SOURCE: InfoSearch Media, Inc.

August 22, 2006 08:00 ET

InfoSearch Media, Inc. Reports Second Quarter 2006 Results

Continued Growth in Core Business, ContentLogic, and Further Expansion Into User Generated Content With Social Q&A Site Answerbag.com

MARINA DEL REY, CA -- (MARKET WIRE) -- August 22, 2006 -- InfoSearch Media, Inc. (OTCBB: ISHM), a leading online media and search marketing firm, today announced financial results for its second quarter ended June 30, 2006.

InfoSearch Media reported revenue of $1.7 million for the second quarter of 2006, compared to $2.2 million for the second quarter of 2005. Revenue for ContentLogic grew 78% year-over-year to $1.6 million during the second quarter of 2006, compared to $0.9 million for the second quarter of 2005. The Company reported a GAAP net loss of $3.8 million, or $0.08 per share (basic and diluted) for the second quarter of 2006, compared to a GAAP net loss of $0.2 million, or $0.01 per share (basic and diluted) for the second quarter of 2005. During the three months ended June 30, 2006, InfoSearch recorded negligible deferred revenue associated with our ArticleInsider product, which resulted in deferred revenues at the end of the second quarter more in line with our operating business.

The expenses contributing to the GAAP net loss for the second quarter of 2006 included an expense of $3.3 million related to non-cash equity compensation for options and restricted stock grants provided to consultants, employees, and members of the Board of Directors for the three months ended June 30, 2006 versus $0.3 million for the same period in 2005. As all of the stock option grants to employees are priced above the current market price, in an effort to maintain employee retention, the Board of Directors approved the acceleration of stock option and restricted stock vesting as of June 30, 2006, which resulted in a one-time expense of $1.9 million being recorded for the three months ended June 30, 2006. The expense associated with this acceleration is a substantial portion of the stock option expense recognized during the second quarter of 2006 and will reduce future stock compensation expenses. Partially offsetting this was a non-cash gain of $1.3 million related to the decrease in fair value of warrants.

"During the quarter, our core business, ContentLogic, continued to show year-over-year and sequential growth and we have strengthened our position in content generation through third party distribution of our platform. We believe our recent completion of a nationwide rollout with our first VAR partner, WSI, will help to generate further market expansion," explained George Lichter, President and CEO of InfoSearch. "While we are working through a transition period with our Web Properties, we are optimistic about our move into user-generated social content through our acquisition of Answerbag. We have greatly enhanced our offering and continue to add new unique users driven by the upgrade of our website, the introduction of Video Answers, improvements in functionality and the additions of new experienced leaders, such as David Warthen, co-founder and former CTO of Ask Jeeves. We are executing on our plans and expect to achieve solid growth in 2007."

About InfoSearch Media

InfoSearch Media (http://www.infosearchmedia.com) is a leading provider of content based cost-effective search engine marketing services. InfoSearch Media maintains a network of over 200 professional writers that help businesses succeed on the web by implementing content-based solutions that simultaneously increase online search engine rankings and website sales performance. InfoSearch Media drives website performance through its two products: ContentLogic and Web Properties (ArticleInsider and Answerbag).

Safe Harbor Statement

This release contains "forward-looking statements" that involve risks and uncertainties. Actual results may differ materially from expectations discussed in such forward-looking statements. Factors that might cause such differences include, but are not limited to the challenges of attracting new customers and maintaining existing customers and developing, deploying and delivering InfoSearch services; competition from existing and new competitors; the ability to generate sufficient cash flow or otherwise obtain funds to repay new or outstanding indebtedness; the loss or decline in business from our key customers and other risks described from time to time in InfoSearch's filings with the Securities and Exchange Commission. In particular, see InfoSearch's recent quarterly and annual reports filed with the Securities and Exchange Commission, copies of which are available upon request from InfoSearch. InfoSearch does not assume any obligation to update the forward-looking information contained in this press release.

                          InfoSearch Media, Inc.
                        Consolidated Balance Sheet
                                (Unaudited)


                                                 June 30,     December 31,
                                                   2006           2005
ASSETS:  
CURRENT ASSETS:
 Cash                                         $   1,527,618  $   4,828,560
 Accounts receivable                          $     127,329  $       4,449
 Due from related parties                     $           -  $      25,000
 Prepaid expenses and other current assets    $     337,127  $      25,000
                                              -------------  -------------

  Total Current Assets                        $   1,992,074  $   5,067,771

Employee advance                              $           -  $       2,500

Content development                           $      91,027  $     394,054

Property and equipment                        $     210,152  $     285,021

Security deposit                              $      37,500  $      37,500

Intangibles                                   $     466,025  $           -
                                              -------------  -------------

  Total Assets                                $   2,796,778  $   5,741,846
                                              =============  =============

LIABILITIES and SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
 Accounts payable                             $     267,311  $     276,704
 Accrued bonuses                              $      36,459  $     176,505
 Accrued expenses                             $     433,525  $     268,645
 Liquidated damages                           $     359,378  $           -
 Current portion capital leases               $      33,015  $      33,004
 Deferred revenue                             $     754,516  $   2,074,103
 Provisions for refunds payable/bad debt      $      28,798  $      44,151
                                              -------------  -------------

  Total Current Liabilities                   $   1,913,001  $   2,873,112

Capital leases, net of current portion        $       1,680  $      17,621

Deferred revenue                              $           -  $     553,943

Fair value of warrant liability               $     511,289  $   2,526,272
                                              -------------  -------------

  Total Liabilities                           $   2,425,970  $   5,970,948

SHAREHOLDERS' EQUITY:
Preferred stock, undesignated, par value
 $0.001 per share, 25,000,000 shares
 authorized; no shares issued and
 outstanding;                                 $           -  $           -

