MAMA Mamas Creations Inc

Mamma.com Inc. (NASDAQ:MAMA) -0- *T - Q3 2005 revenue decrease by 27% to $2.4 million due to the streamlining of our distribution networks in order to better compete by improving conversion rates to our advertisers. - Opt-in Email operations were closed and presented as discontinued operations, additional write down and restructuring charges of $0.87 million. - Additional expenses of $0.24 million related to the SEC investigation. - Net loss of $1.5 million ($0.13/share). - Cash and cash equivalents still remain strong at $24 million. *T Mamma.com Inc., (the "Company"), (NASDAQ:MAMA), reported its financial results for the third quarter ended September 30, 2005. Unless otherwise stated, all figures in this release are in US dollars. The Company's Q3 2005 net loss was $1,505,688 ($0.13 per share) compared to net earnings of $283,909 ($0.02 per share) for the same period in 2004. Revenue in the third quarter of 2005 was $2,390,634, 27% below the $3,291,204 revenue for the same period in 2004. The reduction in revenue reflects the industry pressure on delivering better conversion rates and improving traffic quality. Following the continuous poor performance of its Opt-in Email operations, the Company discontinued the operations of its subsidiary, Digital Arrow. The remainder of the Property, Plant and Equipment, Intangible Assets and Goodwill related to Digital Arrow were written down to nil in Q3 2005 and these results were presented as discontinued operations. Loss from continuing operations in Q3 2005 was $574,314 including significant expenses such as: professional fees related to the SEC investigation of $241,000 and an increase in directors and officers insurance of $156,000. Payout costs over revenues were at 44%, which was the same percentage in Q3 2004. Cash and cash equivalents still remained strong at $23,877,897, a decrease of $122,039 from the previous quarter. Guy Faure, the Company's President and CEO stated: "Revenues in the third quarter were below Q3 2004 as we have worked diligently with our advertisers to focus on advertising which yields an acceptable return. We have been able to effectively eliminate poor converting traffic from our Affiliates from both the Search, and Ad Networks, and have set up better processes to qualify new Affiliates who can provide good quality converting traffic for our advertisers. The Opt-in Email operations were discontinued because of declining demand for the service. We will now focus on the two main on-line advertising sectors that we know best; the search network that we intend to grow with the Copernic potential acquisition and the Ad Network that we believe offers significant organic growth opportunities." Guy Faure continued: "We are working at completing the definitive agreement for the Copernic acquisition and expect to close before the end of November 2005 as previously disclosed. We expect that the completion of this transaction will allow the Company to aggressively compete in the on-line advertising sectors for 2006." The unaudited financial statements for the third quarter ended September 30, 2005 will shortly be available on SEDAR and EDGAR and on our Web site www.mammainc.com . The call-in number for Friday, November 11, 2005 is: l-416-695-5261 (for local and international participants) or please call toll free l-877-888-3855 (North America only). The live Web cast will be available on the Investor Relations section of the Mamma Media Solutions website: www.mammamediasolutions.com/corporate/ir/financial.html. The archived Web cast will be made available on the Company's Web site starting one hour after the completion of the call. About Mamma.com Inc. Mamma Media Solutions(TM) is focused on providing first-rate quality information retrieval on the Internet through its metasearch engine and is a leading provider of integrated marketing solutions to online advertisers. Mamma.com The Mother of All Search Engines(R) (www.mamma.com) is one of the most popular metasearch engines on the Internet, as it makes it easier and faster for people to find information by gathering the most relevant results from the best search engines on the Internet. Mamma Media Solutions(TM) is equally focused on being one of the leading providers of online marketing solutions to advertisers as its integrated offer includes keyword search listings and numerous sizes of graphic ad units. Mamma Media Solutions(TM) maintains a large publisher network on which it distributes search and graphic ad units for its advertisers. The Company also holds minority interests in analog integrated circuit products, and in the new media and telecommunications sectors. For more information, visit www.mammamediasolutions.com . Statements contained in this press release, which are not historical