Stockhouse Inc.
TSX VENTURE : SHC
OTC Bulletin Board : STKH

Stockhouse Inc.

August 13, 2008 16:00 ET

Stockhouse Reports Second Quarter 2008 Results

NEW YORK, NEW YORK--(Marketwire - Aug. 13, 2008) - Stockhouse Inc. (OTCBB:STKH)(TSX VENTURE:SHC) today announced financial results for the second quarter ended June 30, 2008. A conference call and webcast will be held today at 4:10 PM EDT to discuss the results. All results are reported in US Dollars under accounting principles generally accepted in the United States of America (US GAAP).

Stockhouse® revenues for the second quarter of 2008 were $3.3 million, a decrease of 12 percent year-over-year. Six month revenues were $6.8 million, unchanged from the six months ended June 30, 2007. The Company had an EBITDA loss of $1.7 million and net loss of $2.8 million for the quarter. The net loss included non cash write offs of goodwill and intangible assets amounting to $0.8 million. The Company used $1.1 million cash in operations during the quarter and ended the quarter with $3.5 million cash on hand.



--------------------------------------------------------------------------
3-month 3-month 6-months 6-months
Period Period Period Period
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
($ '000's ($ '000's ($ '000's ($ '000's
except except except except
EPS) EPS) EPS) EPS)
--------------------------------------------------------------------------
Licensing/Subscription $2,567 $2,614 $5,191 $4,789
--------------------------------------------------------------------------
Advertising $699 $1,091 $1,574 $2,016
--------------------------------------------------------------------------
Total Revenues $3,266 $3,705 $6,765 $6,805
--------------------------------------------------------------------------
Cost of Revenues
(excluding amortization) $1,441 $1,590 $2,911 $2,860
--------------------------------------------------------------------------
Total Operating Expenses
(excluding cost of
revenues, amortization
and impairment charges) $3,514 $2,966 $7,107 $5,258
--------------------------------------------------------------------------
EBITDA (1) ($1,689) ($851) ($2,916) ($1,313)
--------------------------------------------------------------------------
Net Loss ($2,753) ($1,211) ($4,199) ($1,768)
--------------------------------------------------------------------------
EPS ($0.07) ($0.03) ($0.10) ($0.05)
--------------------------------------------------------------------------
Cash $3,494 $2,821 $3,494 $5,453
--------------------------------------------------------------------------

Reconciliation of Net Loss to EBITDA

--------------------------------------------------------------------------
3-month 3-month 6-months 6-months
Period Period Period Period
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
($ '000's ($ '000's ($ '000's ($ '000's
except except except except
EPS) EPS) EPS) EPS)
--------------------------------------------------------------------------
Net Loss ($2,753) ($1,211) ($4,199) ($1,768)
Add:
Interest (11) (26) (20) (33)
Provision for income taxes 1 0 1 1
Amortization of property
and equipment 95 115 179 216
Amortization of intangible
assets 144 271 288 271
Impairment of goodwill 99 0 99 0
Impairment of intangible
assets 736 0 736 0
------------------------------------------------
EBITDA (1) ($1,689) ($851) ($2,916) ($1,313)
--------------------------------------------------------------------------


Cost Restructuring to Return Company to Profitability

Over the past two quarters, Stockhouse has undertaken a detailed cost restructuring plan with the goal of returning the Company to EBITDA profitability in Q4, 2008. The Company has consolidated its accounting function, launched a new mobile product eliminating third party license costs, eliminated low margin revenue, reduced its workforce by 12% and cancelled or renegotiated vendor agreements. The Company expects these actions to generate significant annual cost savings. Stockhouse expects to realize a portion of these savings in Q3 and fully realize them in Q4 of this year.

Completes $3,000,000 Financing

During the quarter, the Company successfully placed $3,000,000 in preferred shares that convert into common shares at $0.4545/share.

Strengthen the Company's Advertising Sales Capability

This quarter, Theresa McVean joined the Company as Vice President, Advertising Sales. Ms. McVean brings more than 10 years experience in online advertising sales including being the Managing Director of online advertising for the Toronto Star / Star Media, Canada's largest newspaper, Account Director at RSCG 4D the world's largest interactive advertising agency and currently serves on the board of the Interactive Advertising Bureau (IAB). Ms. McVean also added an experienced advertising sales person and advertising traffic manager to the team.

