Momentum Advanced Solutions Inc.
TSX : WWW

Momentum Advanced Solutions Inc.

September 11, 2007 17:40 ET

Momentum Announces Q1 Results

TORONTO, ONTARIO--(Marketwire - Sept. 11, 2007) - Momentum Advanced Solutions Inc. (TSX:WWW), ("Momentum" or the "Company"), a leader in the emerging world of Internet outsourcing, today announced results for the first quarter of fiscal 2008 ended July 31, 2007.

Q1 FY'08 vs. Q1 FY'07 Highlights

- Total revenue increased 17% to $3,804,536 vs. $3,259,000

- Web Solutions and Services ("WSS") revenue increased 10% to $2,445,999 vs. $2,221,000

- Managed Services ("MS") revenue increased 31% to $1,358,537 vs. $1,038,000

- Total gross profit up 22% to $1,426,528 vs. $1,168,000

- EBITDA(1) improved to a loss of $70,937 up $367,063 from a loss of $438,000

- Net loss from continuing operations was $355,901 vs. a loss of $724,000

- Net loss after discontinued operations was $394,139 vs. a loss of $290,000

Q1 FY'08 vs. Q1 FY'07

Total revenue for the first quarter of fiscal 2008 increased by 17% or $545,536 to $3,804,536 from $3,259,000 recorded in the same period of fiscal 2007. WSS and MS revenue increased by 10% and 31% respectively over the same quarter of the prior year.

Total gross profit for the quarter was $1,426,528, up 22% from $1,168,000 recorded in Q1 of fiscal 2007. This was a result of the increase in revenue and also improved leverage of MS revenue over a relatively fixed cost structure.

Selling and administrative expenses were $1,643,981 in the first quarter compared with $1,701,000 in the first quarter of FY07. Selling costs were higher due to increased pre-sales efforts and investments in marketing activities. Administrative costs declined due to a reduction in staff and the recovery of facility and shared service costs.

The above resulted in an EBITDA loss of $70,937 for the first quarter of FY08, an improvement of $367,063 from an EBITDA loss of $438,000 in the same quarter of the prior year.

Net loss from continuing operations improved by $368,099 to a loss of $355,901 in the first quarter of 2008 compared with a loss of $724,000 in the first quarter of fiscal 2007 primarily due to an increase in MS sales. Net loss after discontinued operations was $394,139 in Q1 of fiscal 2008 compared with a loss of $290,000 in Q1 of fiscal 2007.

"While I am pleased with the revenue growth over the same period of the previous year during this typically slow quarter, I believe that the company has the potential to perform at a much higher level", stated Sheldon Pollack, CEO of Momentum. "Nonetheless, I believe that the investments we are making in marketing and pre-sales activities should result in renewed growth and improved operating performance going forward".



Momentum Advanced Solutions Inc.
Consolidated Balance Sheets
As at July 31 and April 30, 2007

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July 31, 2007 April 30, 2007
Unaudited
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Assets
Current assets:
Cash $ 207,946 $ 2,758,000
Short-term investments 3,605,587 -
Accounts receivable 3,176,938 3,012,000
Proceeds receivable from sale of business - 2,300,000
Prepaid expenses and other assets 837,927 631,000
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7,828,398 8,701,000

Restricted cash - 250,000
Deferred costs 92,750 97,000
Capital assets 4,525,276 4,380,000
Goodwill 550,277 550,277

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$ 12,996,701 $ 13,978,277
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 1,284,696 $ 1,850,346
Deferred revenue 215,170 214,000
Current portion of obligations under
capital leases 195,173 207,000
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1,695,039 2,271,346

Obligations under capital leases 217,931 257,000
Long-term facility lease accrual 129,837 144,000

Shareholders' equity 10,953,894 11,305,931

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$ 12,996,701 $ 13,978,277
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Momentum Advanced Solutions Inc.
Consolidated Statements of Operations and Retained Earnings (unaudited)
For the three months ended July 31, 2007 and 2006

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Three months ended
July 31
2007 2006
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Sales
Web solutions and services $ 2,445,999 $ 2,221,000
Managed services 1,358,537 1,038,000
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Sales 3,804,536 3,259,000

Cost of Sales
Web solutions and services 1,654,072 1,499,000
Managed services 723,936 592,000
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Cost of Sales 2,378,008 2,091,000

