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

Stockhouse Inc.

November 17, 2008 06:00 ET

Stockhouse Reports Third Quarter 2008 Results

NEW YORK, NEW YORK--(Marketwire - Nov. 17, 2008) - Stockhouse, Inc. (OTCBB:STKH)(TSX VENTURE:SHC) today announced financial results for the third quarter ended September 30, 2008. A conference call and webcast will be held today at 9:00 AM 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 third quarter of 2008 were $2.54 million, a decrease of 27 percent year-over-year. Nine month revenues were $9.31 million, a decrease of 9 percent from the nine months ended September 30, 2007. The Company had an EBITDA loss of $1.66 million and net loss of $1.71 million for the quarter.

Advertising revenue decreased 52%. Licensing/subscription revenue decreased 19% primarily attributable to a 43% decline in our pager subscription services. Our pager subscription services continue to represent a diminishing revenue stream as customers change to other types of wireless devices. Revenue from our Marketstream mobile customers increased by 5% in the three months ended September 30, 2008 compared to the comparable prior year quarter. The company's recurring revenue from our licensing and non pager mobile products has been stable.

Cost of Revenues for the quarter have decreased 20% and total operating expenses of the company have decreased 25% year over year.

"The decline in the stock market has had a negative impact on our quarterly results," stated Marcus New, CEO. "Public company issuers who traditionally have been a significant advertising group have rapidly decreased their purchases. This combined with the summer quarter which is traditionally the weakest of the year, caused a significant decline in our advertising revenue and impacted our gross margin. Our pager revenue also declined at a pace faster than anticipated."

Mr. New continued, "In anticipation of the stock market and economic challenges, the company laid off 12% of our staff at the beginning of July and upon the deterioration of the stock market in the fall, a further 24% of our staff at the beginning of October. The company since the beginning of the year has actively been reducing costs including eliminating third party vendors, consolidating financial systems, offices and functions which have led to a 25% reduction in operating expenses and 20% reduction in cost of revenues for the quarter."



--------------------------------------------------------------------------
3-month 3-month 9-month 9-month
Period Period Period Period
Ended Ended Ended Ended
Sept 30, Sept 30, Sept 30, Sept 30,
2008 2007 2008 2007
($ '000's ($ '000's ($ '000's ($ '000's
except except except except
EPS) EPS) EPS) EPS)
--------------------------------------------------------------------------
Licensing/Subscription 2,128 2,621 7,319 7,409
--------------------------------------------------------------------------
Advertising 416 862 1,990 2,877
--------------------------------------------------------------------------
Total Revenues 2,544 3,483 9,309 10,286
--------------------------------------------------------------------------
Cost of Revenues (excluding
amortization) 1,380 1,728 4,291 4,588
--------------------------------------------------------------------------
Total Operating Expenses (excluding
cost of revenues, amortization and
impairment charges) 2,825 3,747 9,932 9,005
--------------------------------------------------------------------------
EBITDA (1) (1,661) (1,992) (4,914) (3,307)
--------------------------------------------------------------------------
Net Loss (1,714) (2,266) (5,913) (4,034)
--------------------------------------------------------------------------
EPS (0.04) (0.06) (0.14) (0.10)
--------------------------------------------------------------------------
Cash 1,485 4,126 1,485 4,126
--------------------------------------------------------------------------
(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.


Completes C$672,000 Financing

Subsequent to quarter end, Stockhouse closed a C$672,000 (US$550,000), 1 year term 18% secured debenture to increase working capital. Interest will be paid quarterly and the debenture does not convert to equity. Marcus New, CEO purchased C$200,000 of the debenture.

2008 Stockhouse Focus:

1. Increase traffic to Stockhouse

During Q3, typically the slowest quarter of the year, the company reports an average of 620,000 unique visitors and 7.1 minutes average time spent per user.

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

Subsequent to quarter end, the company launched its new mobile platform and service Stockstream Mobile. Stockstream Mobile is a full featured application for BlackBerry smart phones designed to stream real-time financial information to individual investors. Stockstream Mobile provides the individual investor with live data and news from Reuters, the world's most reliable provider of financial information.

Stockstream Mobile, a powerful tool for the global investor, offers:

- Global market data and news

- Data on equities, options, futures, and indices

- Price and news alerts providing immediate notice of changes or news

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.

During the third quarter we increased the number of Stockhouse stories from 120 a week during Q2 to 170 a week by the end of Q3, peaking at 223 proprietary news stories.

The company continues to work with Marlin & Associates to review strategic options for the company.

Conference Call and Web cast

To participate in the conference call scheduled for 9:00 AM 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.