This quarter, Stockhouse also implemented industry-leading analytics tools to improve our understanding of traffic, user experience and ad delivery for customers: Omniture for site statistics and DART for Publishers for online advertisement delivery.

"We are disappointed with our Q2 advertising results which were significantly impacted by a gap in staffing and stock market conditions," stated Marcus New, Stockhouse President and Chief Executive Officer. "However, we believe that we have now successfully built the foundation for future success by adding strong sales leadership and key personnel to the team, implementing the industry's leading online advertising delivery system, and strengthening our analytics tools."

2008 Stockhouse Focus:

1. Increase traffic to Stockhouse.com

During Q2, the Company reports an average of 700,000 unique visitors and 7.6 minutes average time spent per user. At the beginning of the second quarter, the Company launched the new Stockhouse.com. Over the years, the previous version of Stockhouse.com had established many direct and indirect links with other sites and content feeds on the web. These links were temporarily severed when we launched the new site due to the consolidation of the previous version of Stockhouse.com with the Beta version into one site. The severed links, combined with the change in where the content was stored, affected search engine optimization and caused a drop-off in traffic to Stockhouse.com during the second quarter. The Company is actively working to optimize the site and grow its traffic.

2. Continue to increase the number of subscriptions to Stockstream and Stockstream Mobile

On June 11th, Stockhouse previewed Stockstream Mobile, a new application for streaming real-time financial data to BlackBerry® smart phones, from partner Research In Motion's BlackBerry booth at the Securities Industry and Financial Markets Association (SIFMA) 2008 Technology Management Conference and Exhibit in New York City. Stockstream Mobile (for individual investors) and Stockstream Mobile Pro (for professional traders) position Stockhouse to benefit from the rapid growth occurring in the wireless device market. Currently, we are in discussions with a number of potential channel partners for Stockstream Mobile. Subsequent to quarter end, we have signed up 3 resellers. We expect to begin delivery of the product by the end of Q3.

3. Create and publish the Internet's first community financial news feed generated from our proprietary electronic reputation filtering system drawn from the citizen journalist and user generated content community on Stockhouse.com.

During the second quarter, we increased the number of Stockhouse.com stories from 60 a week during Q1 to 120 a week by the end of Q2, peaking at 211 proprietary news stories in the final week of June 2008. We have had initial success in signing redistributors and expect to continue to increase the number of stories we publish and the number of sites we distribute to in future quarters.

Marcus New, CEO of Stockhouse stated, "During the second quarter, we launched the new Stockhouse.com, previewed the new Stockstream Mobile, continued to optimize our cost structure with the number one focus on profitability, built out our advertising capability, expanded our proprietary news feed and added key people to the team." Mr. New continued, "We expect our advertising revenues to be positively impacted going forward by the installation of our new advertising server technology. Since the installation was completed at the end of Q2, we are already seeing improvements in inventory management, campaign execution and customer satisfaction. We entered the third quarter with an Advertising unit that is poised to increase our user monetization rates, initial channel resellers signed for our recently launched Stockstream Mobile, and a streamlined cost structure that positions us to achieve our goal of EBITDA profitability in Q4."

Stockhouse Strengthens Board with Industry Marketing Expert

Stockhouse is pleased to have Ms. Janet Scardino join the board of directors. Ms. Scardino is currently the President and CMO of the Knot (NASDAQ:KNOT), was formerly EVP Reuters Group, SVP international marketing for AOL, and SVP Marketing for MTV. Ms. Scardino brings world class marketing experience in growing brands, communities, and financial media businesses.

Conference Call and Web cast

To participate in the conference call scheduled for 4:10pm EDT today, please call 1-866-400-3310 five to ten minutes prior to the start time. To listen to the live web cast, please go to www.stockgroup.com.

The earnings call will be recorded and accessible on our website for a period of one month. Participants intending to access the web cast should have Windows Media® Player installed prior to connecting to the call.

