Mamma.com Inc.
NASDAQ : MAMA

Mamma.com Inc.

May 27, 2005 16:05 ET

Mamma.Com Releases 2005 Q1 Financials Exceptional Expenses of $1 Million Contribute to a Net Loss of $890,822 '$0.07/Share'

MONTREAL, QUEBEC--(CCNMatthews - May 27, 2005) - Mamma.com Inc., (the "Company"), (NASDAQ:MAMA)



- Q1 2005 Revenue decrease by 23% to $3.2 million as major
customer contribution declines from $2.26 million to $0.25
million partially offset by other Search and Ad Network revenue
increases.
- Liquidities remain at $27.5 million due to an increase of
accounts payable of $0.5 million.


Mamma.com Inc., (the "Company"), (NASDAQ:MAMA), reported its financial results for the first quarter ended March 31, 2005. Release of Q1 2005 financial results had been delayed beyond the March 31, 2005 prescribed timeframe as a result of change of auditors on March 18, 2005. Unless otherwise stated, all figures in this release are in US dollars.

The Company's Q1 2005 net loss was $890,822 ($0.07 per share) compared to net earnings of $1,383,678 ($0.17 per share) for the same period in 2004. Earnings in the first quarter of 2004 included results of discontinued operations of $974,569 ($0.12/share) resulting from the sale of Intasys Billing Technologies' assets during the quarter. Revenue in the first quarter of 2005 was $3,245,314, 23% below the $4,212,480 revenue for the same period in 2004. The decline in revenue reflects the drop of a major customer's contribution from over $2 million to $250,000. This is partially offset by revenue growth in the Company's Search and Ad Network revenue streams as well as Digital Arrow's revenue contribution of $228,407.

Significant cost variances were: professional fees related to the SEC investigation, increased audit fees and other fees related to the Special Independent Committee of approximately $929,000, and approximately $75,000 related to the acquisition process of Copernic Technologies Inc. ("Copernic") which was cancelled in the current quarter (Q2 2005). Payout costs over revenues decreased by 1.5% to 43.4%.

In the first quarter, directors and officers voluntarily withdrew their entitlement to 295,000 options awarded on November 2, 2004 and these were cancelled. These options would have resulted in a quarterly non-cash expense of $200,000 in 2005. The non-cash expense "compensation cost" of $138,395 previously recorded pertaining to these options has been reversed in the first quarter of 2005.

Cash, cash equivalents, restricted cash and temporary investments remained at $27,488,485 at the end of the first quarter primarily due to a $150,868 decrease in accounts receivable and a $519,078 increase in accounts payable.

Significant events in the first quarter were: the ongoing SEC investigation with which the Company intends to continue to cooperate fully, the withdrawal of services of its former auditors on February 15, 2005, the purported securities class action law suits the first of which was filed on February 22, 2005, a review of information supervised by a Special Independent Committee of the Company's Audit Committee, and due diligence on the Copernic transaction. Subsequent to the end of the first quarter, the Copernic transaction was cancelled as they advised that they were terminating the letter of intent and the review of the Special Independent Committee was completed.

Copernic has been advised that Mamma.com Inc. believes it is entitled to the break-up fee stipulated in the letter of intent.

Guy Faure, the Company's President and CEO stated: "Striving to offer our advertisers a premium quality network, we have reduced distribution to some publishers. Therefore, the revenue decrease from a major customer had been anticipated as its revenue contribution had decreased throughout the year 2004. During the first quarter, we have invested in new human resources that will be dedicated to build our publisher base for the Ad Network. We expect that increased inventory should contribute to added revenues for the third quarter of this year. While the termination of the Copernic transaction is a disappointment, we are fortunate to remain financially healthy and well positioned to execute another acquisition/merger which will complement our core businesses. There has no doubt been a wide spectrum of challenges since the beginning of the year, some of them requiring a disproportionate amount of senior management attention outside of core operations. However, we remain committed to our strategic objective and continue to work toward achieving growth both organically and via selective acquisitions."

The Company has now filed its year-end audited financial statements on SEDAR and EDGAR and will file its first quarter 2005 results on SEDAR and EDGAR prior to May 31, 2005. As well, the Company will file its Form 20F - Annual Report for the year ended December 2004 - with the United States Securities and Exchange Commission and the Ontario Securities Commission prior to May 31, 2005. On completion of all these filings, the Company will be compliant with all regulatory filing requirements to this date.

