Cyberplex Inc.
TSX : CX

Cyberplex Inc.

August 10, 2011 16:01 ET

Cyberplex Reports Second Quarter 2011 Results

Significant Progress in Rebuilding and Strategic Initiatives Underway

TORONTO, ONTARIO--(Marketwire - Aug. 10, 2011) - Cyberplex Inc. (TSX:CX) a leader in online publishing and customer acquisition strategies today announced its financial results for the second quarter ended June 30, 2011. Total revenue for the quarter was $14.4 million, a decrease from the $18.2 million recorded in the same quarter of 2010, and adjusted EBITDA for the quarter was approximately $812,000 as compared to $523,000 in the same period of 2010. The net loss for the quarter was $2.0 million as compared to a net loss of $2.2 million in the same period a year ago.

Financial Results for the second quarter ended June 30, 2011
  • The Company generated revenue of $14.4 million, consistent with the revenue from the previous quarter and a decrease of 21% compared to $18.2 million generated during the same quarter in 2010;
  • Adjusted EBITDA for the quarter was $812,000, a significant increase from the $150,000 generated in the previous quarter and an increase from the $523,000 earned in 2010;
  • Net loss for the quarter was $2.0 million compared to a net loss of $2.2 million in 2010.

"Our results this quarter show that we have made significant progress in rebuilding the organization and resetting the foundation for future growth" said Geoffrey Rotstein, Chief Executive Officer of Cyberplex. "Although there is still much work to be done, by expanding our internal capabilities and direct access to traffic sources, while forging new and strategic partnerships that emphasize quality, we can now consistently deliver highly targeted audiences in a way that is resonating extremely well with our advertisers and agency clients."

The Company also reported that negotiations with Tsavo Media's principal lender, American Capital, remain ongoing. Although the Company had hoped to have had a resolution in place by this time, there are details that remain subject to further discussions. "We need to ensure that any proposed resolution with our lender will address the future needs of Tsavo and will be in the best interests of our shareholders", said Mr. Rotstein. "While negotiations remain productive and have advanced considerably over the past several weeks, we cannot conclude that we have an agreement in place with the lender at this time. It is our intention to keep all of our shareholders informed and we expect to hold a conference call when there is more information to share."

Second Quarter Operational Highlights
  • Completed the integration of the EQ Ads platform into other leading advertising networks providing the capacity to reach over 8 billion daily impressions;
  • Secured engagements with a Canadian financial institution and a leading Canadian university to develop online marketing and audience development programs;
  • Continued to optimize technical algorithims and bidding strategies to address changes in the Yahoo!-Bing systems and revenue per click calculations;
  • Transitioned campaigns away from historical health and wellness clients and secured campaigns in the more established finance, education, group buying and online dating categories;
  • Developed mobile distribution capabilities to further enhance targeted search and customer acquisition initiatives into new distribution channels;
  • Continued to implement measures to ensure cost structure is aligned to the Company's current organization and requirements.

"The second quarter was quite a rebound for our organization, but it was just the beginning" said Ted Hastings, President of Cyberplex. "As we continue to execute on our strategy of growth and revenue diversification, we remain focused on providing advertisers with solutions across various forms of distribution, online, video and mobile."

Cyberplex is also pleased to announce that Jeffrey Collins has joined Cyberplex in the role of Chief Financial Officer. Jeffrey has served in various senior financial roles in private technology companies in Canada for over 10 years. Most recently, Jeffrey served as Chief Financial Officer of Shoplogix Inc. Jeffrey will fill the role previously served by Richard Maisel. "We are excited to welcome Jeff to our leadership team. Jeffrey's knowledge and experience working with technology companies makes him an extremely valuable addition to our leadership team", said Geoffrey Rotstein, Chief Executive Officer. "We also would like to take the opportunity to thank Richard for his contribution to Cyberplex. He has been an important member of our team during a difficult period and we are very appreciative for all that he has done for the Company."

