Mamma.com Inc.
NASDAQ : MAMA

Mamma.com Inc.

November 08, 2005 16:55 ET

Mamma.com Releases 2005 Q3 Financials and Issues Media Advisory for Earnings Call on Friday, November 11, 2005

MONTREAL, QUEBEC--(CCNMatthews - Nov. 8, 2005) - Mamma.com Inc. (NASDAQ:MAMA)



- Q3 2005 revenue decrease by 27% to $2.4 million due to the
streamlining of our distribution networks in order to better
compete by improving conversion rates to our advertisers.
- Opt-in Email operations were closed and presented as discontinued
operations, additional write down and restructuring charges of
$0.87 million.
- Additional expenses of $0.24 million related to the SEC
investigation.
- Net loss of $1.5 million ($0.13/share).
- Cash and cash equivalents still remain strong at $24 million.


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

The Company's Q3 2005 net loss was $1,505,688 ($0.13 per share) compared to net earnings of $283,909 ($0.02 per share) for the same period in 2004. Revenue in the third quarter of 2005 was $2,390,634, 27% below the $3,291,204 revenue for the same period in 2004. The reduction in revenue reflects the industry pressure on delivering better conversion rates and improving traffic quality.

Following the continuous poor performance of its Opt-in Email operations, the Company discontinued the operations of its subsidiary, Digital Arrow. The remainder of the Property, Plant and Equipment, Intangible Assets and Goodwill related to Digital Arrow were written down to nil in Q3 2005 and these results were presented as discontinued operations.

Loss from continuing operations in Q3 2005 was $574,314 including significant expenses such as: professional fees related to the SEC investigation of $241,000 and an increase in directors and officers insurance of $156,000. Payout costs over revenues were at 44%, which was the same percentage in Q3 2004.

Cash and cash equivalents still remained strong at $23,877,897, a decrease of $122,039 from the previous quarter.

Guy Faure, the Company's President and CEO stated: "Revenues in the third quarter were below Q3 2004 as we have worked diligently with our advertisers to focus on advertising which yields an acceptable return. We have been able to effectively eliminate poor converting traffic from our Affiliates from both the Search, and Ad Networks, and have set up better processes to qualify new Affiliates who can provide good quality converting traffic for our advertisers. The Opt-in Email operations were discontinued because of declining demand for the service. We will now focus on the two main on-line advertising sectors that we know best; the search network that we intend to grow with the Copernic potential acquisition and the Ad Network that we believe offers significant organic growth opportunities."

Guy Faure continued: "We are working at completing the definitive agreement for the Copernic acquisition and expect to close before the end of November 2005 as previously disclosed. We expect that the completion of this transaction will allow the Company to aggressively compete in the on-line advertising sectors for 2006."

The unaudited financial statements for the third quarter ended September 30, 2005 will shortly be available on SEDAR and EDGAR and on our Web site www.mammainc.com .

The call-in number for Friday, November 11, 2005 is: l-416-695-5261 (for local and international participants) or please call toll free l-877-888-3855 (North America only).

The live Web cast will be available on the Investor Relations section of the Mamma Media Solutions website: www.mammamediasolutions.com/corporate/ir/financial.html. The archived Web cast will be made available on the Company's Web site starting one hour after the completion of the call.

About Mamma.com Inc.

Mamma Media Solutions™ is focused on providing first-rate quality information retrieval on the Internet through its metasearch engine and is a leading provider of integrated marketing solutions to online advertisers. Mamma.com The Mother of All Search Engines® (www.mamma.com) is one of the most popular metasearch engines on the Internet, as it makes it easier and faster for people to find information by gathering the most relevant results from the best search engines on the Internet. Mamma Media Solutions™ is equally focused on being one of the leading providers of online marketing solutions to advertisers as its integrated offer includes keyword search listings and numerous sizes of graphic ad units. Mamma Media Solutions™ maintains a large publisher network on which it distributes search and graphic ad units for its advertisers. The Company also holds minority interests in analog integrated circuit products, and in the new media and telecommunications sectors. 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
September 30, December 31,
2005 2004
$ $
Assets

Current assets
Cash and cash equivalents 23,877,897 20,609,089
Restricted cash - 148,000
Temporary investments - 6,874,155
Accounts receivable 1,762,079 2,502,535
Income taxes receivable 93,292 120,590
Prepaid expenses 507,305 129,390
Assets of discontinued operations 4,406 274,770
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26,244,979 30,658,529

Assets of discontinued operations - 1,882,857

Investments 720,000 720,000

Property, plant and equipment 314,598 304,624

Intangible assets 654,035 753,778

Goodwill 846,310 846,310
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28,779,922 35,166,098
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Liabilities

Current liabilities
Accounts payable and accrued liabilities 2,178,965 2,244,958
Deferred revenue 262,849 233,459
Liabilities of discontinued operations 190,685 652,109
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2,632,499 3,130,526
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Shareholders' Equity

Capital stock
Authorized
Unlimited common shares, no par value
Issued and outstanding 11,960,864
common shares (12,263,029 in 2004) 88,258,195 90,496,088

Additional paid-in capital 5,474,394 5,255,249

Deferred stock-based compensation (307,081) (1,333,443)

Cumulative translation adjustment 360,884 360,884

Accumulated deficit (67,638,969) (62,743,206)
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26,147,423 32,035,572
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28,779,922 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 nine months For the three months
ended September 30 ended September 30
---------------------------------------------------------------------
2005 2004 2005 2004
$ $ $ $

