MONTREAL, CANADA , (NASDAQ: CNIC), a leading software
development company in the technology sector, specializing in
internet, desktop and mobile search products, today reported its
financial results for the fourth quarter and year ended December
31, 2007. Unless otherwise stated, all figures in this release are
in US dollars.
Financial Highlights
- Revenue was $1.7 million for the fourth quarter 2007 compared
to $3.6 million in the fourth quarter of 2006
- Revenue for the year ended December 31, 2007 was $8.1 million
compared to $9.6 million in the same period in 2006
- Net loss of $11.0 million ($0.75 per share), including
write-downs of $10.2 million in the fourth quarter 2007, compared
to net earnings of $420,000 ($0.02 per share) in the fourth quarter
2006
- Net loss of $14.4 million ($0.99 per share) in 2007 compared
to net loss of $4.3 million or ($0.30 per share) in 2006, excluding
the write-downs of $10.2 million, net loss for 2007 was slightly
lower than the previous year
- Excluding write-downs, full year 2007 operating expenses were
$11.0 million, up from $10.3 million in 2006 due to continued focus
on our product line extension strategy and
- Liquidities sufficient to meet normal operating requirements
until end of 2008, were at $6.9 million as of December 31, 2007,
compared to $8.0 million as of December 31, 2006
Recent Highlights
- Appointed Marc Ferland President and CEO of Copernic. Mr.
Ferland has been a Director of the Company, since September
2007
- Launched upgrade of Copernic desktop search - in line with our
product line extension strategy
- Expanded software distribution channels by adding resellers
and distributors to our network
- Announced an agreement with Yellow Pages Group (TSX: YLO-UN)
to supply local Canadian advertiser listings to the mamma.com
search engine
"Copernic continues to work through rebuilding the Company and
is clearly focused on the future," said Marc Ferland, Copernic's
President and CEO. "Through the expansion and development of our
product lines and cost improvements, we remain confident that the
proper processes are in place to allow us to achieve our strategic
goals."
Financial Results for the quarter ended December 31, 2007
Revenues in the fourth quarter of 2007 totalled $1,654,000, down
from $3,566,000 in the fourth quarter of 2006.
Search advertising revenues in the fourth quarter 2007 were down
as compared to 2006, declining from $2,504,000 to $1,432,000. As in
previous quarters, the Company has faced increasing industry
pressures affecting advertising rates. In working to alleviate
these pressures, Copernic has been expanding partnerships, such as
that with Yellow Pages Group, to supply local advertiser listings
to the mamma.com search engine.
Graphic advertising revenues were stable quarter over quarter,
but the total of $15,000 generated in the quarter ended December
31, 2007 was substantially down from the quarter ended December 31,
2006, in which revenues totalled $132,000.
Software licensing, customization and maintenance revenue was
down from the fourth quarter of 2006, with the total for the
quarter ended December 31, 2007 reaching $207,000 a decrease from
$930,000 in the fourth quarter of 2006. The decrease is mainly
attributed to a sale of one significant CDS license in Q4 2006 of
$570K compared to no significant one in 2007 and two contracts for
customized development and maintenance that were not renewed in
2007.
Gross Margin in the fourth quarter was 67%, compared to 74% in
the same quarter in 2006 mainly due to reduced software licensing
revenue where gross margin is typically higher.
Expenses in the fourth quarter, excluding write-downs, totalled
$2,751,000; slightly up from $2,529,000 in the fourth quarter 2006.
In the quarter, the Company recorded total write-downs of goodwill
and intangible assets of $10,046,000 due to delays in execution and
changes of market conditions of its software commercial deployment
solutions, reduced media yearly revenue mainly due to slowdown in
sponsored clicks and general decline in demand in pop-up campaigns.
In addition, the Company recognized a write-down of $100,000 in an
investment, net of a reversal for settlement costs.
Net loss in the fourth quarter 2007 was $10,990,000 ($0.75 per
share), compared to a net earnings of $420,000 ($0.02 per share) in
the fourth quarter 2006.
Liquidities totalled $6,872,000, which was a decrease of 795,000
over the previous quarter. Liquidities included restricted cash of
$807,000, of which $347,000 became available in January 2008 and
the remaining balance is expected to be also released in a few
months.
Financial Results for the Full Year 2007
Revenues for the full year 2007 were $8,116,000, down from
$9,596,000 in 2006, a decline of $1,480,000.
Search advertising revenues were up year over year in 2007,
rising from $7,198,000 in 2006 to $7,247,000 in the current
year.
Graphic advertising revenues continued to decline to $108,000 in
2007, down from $827,000 in 2006 and licensing, customization and
maintenance revenues, declined to $761,000 in 2007 from $1,571,000
in 2006.
Gross margin declined for the 2007 fiscal year, dropping to 68%
from 72% in 2006 mainly due to reduced software licensing revenue
where gross margin is typically higher.
