Mamma.com Inc.
NASDAQ : MAMA

Mamma.com Inc.

August 09, 2005 17:04 ET

Mamma.com Releases 2005 Q2 Financials

MONTREAL, QUEBEC--(CCNMatthews - Aug. 9, 2005) - Mamma.com Inc. (NASDAQ:MAMA)



- Q2 2005 revenue decrease by 35% to $2.6 million due to a decline in
business with a major customer from $1.4 million to $0.146 million
partially offset by other Search and Ad Network revenue increases
- Write down and restructuring charges of $0.92 million related to
Digital Arrow
- Additional expenses of $0.8 million for the purported securities
class action lawsuits and the SEC investigation.
- Net Loss of $2.5 million ($0.20/share).
- Cash and cash equivalents still remain strong at $24 million.


Mamma.com Inc., (the "Company"), (NASDAQ:MAMA), reported its financial results for the second quarter ended June 30, 2005. Unless otherwise stated, all figures in this release are in US dollars.

The Company's Q2 2005 net loss was $2,499,253 ($0.20 per share) compared to net earnings of $108,387 ($0.01 per share) for the same period in 2004. Revenue in the second quarter of 2005 was $2,590,220, 35% below the $3,957,428 revenue for the same period in 2004. The reduction in revenue reflects the decline in business with a major customer from over $1.4 million to $146,000. This is partially offset by revenue growth in the Company's Search and Ad Network revenue streams.

Significant cost variances were: professional fees related to the purported securities class action lawsuits and SEC investigation of $784,000, increased directors and officers insurance of $165,000, $794,092 write-down of assets and restructuring charges of $127,874 related to Digital Arrow due to the poor performance of its opt-in e-mail business unit. Payout costs over revenues decreased to 41% compared to 44.9% for the same quarter of 2004 due to a decrease in the percentage paid to partners combined with an increase in revenue generated from our meta search engine for which no payout costs are incurred.

Cash and cash equivalents still remained strong at $23,999,936 after the redemption of 304,665 common shares for $1,053,155, payments of directors and officers' insurance and additional fees related to the purported securities class action lawsuits and SEC investigation.

Guy Faure, the Company's President and CEO stated: "Revenues in the current second quarter were below Q2 2004 due to a revenue decline of a major customer and as we reduced distribution of paid advertising in the search and Ad networks offering our advertisers only high demand traffic. The Opt-in email operations have not delivered management expected results and we are now taking action to reduce operational expenses and transfer most of the sales and operations to our Montreal head office."

Guy Faure continued: "On June 20th Mamma announced the launch of its Mammahealth.com initiative. This specialised search application is the first in a series that will offer Internet users a unique search tool that queries "on-line & real-time"specialized data bases. The application provides search results from various specialized sources, and aggregates and presents content to the user in a consistent fashion. We have also recently announced an agreement with InfoSpace where they will provide distributed search results to be placed on the Mamma.com search engine beginning August 1, 2005. In the terms of the deal, InfoSpace will supply search results from some of the leading search engines on the Web. Also, as part of the agreement, the distribution of InfoSpace paid links on Mamma.com is expected to increase the number of paid clicks to InfoSpace's paid search distribution network and increase search revenues for both companies. Our ability to compete should be strengthened as we increase distribution and develop premium services, which should allow Mamma to increase its average selling price.

