Empirical Inc.
TSX VENTURE : EM

Empirical Inc.

November 27, 2008 17:22 ET

Empirical Showing Revenue Growth

MISSISSAUGA, ONTARIO--(Marketwire - Nov. 27, 2008) - Empirical Inc. (TSX VENTURE:EM) (the "Company" or "Empirical") is pleased to announce that it has released its results for the third quarter and nine months ending September 30, 2008.

Empirical Inc's 2008 Consolidated Financial Statements and Management's Discussion and Analysis are available on SEDAR at www.sedar.com.

Third Quarter and Nine Month 2008 Results

Revenue for the quarter ending September 30, 2008 was $3.5 million, up from $2.4 million for the same period in 2007. The increase in revenue resulted from several new business wins, including CBC's "One million acts of green", plus revenue growth from existing key clients. Revenue for the nine months ending September 30, 2008 was $8.1 million compared to $7.6 million for the same period in 2007.

Empirical's Office of the President consisting of Ian McKinnon, Chief Financial Officer David Garland and Vice President of Marketing Don Cochrane, collectively stated, "Our 2008 sales strategy is manifesting revenue growth from Empirical's integrated marketing solutions offering with both existing clients and new customers."

EBITDA (loss) for the quarter ended September 30, 2008 was breakeven compared to $0.2 million for the same period in 2007 due to higher revenues and a decrease in selling, administrative and general expenses ("SG&A") primarily. For the quarter ended September 30 2008, SG&A expenses were $1.8 million compared to $2.1 million for the same period in 2007. EBITDA (loss) for the nine months ended September 30, 2008 increased to $1.3 million from $0.7 million for the same period in 2007. SG&A expenses were $5.8 million compared to $6.0 million in the same period in 2007.

Amortization of capital assets and intangibles increased for the quarter ended September 30, 2008 at $0.7 million compared to $0.5 million for the same period in 2007. Amortization of capital assets and intangibles increased for the nine months ended September 30, 2008 at $1.8 million when compared to $1.5 million for the same period in 2007. Both increases were a result of the additional intangibles added from the acquisition of Mediamix Marketing Group Inc. that was completed during the second quarter of 2008.

Interest and Finance Charges including interest on long-term debt for the quarter ended September 30, 2008 was $0.5 million compared to $0.3 million for the same period in 2007. For the nine months ended September 30, 2008, Interest and Finance Charges including interest on long-term debt was $1.2 million compared to $0.9 million when compared to the same period in 2007. Both increases were related to an increase in debt and higher interest rates on that debt.

During the quarter ended September 30, 2008, the Company incurred Other Income of $13,060 made up primarily trade payable settlements. During the nine months ended September 30, 2008, the Company incurred Other Income of $0.4 million related to trade payable settlements, compared to Other Expense of $0.9 million for the same period in 2007.

The Net Loss for the quarter ended September 30, 2008 was $1.2 million which is higher compared to a Net Loss of $1.0 million for the same period in 2007. The Net Loss for the nine months ended September 30, 2008 was $4.1 million, a slight improvement compared to $4.2 million for the same period in 2007.

Other items:

During the quarter ended September 30, 2008, all of the outstanding demand promissory notes were converted into two secured debentures as follows: $1.3 million to Quorum Investment Pool Limited Partnership ("QIP") and $0.2 million to Quorum Secured Equity Trust ("QSET"). Each debenture matures on September 26, 2009 and bears interest at 10% per annum, calculated monthly and payable quarterly in arrears.

At September 30, 2008, the Company was in breach of certain financial covenants related to all the debentures issued to QIP, QSET and Ontario SME Capital Corporation ("SME") and is currently in negotiations to determine how to resolve this matter. As a result, all of the debt related to these debentures has been classified as short-term on the balance sheet.