Revenue 7,805,543 11,220,003 2,390,634 3,291,204
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Expenses
Search and graphic
ad serving 209,618 164,170 81,313 56,260
Marketing, sales and
services 4,957,521 6,478,849 1,551,083 1,957,168
General and
administration 4,546,230 2,416,315 1,106,836 681,784
Product development
and technical
support 940,938 612,682 305,790 231,811
Amortization of
property, plant and
equipment 72,315 91,177 23,240 30,300
Amortization of
intangible assets 147,714 143,385 51,325 48,145
Interest income (504,277) (116,928) (193,119) (87,710)
Loss on foreign
exchange 23,203 45,519 22,927 52,759
Write-down of
property, plant and
equipment 2,826 - 2,826 -
---------------------------------------------------------------------

10,396,088 9,835,169 2,952,221 2,970,517
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Earnings (loss) from
continuing
operations before
income taxes (2,590,545) 1,384,834 (561,587) 320,687

Provision for
(recovery of)
current income
taxes 12,727 159,299 12,727 (9,000)
Provision for future
income taxes - 392,200 - 4,000
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Earnings (loss) from
continuing
operations (2,603,272) 833,335 (574,314) 325,687

Results of
discontinued
operations (2,292,491) 942,639 (931,374) (41,778)
---------------------------------------------------------------------

Net earnings (loss)
for the period (4,895,763) 1,775,974 (1,505,688) 283,909
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---------------------------------------------------------------------

Net earnings (loss)
per common share
- basic
Earnings
(loss) from
continuing
operations (0.21) 0.08 (0.05) 0.02
Results of
discontinued
operations (0.19) 0.09 (0.08) 0.00
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Net earnings (loss)
per common share
- basic (0.40) 0.17 (0.13) 0.02

Net earnings (loss)
per common share
- diluted
Earnings
(loss) from
continuing
operations (0.21) 0.08 (0.05) 0.02
Results of
discontinued
operations (0.19) 0.08 (0.08) 0.00
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Net earnings (loss)
per common share
- diluted (0.40) 0.16 (0.13) 0.02

Weighted average
number of shares
outstanding
- basic 12,159,498 10,253,834 11,959,125 12,189,768
Additions to reflect
the impact of:
Exercise of stock
options - 160,798 - 91,573
Exercise of
warrants - 603,130 - 44,866
---------------------------------------------------------------------
Weighted average
number of shares
outstanding
- diluted 12,159,498 11,017,762 11,959,125 12,326,207
---------------------------------------------------------------------
---------------------------------------------------------------------



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 nine months For the three months
ended September 30 ended September 30
---------------------------------------------------------------------
2005 2004 2005 2004
$ $ $ $

Cash flows from

Operating activities
Earnings (loss) from
continuing
operations (2,603,272) 833,335 (574,314) 325,687
Adjustments for
Amortization of
property, plant
and equipment 72,315 91,177 23,240 30,300
Amortization of
intangible
assets 147,714 143,385 51,325 48,145
Employee
stock-based
compensation 54,344 107,229 72,203 35,743
Tax credits - 81,505 - -
Future income
taxes - 392,200 - 4,000
Unrealized loss
on foreign
exchange - 14,192 - 830
Financial fees
paid by issuance
of capital stock
and warrants - 260,301 - 49,909
Write-down of
property, plant
and equipment 2,826 - 2,826 -
Net change in non-cash
working capital items 353,236 532,125 469,207 74,817
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Cash from (used for)
operating activities
from continuing
operations (1,972,837) 2,455,449 44,487 569,431
Cash from (used for)
operating activities
from discontinued
operations (600,694) (872,437) (155,594) 79,686
---------------------------------------------------------------------
(2,573,531) 1,583,012 (111,107) 649,117
---------------------------------------------------------------------
Investing activities
Purchase of property,
plant and equipment (85,115) (45,976) (11,581) (13,986)
Purchase of
intangible assets (47,971) (1,511) (5,776) -
Net decrease
(increase) in
temporary
investments 6,874,155 (2,977,309) - (3,000,485)
---------------------------------------------------------------------

Cash from (used for)
investing activities
from continuing
operations 6,741,069 (3,024,796) (17,357) (3,014,471)
Cash from investing
activities from
discontinued
operations - 411,799 - -
---------------------------------------------------------------------
6,741,069 (2,612,997) (17,357) (3,014,471)
---------------------------------------------------------------------
Financing activities
Issuance of capital
stock and warrants 6,425 22,760,261 6,425 266,390
Share issue costs - (1,058,819) - (23,820)
Redemption of common
shares (1,053,155) - - -
---------------------------------------------------------------------

Cash from (used for)
financing
activities (1,046,730) 21,701,442 6,425 242,570
---------------------------------------------------------------------

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 3,120,808 20,750,832 (122,039) (2,122,784)

Cash and cash
equivalents and
restricted cash
- Beginning of
period 20,757,089 4,489,077 23,999,936 27,362,693
---------------------------------------------------------------------

Cash and cash
equivalents and
restricted cash -
End of period 23,877,897 25,239,909 23,877,897 25,239,909
---------------------------------------------------------------------
---------------------------------------------------------------------

Cash and cash
equivalents
comprise:
Cash 1,363,506 4,066,873 1,363,506 4,066,873
Short-term
investments 22,514,391 21,025,036 22,514,391 21,025,036
---------------------------------------------------------------------
23,877,897 25,091,909 23,877,897 25,091,909
Restricted cash - 148,000 - 148,000
---------------------------------------------------------------------
23,877,897 25,239,909 23,877,897 25,239,909
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