SOURCE: InfoSearch Media

August 21, 2007 07:55 ET

InfoSearch Media Reports Second Quarter 2007 Results

Leading Internet Traffic-Building Company Significantly Reduces Operating Costs

MARINA DEL REY, CA--(Marketwire - August 21, 2007) - InfoSearch Media, Inc. (OTCBB: ISHM), a leading Internet marketing firm that delivers search optimized video and text content, has announced financial results for its second quarter ended June 30, 2007.

InfoSearch Media reported revenues of $1.2 million for the second quarter of 2007, compared to $1.6 million for the second quarter of 2006. The second quarter of 2006 revenues included the recognition of remaining deferred revenue from the Company's discontinued ArticleInsider product.

The Company reported a GAAP net loss of $1.1 million, or $0.02 per share (basic and diluted) for the second quarter of 2007, compared to a GAAP net loss of $3.8 million, or $0.08 per share (basic and diluted) for the second quarter of 2006. Gross margins declined to 61% for the second quarter of 2007 as compared to 66% for the second quarter of 2006.

Total operating costs and expenses in the second quarter of 2007 decreased 69% to $1.8 million from $5.8 million in the second quarter of 2006. The Company implemented a number of cost reductions during the quarter which will result in further reductions to operating expenses going forward.

"During the second quarter, we focused on a number of strategic initiatives that strengthened our business model and significantly improved our operational efficiencies," said George Lichter, President and CEO, InfoSearch Media. "Leveraging recent research, we implemented a new product and sales strategy focused on what our customers care about most -- attracting traffic less expensively than through pay-per-click marketing programs. In support of this strategy, we launched a new website with a full e-commerce offering that we believe will position us to build market awareness and understanding of our traffic-building capabilities. Additionally, we have developed a number of offerings that will enable us to capture additional customers away from competitors' pay-per-click products. We will continue to look for opportunities to broaden our product portfolio and partner with leading service organizations to drive revenue growth and improve profitability throughout the year."

Recent Company Highlights:

--  Launch of New Website with E-Commerce Capabilities -- the Company
    launched its new website in July with a full e-commerce platform, offering
    customers the ability to configure and buy packages of traffic-building
    text and video content online. Customers now can choose from specially
    designed packages, custom configure them to include value-added, optional
    services and directly order and complete their purchases online via a
    secure e-commerce platform.
    
--  Expansion of Complementary Services -- the Company launched two
    complementary services, TrafficBuilder SEO Rx and TrafficBuilder Directory
    Submit, to provide clients with additional, robust search engine visibility
    solutions which have already begun getting traction with clients.
    TrafficBuilder SEO Rx is a streamlined website analysis providing clients
    with a review of all primary "on-page" (internal) website aspects as well
    as key "off-page" (external) issues. TrafficBuilder Directory Submit is a
    service that manually and professionally submits client websites to the
    best SEO-friendly web directories.
    
--  Conclusion of TrafficBuilder Video Pilot -- the Company concluded its
    successful pilot program for TrafficBuilder Video, having worked closely
    with several clients including Rodale Publications, to deliver a diverse
    series of search-targeted videos across a broad range of customer-
    identified topics. TrafficBuilder Video is the only search-targeted online
    video product available industry-wide, providing clients with affordable,
    high-quality, site-enhancing and traffic-building online videos based on
    custom topics. InfoSearch Media TrafficBuilder Video spots are available
    for viewing on Rodale Publications' menshealth.com website at:
    http://www.menshealth.com/cda/article.do?site=MensHealth&channel=fitness
    &category=sports&conitem=f67599c6c4c13110VgnVCM10000013281eac 
    

About InfoSearch Media

InfoSearch Media (http://www.InfoSearchMedia.com) is a leading Internet marketing company and the largest dedicated provider of traffic-targeted online text and video content. InfoSearch Media's network of professional writers, editors, technical specialists and video producers helps businesses succeed on the Web by implementing cost-effective Internet marketing solutions designed to deliver more traffic for customers of every size. Whether a business needs more local traffic in 100 cities or is a content publisher with an ongoing need for fresh, targeted Web content, InfoSearch Media offers the outsourced solutions, capacity and reputation to help it win the audience it needs on the Internet.

