MAMA Mamas Creations Inc

Mamma.com Inc. (NASDAQ:MAMA) -0- *T - Q4 revenues decreased by 51% to $1.659 million due to the loss of a significant number of sales people from our Ad Network team, yearly revenues decreased by 35% to $9,464,000 - Q4 net loss of $0.763 million ($0.06 per share), yearly net loss of $5,658,000 ($0.46 per share) - Copernic acquisition successfully completed on December 22, 2005. - Cash, cash equivalents and temporary investments at $8.5 million post-Copernic transaction. *T Mamma.com Inc., (the "Company"), (NASDAQ:MAMA), reported its financial results for the fourth quarter ended December 31, 2005. Unless otherwise stated, all figures in this release are in US dollars. The Company's Q4 2005 net loss was $762,555 ($0.06 per share) compared to a net loss of $671,567 ($0.06 per share) for the same period in 2004. Net loss for the year was $5,658,318 ($0.46 per share) compared to net earnings of $1,104,407 ($0.10 per share) for the year of 2004. Revenues in the fourth quarter of 2005 were $1,659,017, 51% below the $3,416,315 revenues for the same period in 2004. The decrease was due to a reduction in search revenues of $903,392 mostly due to the industry pressure to deliver better conversion rates and to improve traffic quality by cutting non-converting clicks in our search network and a reduction in the Ad Network revenues of $853,906 due to the loss of a significant number of sales people. Revenues for the year 2005 were $9,464,560, 35% below the $14,636,318 revenues for the year 2004. The decrease of revenues was due to a reduction in revenues for search of $4,662,959 explained by a significant reduction in business with a major customer for approximately $3.8 million and a reduction in revenues for Ad Networks of $508,799. Loss from continuing operations in Q4 2005 was $739,711, compared with Q4 2004 of $462,582, including significant expenses such as: professional fees related to the ongoing SEC investigation and securities class action lawsuits of $81,000 and an increase in directors' and officers' insurance of $108,000. These expenses were offset by, among other things, a reduction in other professional fees. Payout costs over revenues were at 45%, compared with 41% in Q4 2004. Product development and technical support increased by $66,124 in Q4 2005 compared to Q4 2004 mainly because of an increase of approximately $56,000 in salaries due to additional staff. Loss from continuing operations for the year 2005 was $3,342,983 compared to earnings from continuing operations of $370,753 in 2004. Cash, cash equivalents and temporary investments are at $8,514,513, after the Copernic transaction which used $15,851,922 of cash and cash equivalents net of cash acquired. Guy Faure, the Company's President and CEO stated: "Following a good year in 2004, 2005 was disappointing as it was a year in which the industry had to compete fiercely for clicks and impressions of high quality. The fourth quarter was particularly disappointing because of a significant decline in revenues due to the loss of several sales people and a network manager. Together, the former employees started a competitive business in the Ad Network space. The Company believes that this business was initiated when most of the founding members were still employed with Mamma.com. We have taken an aggressive stance about this matter and are pursuing legal action against the company and its principals." Added Mr. Faure: "Through recent hiring, we are confident about our ability to succeed in ramping up the Ad Network revenues to previously experienced levels. We have also recently deployed our premium network offering, which should provide for higher CPM's (cost per thousand impressions) and eventually, higher margins." Guy Faure continued: "We are very pleased with the completion of the Copernic acquisition which should be accretive to earnings in 2006 and should position the Company as a leader in search technologies and applications and as a multi-channel on-line marketing services provider. We have high expectations for the Copernic Desktop Search (CDS) award-winning product. This world-class software has already seen a healthy adoption rate in blue chip customer agreements and we expect that other major portals will also want to adopt CDS in order to protect user attrition and generate more cost per click revenues from their search partners. Guy Faure concluded: "We have managed to navigate through a tough year in 2005 fighting through legal and operational issues and have come out of the storm a stronger company. With a healthy network of partners and with the addition of Copernic we believe that the Company is well poised to succeed in 2006". Following the acquisition of Copernic completed on December 22, 2005, the Company has filed its Business Acquisition Report on both SEDAR and EDGAR on March 7th, 2006. The unaudited financial statements for the fourth quarter ended December 31, 2005 will soon be available on SEDAR and EDGAR and on www.mammainc.com. The call-in number for Monday, March 13, 2006 at 10:30 am (Eastern time) is: 1-416-695-5261 (for local and international participants) or please call toll free 1-800-769-8320 (North America only). The live Web cast will be available on the Investor Relations section of the Mamma Media Solutions website: http://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 a leading provider of award winning search technology for both the Web and desktop space, delivered through its properties, www.mamma.com and www.copernic.com respectively. The Company is also a top provider of online marketing solutions to advertisers, providing keyword and graphic ad placement on its large publisher network. 