Summary of Results
Three months ended Nine months ended

September 30, September 30,
2008 2007 2008 2007
---- ---- ---- ----

Revenue $ 3,512,389 $ 2,395,393 $ 8,150,379 $ 7,618,434

EBITDA (loss) (4,012) (190,152) (1,299,063) (697,778)

Amortization 684,770 486,505 1,815,450 1,540,046

Interest and
Finance
Charges(1) 477,728 264,937 1,223,285 943,631

Other Expense
(Income) (13,060) - (359,813) 882,086

Stock Based
Compensation 26,628 48,736 88,431 132,977

----------------------------------------------------------
Net Loss $ (1,180,078) $ (990,330) $ (4,066,416) $ (4,196,518)
----------------------------------------------------------
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Loss per Share-
Basic $ (0.02) $ (0.02) $ (0.06) $ (0.08)

Loss Per Share- n.a.(2) n.a.(2) n.a.(2) n.a.(2)
Diluted


Notes

(1) Interest & finance charges include interest and finance charges and
interest on long-term debt.

(2) Not applicable where anti-dilutive.


This news release contains certain forward-looking information and statements. Forward-looking information typically contains statements with words such as "consider", "anticipate", "believe", "expect", "plan", "intend", "may", "will", "likely" or similar words suggesting future outcomes or statements regarding an outlook for, or future changes in, the Company's financial performance, results of operations or other expectations future events or performance. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, readers should not place undue reliance on forward-looking information and should be aware that forward looking statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results, performance or achievements of the Company to differ materially from those suggested by the forward-looking statements. These factors include but are not limited to, uncertainty in connection with the Company's ability to continue as a going concern, the possible failure of the Company to receive the continued support of its lenders and other creditors and to obtain additional financing and successfully plan and execute business improvement strategies that will generate future positive cash flows, restrictions and covenants contained in the Company's agreements with its lenders including holders of its convertible secured debentures and promissory notes, high levels of interest-bearing debt and resultant debt services costs, downturns in general economic conditions and resulting changes in client business and marketing budgets, the highly competitive nature of the marketing services industry including providers of online marketing services, the greater resources available to larger and better financed competitors, low barriers to entry for new competitors, dependence upon a limited number of clients contributing a significant percentage of revenues, inability to acquire new clients or new assignments from existing clients, ability to successfully integrate the recent acquisition of Mediamix Marketing Group Inc. ("MediaMix"), ability to continue to enhance and improve the responsiveness, functionality and features of its online marketing suite of promotions products and the retention of key management, sales and marketing and technical personnel.

The above list of factors affecting forward-looking information is not exhaustive, and reference should be made in the MD&A under "Risk" and Uncertainties" and in the Company's filings with Canadian securities regulatory authorities. The Company undertakes no obligation, except as required by law, to update publicly or otherwise any forward-looking information, whether as a result of new information, future events or otherwise, or the above list of factors affecting this information.

Except as outlined below financial information has been prepared in accordance with generally accepted accounting principles applicable to a going concern which assumes the Company will realize on its assets and satisfy its obligations as they become due in the normal course of operations. Accordingly, they do not give effect to adjustments that would be necessary should the Company be unable to continue as a going concern. In other than in the normal course of business, the Company may be required to realize its assets and liquidate its liabilities and commitments at amounts different from those in the accompanying consolidated financial statements. The application of the going concern concept is dependent upon the Company receiving the continued support of its lenders and other creditors, its ability to secure additional financing and its ability to generate future positive cash flow. The Company is pursuing additional capital resources; however it is not possible to predict whether financing efforts shall be successful or if the Company will attain profitable levels of operations. If the going concern assumption was not appropriate for these financial statements, adjustments would be necessary in the carrying value of assets and liabilities, reported income and expenses and in the balance sheet classifications used.

As used herein, "EBITDA" refers to earnings before amortization of property and equipment, amortization of intangible assets, interest including interest on long-term debt and finance charges, write down of intangible assets, stock-based compensation and other non-recurring expenses including loss on extinguishment of debt, provision for loan receivable and loss on sublet of warehouse and office space. The Company cautions that EBITDA is not a recognized measure under GAAP and that measures adjusted to a basis other than GAAP do not have a standardized meaning and are unlikely to be comparable to similar measures used by other companies. EBITDA is presented as a supplemental measure to net income (loss) as management believes it provides useful information regarding operating performance and is commonly used by investors, financial analysts and lenders to value the Company and assess the Company's ability to service debt. The items required to reconcile between EBITDA and net income (loss) are amortization of property and equipment, amortization of intangible assets, interest including interest on long-term debt and finance charges, write down of intangibles assets, stock-based compensation and other non-recurring expenses including loss on extinguishment of debt, provision for loan receivable and loss on sublet of warehouse and office space.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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