Common stock, $0.001 par value, authorized
 200,000,000 shares; issued and outstanding
 46,182,330 and 42,277,775 for 2006 and
 2005, respectively.                          $      46,183  $      42,278

Additional Paid in Capital                    $  10,795,098  $   6,056,291

Accumulated Deficit                           $ (10,470,473) $  (6,327,671)
                                              -------------  -------------

  Total Shareholders Equity                   $     370,808  $    (229,102)

  Total Liabilities and Shareholders Equity   $   2,796,778  $   5,741,846
                                              =============  =============


                          InfoSearch Media, Inc.
                   Consolidated Statement of Operations
                                (Unaudited)


                          For the Three Months    For the Six Months Ended
                             Ended June 30,               June 30,
                        ------------------------  ------------------------
                            2006         2005         2006         2005
                        -----------  -----------  -----------  -----------
Net Sales               $ 1,677,218  $ 2,197,041  $ 4,530,783  $ 3,810,734

Cost of Sales           $   593,557  $   581,521  $ 1,808,173  $   812,917
                        -----------  -----------  -----------  -----------

Gross Profit            $ 1,083,661  $ 1,615,520  $ 2,722,610  $ 2,997,817

Operating Expenses:

   General &
    Administrative      $ 5,598,027  $ 1,257,592  $ 7,817,208  $ 2,441,155

   Sales & Marketing    $   669,118  $   610,238  $ 1,084,034  $ 1,053,981
                        -----------  -----------  -----------  -----------

Total Costs and
 Expenses               $ 6,267,145  $ 1,867,830  $ 8,901,242  $ 3,495,136

                                                 
Loss from Operations    $(5,183,484) $  (252,310) $(6,178,632) $  (497,319)

Change in Fair Value of
 Warrants               $ 1,348,209  $         -  $ 2,014,983  $         -

Other Expenses          $   (25,000) $         -  $   (25,000) $         -

Interest Income         $    15,293  $     8,926  $    47,583  $    28,343
                        -----------  -----------  -----------  -----------

Earnings (Loss) before                           
 Taxes                  $(3,844,982) $  (243,384) $(4,141,066) $  (468,976)

Provision for Taxes     $     1,735  $         -  $     1,735  $         -
                        -----------  -----------  -----------  -----------

Net Earnings (Loss) for                          
 the Period             $(3,846,717) $  (243,384) $(4,142,801) $  (468,976)
                        ===========  ===========  ===========  ===========


Loss per Share - Basic
 and Diluted            $     (0.08) $     (0.01) $     (0.09) $     (0.01)
                        ===========  ===========  ===========  ===========

Weighted Average Shares
 Outstanding             46,169,256   33,851,580   45,882,067   33,834,191
                        ===========  ===========  ===========  ===========


                          InfoSearch Media, Inc.
                          Statement of Cash Flows
                     For The 6 Months Ending June 30,



                                                    2006          2005
                                                ------------  ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss)                               $ (4,142,801) $   (468,976)

Adjustment to reconcile net income(loss) to net
 cash
  Provided by/(Used for) operating activities
   Depreciation and Amortization                $    429,919  $    108,083
   Stock based compensation                     $  4,505,680  $    395,017
   Disposals - fixed assets                     $      9,462  $          -
   Change in fair value of warrants             $ (2,014,983) $          -

Changes in assets and liabilities:
   Accounts receivable                          $   (122,880) $     45,892
   Prepaid expenses and other current assets    $    (99,865) $   (263,399)
   Accounts payable and accrued expenses        $    374,754  $    (45,376)
   Amounts refunded to customers                $    (15,351) $   (470,944)
   Deferred revenue                             $ (1,873,531) $ (1,046,806)
                                                ------------  ------------
Total adjustments                               $  1,193,203  $ (1,277,533)

NET CASH PROVIDED BY/(USED IN) OPERATING
 ACTIVITIES                                     $ (2,949,597) $ (1,746,509)

CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures - fixed assets          $    (31,632) $   (139,703)
   Capital expenditures - content development   $    (49,361) $   (283,589)
   Intangible assets                            $   (254,420) $          -
                                                ------------  ------------
NET CASH PROVIDED BY/(USED IN) INVESTING
 ACTIVITIES                                     $   (335,413) $   (423,292)


CASH FLOWS FROM FINANCING ACTIVITIES:
   Principal payments of capital lease
    obligations                                 $    (15,930) $    (15,970)
   Gross proceeds from private placement        $          -  $  3,699,868
   Employee advances                            $          -  $      1,000
   Gross proceeds from the sale of common
    stock                                       $          -  $    250,000
                                                ------------  ------------
NET CASH PROVIDED BY/(USED IN) FINANCING
 ACTIVITIES                                     $    (15,930) $  3,934,898

Net Increase (Decrease) in cash                 $ (3,300,941) $  1,765,097

Cash - Beginning of Period                      $  4,828,560  $  1,328,958
                                                ------------  ------------

Cash - End of Period                            $  1,527,618  $  3,094,055
                                                ============  ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
 INFORMATION
   Cash paid for interest                       $      3,866  $      7,246
                                                ============  ============
   Income tax paid                              $      1,735  $          -
                                                ============  ============

NON-CASH SUPPLEMENTAL DISCLOSURE OF INVESTING
 AND FINANCING ACTIVITIES:
   Stock issuances for acquisition of Answerbag $    237,031  $          -
                                                ============  ============

Contact Information

  • Investor Contact:
    Alex Wellins
    The Blueshirt Group, for InfoSearch Media, Inc.
    415/217-5861
    Email Contact

    Media Contact:
    Aimee Yoon
    Dotted Line Communications for InfoSearch Media, Inc.
    (617) 332-1658
    Email Contact