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

Stockgroup Information Systems Inc.

August 14, 2006 09:00 ET

Stockgroup Reports 14th Consecutive Quarter of Revenue Growth

NEW YORK, NEW YORK--(CCNMatthews - Aug. 14, 2006) - Stockgroup Information Systems Inc. (OTCBB:SWEB)(TSX VENTURE:SWB) today announced the financial results for its second quarter ended June 30, 2006. A conference call and webcast will be held today at 4:05 PM EST to discuss the results. All results are reported in US Dollars (US) under accounting principles generally accepted in the United States of America (US GAAP).

Stockgroup™ reported Q2 revenue of $1,780,650, a 20% increase in revenue over Q2 2005 - its 14th consecutive quarter of revenue growth. It posted a loss of $518,730, due primarily to continuing investment in product development, marketing and sales infrastructure.

Q206 Financial Highlights Compared to Q2F05:

- Increased revenue 20% to $1,780,650

- Advertising services revenue increased 26% to $952,854

- Ended the quarter with $2.2 million in cash

- Produced positive operating cash flow of $113,126



--------------------------------------------------------------------
3 months 3 months 6 months 6 months
ended ended ended ended
June 30, June 30, June 30, June 30,
2006 2005 2006 2005
--------------------------------------------------------------------
Revenues $1,780,650 $1,477,937 $3,585,088 $2,934,612
--------------------------------------------------------------------
Net Income (Loss) ($ 518,730) $ 77,505 ($ 633,667) $ 90,316
--------------------------------------------------------------------
Cash and Cash
equivalents $2,164,028 $2,198,039 $2,164,028 $2,198,039
--------------------------------------------------------------------


"In Q2, Stockgroup continued its focus on growing its sales and marketing infrastructure and building innovative products," stated Marcus New, President and CEO of Stockgroup. "Although the Company reported a loss this quarter, cash flow from operations was positive and year-over-year revenue growth remains strong at 20%. This is an investment year for Stockgroup and we remain optimistic that our progress to date will position us for success in the future. We anticipate traction over the next two quarters on the investments we're making in our product development, marketing and sales strategies."

The following is Mr. New's report on Stockgroup's progress towards its 2006 goals:

Growing Sales Infrastructure: New VP Sales

To monetize the Company's growth strategies, Stockgroup is bolstering its sales infrastructure. On June 1st, Stockgroup welcomed Michael Donnelly as the new VP Sales responsible for providing strategic direction for all sales and business development activities in licensing and advertising. Mr. Donnelly has over 15 years of experience in business and financial information publishing and electronic media. Mr. Donnelly has served as Executive VP of Licensing Sales for MarketWatch, Executive VP for Pinnacor, and VP, National Account Sales and Eastern Regional Sales Manager for Reuters. Pinnacor under Mr. Donnelly achieved over $34 million in annual revenues. In 2004, he played an integral role in the $103 million merger between Pinnacor and MarketWatch. In addition to senior level experience in our specific marketplace, Mr. Donnelly brings an established network of relationships in the financial services sector that will facilitate new opportunities for Stockgroup.

Investment in Marketing

Stockgroup is committed to meeting its key strategic goals and supporting its products. Investing in marketing is critical to the success of bringing new products to existing markets and to capitalize on opportunities in untapped markets. The Company invested in a number of marketing activities in Q2. Some highlights include:

- Promoted StockHouse® Blogs to increase site traffic with unique content.

- Launched an ad campaign for StockStream™ subscriptions on MSN/Sympatico and Captivate Network Elevator News.

- Initiated a multi-pronged campaign to introduce StockStream to U.S. financial institutions that included demonstrations at the Securities Industry Association (SIA) 2006 Technology Management Conference in New York, one of the largest technology events in the U.S. securities industry.

- Launched an online ad campaign on several trade marketing websites to promote StockHouse as a highly targeted demographic for advertising.