(1) EBITDA - Earnings (Loss) Before Interest, Taxes, Depreciation and Amortization is a non-GAAP measure that does not have a standardized meaning and may not be comparable to similar measures disclosed by other issuers. This measure does not have a comparable US GAAP measure. EBITDA is calculated as Income (Loss) from operations less depreciation, amortization, impairment of goodwill and intangible assets, interest income and provision for income tax.

About Stockhouse Inc.

Stockhouse is a leading financial media company focused on user generated content and collaborative technologies. The Stockhouse platform for web-based portfolio management and financial content is licensed to top North American brokerage firms and media companies. This platform is also extended through Stockhouse.com, a leading online financial portal owned and operated by Stockhouse Inc. Stockhouse.com is home to Bullboards message board - Canada's largest community of active investors. Recognized for its engaged audience, Stockhouse.com provides a sought-after demographic for advertisers.

Legal notice regarding Trademarks

"Stockgroup", "Stockhouse" and "Bullboards" are either registered trademarks or trademarks of Stockhouse Inc. (formerly Stockgroup Information Systems Inc.) and/or its affiliated companies in Canada, the United States and/or other countries.

"Microsoft", "Windows" and "Windows Media" are either registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries.

The BlackBerry and RIM families of related marks, images and symbols are the exclusive properties and trademarks of Research In Motion Limited.

Other names may be trademarks of their respective owners.

Legal notice regarding Forward Looking Statements

This release contains "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. 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 document include, but are not limited to, statements that: (i) Stockhouse's new "Reputation analytics" system works to solve the quality and relevancy problem associated with user generated content; (ii) the reputation of individuals who contribute content can be identified and ranked for the benefit of the community; (iii) Stockhouse believes it is at the leading edge of being able to serve citizen journalist contributors and filter the highest quality content to create a new community news feed on the stock market; (iv) the addition of reputation analytics, collaborative tools, citizen journalism and social networking features for investors to the Stockhouse website will further position Stockhouse as a leader in online financial media; (v) powerful reputation analytics will enable Stockhouse.com users to effectively search millions of user generated content items, filtered for quality and reputation of contributor, to help gain market advantage; (vi) Stockhouse will achieve its goal of EBITDA profitability in Q4, 2008; Factors which could delay or prevent these forward looking statements from being achieved include that our product offerings may present greater technical challenges than anticipated, causing delays or preventing features we intend to offer; that competitors may offer better or cheaper alternatives to our products; we may lose key employees; we may not have sufficient capital to fund our plans; and that the market for our products may not grow. Readers are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date of this press release. In addition, this release should be read in conjunction with the Company's current periodic reports which are on file with the SEC and available at the SEC website at www.sec.gov. Stockhouse undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this press release. All forward looking statements are qualified in their entirety by this cautionary statement.

To find out more about Stockhouse Inc. (OTCBB: STKH, TSX-V: SHC), visit our website at www.stockgroup.com.



STOCKHOUSE INC.
(formerly Stockgroup Information Systems Inc.)
CONSOLIDATED BALANCE SHEETS
(Expressed in Thousands of U.S. Dollars, except number of shares and
per share information)
(Unaudited)

June 30, December 31,
2008 2007
-----------------------------

ASSETS
Current Assets:
Cash and cash equivalents $ 3,494 $ 2,821
Accounts receivable
(net of allowances of $539 and $456) 1,466 1,906
Prepaid and other current assets 531 752
-----------------------------
TOTAL CURRENT ASSETS 5,491 5,479

Property and equipment, net 624 703
Goodwill - 99
Intangible assets, net 506 1,530
-----------------------------
TOTAL ASSETS $ 6,621 $ 7,811
-----------------------------
-----------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 2,492 $ 1,818
Accrued liabilities 2,202 2,824
Deferred revenues 1,257 1,341
Capital lease obligations 163 190
-----------------------------
TOTAL CURRENT LIABILITIES 6,114 6,173

Long-term payable - 41
Long-term capital lease obligations 30 66
Long-term deferred revenues 32 15
-----------------------------
TOTAL LIABILITIES 6,176 6,295

