Condensed Consolidated Statements of Cash Flows

---------------------------------------------------------------------------
(unaudited) (expressed in U.S. dollars and in accordance with generally
accepted accounting principles in Canada)

For the six months For the three months
ended June 30, ended June 30,
--------------------------------------------------------------------------
2008 2007 2008 2007
$ $ $ $

Cash flows from
(used for)

Operating activities
Loss from continuing
operations (1,608,590) (2,466,028) (522,399) (1,085,326)
Adjustments for
Amortization of
property and
equipment 99,861 117,634 52,688 61,292
Amortization of
intangible assets 508,433 984,371 255,380 493,254
Employee stock-based
compensation 11,662 375,260 (428) 78,588
Future income taxes (145,301) (299,997) (72,651) (149,998)
Write-down of property
and equipment 21,531 - -
Unrealized loss (gain)
on foreign exchange (2,431) 1,589 3,753 1,589
Net change in non-cash
working capital items (762,462) 684,095 (919,735) (319,750)
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Cash used for operating
activities from
continuing operations (1,877,297) (603,076) (1,203,392) (920,351)
Cash used for operating
activities from
discontinued operations - (6,253) - -
--------------------------------------------------------------------------
(1,877,297) (609,329) (1,203,392) (920,351)
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Investing activities
Purchase of
intangible assets (5,056) (61,387) - (36,950)
Purchase of property
and equipment (7,785) (136,754) (5,920) (81,530)
Net decrease (increase)
in temporary
investments 3,965,384 4,071,130 - (19,509)
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Cash from (used for)
investing
activities 3,952,543 3,872,989 (5,920) (137,989)
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Financing activities
Issuance of capital
stock - 676,258 - 179,404
Repayment of
obligations under
capital leases (28,470) - (15,464) -
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Cash from (used for)
financing activities (28,470) 676,258 (15,464) 179,404
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Net change in cash and
cash equivalents
during the period 2,046,776 3,939,918 (1,224,776) (878,936)

Cash and cash
equivalents -
Beginning of period 2,907,028 2,379,617 6,178,580 7,198,471
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Cash and cash
equivalents -
End of period 4,953,804 6,319,535 4,953,804 6,319,535
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Cash and cash
equivalents
comprise:
Cash 1,252,811 1,817,587 1,252,811 1,817,587
Short-term investments 3,700,993 4,501,948 3,700,993 4,501,948
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4,953,804 6,319,535 4,953,804 6,319,535

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