facts, are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties that can cause actual results to differ materially from estimated results. Such risks and uncertainties are detailed in the Company's filings with the United States Securities and Exchange Commission and the Ontario Securities Commission and include but are not limited to the extent to which the results of the SEC investigation or the purported securities class action law suits negatively affect the Company. The Company expressly disclaims any intent or obligation to update any description of the scope, focus or subject matter of the statements in this press release. -0- *T Mamma.com Inc. Condensed Consolidated Balance Sheets (Unaudited) (expressed in U.S. dollars and in accordance with generally accepted accounting principles in Canada) As at As at September 30, December 31, 2005 2004 $ $ Assets Current assets Cash and cash equivalents 23,877,897 20,609,089 Restricted cash - 148,000 Temporary investments - 6,874,155 Accounts receivable 1,762,079 2,502,535 Income taxes receivable 93,292 120,590 Prepaid expenses 507,305 129,390 Assets of discontinued operations 4,406 274,770 --------------------------------------------------------------------- 26,244,979 30,658,529 Assets of discontinued operations - 1,882,857 Investments 720,000 720,000 Property, plant and equipment 314,598 304,624 Intangible assets 654,035 753,778 Goodwill 846,310 846,310 --------------------------------------------------------------------- 28,779,922 35,166,098 --------------------------------------------------------------------- --------------------------------------------------------------------- Liabilities Current liabilities Accounts payable and accrued liabilities 2,178,965 2,244,958 Deferred revenue 262,849 233,459 Liabilities of discontinued operations 190,685 652,109 --------------------------------------------------------------------- 2,632,499 3,130,526 --------------------------------------------------------------------- Shareholders' Equity Capital stock Authorized Unlimited common shares, no par value Issued and outstanding 11,960,864 common shares (12,263,029 in 2004) 88,258,195 90,496,088 Additional paid-in capital 5,474,394 5,255,249 Deferred stock-based compensation (307,081) (1,333,443) Cumulative translation adjustment 360,884 360,884 Accumulated deficit (67,638,969) (62,743,206) --------------------------------------------------------------------- 26,147,423 32,035,572 --------------------------------------------------------------------- 28,779,922 35,166,098 --------------------------------------------------------------------- --------------------------------------------------------------------- Mamma.com Inc. Condensed Consolidated Statements of Operations (Unaudited) (expressed in U.S. dollars and in accordance with generally accepted accounting principles in Canada) For the nine months For the three months ended September 30 ended September 30 --------------------------------------------------------------------- 2005 2004 2005 2004 $ $ $ $ Revenue 7,805,543 11,220,003 2,390,634 3,291,204 --------------------------------------------------------------------- Expenses Search and graphic ad serving 209,618 164,170 81,313 56,260 Marketing, sales and services 4,957,521 6,478,849 1,551,083 1,957,168 General and administration 4,546,230 2,416,315 1,106,836 681,784 Product development and technical support 940,938 612,682 305,790 231,811 Amortization of property, plant and equipment 72,315 91,177 23,240 30,300 Amortization of intangible assets 147,714 143,385 51,325 48,145 Interest income (504,277) (116,928) (193,119) (87,710) Loss on foreign exchange 23,203 45,519 22,927 52,759 Write-down of property, plant and equipment 2,826 - 2,826 - --------------------------------------------------------------------- 10,396,088 9,835,169 2,952,221 2,970,517 --------------------------------------------------------------------- Earnings (loss) from continuing operations before income taxes (2,590,545) 1,384,834 (561,587) 320,687 Provision for (recovery of) current income taxes 12,727 159,299 12,727 (9,000) Provision for future income taxes - 392,200 - 4,000 --------------------------------------------------------------------- Earnings (loss) from continuing operations (2,603,272) 833,335 (574,314) 325,687 Results of discontinued operations (2,292,491) 942,639 (931,374) (41,778) --------------------------------------------------------------------- Net earnings (loss) for the period (4,895,763) 1,775,974 (1,505,688) 283,909 --------------------------------------------------------------------- --------------------------------------------------------------------- Net earnings (loss) per common share - basic Earnings (loss) from continuing operations (0.21) 0.08 (0.05) 0.02 Results of discontinued operations (0.19) 