Gross Profit
Web solutions and services 791,927 722,000
Managed services 634,601 446,000
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Gross Profit 1,426,528 1,168,000

Expenses:
Selling 695,435 475,000
Administrative 948,546 1,226,000
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1,643,981 1,701,000

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Loss before the undernoted (217,453) (533,000)

Amortization of capital assets 136,005 191,000
Interest and other 2,443 -
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138,448 191,000

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Net loss from continuing operations $ (355,901) $ (724,000)
Net income (loss) from discontinued operations (38,238) 434,000
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Net loss and comprehensive loss $ (394,139) $ (290,000)
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Retained earnings, beginning of period 4,156,501 601,000
Loss for the period (394,139) (290,000)
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Retained earnings, end of period $ 3,762,362 $ 311,000
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Basic and diluted earnings (loss) per share
Continuing operations $ (0.01) $ (0.01)
Discontinued operations - 0.01
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Basic and diluted earnings per share $ (0.01) $ -
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Basic weighted average common
shares outstanding 65,625,077 65,625,077
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Diluted weighted average common
shares outstanding 66,125,223 65,625,077
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Momentum Advanced Solutions Inc.
Consolidated Statements of Cash Flows (unaudited)
For the three months ended July 31, 2007 and 2006

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Three months ended
July 31
2007 2006
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Cash provided by (used in):
Operations:
Net loss $ (394,139) $ (290,000)
Items not involving cash:
Amortization of capital assets 282,521 286,000
Amortization of deferred costs 4,250 -
Unrealized gain on short-term investments (5,587) -
Stock based compensation 42,102 15,000
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(70,853) 11,000
Changes in non-cash operating working capital 1,363,655 (2,827,000)
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1,292,802 (2,816,000)
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Financing:
Payments on obligations under capital leases (50,896) (47,000)
Decrease in restricted cash 250,000 -
Repayment of long-term debt and note payable - (23,000)
Long-term facility lease accrual (14,163) (17,000)
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184,941 (87,000)
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Investments:
Purchase of capital assets (427,797) (378,000)
Purchase of short-term investments (3,800,000) -
Sale of short-term investments 200,000 -
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(4,027,797) (378,000)
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Decrease in cash (2,550,054) (3,281,000)
Cash beginning of period 2,758,000 3,357,000
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Cash end of period $ 207,946 $ 76,000
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Forward Looking Statement

Readers should take note that certain statements in this press release are forward-looking and may not give full weight to all of the potential risks and uncertainties. These forward-looking statements include statements that are subject to risks and uncertainties. Forward-looking statements are subject by their nature to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the forward-looking statements. Any forward-looking statements speak only as of the date made. The company is not undertaking to update any information in the foregoing reports until the effective date of its future reports required by the securities laws.

1) EBITDA is defined as loss before amortization, interest and discontinued operations, adding back amortization recorded in Managed Services cost of sales. The Company uses EBITDA amongst other measures to assess the operating performance of its ongoing business. The Company believes that EBITDA is useful supplemental information as it provides an indication of the results generated by the Company's continuing business activities prior to taking into consideration financing costs and capital asset amortization costs. Similarly, readers may find this non-GAAP financial measure useful although the term EBITDA does not have a recognized meaning under Canadian generally accepted accounting principles and therefore may not be comparable to similarly titled measures presented by other companies. EBITDA should not be construed as the equivalent to cash flow from operations. The most comparable GAAP measurement for EBITDA is net loss from continuing operations. A reconciliation between net loss from continuing operations and EBITDA is provided below.



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Three Months Ended July 31 2007 2006
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Net loss from continuing operations $ (355,901) $ (724,000)
Amortization of capital assets 136,005 191,000
Amortization of capital assets included in
Managed Services cost of sales 146,516 95,000
Interest and other 2,443 -
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EBITDA $ (70,937) $ (438,000)
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About Momentum Advanced Solutions Inc.

Momentum is a leader in the emerging world of Internet outsourcing. Momentum's Internet outsourcing solutions provide our customers with the Innovation, Integration and Operations expertise required to allow them to successfully reduce costs and/or improve productivity by outsourcing to us any or all of their mission critical web-based applications and Managed Internet infrastructure. Headquartered in Markham, Ontario the Company has offices in Ottawa, Windsor and Toronto. Momentum Advanced Solutions is publicly traded on the Toronto Stock Exchange and trades under the symbol "WWW".

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