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. Management assumes no obligation to comment on or provide an update to its stock purchases or sales in the future except as specifically required by law and by the Securities and Exchange Commission. 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 STATEMENTS OF OPERATIONS
                                (unaudited)

                          For the Three Months      For six months ended
                             Ended June 30,               June 30,
                        ------------------------  ------------------------
                            2007         2006         2007         2006
                        -----------  -----------  -----------  -----------
CONTENT SALES           $ 1,120,194  $ 1,585,098  $ 2,396,109  $ 3,048,182
WEB PROPERTIES SALES         39,799       58,787       70,749    1,449,268
                        -----------  -----------  -----------  -----------
NET SALES                 1,159,993    1,643,885    2,466,858    4,497,449
                        -----------  -----------  -----------  -----------

CONTENT COST OF SALES       438,752      529,214      899,927      978,409
WEB PROPERTIES COST OF
 SALES                       16,900       23,210       32,221      762,032
                        -----------  -----------  -----------  -----------
COST OF SALES               455,652      552,424      932,148    1,740,441

                        -----------  -----------  -----------  -----------
GROSS PROFIT                704,341    1,091,461    1,534,710    2,757,008
                        -----------  -----------  -----------  -----------

OPERATING EXPENSES
 General &
  administrative          1,349,193    5,104,821    2,371,469    6,994,247
 Sales & marketing          427,384      667,629      961,511    1,082,545
                        -----------  -----------  -----------  -----------
   TOTAL COSTS AND
    EXPENSES              1,776,577    5,772,450    3,332,979    8,076,793

                        -----------  -----------  -----------  -----------
LOSS FROM OPERATIONS     (1,072,236)  (4,680,990)  (1,798,269)  (5,319,785)
                        -----------  -----------  -----------  -----------

CHANGE IN FAIR VALUE OF
 WARRANTS                   (61,745)   1,348,209      234,458    2,014,983

LIQUIDATED DAMAGES                -     (356,310)           -     (356,310)

OTHER EXPENSES                    -      (25,000)           -      (25,000)

INTEREST INCOME              18,503       20,245       36,124       54,518

INTEREST EXPENSE               (317)      (4,952)      (1,158)      (6,934)
                        -----------  -----------  -----------  -----------

LOSS FROM CONTINUING
 OPERATIONS BEFORE TAX   (1,115,796)  (3,698,797)  (1,528,846)  (3,638,528)

TAXES FROM CONTINUING
 OPERATIONS                     825        1,735        2,875        1,735
                        -----------  -----------  -----------  -----------

NET LOSS FROM
 CONTINUING OPERATIONS   (1,116,621)  (3,700,532)  (1,531,721)  (3,640,263)

DISCONTINUED OPERATIONS
 Loss from discontinued
  operations of
  Answerbag, Inc. (net
  of tax, $ 9,137)                -       89,623            -       89,623
                        -----------  -----------  -----------  -----------

LOSS BEFORE TAXES        (1,116,621)  (3,790,155)  (1,531,721)  (3,729,886)
                        -----------  -----------  -----------  -----------

       Tax Provision
                        -----------  -----------  -----------  -----------



NET LOSS                $(1,116,621) $(3,790,155) $(1,531,721) $(3,729,886)
                        ===========  ===========  ===========  ===========

LOSS PER SHARE FROM
 CONTINUING OPERATIONS
        BASIC           $     (0.02) $     (0.08) $     (0.03) $     (0.08)
                        ===========  ===========  ===========  ===========
        DILUTED         $     (0.02) $     (0.08) $     (0.03) $     (0.08)
                        ===========  ===========  ===========  ===========
LOSS PER SHARE FROM
 DISCONTINUED
 OPERATIONS
        BASIC           $         -  $         -  $         -  $         -
                        ===========  ===========  ===========  ===========
        DILUTED         $         -  $         -  $         -  $         -
                        ===========  ===========  ===========  ===========
LOSS PER SHARE
        BASIC           $     (0.02) $     (0.08) $     (0.03) $     (0.08)
                        ===========  ===========  ===========  ===========
        DILUTED         $     (0.02) $     (0.08) $     (0.03) $     (0.08)
                        ===========  ===========  ===========  ===========

WEIGHTED AVERAGE SHARES
 OUTSTANDING - BASIC     52,547,662   46,169,256   52,132,276   45,882,067

WEIGHTED AVERAGE SHARES
 OUTSTANDING - DILUTED   52,547,662   46,169,256   52,132,276   45,882,067




                          INFOSEARCH MEDIA, INC.
                        CONSOLIDATED BALANCE SHEETS


                                                     June 30,    December
                                                       2007      31, 2006
                                                    ----------- -----------
                                                    (unaudited)

CURRENT ASSETS:
 Cash                                               $   573,453 $ 2,495,654
 Restricted cash                                        380,245     380,530
 Accounts receivable                                     50,385      68,941
 Due from related parties                                16,309      50,732
 Prepaid and other current assets                       151,752     201,604
                                                    ----------- -----------

   TOTAL CURRENT ASSETS                               1,172,144   3,197,461

EMPLOYEE ADVANCE                                          4,700       1,000

CONTENT DEVELOPMENT                                           -       4,083

PROPERTY AND EQUIPMENT, NET                             139,351     131,139

SECURITY DEPOSIT                                         37,500      37,500

EQUITY WARRANT ASSET                                    143,561     308,837
                                                    ----------- -----------