The unaudited financial statements for the second quarter ended June 30, 2005 will shortly be available on SEDAR and EDGAR and on our Web site 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 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
June 30, December 31,
2005 2004
$ $
Assets

Current assets
Cash and cash equivalents 23,999,936 20,609,089
Restricted cash - 148,000
Temporary investments - 6,874,155
Accounts receivable 2,232,084 2,689,540
Income taxes receivable 71,920 120,590
Prepaid expenses 663,392 135,110
Assets of discontinued operations 35,180 82,045
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27,002,512 30,658,529

Investments 720,000 720,000

Property, plant and equipment 373,619 374,819

Intangible assets 1,390,242 2,010,244

Goodwill 1,008,868 1,402,506
---------------------------------------------------------------------

30,495,241 35,166,098
---------------------------------------------------------------------
---------------------------------------------------------------------

Liabilities

Current liabilities
Accounts payable and accrued liabilities 2,542,710 2,646,316
Deferred revenue 289,466 256,984
Liabilities of discontinued operations 88,582 227,226
---------------------------------------------------------------------

2,920,758 3,130,526
---------------------------------------------------------------------

Shareholders' Equity

Capital stock
Authorized
Unlimited common shares, no par value
Issued and outstanding 11,958,364 common
shares (12,263,029 in 2004) 88,247,786 90,496,088

Additional paid-in capital 5,495,206 5,255,249

Deferred stock-based compensation (396,112) (1,333,443)

Cumulative translation adjustment 360,884 360,884

Accumulated deficit (66,133,281) (62,743,206)
---------------------------------------------------------------------

27,574,483 32,035,572
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30,495,241 35,166,098
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---------------------------------------------------------------------



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 six months ended For the three months ended
June 30 June 30
---------------------------------------------------------------------
2005 2004 2005 2004
$ $ $ $

Revenue 5,835,534 8,169,908 2,590,220 3,957,428
---------------------------------------------------------------------

Expenses
Search, graphic
ad and email
serving 138,545 104,954 64,050 50,399
Marketing, sales
and services 3,828,433 4,698,891 1,811,514 2,318,989
General and
administration 3,612,071 1,760,315 1,915,227 1,109,280
Product
development and
technical support 698,997 380,871 370,196 159,527
Amortization of
property, plant
and equipment 59,734 62,681 29,627 32,722
Amortization of
intangible assets 276,743 116,952 139,697 69,172
Interest income (311,156) (29,218) (160,385) (21,486)
Loss (gain) on
foreign exchange 276 (7,240) (2,419) 1,491
Restructuring
charges 127,874 - 127,874 -
Write-down of
property, plant
and equipment,
intangible assets
and goodwill 794,092 - 794,092 -
---------------------------------------------------------------------
9,225,609 7,088,206 5,089,473 3,720,094

---------------------------------------------------------------------

Earnings (loss)
from continuing
operations before
income taxes (3,390,075) 1,081,702 (2,499,253) 237,334

Provision for
(recovery of)
current income
taxes - 168,299 - (138,244)
Provision for
future income
taxes - 388,200 - 259,484
---------------------------------------------------------------------

Earnings (loss)
from continuing
operations (3,390,075) 525,203 (2,499,253) 116,094

Results of
discontinued
operations - 966,862 - (7,707)
---------------------------------------------------------------------

Net earnings
(loss) for the
period (3,390,075) 1,492,065 (2,499,253) 108,387
---------------------------------------------------------------------
---------------------------------------------------------------------

Net earnings
(loss) per common
share - basic
Earnings (loss)
from continuing
operations (0.28) 0.06 (0.20) 0.01
Results of
discontinued
operations - 0.10 - 0.00
---------------------------------------------------------------------
Net earnings
(loss) per
common share
- basic (0.28) 0.16 (0.20) 0.01

Net earnings
(loss) per common
share - diluted
Earnings (loss)
from continuing
operations (0.28) 0.05 (0.20) 0.01
Results of
discontinued
operations - 0.09 - 0.00
---------------------------------------------------------------------
Net earnings
(loss) per
common share
- diluted (0.28) 0.14 (0.20) 0.01

Weighted average
number of shares
outstanding
- basic 12,261,346 9,275,229 12,259,681 10,542,582
Additions to
reflect the
impact of:
Exercise of
stock options - 195,791 - 126,630
Exercise of
warrants - 885,330 - 84,525
---------------------------------------------------------------------
Weighted average
number of shares
outstanding
- diluted 12,261,346 10,356,350 12,259,681 10,753,737
---------------------------------------------------------------------
---------------------------------------------------------------------



