Comamtech Inc.
OTC Bulletin Board : COMT.PK

March 29, 2011 16:00 ET

Comamtech Inc. Announces 2010 Year-end Results

MONTREAL, CANADA--(Marketwire - March 29, 2011) - Comamtech Inc., (the "Company"), (PINK SHEETS:COMT), today reported its audited financial results for the year ended December 31, 2010. Unless otherwise stated, all figures in this release are in US dollars.

The financial statements include and reflect the operations of its subsidiary, Copernic Inc. ("Copernic"), before the reorganization and until the date of its disposal by the Company on November 4, 2010. Following this transaction, the Company became a "public shell" company with no operating business and will remain so until completion of the arrangement (the "Arrangement") with DecisionPoint System Inc. ("DecisionPoint") as further described below.

Financial Highlights

  • The Company sold Copernic for an amount of $6.01 million. The net book value of this investment was $4.91 million, resulting in a gain on disposal of its operating subsidiary in the amount of $1.10 million.
  • The value of the Shareholders' equity is $8.25 million as of December 31, 2010 comprised mainly of cash ($4.27 million), a convertible debenture ($2.73 million) and a balance of sale of receivables ($1.57 million).

Recent Highlights

  • On August 25, 2010 Copernic and N. Harris Computer Corporation ("Harris"), a wholly-owned subsidiary of Constellation Software Inc., jointly announced that they had entered into a definitive arrangement agreement ("Harris Plan of Arrangement") with Comamtech under which Copernic would ultimately be acquired and taken private by Harris. On October 25, 2010, at Copernic's Annual General Meeting and Special Shareholders' Meeting, the shareholders approved the proposed transaction. On November 1, 2010, the Ontario Superior Court of Justice granted a final order approving the Harris Plan of Arrangement. Following that, the Harris Plan of Arrangement closed on November 5, 2010, and the shareholders of Copernic became shareholders of Comamtech through an exchange of shares on a 1:1 basis resulting in Copernic becoming a wholly-owned subsidiary of Comamtech. Comamtech retained certain non-operating assets of Copernic having a book value of $2,896,961. This acquisition was accounted for at book values using continuity-of-interest method of accounting.. Consequently, the number presented for the current year include those of Copernic's prior to the Harris Plan of Arrangement and the comparatives were those included in Copernic's audited consolidated financial statements as previously issued.
  • On October 20, 2010, Comamtech and its wholly-owned subsidiary 2259736 Ontario Inc.("MergerCo") has entered into an arrangement agreement with DecisionPoint, whereby Comamtech would acquire (through MergerCo) all the outstanding shares of DecisionPoint in a reverse take-over.The Arrangement will be completed by way of a plan of arrangement under Section 182 of the Business Corporations Act and provides for the amalgamation of DecisionPoint with MergerCo. In consideration for the amalgamation, shareholders of DecisionPoint will exchange all of their shares of DecisionPoint into common shares of Comamtech, except that DecisionPoint shareholders holding its preferred shares will exchange such shares for preferred shares of Comamtech, which in turn, shall be convertible into common shares of Comamtech. On March 2, 2011, at the Company's Special Meeting of Shareholders, the shareholders approved the proposed transaction. On March 23, 2011, the Company announced that it had adjourned the request for final order and entered into a second amendment to the Arrangement including an amended plan of arrangement. The amendments to the Arrangement require a new special meeting of the shareholders of Comamtech to approve the revised plan of arrangement.

About Comamtech Inc.

Comamtech Inc. (PINK SHEET:COMT) is the successor to Copernic Inc. which was sold to N. Harris Computer Corporation on November 4, 2010.

Forward Looking Statements

Forward Looking 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 outcomes to differ materially from plans, projections, expectations and other anticipated results. Some of these risks and uncertainties are detailed in the Company's filings with the U.S. Securities and Exchange Commission and the Ontario Securities Commission. The Company expressly disclaims an intent or obligation to update any description of the scope, focus or subject matter of the forward-looking statements or any other matters contained in this press release except as otherwise required by law.