   TOTAL ASSETS                                     $ 1,497,256 $ 3,680,020
                                                    =========== ===========
 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
 Accounts payable                                    $  188,106  $  204,271
 Accrued salaries and bonuses                            69,449     264,515
 Accrued expenses                                       333,475     400,052
 Accrued expenses Answerbag acquisition                      -       75,156
 Capital leases                                             459      17,621
 Deferred revenue                                       417,416     454,741
 Provision for refunds payable/chargebacks               14,360      30,842

 Current tax liability                                    1,250           -
                                                    ----------- -----------

   TOTAL CURRENT LIABILITIES                          1,024,515   1,447,198

INCOME TAX PAYABLE                                      156,000           -

FAIR VALUE OF WARRANT LIABILITY                         997,990   1,396,215
                                                    ----------- -----------

   TOTAL LIABILITIES                                  2,178,505   2,843,413


COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY (DEFICIT):
 Preferred stock, undesignated, par value
  $.001 per share, 25,000,000 shares                          -           -
  authorized; no shares issued and
  outstanding;
 Common stock, $.001 par value, authorized
  200,000,000 shares;                                    52,659      51,491
  issued and outstanding 52,658,337 and
  51,491,197, respectively
 Committed stock, 0 and 164,282 shares                        -      22,586
 Additional paid in capital                          11,321,393  11,130,109

 Accumulated deficit                                (12,055,301)(10,367,580)
                                                    ----------- -----------
   TOTAL STOCKHOLDERS' EQUITY (DEFICIT):               (681,249)    836,606
                                                    ----------- -----------

   TOTAL LIABILITIES AND STOCKHOLDERS'
    EQUITY (DEFICIT)                                $ 1,497,256 $ 3,680,020
                                                    =========== ===========




                          INFOSEARCH MEDIA, INC.
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (unaudtied)

                                                  Period ended June 30,
                                                    2007          2006
                                                ============  ============
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                     $ (1,531,721) $ (3,729,886)
   Adjustment from Discontinued Operations                 -        89,623
                                                ------------  ------------
   Net Loss From Continuing Operations            (1,531,721)   (3,640,263)


   Adjustment to reconcile net loss to net
    cash used in operating activities
      Depreciation and amortization                   60,038       404,492
      Equity based compensation                      169,718     4,505,680
      Loss from disposal of fixed assets                   -         9,462
      Change in fair value of warrants              (232,949)   (2,014,983)

   Changes in assets and liabilities:
      Accounts receivable                             19,183      (120,740)
      Due from related parties                        34,423             -
      Prepaid expenses and other current assets       49,852       (99,865)
      Employee Advances                               (3,700)            -
      Accounts payable, accrued expenses
       and other liabilities                        (352,964)      374,754
      Income Tax Payable                               1,250             -
      Provision for refunds                          (16,482)      (15,351)
      Deferred revenue                               (37,325)   (1,873,531)
                                                ------------  ------------
         Total adjustments                          (305,763)    1,169,918

NET CASH USED IN CONTINUING OPERATIONS:           (1,840,677)   (2,470,345)

   Net loss from discontinued operations                   -       (89,623)
                                                ------------  ------------

NET CASH USED IN DISCONTINUED OPERATIONS                   -       (89,623)

NET CASH USED IN OPERATING ACTIVITIES             (1,840,677)   (2,559,968)

CASH FLOWS FROM INVESTING ACTIVITIES:
   Restricted cash                                       288             -
   Intangible assets                                       -      (180,728)
   Capital expenditures - fixed assets               (68,250)      (31,632)
   Capital expenditures - content development              -       (49,361)
                                                ------------  ------------

NET CASH USED IN CONTINUING INVESTMENT
 ACTIVITIES                                          (67,962)     (261,721)

   Change in intangible assets held for sale
    from discontinued investing activities                 -      (466,025)
                                                ------------  ------------

NET CASH USED IN DISCONTINUED INVESTMENT
 ACTIVITIES                                                -      (466,025)

NET CASH USED IN INVESTING ACTIVITIES                (67,962)     (727,746)

CASH FLOWS FROM FINANCING ACTIVITIES:
   Principal payments of capital lease
    obligations                                      (17,162)      (15,930)
   Warrants Exercise                                   3,600             -
                                                ------------  ------------

NET CASH USED IN FINANCING ACTIVITIES                (13,562)      (15,930)

Net decrease in cash and cash equivalents         (1,922,201)   (3,303,644)

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD    2,495,654     4,828,560
                                                ------------  ------------

CASH AND CASH EQUIVALENTS - END OF PERIOD       $    573,453  $  1,524,916
                                                ============  ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
 INFORMATION
   Cash paid for interest                       $        292  $      3,866
                                                ============  ============

   Income tax paid                              $      2,875  $      1,755
                                                ============  ============

NON-CASH SUPPLEMENTAL DISCLOSURE OF INVESTING
 AND FINANCING ACTIVITIES:
   Stock issued or committed to be issued for
    the acquisition of Answerbag                $          -  $    237,031
                                                ============  ============

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