The unaudited financial statements for the first quarter ended March 31, 2005 will shortly be available on SEDAR and EDGAR and on our Web site http://www.mammainc.com .

About Mamma.com Inc.

Mamma Media Solutions™ is focused on providing quality information retrieval on the Internet through its metasearch engine and is a leading provider of integrated marketing solutions to online advertisers. For more information, visit http://www.mammamediasolutions.com

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 results to differ materially from estimated results. Such risks and uncertainties are detailed in the Company's filings with the United States Securities and Exchange Commission and the Ontario Securities Commission and include but are not limited to the extent to which the results of the SEC investigation or the purported securities class action law suits negatively affect the Company. The Company expressly disclaims any intent or obligation to update any description of the scope, focus or subject matter of the statements in this press release.



Mamma.com Inc.
Condensed Consolidated Balance Sheets
(Unaudited)(expressed in U.S. dollars and in accordance with
generally accepted accounting principles in Canada)

As at As at
March 31, December 31,
---------------------------------------------------------------------
2005 2004
$ $

Assets

Current assets
Cash and cash equivalents 20,427,924 20,609,089
Restricted cash 148,000 148,000
Temporary investments 6,912,561 6,874,155
Accounts receivable 2,538,672 2,689,540
Income taxes receivable 72,283 120,590
Prepaid expenses 125,953 135,110
Current assets of
discontinued operations 26,162 82,045
---------------------------------------------------------------------
30,251,555 30,658,529

Investments 720,000 720,000

Property, plant and equipment 393,562 374,819

Intangible assets 1,882,676 2,010,244

Goodwill 1,402,506 1,402,506
---------------------------------------------------------------------
34,650,299 35,166,098
---------------------------------------------------------------------
---------------------------------------------------------------------

Liabilities

Curent liabilities
Accounts payable and
accrued liabilities 3,165,394 2,646,316
Deferred revenue 322,819 256,984
Liabilities of discontinued
operations 109,844 227,226
---------------------------------------------------------------------
3,598,057 3,130,526
---------------------------------------------------------------------

Shareholders' Equity

Capital stock
Authorized
Unlimited common shares,
no par value
Issued and outstanding
12,263,029 common shares 90,496,088 90,496,088

Additional paid-in capital 4,311,169 5,255,249

Deferred stock-based
compensation (481,871) (1,333,443)

Cumulative translation
adjustment 360,884 360,884

Accumulated deficit (63,634,028) (62,743,206)
---------------------------------------------------------------------
31,052,242 32,035,572
---------------------------------------------------------------------
34,650,299 35,166,098
---------------------------------------------------------------------
---------------------------------------------------------------------


Mamma.com Inc.
Condensed Consolidated Statements of Operations
(Unaudited)(expressed in U.S. dollars and in accordance with
generally accepted accounting principles in Canada)

For the three months ended
March 31
---------------------------------------------------------------------
2005 2004
$ $

Revenue 3,245,314 4,212,480
---------------------------------------------------------------------

Expenses
Search, graphic ad and
e-mail serving 74,495 54,555
Marketing, sales and services 2,016,919 2,379,902
General and administration 1,696,844 651,035
Product development and
technical support 328,801 221,344
Amortization of property,
plant and equipment 30,107 29,959
Amortization of intangible
assets 137,046 47,780
Interest income (150,771) (7,732)
Loss (gain) on foreign exchange 2,695 (8,731)
---------------------------------------------------------------------
4,136,136 3,368,112
---------------------------------------------------------------------

Earnings (loss) from continuing
operations before income taxes (890,822) 844,368

Provision for current income taxes - 224,783
Provision for future income taxes - 210,476
---------------------------------------------------------------------

Earnings (loss) from
continuing operations (890,822) 409,109

Results of discontinued operations - 974,569
---------------------------------------------------------------------

Net earnings (loss) for the period (890,822) 1,383,678
---------------------------------------------------------------------
---------------------------------------------------------------------