Building the StockHouse Brand

An integral component of the StockHouse strategy is to lead the online financial media industry with innovative site features and content on StockHouse.com to attract and engage site visitors, creating value for advertisers. On May 30th, Stockgroup launched the StockHouse Blogs, allowing investors to create their own stock-related online journals, called blogs. StockHouse is a pioneer in capturing and publishing stock-related user-generated content. This unique information attracts sophisticated and affluent investors to StockHouse, who are a highly sought-after demographic for advertisers.

Continuous Product Innovation

Utilizing its expertise and knowledge of social networks, collaboration technologies, portfolio management tools and analytics, Stockgroup's product strategy is to build highly differentiated products for underserved markets to generate long-term recurring revenue. In Q2, Stockgroup continued to focus product development on enhancing StockStream, the Company's unique streaming real-time web-based portfolio management application. Advanced charting features for end-users and increased capabilities for brokerages will be introduced later this year. No other portfolio management application gives retail investors access to breaking news, research, established social networks, blogs and real-time market data. StockStream is available as a subscription product on StockHouse and as a licensed product for financial institutions.

In addition, product development continued on the next generation of StockHouse scheduled to launch in late 2006. Building on StockHouse's strength of user-generated content, the next generation will include engaging, new tools and site features to drive the social network motivations to build a more powerful community for investors to create, share, and access information never before available.

Conference Call and Webcast

President and CEO Marcus New and CFO Susan Lovell will host a conference call to discuss these results on August 14 (today) at 4:05 PM EST, which will be simultaneously webcast. To participate in the conference call, please register ten to thirty minutes prior to the start time by dialing 1-800-650-1211, ext 152. Once registered, you will be given a dial-in number. To listen to the live webcast, visit www.stockgroup.com for details.

The full 10-QSB is available for review at www.stockgroup.com and www.sec.gov.

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. Stockgroup owns and operates the StockHouse media properties.

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

This release contains "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact and may be "forward looking statements". Forward looking statements are based on expectations, estimates and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this action may be identified through the use of words such as "expects", "will", "anticipates", "estimates", "believes", or statements indicating certain actions "may", "could", or "might" occur.



Stockgroup Information Systems Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
As at June 30, 2006 and December 31, 2005
(Expressed in U.S. Dollars, except number of common shares)
(unaudited)

June 30, December 31,
2006 2005 (1)
-------------------------

ASSETS
CURRENT
Cash and cash equivalents $ 2,164,028 $ 2,056,761
Accounts receivable (net of allowances
for doubtful accounts of $92,158,
December 31, 2005 $79,982) 673,753 760,294
Prepaid and other current assets 112,781 134,183
TOTAL CURRENT ASSETS 2,950,562 2,951,238

Property and equipment 464,911 338,686
-------------------------

TOTAL ASSETS $ 3,415,473 $ 3,289,924
-------------------------
-------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT
Accounts payable and accrued
liabilities $ 1,023,223 $ 788,618
Accrued payroll liabilities 214,709 157,570
Deferred revenues 955,638 656,805
Capital lease obligations 112,778 63,647
Income tax payable 10,000 10,000
-------------------------
TOTAL CURRENT LIABILITIES 2,316,348 1,676,640

Capital lease obligations 125,399 75,233
Long-term deferred revenues 86,092 89,113
-------------------------
TOTAL LIABILITIES 2,527,839 1,840,986
-------------------------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
Authorized shares
- 75,000,000 common shares,
no par value
- 5,000,000 preferred shares,
no par value
Issued and outstanding - 33,561,821
common shares at June 30, 2006;
33,522,296 common shares
at December 31, 2005 13,357,646 13,359,341
Additional paid-in capital 3,276,475 3,202,417
Accumulated deficit (15,746,487) (15,112,820)
-------------------------

TOTAL SHAREHOLDERS' EQUITY 887,634 1,448,938
-------------------------

$ 3,415,473 $ 3,289,924
-------------------------
-------------------------

(1) The balance sheet at December 31, 2005 has been derived from
the audited condensed consolidated financial statements at that
date.

