Stockgroup Information Systems Inc.
TSX VENTURE : SWB
OTC Bulletin Board : SWEB

Stockgroup Information Systems Inc.

November 14, 2005 09:30 ET

Stockgroup Reports 11th Quarter of Revenue Growth

NEW YORK, NEW YORK--(CCNMatthews - Nov. 14, 2005) - Stockgroup Information Systems Inc. (OTCBB:SWEB)(TSX VENTURE:SWB) announced today its financial results for the quarter ended September 30th 2005 with a 12% increase in revenue over Q3 2004.

Q3 Financial Highlights (all USD) Compared to Q3F04:

- Increased revenue 12% to $1,369,103

- Increased Financial Software and Content Systems revenues 50% to $767,367

- Ended the quarter with more than $2.3 million in cash

- Produced positive operating cash flow of $204,831

- Decreased general and administrative expenses by 6%



-------------------------------------------------------------------
3 months 3 months
ended ended 9 months 9 months
September 30 September 30 ended ended
'05 '04 September 30 September 30
(Q3) (Q3) '05 '04
-------------------------------------------------------------------
Revenues $ 1,369,103 $ 1,226,986 $ 4,303,715 $ 3,458,171
-------------------------------------------------------------------
Gross Profit $ 886,464 $ 989,032 $ 3,256,024 $ 2,799,635
-------------------------------------------------------------------
Net Income
(Loss) $ (207,623) $ 11,449 $ (117,307) $ (24,719)
-------------------------------------------------------------------
Cash and
Equivalents $ 2,327,321 $ 1,624,141 $ 2,327,321 $ 1,624,141
-------------------------------------------------------------------


Marcus New, Chief Executive Officer, stated, "This quarter, Stockgroup continued to focus on building its sales and management team and developing new products. The increasing market demand for stock information and growth of our sales force has resulted in a third quarter revenue increase of 50% from the Financial Software and Content Systems business over 2004. Although Advertising Services experienced a decline of 15.9% for the same period, we have already seen strong signs of an improved next quarter. Stockgroup's solid revenue growth and strengthening cash position continues to point towards successful execution of our key 2005 objectives."

The company has changed its process and systems to comply with the internal reporting systems of its market data vendors on a go forward basis. This resulted in a one time charge of $116,000 in the quarter.

Strengthened Management Team and Board

In Q3, Stockgroup continued to build its management team with the successful addition of two proven senior executives as VP of Marketing and Publisher/Executive Editor of StockHouse™.

Bruce Nunn, VP of Marketing, was formerly the Director of Marketing for Fincentric, a wealth management software company. At Fincentric, he was responsible for the marketing strategy and execution that led the company from C$7 million to C$62 million in revenue in three years.

Darin Diehl joined Stockgroup from The Advisor Group at Rogers Media where he was the Executive Editor, Associate Publisher. Prior to The Advisor Group, Mr. Diehl was a managing editor at Global Strategy Financial Inc. and national news director at Standard Broadcast News.

Stockgroup strengthened the board of directors by attracting Elisabeth DeMarse, formerly the CEO of BankRate (NASDAQ:RATE), an online financial community. In four years with BankRate, Ms. DeMarse was responsible for growing the company from $5 million to $37 million in advertising revenue. In addition, Ms. DeMarse was EVP of Bloomberg L.P. where in her tenure the company grew from $50 million to more than $1.5 billion and into one of the world's largest financial brands.

Focused on Product Development

At the end of the quarter Stockgroup launched a key revenue-generating product called StockStream™ Version 1.0 in beta. StockStream is a web based streaming real time quote application with multiple watch lists, level 2 screens, time and sales lists, charting and news. StockStream will be marketed through StockHouse, Financial Software and Content Systems sales force, and external marketing initiatives.

Mr. New continued, "StockStream is consistent with our stated 2005 objectives of building a pipeline of innovative products to address the growing demands of our customers to provide them actionable analytics to help them keep their best customers more engaged with their brands."