Comamtech Inc.  
Condensed Consolidated Balance Sheets  
As at December 31, 2010 and 2009  
(expressed in U.S. dollars and in accordance with generally accepted accounting principles in Canada)  
  2010   2009  
  $   $  
Assets        
Current assets        
Cash 4,265,488   465,949  
Temporary investments -   3,504,930  
Accounts receivable 63,537   256,110  
Income taxes receivable -   337,802  
Balance of sale receivable -   655,131  
Prepaid expenses 21,783   118,149  
Other assets 2,993,274   -  
  7,344,082   5,338,071  
Balance of sale receivable -   3,694,060  
Property and equipment -   115,110  
Intangible assets -   202,597  
Goodwill -   3,362,003  
Other assets 1,567,751   -  
  8,911,833   12,711,841  
Liabilities        
Current liabilities        
Accounts payable and accrued liabilities 666,679   1,010,140  
Deferred revenue -   103,668  
Deferred rent -   1,534  
Current portion of obligations under capital leases -   50,630  
  666,679   1,165,972  
Obligations under capital leases -   7,906  
Future income taxes -   45,146  

Shareholders' Equity
       
Capital stock        
Authorized        
  Unlimited number of common shares, no par value        
Issued and outstanding        
  2,097,861 (2,091,437 as at December 31, 2009) common shares 96,567,321   96,556,485  
Contributed Surplus 5,931,048   5,853,737  
Accumulated other comprehensive income 561,137   561,137  
Accumulated deficit (94,814,352 ) (91,478,542 )
  8,245,154   11,492,817  
  8,911,833   12,711,841  
   
   
   
Comamtech Inc.  
Condensed Consolidated Statements of Operations  
(expressed in U.S. dollars and in accordance with generally accepted accounting principles in Canada)  
                 
  For the twelve months ended December 31,   For the three months ended December 31,  
  2010   2009   2010   2009  
  $   $   $   $  
Revenues 1,261,759   1,653,026   181,794   372,943  
Cost of revenues 25,393   62,304   2,988   7,136  
Gross Margin 1,236,366   1,590,722   178,806   365,807  
Expenses                
Marketing, sales and services 403,073   625,243   30,625   193,312  
General and administration 3,373,805   2,329,947   1,048,088   566,536  
Product development and technical support 649,000   1,125,102   12,609   271,085  
Amortization of property and equipment 52,703   117,909   7,329   30,834  
Amortization of intangible assets 69,871   720,729   11,427   182,335  
Gain on disposal of property and equipment (3,746 ) -   (919 ) -  
Gain on disposal of intangible assets (9,960 ) -   -   -  
Write-downs of long-lived assets -   10,924   -   10,924  
Restructuring charges -   33,677   -   13,053  
Interest and other income (331,062 ) (333,979 ) (106,801 ) (149,272 )
Gain on disposal of an investment -   (169,239 ) -   -  
Gain on disposal of its operating subsidiary (1,109,736 ) -   (1,109,736 ) -  
Loss (gain) on foreign exchange 48,601   70,772   (976 ) 23,643  
  3,142,549   4,531,085   (108,354 ) 1,142,450  
Earning (loss) from continuing operations before income taxes and discontinued operations (1,906,183 ) (2,940,363 ) 287,160   (776,643 )
                 
Current income taxes 9,877   1,498   9,877   -  
Future income taxes (15,709 ) (656,347 ) (2,856 ) (60,067 )
(Recovery of) income taxes (5,832 ) (654,849 ) 7,021   (60,067 )
Net income (Loss) from continuing operations before discontinued operations (1,900,351 ) (2,285,514 ) 280,139   (716,576 )
Net income (loss) from discontinued operations (1,435,459 ) 4,399,406   19,904   14,295  
Net income (loss) for the year (3,335,810 ) 2,113,892   300,043   (702,281 )
Basic and diluted loss / share - continuing operations (0.91 ) (1.09 ) 0.13   (0.34 )
Basic and diluted earnings / share - discontinued operations (0.68 ) 2.10   0.01   0.01  
Basic and diluted net loss / share (1.59 ) 1.01   0.14   (0.34 )
                 