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. Through its award winning Copernic Desktop Search product, Copernic Technologies develops cutting edge search solutions bringing the power of a sophisticated, yet easy-to-use search engine right to the user's PC. It allows for instant searching of files, emails, and email attachments stored anywhere on a PC hard drive. Its desktop search application won the CNET Editors' Choice Award as well as the PC World " World Class award" in 2005. More information can be found at www.mammamediasolutions.com and www.copernic.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 lawsuits negatively impact 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 Condensed Consolidated Balance Sheets (Unaudited) (expressed in U.S. dollars and in accordance with generally accepted accounting principles in Canada) As at As at December 31, December 31, 2005 2004 $ $ Assets Current assets Cash and cash equivalents 4,501,201 20,609,089 Restricted cash - 148,000 Temporary investments 4,013,312 6,874,155 Accounts receivable 2,623,940 2,502,535 Income taxes receivable 606,226 120,590 Prepaid expenses 295,288 129,390 Future income taxes 33,505 - Current assets of discontinued operations 9,694 274,770 -------------------------------------------------------------------- 12,083,166 30,658,529 Future income taxes 13,483 - Income tax credit 54,912 - Assets of discontinued operations - 1,882,857 Investments 720,000 720,000 Property, plant and equipment 598,758 304,624 Intangible assets 8,601,848 753,778 Goodwill 16,255,031 846,310 -------------------------------------------------------------------- 38,327,198 35,166,098 -------------------------------------------------------------------- -------------------------------------------------------------------- Liabilities Current liabilities Accounts payable and accrued liabilities 2,690,943 2,244,958 Deferred revenue 249,953 233,459 Income tax payable 8,062 - Liabilities of discontinued operations 189,223 652,109 -------------------------------------------------------------------- 3,138,181 3,130,526 -------------------------------------------------------------------- Future income taxes 2,672,036 - -------------------------------------------------------------------- Shareholders' Equity Capital stock Authorized Unlimited common shares, no par value Issued and outstanding 14,340,864 common shares (12,263,029 in 2004) 95,298,234 90,496,088 Additional paid-in capital 5,985,077 5,255,249 Deferred stock-based compensation (735,175) (1,333,443) Cumulative translation adjustment 370,369 360,884 Accumulated deficit (68,401,524) (62,743,206) -------------------------------------------------------------------- 32,516,981 32,035,572 -------------------------------------------------------------------- 38,327,198 35,166,098 -------------------------------------------------------------------- -------------------------------------------------------------------- Mamma.com Condensed Consolidated Statements of Operations (Unaudited) (expressed in U.S. dollars and in accordance with generally accepted accounting principles in Canada For the For the twelve months ended three months ended December 31 December 31 -------------------------------------------------------------------- 2005 2004 2005 2004 $ $ $ $ Revenues 9,464,560 14,636,318 1,659,017 3,416,315 Cost of revenues 4,204,030 6,539,213 739,276 1,404,294 -------------------------------------------------------------------- Gross margin 5,260,530 8,097,105 919,741 2,012,021 -------------------------------------------------------------------- Expenses Marketing, sales and services 2,023,925 2,188,488 321,541 679,964 General and administration 5,692,092 3,567,247 1,145,862 1,150,933 Product development and technical support 1,286,345 891,541 345,407 279,283 Amortization of property, plant and equipment 106,788 133,123 31,647 41,945 Amortization of intangible assets 242,031 191,218 94,317 47,833 Interest and other income (768,738) (233,506) (264,461) (116,578) Write-down of investment - 365,286 - 365,286 Loss on foreign exchange 47,080 68,275 23,876 22,756 -------------------------------------------------------------------- 8,629,523 7,171,672 1,698,189 2,471,422 -------------------------------------------------------------------- Earnings (loss) from continuing operations before income taxes (3,368,993) 925,433 (778,448) (459,401) Provision for (recovery of) income taxes (12,046) 153,825 (24,773) (5,474) Provision for future income taxes (13,964) 400,855 (13,964) 8,655 -------------------------------------------------------------------- Earnings (loss) from continuing operations (3,342,983) 370,753 (739,711) (462,582) Results of discontinued operations, net of income taxes (2,315,335) 733,654 (22,844) (208,985) -------------------------------------------------------------------- Net earnings (loss) for the period (5,658,318) 1,104,407 (762,555) (671,567) -------------------------------------------------------------------- -------------------------------------------------------------------- Net earnings (loss) per common share - basic and diluted Earnings (loss) from continuing operations (0.27) 0.03 (0.06) (0.04) Results of discontinued operations (0.19) 0.07 (0.00) (0.02) -------------------------------------------------------------------- Net earnings (loss) per common share - basic (0.46) 0.10 (0.06) (0.06) -------------------------------------------------------------------- -------------------------------------------------------------------- Mamma.com Condensed Consolidated Cash Flows (Unaudited) (expressed in U.S. dollars and in accordance with generally accepted accounting principles in Canada) For the For the twelve months ended three months ended December 31 December 31 -------------------------------------------------------------------- 2005 2004 2005 2004 $ $ $ $ Cash flows from (used for) Operating activities Earnings (loss) from continuing operations (3,342,983) 370,753 (739,711) (462,582) Adjustments for Amortization of property, plant and equipment 106,788 133,123 31,647 41,945 Amortization of intangible assets 242,031 191,218 94,317 47,833 Employee stock-based compensation 136,933 281,367 82,589 174,138 Write-down of investment - 365,286 - 365,286 Financial fees paid by issuance of capital and warrants - 260,301 - - Future income taxes (13,964) 400,855 (13,964) 8,655 Tax credits - 81,505 - - Unrealized loss on foreign exchange - 14,622 - 430 Net change in non-cash working capital items 1,420,013 (302,567) 1,066,776 (834,691) ------------------------------------------------------------------- Cash from (used for) operating activities from continuing operations (1,451,182) 1,796,463 521,654 (658,986) Cash from (used for) operating activities from discontinued operations (630,288) (790,370) (29,594) 82,067 ------------------------------------------------------------------- (2,081,470) 1,006,093 492,060 (576,919) ------------------------------------------------------------------- Investing activities Business Acquisitions (15,851,922) - (15,851,922) - Purchase of intangible assets (54,943) (9,434) (6,972) (7,923) Purchase of property, plant and equipment (85,687) (70,284) (572) (24,308) Net decrease (increase) in temporary investments 2,860,843 (6,850,979) (4,013,312) (3,851,505) ------------------------------------------------------------------- Cash used for investing activities from continuing operations (13,131,709) (6,930,697)(19,872,778) (3,883,736) Cash from investing activities from discontinued operations - 434,975 - - ------------------------------------------------------------------- (13,131,709) (6,495,722)(19,872,778) (3,883,736) ------------------------------------------------------------------- Financing activities Issuance of capital stock 6,424 22,760,261 - - Share issue costs - (1,058,819) - - Redemption of common shares (1,053,155) - - - ------------------------------------------------------------------- (1,046,731) 21,701,442 - - ------------------------------------------------------------------- Effect of foreign exchange rate changes on cash and cash equivalents 4,022 79,375 4,022 - ------------------------------------------------------------------- Net change in cash and cash equivalents and restricted cash during the period (16,255,888) 16,291,188 (19,376,696) (4,460,655) Cash and cash equivalents and restricted cash - Beginning of period 20,757,089 4,465,901 23,877,897 25,217,744 ------------------------------------------------------------------- Cash and cash equivalents and restricted cash - End of period 4,501,201 20,757,089 4,501,201 20,757,089 ------------------------------------------------------------------- ------------------------------------------------------------------- Cash and cash equivalents comprise: Cash 4,501,201 1,565,600 4,501,201 1,565,600 Short-term investments - 19,043,489 - 19,043,489 ------------------------------------------------------------------- 4,501,201 20,609,089 4,501,201 20,609,089 Restricted cash - 148,000 - 148,000 ------------------------------------------------------------------- 4,501,201 20,757,089 4,501,201 20,757,089 ------------------------------------------------------------------- ------------------------------------------------------------------- *T Mamma.com Inc. (NASDAQ:MAMA)