Non-GAAP Financial Measures

This press release includes a discussion of "Adjusted EBITDA," which is a non-GAAP financial measure. The Company defines Adjusted EBITDA as net income (loss) before (a) Finance costs (income), net; (b) income tax expense (recovery); (c) depreciation of property and equipment and amortization of intangible assets; (d) stock-based compensation expense related to the Company's grant of stock options and (e) employee termination costs. Management uses Adjusted EBITDA as a measurement of the Company's operating performance because it provides information related to the Company's ability to provide cash flows for acquisitions, capital expenditures and working capital requirements. The Company also believes that analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies in its industry.

The non-GAAP financial measure is used in addition to and in conjunction with results presented in accordance with the Company's GAAP and should not be relied upon to the exclusion of GAAP financial measures. Management strongly encourages investors to review the Company's consolidated financial statements in their entirety and to not rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. In addition, the Company expects to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of these items from the Company's non-GAAP measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring.

The table below reconciles net income (loss) and Adjusted EBITDA for the periods presented:

Three months ended June 30 Six months ended June 30
(In thousands of Canadian dollars) 2011 2010 2011 2010
Net loss$(2,031)$(2,249)$(5,625)$(2,390)
Add:
Depreciation of property and equipment 337 166 718 245
Amortization of intangible assets 2,173 1,089 4,383 1,166
Finance cost (income), net 364 187 1,237 (63)
Restructuring expenses - - 263 -
Transaction expenses - 1,510 - 1,510
Stock based compensation 99 133 246 297
Income tax recovery (130) (313) (260) (107)
Adjusted EBITDA$812 $523 $962 $658

About Cyberplex

Cyberplex Inc. (www.cyberplex.com) is a North American leader in online publishing and customer acquisition strategies. The Company, through its subsidiaries, leverages over 300 proprietary web properties and its vast publisher network to efficiently connect advertisers to their most relevant online customers and prospects. By combining high quality publishing initiatives with efficient technology solutions and online marketing expertise, the Company is able to deliver the optimal targeted audience to online advertisers. Cyberplex delivers measurable results that improve advertiser ROI, monetize the value of online properties and build targeted, loyal online audiences.

Forward-Looking Statements

This news release may contain forward-looking statements that are based on management's current expectations and are subject to known and unknown uncertainties and risks, which could cause actual results to differ materially from those contemplated or implied by such forward-looking statements. Cyberplex is under no obligation to update any forward-looking statements contained herein should material facts change due to new information, future events or otherwise.