0.09 (0.08) 0.00 --------------------------------------------------------------------- Net earnings (loss) per common share - basic (0.40) 0.17 (0.13) 0.02 Net earnings (loss) per common share - diluted Earnings (loss) from continuing operations (0.21) 0.08 (0.05) 0.02 Results of discontinued operations (0.19) 0.08 (0.08) 0.00 --------------------------------------------------------------------- Net earnings (loss) per common share - diluted (0.40) 0.16 (0.13) 0.02 Weighted average number of shares outstanding - basic 12,159,498 10,253,834 11,959,125 12,189,768 Additions to reflect the impact of: Exercise of stock options - 160,798 - 91,573 Exercise of warrants - 603,130 - 44,866 --------------------------------------------------------------------- Weighted average number of shares outstanding - diluted 12,159,498 11,017,762 11,959,125 12,326,207 --------------------------------------------------------------------- --------------------------------------------------------------------- Mamma.com Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (expressed in U.S. and dollars in accordance with generally accepted accounting principles in Canada) For the nine months For the three months ended September 30 ended September 30 --------------------------------------------------------------------- 2005 2004 2005 2004 $ $ $ $ Cash flows from Operating activities Earnings (loss) from continuing operations (2,603,272) 833,335 (574,314) 325,687 Adjustments for Amortization of property, plant and equipment 72,315 91,177 23,240 30,300 Amortization of intangible assets 147,714 143,385 51,325 48,145 Employee stock-based compensation 54,344 107,229 72,203 35,743 Tax credits - 81,505 - - Future income taxes - 392,200 - 4,000 Unrealized loss on foreign exchange - 14,192 - 830 Financial fees paid by issuance of capital stock and warrants - 260,301 - 49,909 Write-down of property, plant and equipment 2,826 - 2,826 - Net change in non-cash working capital items 353,236 532,125 469,207 74,817 --------------------------------------------------------------------- Cash from (used for) operating activities from continuing operations (1,972,837) 2,455,449 44,487 569,431 Cash from (used for) operating activities from discontinued operations (600,694) (872,437) (155,594) 79,686 --------------------------------------------------------------------- (2,573,531) 1,583,012 (111,107) 649,117 --------------------------------------------------------------------- Investing activities Purchase of property, plant and equipment (85,115) (45,976) (11,581) (13,986) Purchase of intangible assets (47,971) (1,511) (5,776) - Net decrease (increase) in temporary investments 6,874,155 (2,977,309) - (3,000,485) --------------------------------------------------------------------- Cash from (used for) investing activities from continuing operations 6,741,069 (3,024,796) (17,357) (3,014,471) Cash from investing activities from discontinued operations - 411,799 - - --------------------------------------------------------------------- 6,741,069 (2,612,997) (17,357) (3,014,471) --------------------------------------------------------------------- Financing activities Issuance of capital stock and warrants 6,425 22,760,261 6,425 266,390 Share issue costs - (1,058,819) - (23,820) Redemption of common shares (1,053,155) - - - --------------------------------------------------------------------- Cash from (used for) financing activities (1,046,730) 21,701,442 6,425 242,570 --------------------------------------------------------------------- Effect of foreign exchange rate changes on cash and cash equivalents - 79,375 - - --------------------------------------------------------------------- Net change in cash and cash equivalents and restricted cash during the period 3,120,808 20,750,832 (122,039) (2,122,784) Cash and cash equivalents and restricted cash - Beginning of period 20,757,089 4,489,077 23,999,936 27,362,693 --------------------------------------------------------------------- Cash and cash equivalents and restricted cash - End of period 23,877,897 25,239,909 23,877,897 25,239,909 --------------------------------------------------------------------- --------------------------------------------------------------------- Cash and cash equivalents comprise: Cash 1,363,506 4,066,873 1,363,506 4,066,873 Short-term investments 22,514,391 21,025,036 22,514,391 21,025,036 --------------------------------------------------------------------- 23,877,897 25,091,909 23,877,897 25,091,909 Restricted cash - 148,000 - 148,000 --------------------------------------------------------------------- 23,877,897 25,239,909 23,877,897 25,239,909 --------------------------------------------------------------------- --------------------------------------------------------------------- *T Mamma.com Inc. (NASDAQ:MAMA)