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 third quarter ended September 30, 2010
("Q3 2010"). Unless otherwise stated, all figures in this release
are in US dollars.
Financial Highlights
-- Revenues from continuing operations were $0.35 million for Q3 2010, the
same as for Q3 2009.
-- Gross margin from continuing operations in Q3 2010 was 98% compared to
93% for Q3 2009.
-- Expenses from continuing operations in the third quarter of 2010 were at
$1.4 million compared to 1.1 million in the comparable period in 2009.
During Q3 2010, an amount of $0.7 million was spent in relation with
potential business acquisitions. Excluding these fees, expenses for Q3
2010 amounted to 0.7 million.
-- Net loss from continuing operations in Q3 2010 was $1.1 million ($0.52
per share) compared to a net loss of $0.78 million ($0.37 per share) for
the same period in 2009.
-- Liquidities sufficient to meet normal operating requirements until end
of 2010 were at $1.9 million as of September 30, 2010, compared to $4.4
million as of September 30, 2009.
Recent Highlights
-- Copernic Inc. announced on October 25th that its shareholders have
approved the sale of Copernic to N. Harris Computer Corporation
("Harris"), a wholly-owned subsidiary of Constellation Software Inc.
(TSX: CSU), pursuant to a plan of arrangement (the "Plan of
Arrangement"). On August 25, 2010, Copernic and Harris jointly announced
that they had entered into an arrangement agreement with Comamtech Inc.
("Comamtech"), a newly incorporated corporation, with respect to an
arrangement (the "Arrangement") pursuant to which Copernic will
ultimately be acquired and taken private by Harris and current
shareholders of Copernic will become shareholders of Comamtech, which
shall retain certain non-operating assets of Copernic.
A special meeting of shareholders was held at 10:00 a.m. (EDT) on
October 25, 2010 (the "Special Meeting"), whereby a special resolution
approving the Plan of Arrangement was approved by 98 % of the votes cast
by shareholders of Copernic represented in person or by proxy at the
Special Meeting. Copernic's board of directors had previously
unanimously recommended that holders of Copernic common shares vote in
favour of the Plan of Arrangement.
-- On October 20, 2010, Copernic announced that its wholly-owned
subsidiary, Comamtech Inc. ("Comamtech"), entered into a definitive
arrangement agreement (the "Arrangement Agreement") with DecisionPoint
Systems, Inc. ("DNPI"), with respect to an arrangement (the
"Arrangement") to acquire all the outstanding shares of DNPI in a
reverse take-over with the result, that at closing DNPI shareholders
shall hold approximately 70.6% of the issued and outstanding shares of
Comamtech, on a fully diluted basis.
The Arrangement will be completed by way of a plan of
arrangement under the Business Corporations Act (Ontario) (the
"Plan of Arrangement") and provides for the amalgamation of DNPI
with 2259736 Ontario Inc., a wholly-owned subsidiary of
Comamtech.
Completion of the Arrangement will be subject to certain
customary conditions, including approval of the Arrangement by not
less than 66 2/3 percent of the votes cast at a special meeting of
the shareholders of Comamtech. The shareholders of Comamtech will
be asked, at the special meeting, to approve the continuance of
Comamtech under the General Corporation Law of the State of
Delaware. The completion of the Arrangement is also subject to
court approvals, the approval of the amalgamation by DNPI
shareholders, the closing of the transaction with Harris and
certain regulatory approvals.
Pursuant to the Arrangement Agreement, Comamtech has agreed to
pay DNPI a termination fee of $500,000 in certain circumstances if
the proposed Arrangement is not completed. DNPI, likewise, has
agreed to pay Copernic a termination fee of $500,000 in the event
of a material breach or non-performance by DNPI of its obligations
under the Arrangement Agreement. The Arrangement Agreement also
contains mutual non-solicitation covenants and mutual rights to
match any superior proposal.
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 www.copernic.com and
www.mycopernic.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.