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) 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; (iii) 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; 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)

September 30, December 31,
2008 2007
------------------------
ASSETS
Current Assets:
Cash and cash equivalents $ 1,485 $ 2,821
Restricted cash 131 -
Accounts receivable (net of allowances of $325
and $456) 1,103 1,906
Prepaid and other current assets 512 752
------------------------
TOTAL CURRENT ASSETS 3,231 5,479

Property and equipment, net 587 703
Goodwill - 99
Intangible assets, net 455 1,530
------------------------
TOTAL ASSETS $ 4,273 $ 7,811
------------------------
------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 2,017 $ 1,818
Accrued liabilities 2,112 2,824
Deferred revenues 1,183 1,341
Capital lease obligations 129 190
------------------------
TOTAL CURRENT LIABILITIES 5,441 6,173

Long-term payable - 41
Long-term capital lease obligations 12 66
Long-term deferred revenues 15 15
------------------------
TOTAL LIABILITIES 5,468 6,295

Shareholders' (Deficiency) 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 3,877 3,652
Accumulated deficit (26,951) (21,038)
------------------------
TOTAL SHAREHOLDERS' (DEFICIENCY) EQUITY (1,195) 1,516
------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 4,273 $ 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 Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
--------------------------------------
REVENUES
Licensing and subscriptions $ 2,128 $ 2,621 $ 7,319 $ 7,409
Advertising services 416 862 1,990 2,877
--------------------------------------
TOTAL REVENUES $ 2,544 $ 3,483 $ 9,309 $ 10,286

OPERATING COSTS AND EXPENSES

Cost of revenues (exclusive of
amortization) 1,380 1,728 4,291 4,588
Sales and marketing 1,062 1,186 3,718 3,544
Research and development 356 846 1,108 1,518
General and administrative 1,484 1,842 5,362 4,286
Amortization of intangible assets 51 177 339 447
Impairment of goodwill - - 99 -
Impairment of intangible assets - - 736 -
--------------------------------------

TOTAL OPERATING EXPENSES 4,333 5,779 15,653 14,383
--------------------------------------

Loss from operations (1,789) (2,296) (6,344) (4,097)

Interest and other income, net 83 32 440 66
--------------------------------------
Net loss before income taxes (1,706) (2,264) (5,904) (4,031)
Provision for income taxes 8 2 9 3
--------------------------------------
Net loss and comprehensive loss $ (1,714) $ (2,266) $ (5,913) $ (4,034)
--------------------------------------
--------------------------------------
Net loss per common share:
Basic and diluted $ (0.04) $ (0.06) $ (0.14) $ (0.10)
--------------------------------------
--------------------------------------
Common shares used in computing
basic and diluted net loss per
share (thousands) 41,297 40,794 41,304 38,726
--------------------------------------
--------------------------------------


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

Nine Months Ended
September 30,
2008 2007
------------------------
Operating activities:
Net loss $ (5,913) (4,034)
Adjustments to reconcile net loss to net cash
(used in) / provided by operating activities:
Amortization of property and equipment 256 343
Amortization of intangible assets 339 447
Impairment of goodwill 99 -
Impairment of intangible assets 736 -
Stock-based compensation 234 137
Gain on sale of shares in Stockscores (75) -
Changes in operating assets and liabilities:
Accounts receivable 803 291
Prepaid and other current assets (60) (250)
Accounts payable 200 612
Accrued liabilities (579) 817
Deferred revenues (159) 253
------------------------
CASH USED IN OPERATING ACTIVITIES (4,119) (1,384)
------------------------
Investing activities:
Purchases of property and equipment (68) (271)
Proceeds on sale of shares in Stockscores 75 -
Acquisition of Mobile Finance Division - (225)
Acquisition of Semotus Assets (50) (216)
Restricted cash (131) -
------------------------
CASH USED IN INVESTING ACTIVITIES (174) (712)
------------------------
Financing activities:
Proceeds on exercise of stock options 167 161
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 (179) (98)
------------------------
CASH PROVIDED BY FINANCING ACTIVITIES 2,957 4,209
------------------------
Net (decrease) increase in cash and cash
equivalents (1,336) 2,113
Cash and cash equivalents, beginning of period 2,821 2,013
------------------------
Cash and cash equivalents, end of period $ 1,485 4,126
------------------------
------------------------

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

Contact Information

  • Stockhouse, Inc.
    Susan Lovell
    Chief Financial Officer
    1-800-650-1211
    Website: www.stockgroup.com
    or
    Dukas Public Relations
    Kathleen Corless
    Media Contact
    (212) 704-7385
    Email: kathleen@dukaspr.com
    or
    Dukas Public Relations
    Vanessa Kitchen
    Media Contact
    (212) 704-7385