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Press release from Marketwire

Cyberplex Reports First Quarter 2011 Results

Significant Progress in Rebuilding and Strategic Initiatives Underway

Thursday, June 02, 2011

Cyberplex Reports First Quarter 2011 Results16:01 EDT Thursday, June 02, 2011TORONTO, ONTARIO--(Marketwire - June 2, 2011) - Cyberplex Inc. (TSX:CX) a leader in online publishing and customer acquisition strategies today announced its financial results for the first quarter ended March 31, 2011. Total revenue for the quarter was $14.6 million, an increase from the $12.3 million recorded in the same quarter of 2010, and adjusted EBITDA for the quarter was approximately $150,000 as compared to $135,000 in the same period of 2010. The net loss for the quarter was $3.6 million as compared to a net loss of $141,000 in the same year ago period."Although tremendous progress was made during the quarter to rebuild the Tsavo business unit, the impact resulting from the Yahoo-Bing integration significantly affected our financial results" said Geoffrey Rotstein, Chief Executive Officer of Cyberplex. "Our team responded quickly in redesigning our systems and technology platform, and as a result we continue to see month-over-month progress. Other divisions continued to execute against our strategic initiatives, securing several new client engagements and partnerships to leverage our interactive agency and targeted distribution." The Company also reported that negotiations with Tsavo Media's principal lender, American Capital, remain ongoing. As previously stated, the Company raised certain concerns with American Capital regarding the transactions that gave rise to the Credit Agreement with Tsavo Media, and has been working towards a resolution with American Capital for some time. "To date, discussions with American Capital have been productive. However, there are details and issues that remain subject to further discussions and so we cannot conclude that we have an agreement in place with the lender at this time", said Mr. Rotstein. First Quarter Operational Highlights Restructured divisions to streamline operations and better align cost structure to the current organization; Partnered with Jaguar Canada to develop location based mobile advertising campaigns through a strategic partnership with Poynt Corporation; Expanded operations of EQ Advertising's demand side platform ("DSP") through investments in infrastructure and agency sales initiatives; Transitioned cost-per-action vertical focus from the health and wellness sector to premium advertisers in the education, group buying and online dating verticals; Launched five new web properties to increase online audience development in the health and women's verticals and enhance various lead generation activities; Continued to deliver strategic interactive solutions with leading brand advertisers including Quest Personals, a leader in the tele-personals industry; Travelers Insurance, and Softchoice; and Delivered various mobile and video applications to clients as the Company continued to evolve its targeted search and customer acquisition platforms into new distribution channels; Results for the first quarter ended March 31, 2011The Company generated revenue of $14.6 million, an increase of 19% compared to $12.3 million generated during the same quarter in 2010; Adjusted EBITDA for the quarter was $150,000 compared to $135,000 in 2010; Net loss for the quarter was $3.6 million compared to a net loss of $141,000 in 2010. "Although the beginning of 2011 has been challenging, we are very proud of our team and the number of strategic initiatives that we have been able to deploy over a relatively short time period" said Ted Hastings, President of Cyberplex. "We continue to believe that the skills, expertise and technology that we have within Cyberplex will allow us to compete with anyone in the online space and take advantage of many exciting strategic and growth opportunities."Non-GAAP Financial Measures This press release includes a discussion of "Adjusted EBITDA," which is a non-GAAP financial measure. The Company defines Adjusted EBITDA as net income (loss) before (a) Finance costs (income), net; (b) income tax expense (recovery); (c) depreciation of property and equipment and amortization of intangible assets; (d) stock-based compensation expense related to the Company's grant of stock options and (e) employee termination costs. Management uses Adjusted EBITDA as a measurement of the Company's operating performance because it provides information related to the Company's ability to provide cash flows for acquisitions, capital expenditures and working capital requirements. The Company also believes that analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies in its industry. The non-GAAP financial measure is used in addition to and in conjunction with results presented in accordance with the Company's GAAP and should not be relied upon to the exclusion of GAAP financial measures. Management strongly encourages investors to review the Company's consolidated financial statements in their entirety and to not rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. In addition, the Company expects to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of these items from the Company's non-GAAP measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring. The table below reconciles net income (loss) and Adjusted EBITDA for the periods presented:Three months ended March 31(In thousands of Canadian dollars)20112010Net loss$(3,594)$(141)Add:Depreciation of property and equipment38179Amortization of intangible assets2,21077Finance costs (income), net873(250)Employee termination costs263-Stock