Net earnings (loss) per common
share - basic
Earnings (loss) from continuing
operations (0.07) 0.05
Results of discontinued operations 0.00 0.12
---------------------------------------------------------------------
Net earnings (loss) per common
share - basic (0.07) 0.17

Net earnings (loss) per common
share - diluted
Earnings (loss) from continuing
operations (0.07) 0.04
Results of discontinued operations 0.00 0.10
---------------------------------------------------------------------
Net earnings (loss) per common
share - diluted (0.07) 0.14

Weighted average number of
shares outstanding - basic 12,263,029 8,007,877
Additions to reflect the
impact of:
Exercise of stock option - 241,886
Exercise of warrants - 1,853,810
---------------------------------------------------------------------
Weighted average number of
shares outstanding - diluted 12,263,029 10,103,573
---------------------------------------------------------------------
---------------------------------------------------------------------


Mamma.com Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)(expressed in U.S. dollars and in accordance with
generally accepted accounting principles in Canada)

For the three months ended
March 31
---------------------------------------------------------------------
2005 2004
$ $

Cash flows from

Operating activities
Earnings (loss) from
continuing operations (890,822) 409,109
Adjustments for
Amortization of property,
plant and equipment 30,107 29,959
Amortization of intangible
assets 137,046 47,780
Employee stock-based
compensation (92,508) 35,743
Tax credits - (9,874)
Future income taxes - 210,476
Unrealized loss on foreign
exchange - 6,095
Net change in non-cash working
capital items 793,245 (298,429)
---------------------------------------------------------------------

Cash from (used for) operating
activities from continuing
operations (22,932) 430,859
Cash used for operating activities
from discontinued operations (61,499) (874,502)
---------------------------------------------------------------------
(84,431) (443,643)
---------------------------------------------------------------------

Investing activities
Purchase of property, plant
and equipment (48,850) (19,268)
Purchase of intangible assets (9,478) -
Net increase in temporary
investments (38,406) -
---------------------------------------------------------------------

Cash used for investing
activities from continuing
operations (96,734) (19,268)
Cash from investing activities
from discontinued operations - 1,411,957
---------------------------------------------------------------------
(96,734) 1,392,689
---------------------------------------------------------------------

Financing activities
Issuance of capital stock and
cash from financing activities - 5,758,296
---------------------------------------------------------------------

Effect of foreign exchange rate
changes on cash and cash equivalents - 79,375
---------------------------------------------------------------------

Net change in cash and cash
equivalents and restricted cash
during the period (181,165) 6,786,717

Cash and cash equivalents
and restricted cash - Beginning
of period 20,757,089 4,489,077
---------------------------------------------------------------------

Cash and cash equivalents
and restricted cash - End
of period 20,575,924 11,275,794
---------------------------------------------------------------------
---------------------------------------------------------------------

Cash and cash equivalents comprise:
Cash 426,666 3,252,488
Short-term investments 20,001,258 8,023,306
---------------------------------------------------------------------
20,427,924 11,275,794
Restricted cash 148,000 -
---------------------------------------------------------------------
20,575,924 11,275,794
---------------------------------------------------------------------
---------------------------------------------------------------------

Supplemental cash flow information
Cash paid for interest 4,605 187
Cash paid for income taxes 86,570 -
---------------------------------------------------------------------
---------------------------------------------------------------------

Change in non-cash working
capital items:
Decrease (increase) in assets
Accounts receivable 150,868 (538,551)
Income taxes receivable 48,307 -
Prepaid expenses 9,157 (99,018)
Increase (decrease) in liabilities:
Accounts payable and accrued
liabilities 519,078 58,312
Income taxes payable - 225,955
Deferred revenue 65,835 54,873
---------------------------------------------------------------------
Net change in non-cash working
capital items 793,245 (298,429)
---------------------------------------------------------------------
---------------------------------------------------------------------



Contact Information

  • For financial information:
    Mamma.com Inc.
    Daniel Bertrand
    Executive Vice President and Chief Financial Officer
    (514) 908-4318 or (877) 289-4682 #118 (toll free)
    http://www.mammainc.com
    or
    For other information :
    Mamma.com Inc.
    Guy Faure
    President and Chief Executive Officer
    (514) 908-4346 or (877) 289-4682 #146 (toll free)
    http://www.mammainc.com