Conference Call and Webcast

President and CEO Marcus New, and CFO Doug Keast, will host a conference call to discuss these results on November 14, 2005 (today) at 4:10 PM EST, which will be simultaneously webcast. To participate in the conference call, please dial 1-800-525-6384 five to ten minutes prior to the start time or visit www.stockgroup.com for details on listening to the live webcast.

The full 10-QSB is available for review at www.stockgroup.com, www.edgar.com.

About Stockgroup Information Systems Inc.

As an online media company, Stockgroup Information Systems provides a complete financial data source for investors, investment advisory firms, press and media organizations as well as access to specific demographics for advertisers.

To find out more about Stockgroup (OTCBB: SWEB, TSX-V: SWB), visit our website at www.stockgroup.com.

This document contains forward-looking statements, including, in particular, statements about Stockgroup Information Systems Inc.'s plans, strategies and prospects. These have been based on the Company's current assumptions, expectations and projections about future events.

Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, the Company can give no assurance that these expectations will prove to be correct or that results anticipated in the forward-looking statements will be achieved. These forward-looking statements include risks and uncertainties. These risks and uncertainties include, among other things, market conditions, industry uncertainty and other factors.



Stockgroup Information Systems Inc.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED - Expressed in U.S. Dollars)

September 30, December 31,
2005 2004
(1)
------------------------------

ASSETS
CURRENT
Cash and cash equivalents $ 2,327,321 $ 1,837,012
Marketable securities 7,642 7,361
Accounts receivable (net of
allowances for doubtful accounts
of $89,621;
December 31, 2004 $45,016) 582,495 595,848
Prepaid expenses 78,861 114,426
------------------------------

TOTAL CURRENT ASSETS $ 2,996,319 $ 2,554,647
Property and equipment, net $ 247,295 $ 287,073
------------------------------

$ 3,243,614 $ 2,841,720
------------------------------
------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT
Accounts payable and accrued
liabilities $ 660,753 $ 319,846
Accrued payroll liabilities 174,157 104,230
Deferred revenue 809,608 804,061
Capital lease obligation 33,298 -
Income tax payable 22,495 -
------------------------------

TOTAL CURRENT LIABILITIES $ 1,700,311 $ 1,228,137
Capital lease obligation 58,110 -
------------------------------

TOTAL LIABILITIES 1,758,421 1,228,137
------------------------------
------------------------------

COMMITMENTS AND CONTINGENCIES (note 5)

SHAREHOLDERS' EQUITY (note 2)
Common Stock, No Par Value
Authorized shares - 75,000,000
Issued and outstanding shares -
33,825,296 at September 30, 2005
(33,931,221 - December 31, 2004) $ 13,482,844 $ 13,568,499
Additional paid-in capital 3,173,886 3,099,314
Accumulated deficit (15,171,537) (15,054,230)
------------------------------

TOTAL SHAREHOLDERS' EQUITY $ 1,485,193 $ 1,613,583
------------------------------

$ 3,243,614 $ 2,841,720
------------------------------
------------------------------
(1) The balance sheet at December 31, 2004 has been derived from
the audited consolidated financial statements at that date.


Stockgroup Information Systems Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED - Expressed in U.S. Dollars)

Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2005 2004 2005 2004
------------------------------------------------------

REVENUE
Revenues
(note 4) $ 1,369,103 $ 1,226,986 $ 4,303,715 $ 3,458,171
Cost of
revenues 482,639 237,954 1,047,691 658,536
------------------------------------------------------

Gross profit $ 886,464 $ 989,032 $ 3,256,024 $ 2,799,635

EXPENSES
Sales and
marketing $ 510,144 $ 372,815 $ 1,292,430 $ 1,100,505
General and
administrative 573,171 610,911 2,073,600 1,738,730
------------------------------------------------------

$ 1,083,315 $ 983,726 $ 3,366,030 $ 2,839,235
------------------------------------------------------