See accompanying notes to Condensed Consolidated Financial Statements
in the full 10-QSB.


Stockgroup Information Systems Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and six months period ended June 30, 2006 and 2005
(Expressed in U.S. Dollars, except number of common shares)
(unaudited)

Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2006 2005 2006 2005
------------------------------------------------

REVENUES
Revenues $ 1,780,650 $ 1,477,937 $ 3,585,088 $ 2,934,612

OPERATING COSTS AND
EXPENSES
Cost of revenues
(exclusive of
amortization) 594,623 294,069 1,114,997 565,052
Sales and marketing 892,224 451,185 1,668,425 927,998
General and
administrative 822,640 654,853 1,455,822 1,354,717
------------------------------------------------

Total operating
expenses 2,309,487 1,400,107 4,239,244 2,847,767
------------------------------------------------

(LOSS) INCOME FROM
OPERATIONS (528,837) 77,830 (654,156) 86,845

Other loss - (4,919) - (4,919)
Interest income 17,085 6,594 30,679 10,428
Interest expense (6,978) (2,000) (10,190) (2,038)
------------------------------------------------

NET (LOSS) INCOME
AND COMPREHENSIVE
(LOSS) INCOME $ (518,730)$ 77,505 $ (633,667)$ 90,316
------------------------------------------------
------------------------------------------------

BASIC AND DILUTED
NET (LOSS)
INCOME PER COMMON
SHARE $ (0.01)$ 0.00 $ (0.02)$ 0.00
------------------------------------------------
------------------------------------------------

Weighted average
number of common
shares
- Basic 33,488,477 34,075,846 33,456,122 34,015,745
- Diluted 33,488,477 35,062,932 33,456,122 35,021,189

See accompanying notes to Condensed Consolidated Financial Statements
in the full 10-QSB.


Stockgroup Information Systems Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six month period ended June 30, 2006 and 2005
(Expressed in U.S. Dollars)
(unaudited)

Six Months Ended
June 30, June 30,
2006 2005
-------------------------

OPERATING ACTIVITIES
Net (loss) income $ (633,667) $ 90,316
Adjustments to reconcile net (loss)
income to net cash provided by (used
in) operating activities:
Amortization - Property and equipment 98,314 222,187
Stock-based compensation expense 61,487 45,806
-------------------------

Net changes in operating assets and
liabilities
Accounts receivable 86,541 61,086
Prepaid expenses and other current
assets 21,402 39,960
Accounts payable and accrued
liabilities 234,605 107,142
Accrued payroll liabilities 57,139 16,612
Deferred revenues 295,812 (125,510)
-------------------------

NET CASH PROVIDED BY
OPERATING ACTIVITIES $ 221,633 $ 457,599
-------------------------

INVESTING ACTIVITY
Purchase of property and equipment $ (81,355) $ (70,641)
-------------------------

NET CASH USED IN INVESTING ACTIVITY $ (81,355) $ (70,641)
-------------------------

FINANCING ACTIVITIES
Repurchase of common stock $ (27,318) $ (83,603)
Proceeds on exercise of warrants - 34,634
Proceeds on exercise of stock options 38,193 23,038
Repayment of capital lease obligations (43,886) -
-------------------------

NET CASH USED IN
FINANCING ACTIVITIES $ (33,011) $ (25,931)
-------------------------

NET INCREASE IN CASH
AND CASH EQUIVALENTS $ 107,267 $ 361,027
Cash and cash equivalents, beginning of
the period 2,056,761 1,837,012
-------------------------

CASH AND CASH EQUIVALENTS,
END OF THE PERIOD $ 2,164,028 $ 2,198,039
-------------------------
-------------------------

Supplemental Cash Flow Information
Interest Paid $ 10,190 $ 2,044
Taxes Paid 700 -
Acquisitions under Capital Lease $ 138,839 $ 96,932

See accompanying notes to Condensed Consolidated Financial Statements
in the full 10-QSB.


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