Shareholders' Equity:
Preferred stock:
authorized 5,000,000 shares
Series A convertible; $1,000 per share 2,969 -
Common stock, no par value:
authorized 75,000,000 shares;
issued and outstanding 41,295,922
and 40,916,921 shares 18,910 18,902
Additional paid-in capital 3,803 3,652
Accumulated deficit (25,237) (21,038)
-----------------------------
TOTAL SHAREHOLDERS' EQUITY 445 1,516
-----------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 6,621 $ 7,811
-----------------------------


STOCKHOUSE INC.
(formerly Stockgroup Information Systems Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in Thousands of U.S. Dollars, except per share data)
(Unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
-------------------------------------------
REVENUES
Licensing and subscriptions $ 2,567 $ 2,614 $ 5,191 $ 4,789
Advertising services 699 1,091 1,574 2,016
-------------------------------------------
TOTAL REVENUES $ 3,266 $ 3,705 $ 6,765 $ 6,805

OPERATING COSTS AND EXPENSES

Cost of revenues (exclusive
of amortization) 1,441 1,590 2,911 2,860
Sales and marketing 1,275 1,260 2,656 2,353
Research and development 370 386 752 671
General and administrative 1,964 1,435 3,878 2,450
Amortization of intangible
assets 144 271 288 271
Impairment of goodwill 99 - 99 -
Impairment of intangible
assets 736 - 736 -
-------------------------------------------
TOTAL OPERATING EXPENSES 6,029 4,942 11,320 8,605
-------------------------------------------

Loss from operations (2,763) (1,237) (4,555) (1,800)

Interest and other income, net 11 26 357 33
-------------------------------------------
Net loss before income taxes (2,752) (1,211) (4,198) (1,767)
Provision for income taxes 1 - 1 1
-------------------------------------------
Net loss and comprehensive
Loss $ (2,753) $ (1,211) $ (4,199) $ (1,768)
-------------------------------------------
-------------------------------------------

Net loss per common share:
Basic and diluted $ (0.07) $ (0.03) $ (0.10) $ (0.05)
-------------------------------------------
-------------------------------------------

Common shares used in
computing basic and diluted
net loss per share (thousands) 41,507 38,835 41,307 37,676
-------------------------------------------
-------------------------------------------


STOCKHOUSE INC.
(formerly Stockgroup Information Systems Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in Thousands of U.S. Dollars)
(Unaudited)

Six Months Ended
June 30,
2008 2007
--------------------------
Operating activities:
Net loss $ (4,199) (1,768)
Adjustments to reconcile net loss to net cash
(used in) / provided by operating activities:
Amortization of property and equipment 179 216
Amortization of intangible assets 288 271
Impairment of goodwill 99 -
Impairment of intangible assets 736 -
Stock-based compensation 160 80
Changes in operating assets and liabilities:
Accounts receivable 440 174
Prepaid and other current assets (79) (182)
Accounts payable 654 560
Accrued liabilities (495) 118
Deferred revenues (67) 237
--------------------------
CASH USED IN OPERATING ACTIVITIES (2,284) (294)
--------------------------

Investing activities:
Purchases of property and equipment (18) (70)
Acquisition of Mobile Finance Division - (224)
Acquisition of Semotus Assets (34) (181)
--------------------------
CASH USED IN INVESTING ACTIVITIES (52) (475)
--------------------------

Financing activities:
Proceeds on exercise of stock options 167 119
Proceeds from issuance of preferred shares,
net of costs 2,969 -
Proceeds on private placement, net of costs - 4,146
Repayment of capital lease obligations (127) (56)
--------------------------
CASH PROVIDED BY FINANCING ACTIVITIES 3,009 4,209
--------------------------

Net increase in cash and cash equivalents 673 3,440
Cash and cash equivalents, beginning of period 2,821 2,013
--------------------------
Cash and cash equivalents, end of period $ 3,494 5,453
--------------------------
--------------------------


The TSX Venture Exchange and the OTCBB have not reviewed and do not accept responsibility for the adequacy or accuracy of this press release.

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