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

For the six months ended For the three months ended
June 30 June 30
---------------------------------------------------------------------
2005 2004 2005 2004
$ $ $ $

Cash flows from

Operating
activities
Earnings (loss)
from continuing
operations (3,390,075) 525,203 (2,499,253) 116,094
Adjustments for
Amortization of
property,
plant and
equipment 59,734 62,681 29,627 32,722
Amortization of
intangible
assets 276,743 116,952 139,697 69,172
Employee
stock-based
compensation (17,859) 71,486 74,649 35,743
Tax credits - 81,505 - 91,379
Future income
taxes - 388,200 - 259,484
Unrealized loss
on foreign
exchange - 13,362 - 6,095
Financial fees
paid by
issuance of
capital stock
and warrants - 210,392 - 210,392
Write-down of
property,
plant and
equipment,
intangible
assets and
goodwill 794,092 - 794,092 -
Net change in
non-cash working
capital items (93,280) 333,233 (886,525) 551,074
---------------------------------------------------------------------

Cash from (used
for) operating
activities from
continuing
operations (2,370,645) 1,803,014 (2,347,713) 1,372,155
Cash from (used
for) operating
activities from
discontinued
operations (91,779) (869,119) (30,280) 5,383
---------------------------------------------------------------------
(2,462,424) 933,895 (2,377,993) 1,377,538
---------------------------------------------------------------------
Investing
activities
Business
combination, net
of cash acquired - (1,264,210) - (1,264,210)
Purchase of
property, plant
and equipment (73,534) (31,990) (24,684) (12,722)
Purchase of
intangible assets (42,195) (1,511) (32,717) (1,511)
Net decrease in
temporary
investments 6,874,155 - 6,912,561 -
---------------------------------------------------------------------

Cash from (used
for) investing
activities from
continuing
operations 6,758,426 (1,297,711) 6,855,160 (1,278,443)
Cash from investing
activities from
discontinued
operations - 1,744,185 - 287,228
---------------------------------------------------------------------
6,758,426 446,474 6,855,160 (991,215)
---------------------------------------------------------------------
Financing
activities
Issuance of capital
stock and warrants - 22,493,871 - 16,735,575
Share issue costs - (1,034,999) - (1,034,999)
Redemption of
common shares (1,053,155) - (1,053,155) -
---------------------------------------------------------------------

Cash from (used
for) financing
activities (1,053,155) 21,458,872 (1,053,155) 15,700,576
---------------------------------------------------------------------

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 3,242,847 22,873,616 3,424,012 16,086,899

Cash and cash
equivalents and
restricted cash
- Beginning of
period 20,757,089 4,489,077 20,575,924 11,275,794
---------------------------------------------------------------------

Cash and cash
equivalents and
restricted cash
- End of period 23,999,936 27,362,693 23,999,936 27,362,693
---------------------------------------------------------------------
---------------------------------------------------------------------

Cash and cash
equivalents
comprise:
Cash 1,494,165 27,193,347 1,494,165 27,193,347
Short-term
investments 22,505,771 21,346 22,505,771 21,346
---------------------------------------------------------------------
23,999,936 27,214,693 23,999,936 27,214,693
Restricted cash - 148,000 - 148,000
---------------------------------------------------------------------
23,999,936 27,362,693 23,999,936 27,362,693
---------------------------------------------------------------------
---------------------------------------------------------------------


Contact Information

  • Mamma.com Inc.
    Daniel Bertrand
    Executive Vice President and Chief Financial Officer
    (514) 908-4318 or (888) 844-2372 ext. 118
    www.mammainc.com
    or
    Mamma.com Inc.
    Guy Faure
    President and Chief Executive Officer
    (514) 908-4346 or (888) 844-2372 ext. 146