Total expenses for 2007, including write-downs and settlement
costs were $21,160,000 up from $11,980,000. Excluding write-downs
and settlement costs, expenses for 2007 were $11,013,000, compared
with the total of $10,297,000, due to termination costs of
approximately $695,000 recorded in the first quarter 2007.
Net loss for the full year 2007 was $14,431,000 ($0.99 per
share), down from a loss of $4,269,000 ($0.30 per share) in
2006.
Conference Call Notice
Copernic will host a conference call to discuss its 2007 fourth
quarter and year-end financial results on Thursday, March 6, 2008
at 10:00 a.m. EST. The dial-in number for the conference call is
1-800-732-6179 (Canada and United States) or 416-644-3416
(International). If you are unable to participate in the conference
call, a replay will be available starting that same day at 12:00
p.m. EST by dialing 1-877-289-8525 (Canada and United States) or
416-640-1917 (International) and entering pass code 21261484#,
until March 13, 2008 at midnight EST or by audio webcast on
Copernic's website for 30 days.
A live webcast of the Company's 2007 fourth quarter and year-end
financial results conference call will also be available at 10:00
a.m. EST on March 6, 2008, on the Investor Relations section of the
Company's website:
www.copernic-inc.com/corporate/en/investors/index.html. The
archived webcast will be made available on the Company's website
starting one hour after the completion of the call.
About Copernic Inc.
Copernic Inc. specializes in developing, marketing and selling
cutting-edge search technology, providing innovative home and
business software products and solutions for desktop, web and
mobile users, through its online properties, including
www.mamma.com and www.copernic.com.
With its award winning Copernic Desktop Search� software search
engine product, the Company brings the power of a sophisticated,
yet easy-to-use search engine to the user's PC. Additionally,
Copernic Inc. provides both online advertising as well as pure
content to its vast array of partnerships worldwide through its
well established media placement channels. Copernic handles over 1
billion search requests per month and has media placement
partnerships established not only in North America, but also in
Europe and Australia.
More information can be found at www.copernic-inc.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 Securities and Exchange
Commission and the Ontario Securities Commission. 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.
Copernic Inc.
Condensed Consolidated Balance Sheets
As at December 31, 2007 and 2006
--------------------------------------------------------------------------
(unaudited) (expressed in U.S. dollars and in accordance with
generally accepted accounting principles in Canada)
2007 2006
$ $
Assets
Current assets
Cash and cash equivalents 2,099,560 2,379,617
Restricted cash 807,468 -
Temporary investments 3,965,384 5,591,842
Accounts receivable 918,033 2,734,172
Income taxes receivable 221,205 110,002
Prepaid expenses 208,655 261,885
--------------------------------------------------------------------------
8,220,305 11,077,518
Investments - 150,000
Property and equipment 459,872 503,828
Intangible assets 2,320,676 6,190,298
Goodwill 7,357,003 15,417,844
--------------------------------------------------------------------------
18,357,856 33,339,488
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Liabilities
Current liabilities
Accounts payable and accrued liabilities 1,520,619 2,289,686
Deferred revenue 211,455 227,660
Deferred rent 11,016 12,273
Income taxes payable 8,100 8,100
Liabilities of discontinued operations - 6,253
Current portion of obligations under
capital leases 56,071 -
--------------------------------------------------------------------------
1,807,261 2,543,972
--------------------------------------------------------------------------
Obligations under capital leases 99,788 -
Future income taxes 650,413 1,900,866
--------------------------------------------------------------------------
Shareholders' Equity
Capital stock
Authorized
Unlimited common shares, no par value
Issued and outstanding
14,637,531 common shares
(14,340,864 in 2006) 96,556,485 95,298,234
Additional paid-in ca 5,784,502 5,706,183
Cumulative translation adjustment 561,137 561,137
Accumulated deficit (87,101,730) (72,670,904)
--------------------------------------------------------------------------
15,800,394 28,894,650
--------------------------------------------------------------------------
18,357,856 33,339,488
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Copernic Inc.