   
   
   
Comamtech Inc.  
Condensed Consolidated Statements of Cash Flows  
(expressed in U.S. dollars and in accordance with generally accepted accounting principles in Canada)  
                 
  For the twelve months ended December 31,   For the three months ended December 31,  
  2010   2009   2010   2009  
  $   $   $   $  
Cash flows from (used for)                
Operating activities                
Loss from continuing operations (1,900,351 ) (2,285,514 ) 280,139   (716,576 )
Adjustments for                
Amortization of property and equipment 52,703   117,909   7,329   30,834  
Amortization of intangible assets 69,871   720,729   11,427   182,335  
Employee stock-based compensation 77,311   106,709   385   21,991  
Gain on disposal of property and equipment (3,746 ) -   (3,746 ) -  
Gain on disposal of intangible (9,960 ) -   -   -  
Write-down of goodwill -   -   -   -  
Write-down of intangible assets -   1,462   -   1,462  
Write-down of property and equipment -   9,462   -   9,462  
Gain on disposal of an investment -   (169,239 ) -   -  
Gain on disposal of its operating subsidiary (1,109,736 ) -   (1,109,736 ) -  
Future income taxes (15,709 ) (656,347 ) (2,856 ) (60,067 )
Accreted interest on balance of sale receivable (217,603 ) (200,823 ) -   (74,730 )
Accreted interest on other assets (107,335 ) -   (107,335 ) -  
Unrealized loss (gain) on foreign exchange -   10,529   (542 ) 2,027  
Net change in non-cash working capital items 53,382   130,297   203,444   (48,642 )
Cash used for operating activities from continuing operations (3,111,174 ) (2,214,826 ) (721,491 ) (651,904 )
Cash provided by discontinued operations 2,828   1,051,219   19,904   (18,104 )
Cash used for operations (3,108,346 ) (1,163,607 ) (701,587 ) (670,008 )
                 
Investing activities                
Increase in other assets (263,957 ) -   (198,320 ) -  
Proceeds on the disposal of an investment -   169,239   -   -  
Proceeds on the disposal of its operating subsidiary, net of cash 3,199,800   -   3,199,800   -  
Proceeds on the disposal of an intangible 9,960   -   -   -  
Proceeds on the disposal of property and equipment 3,746   -   3,746   -  
Purchase of intangible assets (2,098 ) (14,373 ) -   (11,149 )
Purchase of property and equipment (3,357 ) (30,627 ) -   (1,730 )
Net decrease in temporary investments -   3,005,227   -   -  
Cash provided by (used for) contiuning operations 2,944,094   3,129,466   3,005,226   (12,879 )
Cash used in discontinued operations 493,507   (579 ) -   229,090  
Cash provided from (used for) investing activities 3,437,601   3,128,887   3,005,226   216,211  
                 
Financing activities                
Issuance of capital stock 10,836   -   1,703   -  
Repayment of obligations under capital leases (45,482 ) (62,106 ) (201 ) (17,641 )
Cash provided from (used for) financing activities (34,646 ) (62,106 ) 1,502   (17,641 )
Net change in cash and cash equivalents during the year 294,609   1,903,174   2,305,141   (471,438 )
Cash and cash equivalents – Beginning of the year 3,970,879   2,067,705   1,960,347   4,442,317  
Cash and cash equivalents – End of year 4,265,488   3,970,879   4,265,488   3,970,879  
Cash and cash equivalents comprise:                
Cash 4,265,488   465,949   4,265,488   465,949  
Temporary investments -   3,504,930   -   3,504,930  
Temporary investments with maturity date in excess of 3 months from date of issuance -   -   -   -  
  4,265,488   3,970,879   4,265,488   3,970,879  

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