More information can be found at 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 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 Sheet
(expressed in U.S. dollars and in accordance with generally accepted
accounting principles in Canada)
As at As at
September 30, December 31,
2010 2009
(unaudited) (audited)
$ $
Assets
Current assets
Cash 503,245 465,949
Temporary investments 1,457,102 3,504,930
Accounts receivable 433,212 256,110
Income taxes receivable 273,410 337,802
Balance of sale receivable - 655,131
Prepaid expenses 295,106 118,149
Other assets 2,700,637 -
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5,662,712 5,338,071
Balance of sale receivable - 3,694,060
Property and equipment 79,206 115,110
Intangible assets 146,251 202,597
Goodwill 3,362,003 3,362,003
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9,250,172 12,711,841
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Liabilities
Current liabilities
Accounts payable and accrued liabilities 1,174,124 1,010,140
Deferred revenue 79,953 103,668
Deferred rent 869 1,534
Current portion of obligations under
capital leases 10,621 50,630
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1,265,567 1,165,972
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Obligations under capital leases 9,289 7,906
Future income taxes 32,293 45,146
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Commitments
Shareholders' Equity
Capital stock
Authorized
Unlimited number of common shares, no
par value
Issued and outstanding
2,096,913 (2,091,437 as at December 31,
2009) common shares 96,565,618 96,556,485
Contributed Surplus 5,930,663 5,853,737
Accumulated other comprehensive income 561,137 561,137
Accumulated deficit (95,114,395) (91,478,542)
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7,943,023 11,492,817
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9,250,172 12,711,841
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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 nine months For the three months
ended ended
September 30, September 30,
------------------------------------------------
2010 2009 2010 2009
$ $ $ $
Revenues 1,079,965 1,280,083 355,273 353,293
Cost of revenues 22,405 55,168 5,224 25,725
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Gross Margin 1,057,560 1,224,915 350,049 327,568
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Expenses
Marketing, sales and
services 372,448 431,931 73,978 146,777
General and administration 2,325,717 1,763,411 1,154,741 616,796
Product development and
technical support 636,391 854,017 174,481 297,076
Amortization of property
and equipment 45,374 87,075 14,127 32,845
Amortization of intangible
assets 58,444 538,394 19,607 182,531
Gain on disposal of
property and equipment (2,827) - - -
Gain on disposal of
intangible assets (9,960) - - -
Restructuring charges - 20,624 - (4,998)
Interest and other income (224,261) (184,707) (314) (161,025)
Gain on disposal of an
investment - (169,239) - -
Loss on foreign exchange 49,577 47,129 7,964 37,118
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3,250,903 3,388,635 1,444,584 1,147,120
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Loss from continuing
operations before income
taxes and discontinued
operations (2,193,343) (2,163,720) (1,094,535) (819,552)
Current income taxes - 1,498 - -
Future income taxes (12,853) (594,990) (4,284) (36,416)
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(12,853) (593,492) (4,284) (36,416)
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Loss from continuing
operations (2,180,490) (1,570,228) (1,090,251) (783,136)
Results of discontinued
operations, net of income
taxes (1,455,363) 4,386,401 (12,092) (38,598)
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Net income (loss) for the
period (3,635,853) 2,816,173 (1,102,343) (821,734)
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Basic and diluted loss /
share - continuing
operations (1.04) (0.75) (0.52) (0.37)
Basic and diluted earnings
(loss)/ share -
discontinued operations (0.69) 2.10 - (0.02)
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Basic and diluted net
earnings (loss)/ share (1.73) 1.35 (0.52) (0.39)
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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 nine months For the three months
ended ended
September 30, September 30,
------------------------------------------------
2010 2009 2010 2009
$ $ $ $
Cash flows from (used for)
Operating activities
Loss from continuing
operations (2,180,490) (1,570,228) (1,090,251) (783,136)
Adjustments for
Amortization of property
and equipment 45,374 87,075 14,127 32,845
Amortization of
intangible assets 58,444 538,394 19,607 182,531
Employee stock-based
compensation 76,926 84,718 2,063 29,493
Gain on disposal of an
investment - (169,239) - -
Gain on disposal of
intangible (9,960) - - -
Future income taxes (12,853) (594,990) (4,284) (36,416)
Accreted interest on
balance of sale
receivable (217,603) (126,093) - (126,093)
Unrealized loss on
foreign exchange 542 8,502 379 4,785
Net change in non-cash
working capital items (150,063) 178,939 278,583 137,571
--------------------------------------------------------------------------
Cash used for operating
activities from
continuing operations (2,389,683) (1,562,922) (779,776) (558,420)
Cash provided by (used
for) discontinued
operations (17,076) 765,357 (12,092) 181,648
--------------------------------------------------------------------------
Cash used for operations (2,406,759) (797,565) (791,868) (376,772)
--------------------------------------------------------------------------
Investing activities
Increase in Other assets (65,637) - - -
Proceeds on the disposal
of an investment - 169,239 - -
Proceeds on the disposal
of an intangible 9,960 - - -
Purchase of intangible
assets (2,098) (3,224) - -
Purchase of property and
equipment (3,357) (28,897) - (5,423)
Net decrease in temporary
investments - 3,005,227 - (3,406)
--------------------------------------------------------------------------
Cash provided by (used
for) continuing
operations (61,132) 3,142,345 - (8,829)
Cash provided by
discontinued operations 493,507 74,297 200,000 74,297
--------------------------------------------------------------------------
Cash provided by investing
activities 432,375 3,216,642 200,000 65,468
--------------------------------------------------------------------------
Financing activities
Issuance of capital stock 9,133 - 8,400 -
Repayment of obligations
under capital leases (45,281) (44,465) (6,554) (16,922)
--------------------------------------------------------------------------
Cash provided by (used
for) financing activities (36,148) (44,465) 1,846 (16,922)
--------------------------------------------------------------------------
Net change in cash and
cash equivalents during
theperiod (2,010,532) 2,374,612 (590,022) (328,226)
Cash and cash equivalents
- Beginning of period 3,970,879 2,067,705 2,550,369 4,770,543
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Cash and cash equivalents
- End of period 1,960,347 4,442,317 1,960,347 4,442,317
--------------------------------------------------------------------------
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Cash and cash equivalents
comprise:
Cash 503,245 438,556 503,245 438,556
Temporary investments 1,457,102 4,003,761 1,457,102 4,003,761
--------------------------------------------------------------------------
1,960,347 4,442,317 1,960,347 4,442,317
Supplemental cash flow
information - continuing
operations
Cash paid for interest 4,006 7,469 800 2,470
Cash paid for income taxes - 1,498 - -
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Contacts: Copernic Inc. Jean-Rock Fournier, CA Executive Vice
President and Chief Financial Officer 418-527-0528 ext. 1271 / Toll
Free: 877-289-4682 jrfournier@copernic.com www.copernic.com
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