based compensation147164Income tax expense (recovery)(130)206Adjusted EBITDA$150$135Conference Call DetailsIn conjunction with the release, Cyberplex will host a conference call on Thursday, June 2, 2011 at 4:30 p.m. EST to discuss the financial results. To access the call, please dial 1-888-892-3255. Please call five minutes prior to the call. A replay of the conference call will be available following the call as of 12:00 a.m. To access the replay dial 1-800-937-6305 followed by the pass code 676594.About CyberplexCyberplex Inc. ( is a North American leader in online publishing and customer acquisition strategies. The Company, through its subsidiaries, leverages over 300 proprietary web properties and its vast publisher network to efficiently connect advertisers to their most relevant online customers and prospects. By combining high quality publishing initiatives with efficient technology solutions and online marketing expertise, the Company is able to deliver the optimal targeted audience to online advertisers. Cyberplex delivers measurable results that improve advertiser ROI, monetize the value of online properties and build targeted, loyal online audiences.Forward-Looking StatementsThis news release may contain forward-looking statements that are based on management's current expectations and are subject to known and unknown uncertainties and risks, which could cause actual results to differ materially from those contemplated or implied by such forward-looking statements. Cyberplex is under no obligation to update any forward-looking statements contained herein should material facts change due to new information, future events or otherwise.Cyberplex Inc.Consolidated Statements of Financial Position(In thousands of Canadian dollars)(Unaudited)March 31, 2011December 31, 2010January 1, 2010AssetsCurrent assets:Cash and cash equivalents$6,166$5,192$10,222Restricted cash6322,310-Short-term investments2571,55111,270Available-for-sale financial assets148140271Accounts receivable8,96013,8799,930Income taxes recoverable632632-Prepaid expenses and other assets2,1452,3213,029Total current assets18,94026,02534,722Non-current assets:Restricted cash3,2211,749-Property and equipment2,5892,921845Intangible assets29,56632,504756Goodwill2,3032,35714,616Deferred tax assets--583Total non-current assets37,67939,53116,800Total assets$56,619$65,556$51,522Liabilities and EquityCurrent liabilities:Accounts payable and accrued liabilities$7,961$10,177$3,694Current portion of provisions590590576Current portion of term loans30,0489,402-Deferred revenue783665668Income taxes payable1,7241,729631Current portion of deferred lease inducements115115107Total current liabilities41,22122,6785,676Non-current liabilities:Long-term portion of term loans-23,583-Provisions2,7562,756-Deferred tax liabilities1,8601,990-Deferred lease inducements156185156Total non-current liabilities4,77228,514156Equity:Share capital65,45265,45233,335Contributed surplus2,0911,9441,471Accumulated other comprehensive income (loss)(2,791)(2,500)247Retained earnings (deficit)(54,126)(50,532)10,637Total equity$10,626$14,364$45,690Total liabilities and equity$56,619$65,556$51,522Cyberplex Inc.Consolidated Statements of Comprehensive Income (Loss)(In thousands of Canadian dollars, except per share amounts)Three months ended March 31, 2011 and 2010(Unaudited)20112010Revenue$14,603$12,261Expenses:Publishing and advertising costs8,9168,806Employee compensation and benefits3,9041,816Other operating expenses1,7801,66814,60012,290Income (loss) before the undernoted3(29)Depreciation of property and equipment38179Amortization of intangible assets2,21077Restructuring expenses263-Loss from operations(2,851)(185)Finance costs (income), net873(250)Income (loss) before income taxes(3,724)65Income tax expense (recovery)(130)206Loss for the period(3,594)(141)Other comprehensive loss:Net change in fair value of available-for-sale financial assets8(40)Foreign currency translation adjustments to equity(299)(1,187)Other comprehensive loss for the period, net of income tax(291)(1,227)Total comprehensive loss for the period$(3,885)$(1,368)Loss per share:Basic(0.03)(0.00)Diluted(0.03)(0.00)Cyberplex Inc.Consolidated Statements of Cash Flows(In thousands of Canadian dollars)Three months ended March 31, 2011 and 2010(Unaudited)20112010Cash flows from operating activities:Loss for the period$(3,594)$(141)Adjustments to reconcile net loss to net cash flows from operating activities:Depreciation of property and equipment38179Amortization of intangible assets2,21077Amortization of deferred lease inducements(29)(27)Stock-based compensation147164Unrealized foreign exchange loss130158Finance costs (income), net873(25)Income tax expense (recovery)(130)206Change in non-cash operating working capital2,786(5,401)Cash generated from (used in) operating activities2,774(4,910)Income taxes paid-(774)Net cash from (used in) operating activities2,774(5,684)Cash flows from financing activities:Repayment of term loans(2,176)-Proceeds from exercise of stock options-8Interest paid(814)(3)Net cash from (used in) financing activities(2,990)5Cash flows from investing activities:Sale of short-term investments1,2942,043Interest income received1928Decrease in restricted cash115-Additions to property and equipment(97)(298)Additions to intangible assets(11)(51)Net cash from investing activities1,3201,722Increase (decrease) in cash and cash equivalents1,104(3,957)Cash and cash equivalents, beginning of period5,19210,222Foreign exchange loss on cash held in foreign currency(130)(158)Cash and cash equivalents, end of period$6,166$6,107FOR FURTHER INFORMATION PLEASE CONTACT: David KatzCyberplex Inc.EVP Corporate Development416.597.8889416.597.2345 (FAX)