Cyberplex Inc.
Unaudited Interim Consolidated Statements of Financial Position
(In thousands of Canadian dollars)
June 30, 2011 December 31, 2010
Assets
Current assets:
Cash and cash equivalents $ 7,238 $ 5,192
Restricted cash - 2,310
Short-term investments 157 1,551
Available-for-sale financial assets 247 140
Accounts receivable 9,112 13,879
Income taxes recoverable 632 632
Prepaid expenses and other assets 2,300 2,321
Total current assets 19,686 26,025
Non-current assets:
Restricted cash 3,198 1,749
Property and equipment 2,460 2,921
Intangible assets 27,197 32,504
Goodwill 2,285 2,357
Total non-current assets 35,140 39,531
Total assets $ 54,826 $ 65,556
Liabilities and Equity
Current liabilities:
Accounts payable and accrued liabilities $ 7,643 $ 10,177
Current portion of provisions 118 590
Current portion of term loans 30,650 9,402
Current portion of finance lease 59 -
Deferred revenue 665 665
Income taxes payable 1,529 1,729
Current portion of deferred lease inducements 115 115
Total current liabilities 40,779 22,678
Non-current liabilities:
Long-term portion of term loans - 23,583
Long-term portion of finance lease 137 -
Provisions 3,228 2,756
Deferred tax liabilities 1,715 1,990
Deferred lease inducements 127 185
Total non-current liabilities 5,207 28,514
Equity:
Share capital 65,452 65,452
Contributed surplus 2,190 1,944
Accumulated other comprehensive loss (2,645 ) (2,500 )
Deficit (56,157 ) (50,532 )
Total equity 8,840 14,364
Total liabilities and equity $ 54,826 $ 65,556
Cyberplex Inc.
Unaudited Interim Consolidated Statements of Comprehensive Income (Loss)
(In thousands of Canadian dollars, except per share amounts)
Three months ended June 30, Six months ended June 30,
2011 2010 2011 2010
Revenue $ 14,423 $ 18,249 $ 29,026 $ 30,510
Expenses:
Publishing and advertising costs 8,420 12,698 17,336 21,504
Employee compensation and benefits 3,556 2,948 7,460 4,764
Other operating expenses 1,734 2,213 3,514 3,881
13,710 17,859 28,310 30,149
Income before the undernoted 713 390 716 361
Depreciation of property and equipment 337 166 718 245
Amortization of intangible assets 2,173 1,089 4,383 1,166
Transaction expenses - 1,510 - 1,510
Restructuring expenses - - 263 -
Loss from operations (1,797 ) (2,375 ) (4,648 ) (2,560 )
Finance cost (income), net 364 187 1,237 (63 )
Loss before income taxes (2,161 ) (2,562 ) (5,885 ) (2,497 )
Income tax recovery (130 ) (313 ) (260 ) (107 )
Loss for the period (2,031 ) (2,249 ) (5,625 ) (2,390 )
Other comprehensive income (loss):
Net change in fair value of available-for-sale financial assets 774 (21 ) 782 (61 )
Amount reclassified to income (566 ) - (566 ) -
Foreign currency translation adjustments to equity (62 ) 2,364 (361 ) 1,177
Other comprehensive income (loss) for the period, net of tax 146 2,343 (145 ) 1,116
Total comprehensive Income (loss) for the period $ (1,885 ) $ 94 $ (5,770 ) $ (1,274 )
Loss per share:
Basic $ (0.02 ) $ (0.03 ) $ (0.04 ) $ (0.03 )
Diluted (0.02 ) (0.03 ) (0.04 ) (0.03 )
Cyberplex Inc.
Unaudited Interim Consolidated Statements of Cash Flows
(In thousands of Canadian dollars)
Six months ended June 30, 2011 and 2010
2011 2010
Cash flows from operating activities:
Loss for the period $ (5,625 ) $ (2,390 )
Adjustments to reconcile net loss to net cash flows from operating activities:
Depreciation of property and equipment 718 245
Amortization of intangible assets 4,383 1,116
Amortization of deferred lease inducements (58 ) (54 )
Stock-based compensation 246 296
Foreign exchange (gain) loss (176 ) 45
Finance cost (income), net 1,237 285
Income tax recovery (260 ) (107 )
Change in non-cash operating working capital 2,003 326
Cash generated from (used in) operating activities 2,468 (238 )
Income taxes paid (196 ) (774 )
Net cash from (used in) operating activities 2,272 (1,012 )
Cash flows from financing activities:
Repayment of term loans (2,176 ) -
Finance lease 200 -
Repayment of finance lease (5 ) -
Proceeds from exercise of stock options - 8
Proceeds from private placement, net of issuance costs - 30,799
Interest paid (818 ) (8 )
Net cash from (used in) financing activities (2,799 ) 30,799
Cash flows from investing activities:
Sale of short-term investments 1,392 11,273
Interest income received 24 45
Proceeds from sale of available-for-sale investments 676 -
Acquisition of EQADS, net of cash acquired (100 ) -
Acquisition of TSAVO, net of cash acquired - (41,962 )
Decrease in restricted cash 741 -
Additions to property and equipment (319 ) (361 )
Additions to intangible assets (17 ) (101 )
Net cash from (used in) investing activities 2,397 (31,106 )
Increase (decrease) in cash and cash equivalents 1,870 (1,319 )
Cash and cash equivalents, beginning of period 5,192 10,222
Foreign exchange gain (loss) on cash held in foreign currency 176 (45 )
Cash and cash equivalents, end of period $ 7,238 $ 8,858

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