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Copernic Inc.: Copernic Announces 2008 Fourth Quarter, Year-End Results and Hiring of New CFO

^{Published on 2009-03-04 13:20:15, Last Modified on 2009-11-04 08:14:47 - Market Wire}
 

MONTREAL, CANADA--(Marketwire - March 4, 2009) - Copernic Inc., (the "Company"), (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, 2008. Unless otherwise stated, all figures in this release are in US dollars.

Financial Highlights

- Revenue was $1.9 million for the fourth quarter 2008 compared to $1.7 million in the fourth quarter of 2007, an increase of 15.4% .

- Revenue for the year ended December 31, 2008 was $7.0 million compared to $8.1 million in the same period in 2007, a decline of 13.6% .

- Net loss of $4.3 million ($0.29 per share), including write-downs of $4.4 million in the fourth quarter 2008, compared to net loss of $11.0 million ($0.75 per share) including write-downs of $10.2 million in the fourth quarter 2007.

- Net loss of $6.5 million ($0.44 per share) in 2008 compared to net loss of $14.4 million ($0.99 per share) in 2007. Excluding the write-downs of $4.4 million in 2008 and $10.2 million in 2007, net loss for 2008 was $2.1 million compare to $4.2 million in 2007.

- Cash of $679,000 was generated from operations in the fourth quarter 2008 versus cash usage of $795,000 in the comparable 2007 period.

- Liquidities sufficient to meet normal operating requirements until end of 2009, were at $5.1 million as of December 31, 2008, compared to $6.9 million as of December 31, 2007.

Recent Highlights

- Announced the consolidation of its operations in Quebec City and will complete the closure of its Montreal office during the first quarter 2009.

- Launched Copernic desktop search Professional edition - in line with our product line extension strategy.

- Announced a Normal Course Issuer Bid to purchase a maximum of 5% of the common shares during the next 12 months.

"Copernic's improved results in the fourth quarter demonstrate the success of its cost restructuring programs coupled with continued new product development," said Marc Ferland, Copernic's President and CEO. "Although we live through uncertain economic times, the management team continues to drive towards sustainable long term profitable growth."

Claire Castonguay, Vice President Finance and Controller will terminate her employment with the Company at the end of the quarter consistent with the closure of the Montreal office at that time. Jean-Rock Fournier, Vice President Finance since the beginning of the quarter and also located in Quebec City will assume the duties of Chief Financial Officer effective March 31st. Mr. Fournier is a Chartered Accountant since 2000, practiced public accounting with KPMG, and has been Vice President Finance with Axion Technologies and PGI, both companies in the Information Technology sector.

Financial Results for the quarter ended December 31, 2008

Revenues in the fourth quarter of 2008 totalled $1,910,000, up from $1,654,000 in the fourth quarter of 2007.

Search and graphic advertising revenues were $1,435,000 in the fourth quarter 2008, even with the comparable period in 2007. Search advertising continues to consolidate with the industry leaders, coupled with additional focus on ROI for advertisers resulting in increased demand for higher quality traffic at reduced prices. Copernic desktop search products, produced revenues of $475,000 in the fourth quarter 2008, versus revenues of $208,000 in the comparable 2007 period and is consistent with our continued investments in new product development.

Gross margin in the fourth quarter was 68.5%, compared to 67.1% in the same quarter in 2007 mainly due to a mix shift to higher margin CDS products offset by price declines in the search advertising business.

Expenses including write-downs were reduced by 48% to $5,750,000 in the fourth quarter of 2008 compared to $12,897,000 for the same period in 2007. Excluding write-downs and settlement costs, expenses in 2008 were at $1,339,000 down from $2,751,000 in the same quarter last year.

Net loss in the fourth quarter 2008 was $4,260,000 ($0.29 per share), compared to $10,990,000 ($0.75 per share) in the fourth quarter 2007.

Liquidities totalled $5,073,000, which was an increase of $679,000 over the previous quarter.

Financial Results for the Full Year 2008

Revenues for the full year 2008 were $7,012,000, down from $8,116,000 in 2007, a 13.6% decline.

Search and graphic advertising revenues were $5,607,000 down year over year in 2008 from $7,354,000 in 2007 or a 23.8% decrease.

Copernic desktop search products were $1,405,000 in 2008, up 84.4% over 2007 at $762,000.

Gross margin decreased in 2008 at 63.9% from 67.5% mainly due to price concessions for search partners to attract higher quality traffic.

Total expenses for 2008, including write-downs and settlement costs were $11,361,000 down from $21,160,000. Excluding write-downs and settlement costs, expenses for 2008 were $6,929,000, compared with the total of $11,013,000 in 2007, due to the positive impact of our restructuring program.

Net loss for the full year 2008 was $6,491,000 ($0.44 per share), down from a loss of $14,431,000 ($0.99 per share) in 2007.

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 in North America and Europe.