Condensed Consolidated Statements of Operations
--------------------------------------------------------------------------
(unaudited) (expressed in U.S. dollars and in accordance
with generally accepted accounting principles in Canada)
For the twelve months For the three months
ended December 31 ended December 31
2007 2006 2007 2006
$ $ $ $
Revenues 8,116,408 9,596,402 1,654,352 3,566,421
Cost of revenues 2,636,410 2,704,101 543,763 918,920
--------------------------------------------------------------------------
Gross Margin 5,479,998 6,892,301 1,110,589 2,647,501
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Expenses
Marketing, sales
and services 1,897,822 1,850,176 480,531 502,416
General and
administration 4,691,572 3,996,327 1,020,709 1,029,243
Product development
and technical
support 2,416,410 2,538,867 651,830 614,340
Amortization of
property and
equipment 302,509 178,192 119,220 48,968
Amortization of
intangible assets 1,991,286 2,067,009 511,384 487,914
Write-downs and
settlement costs 10,146,311 1,683,238 10,146,311 -
Interest and other
income (401,183) (415,950) (74,078) (102,978)
Loss on foreign
exchange 115,071 82,203 41,164 (51,392)
--------------------------------------------------------------------------
21,159,798 11,980,062 12,897,071 2,528,511
---------------------------------------------------------------------------
Earnings (loss) from
continuing
operations before
income taxes and
discontinued
operations (15,679,800) (5,087,761) (11,786,482) 118,990
Recovery of future
income taxes (1,250,453) (724,177) (796,926) (246,356)
Current income
taxes 1,479 (4,876) 525 -
--------------------------------------------------------------------------
Earnings (loss)
from continuing
operations before
discontinued
operations (14,430,826) (4,358,708) (10,990,081) 365,346
Results of
Discontinued
operations, net
of income taxes - 89,328 - 54,828
--------------------------------------------------------------------------
Net earnings (loss)
for the period (14,430,826) (4,269,380) (10,990,081) 420,174
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Basic and diluted
earnings (loss)
per share
from continuing
operations (0.99) (0.31) (0.75) 0.02
Basic and diluted
earnings (loss)
per share
from discontinued
operations - 0.01 - -
--------------------------------------------------------------------------
Basic and diluted net
earnings (loss)
per share (0.99) (0.30) (0.75) 0.02
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Copernic Inc.
Condensed Consolidated Statements of Cash Flows
--------------------------------------------------------------------------
(unaudited) (expressed in U.S. dollars and in accordance
with generally accepted accounting principles in Canada)
For the twelve months For the three months
ended December 31 ended December 31
2007 2006 2007 2006
$ $ $ $
Cash flows from
(used for)
Operating activities
Earnings (loss)
from continuing
operations (14,430,826) (4,358,708) (10,990,081) 365,346
Adjustments for
Amortization of
property and
equipment 302,509 178,192 119,220 48,968
Amortization of
intangible assets 1,991,286 2,067,009 511,384 487,914
Employee stock-
based compensation 660,312 456,281 175,568 66,703
Write-down of
goodwill 8,060,841 - 8,060,841 -
Write-down of
intangible assets 1,985,470 403,425 1,985,470 -
Write-down of
investment 150,000 570,000 150,000 -
Write-down of
property and
equipment - 9,813 - -
Long-term income
tax credits - 54,912 - 54,912
Future income
taxes (1,250,453) (724,177) (796,926) (246,356)
Unrealized loss
on foreign
exchange 12,813 - (1,271) (1,151)
Net change in
non-cash working
capital items 990,158 515,619 17,391 (1,291,098)
--------------------------------------------------------------------------
Cash used for
Operating
activities (1,527,890) (827,634) (768,404) (514,762)
Cash used for
operating activi-
ties from
discontinued
operations (6,253) (83,948) - (9,396)
--------------------------------------------------------------------------
(1,534,143) (911,582) (768,404) (524,158)
--------------------------------------------------------------------------
Investing
activities
Reimbursement
related to
Copernic Techno-
logies Inc.'s
business
acquisition - 379,382 - -
Purchase of
intangible assets (68,433) (51,400) (3,431) (8,373)
Purchase of
property and
equipment (149,658) (76,104) (12,903) (26,513)
Net decrease
(increase) in
temporary
investments 1,626,458 (1,578,530) (3,965,384) (2,557,521)
--------------------------------------------------------------------------
Cash from
(used for)
investing
activities 1,408,367 (1,326,652) (3,981,718) (2,592,407)
--------------------------------------------------------------------------
Financing
activities
Issuance of capital
stock 676,258 - - -
Repayment of
obligations under
capital leases (23,071) - (9,941) -
--------------------------------------------------------------------------
Cash provided from
(used for)
financing
activities 653,187 - (9,941) -
--------------------------------------------------------------------------
Effect of foreign
exchange rate changes
on cash
and cash
equivalents - 116,650 - 5,890
--------------------------------------------------------------------------
Net change in cash,
cash equivalents
and restricted
cash during
the period 527,411 (2,121,584) (4,760,063) (3,110,675)
Cash, cash
equivalents and
restricted cash -
Beginning of
period 2,379,617 4,501,201 7,667,091 5,490,292
--------------------------------------------------------------------------
Cash, cash
Equivalents
and restricted
cash - End of
period 2,907,028 2,379,617 2,907,028 2,379,617
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Cash and cash
Equivalents
comprise:
Cash 596,493 777,637 596,493 77,637
Short-term
investments 1,503,067 1,601,980 1,503,067 1,601,980
--------------------------------------------------------------------------
2,099,560 2,379,617 2,099,560 2,379,617
Restricted cash 807,468 - 807,468 -
--------------------------------------------------------------------------
2,907,028 2,379,617 2,907,028 2,379,617
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Contacts: Copernic Inc. Daniel Bertrand Executive Vice President
and Chief Financial Officer 514-908-4318, Toll Free: 877-289-4682
#118 dbertrand@copernic.com www.copernic-inc.com
Copernic Inc. (MM) (NASDAQ:CNIC)
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Copernic Inc. (MM) (NASDAQ:CNIC)
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