INCOME (LOSS)
FROM
OPERATIONS $ (196,851) $ 5,306 $ (110,006) $ (39,600)

Interest income 10,621 4,581 21,049 14,939
Interest
expense (2,625) (37) (4,663) (1,660)
Other income
(expense) 3,727 1,599 (1,192) 1,602
------------------------------------------------------

INCOME (LOSS)
AND
COMPREHENSIVE
INCOME (LOSS)
BEFORE INCOME
TAX $ (185,128) $ 11,449 $ (94,812) $ (24,719)
------------------------------------------------------

PROVISIONS
FOR INCOME
TAXES
Current 22,495 - 22,495 -
------------------------------------------------------

NET INCOME
(LOSS) AND
COMPREHENSIVE
INCOME (LOSS) $ (207,623) $ 11,449 $ (117,307) $ (24,719)
------------------------------------------------------
------------------------------------------------------

BASIC AND
DILUTED
INCOME
(LOSS) PER
SHARE $ (0.01) $ 0.00 $ 0.00 $ 0.00
------------------------------------------------------
------------------------------------------------------

Fully diluted
weighted
average
shares
outstanding
for the
period 34,764,042 34,643,763 34,951,150 34,064,667


Stockgroup Information Systems Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED - Expressed in U.S. Dollars)

Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2005 2004 2005 2004
------------------------------------------------------

OPERATING
ACTIVITIES
Net income
(loss) $ (207,623) $ 11,449 $ (117,307) $ (24,719)
Add (deduct)
non-cash
items
Amortization 24,231 109,897 246,418 295,018
Bad debt
expense
(recovery) (6,522) (4,145) (33,232) 31,718
Stock-based
compensation - - 45,806 -
-----------------------------------------------------
$ (189,914) $ 117,201 $ 141,685 $ 302,017
Net changes
in non-cash
working
capital
Marketable
securities (4,220) (25,231) (281) (49,698)
Accounts
receivable (41,211) 124 46,585 (158,149)
Prepaid
expenses (456) 33,428 35,565 (32,021)
Accounts
payable and
accrued
liabilities 233,765 39,651 340,907 50,714
Accrued
payroll
liabilities 53,315 7,364 69,927 (15,990)
Income tax
payable 22,495 - 22,495 -
Deferred
revenue 131,057 87,955 5,547 186,072
-----------------------------------------------------

CASH PROVIDED
BY (USED IN)
OPERATIONS $ 204,831 $ 260,492 $ 662,430 $ 282,945
-----------------------------------------------------

INVESTING
ACTIVITIES
Property and
equipment
(net) $ (48,421) $ (41,742) $ (119,062) $ (78,954)
-----------------------------------------------------

CASH USED IN
INVESTING $ (48,421) $ (41,742) $ (119,062) $ (78,954)
-----------------------------------------------------

FINANCING
ACTIVITIES
Repurchase of
common stock $ (34,414) $ - $ (118,017) $ -
Proceeds on
exercise of
warrants 7,286 - 41,920 -
Proceeds on
exercise of
stock options - - 23,038 58,875
Repayment of
capital lease
obligation - - - (38,920)
-----------------------------------------------------

CASH PROVIDED
BY (USED IN)
FINANCING $ (27,128) $ - $ (53,059) $ 19,955
-----------------------------------------------------

INCREASE IN
CASH
AND CASH
EQUIVALENTS $ 129,282 $ 218,750 $ 490,309 $ 223,946
Cash and cash
equivalents,
beginning of
period 2,198,039 1,405,391 1,837,012 1,400,195
-----------------------------------------------------

CASH AND CASH
EQUIVALENTS,
END OF PERIOD $ 2,327,321 $ 1,624,141 $ 2,327,321 $ 1,624,141
-----------------------------------------------------
-----------------------------------------------------


This release has neither been approved nor disapproved by the TSX.

Contact Information

  • Stockgroup Information Systems Inc.
    Doug Keast
    Executive Vice President and CFO
    1-800-650-1211
    www.stockgroup.com