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, 2008 and 2007

-------------------------------------------------------------------
(unaudited) (expressed in U.S. dollars and in accordance
 with generally accepted accounting principles in Canada)

 2008 2007
 $ $
Assets

Current assets
Cash and cash equivalents 2,067,705 2,099,560
Restricted cash - 807,468
Temporary investments 3,005,227 3,965,384
Accounts receivable 907,560 918,033
Income taxes receivable 110,121 221,205
Prepaid expenses 170,864 208,655
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 6,261,477 8,220,305

Property and equipment 240,094 459,872

Intangible assets 918,485 2,320,676

Goodwill 3,362,003 7,357,003
-------------------------------------------------------------------
 10,782,059 18,357,856
-------------------------------------------------------------------
-------------------------------------------------------------------

Liabilities

Current liabilities
Accounts payable and accrued liabilities 991,142 1,520,619
Deferred revenue 156,789 211,455
Deferred rent 4,805 11,016
Income taxes payable - 8,100
Current portion of obligations
 under capital leases 57,267 56,071
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 1,210,003 1,807,261
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Obligations under capital leases 39,992 99,788

Future income taxes 259,848 650,413
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Shareholders' Equity

Capital stock
Authorized
 Unlimited common shares, no par value
Issued and outstanding
 14,637,531 common shares 96,556,485 96,556,485

Additional paid-in capital 5,747,028 5,784,502

Cumulative translation adjustment 561,137 561,137

Accumulated deficit (93,592,434) (87,101,730)
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 9,272,216 15,800,394
-------------------------------------------------------------------
 10,782,059 18,357,856
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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
 2008 2007 2008 2007
 $ $ $ $

Revenues 7,011,631 8,116,408 1,909,648 1,654,352

Cost of revenues 2,530,908 2,636,410 601,519 543,763
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Gross Margin 4,480,723 5,479,998 1,308,129 1,110,589
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Expenses
Marketing, sales and
 services 938,611 1,897,822 160,802 480,531
General and
 administration 2,907,964 4,691,572 525,309 1,020,709
Product development
 and technical support 1,938,724 2,416,410 332,145 651,830
Amortization of
 property and equipment 211,056 302,509 55,353 119,220
Amortization of
 intangible assets 1,019,159 1,991,286 254,746 511,384
Write-downs and
 settlement costs 4,432,264 10,146,311 4,410,733 10,146,311
Restructuring charges 101,012 - 69,621 -
Interest and
 other income (162,880) (401,183) (40,762) (74,078)
Loss (gain) on
 foreign exchange (24,440) 115,071 (18,218) 41,164
--------------------------------------------------------------------------
 11,361,470 21,159,798 5,749,729 12,897,071
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Loss before income
 taxes (6,880,747) (15,679,800) (4,441,600)(11,786,482)

Recovery of future
 income taxes (390,565) (1,250,453) (172,613) (796,926)
Current income taxes 522 1,479 (8,550) 525
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Loss for the period (6,490,704) (14,430,826) (4,260,437)(10,990,081)
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Basic and diluted
 loss per share (0.44) (0.99) (0.29) (0.75)
--------------------------------------------------------------------------
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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
 2008 2007 2008 2007
 $ $ $ $
Cash flows from (used for)

Operating activities
Loss from
 continuing operations (6,490,704) (14,430,826) (4,260,437) (10,990,081)
Adjustments for
 Amortization of
 property and
 equipment 211,056 302,509 55,353 119,220
 Amortization of
 intangible assets 1,019,159 1,991,286 254,746 511,384
 Employee stock-based
 compensation (37,474) 660,312 (5,861) 175,568
 Write-down of goodwill 3,995,000 8,060,841 3,995,000 8,060,841
 Write-down of
 intangible assets 394,192 1,985,470 394,192 1,985,470
 Write-down
 of investment - 150,000 - 150,000
 Write-down of property
 and equipment 43,072 - 21,541 -
 Future income
 taxes (390,565) (1,250,453) (172,613) (796,926)
 Unrealized loss
 on foreign exchange (25,199) 12,813 (18,919) (1,271)
Net change in non-cash
 working capital items (439,106) 990,158 432,702 17,391
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Cash from (used for)
 operating activities (1,720,569) (1,527,890) 659,704 (768,404)
Cash used for operating
 activities from
 discontinued operations - (6,253) - -
--------------------------------------------------------------------------
 (1,720,569) (1,534,143) 659,704 (768,404)
--------------------------------------------------------------------------
Investing activities
Purchase of intangible
 assets (5,054) (68,433) - (3,431)
Purchase of
 property and equipment (15,879) (149,658) (2,836) (12,903)
Net decrease (increase)
 in temporary investments 960,157 1,626,458 (3,005,227) (3,965,384)
--------------------------------------------------------------------------
Cash from (used for)
 investing activities 939,224 1,408,367 (3,008,063) (3,981,718)
--------------------------------------------------------------------------
Financing activities
Issuance of capital
 stock - 676,258 - -
Repayment of
 obligations under
 capital leases (57,976) (23,071) (14,075) (9,941)
--------------------------------------------------------------------------
Cash provided from
 (used for) financing
 activities (57,976) 653,187 (14,075) (9,941)
--------------------------------------------------------------------------

Net change in cash,
 cash equivalents
 and restricted cash
 during the period (839,323) 527,411 (2,326,434) (4,760,063)

Cash, cash equivalents
 and restricted cash -
 Beginning of period 2,907,028 2,379,617 4,394,139 7,667,091
--------------------------------------------------------------------------

Cash, cash equivalents
 and restricted cash - 
 End of period 2,067,705 2,907,028 2,067,705 2,907,028
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Cash and cash
 equivalents
 comprise:
 Cash 1,066,817 596,493 1,066,817 596,493
 Short-term investments 1,000,888 1,503,067 1,000,888 1,503,067
--------------------------------------------------------------------------
 2,067,705 2,099,560 2,067,705 2,099,560

Restricted cash - 807,468 - 807,468
--------------------------------------------------------------------------
 2,067,705 2,907,028 2,067,705 2,907,028
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