Mediagrif Reports Q3 FY2008 Financial Results



    
    - Revenues of $12.2 million compared to $11.9 million in the previous
      year
    - Net earnings of $0.6 million compared to $1.6 million in the previous
      year
    - EPS of $0.04 compared to $0.09 in the previous year
    

    LONGUEUIL, QC, Feb. 12 /CNW Telbec/ - Mediagrif Interactive Technologies
Inc. (TSX: MDF), a world-leading developer of e-business networks and provider
of complete e-business solutions, today announced its financial results for
the third quarter of fiscal year 2008 ended December 31, 2007.
    Revenues for the third quarter amounted to $12.2 million, as compared to
$11.9 million in the corresponding quarter of the previous year. Again this
quarter, most of Mediagrif's major e-business networks experienced good
organic growth, especially the US government e-publishing sector which grew by
14%. Such growth was partly offset by a decrease in the revenues of Carrus
Technologies and Power Source On-Line, and, foreign exchange variations which
again negatively impacted quarterly revenues by over $0.8 million. The
revenues also benefited from a full quarter of the two acquisitions made in Q2
of the current year.
    Operating expenses increased to $8.9 million during the third quarter
from $7.7 million in the corresponding quarter of the previous year mainly due
to the impact of acquisitions, higher headcount, increase of the marketing
activities and growing investments as part of our international expansion
strategy.
    As a result of such increase in operating expenses, earnings from
operations amounted to $0.6 million as compared to $2.0 million for the
corresponding period of the previous year. Net earnings and basic earnings per
share for the third quarter amounted to $0.6 million or $0.04 per share, as
compared to $1.6 million or $0.09 per share for the corresponding quarter of
the previous year.
    "Again this year, the continued rise of the Canadian dollar had a
negative impact on our net earnings, which translated in a loss of $0.065 per
share. However, during the third quarter, we successfully executed on our
integration plan for the two acquisitions made during the previous quarter. We
also announced a new partnership with Airports Council International in
November. This is a great example of how MERX is able to apply its many years
of e-publishing expertise to meet the specific needs of private-sector
businesses, which is a sector we will continue to develop. Finally, we
continued our development activities in Dubai, India and China, where we are
promoting our brand through partnerships with different organizations,"
commented Denis Gadbois, President and Chief Executive Officer of Mediagrif.

    KEY OPERATING HIGHLIGHTS OF Q3 FY2008:

    On November 29th, 2007, our MERX subsidiary announced its partnership
with Airports Council International to launch Aerobidz.com, an e-publishing
service for the global airport industry.

    KEY FINANCIAL HIGHLIGHTS OF Q3 FY2008:

    Revenues for the quarter reached $12.2 million, as compared to
$11.9 million in the corresponding quarter of the previous year. The foreign
exchange fluctuation negatively impacted the quarterly revenues by
$0.8 million. Most of Mediagrif's major e-business networks experienced good
organic growth, especially the US government e-publishing sector. However, we
continued to face a market slowdown in Carrus Technologies due to a tendering
process by one of our partners. Power Source On-Line experienced revenue
decrease caused by net additional members generating lower average revenue.
During the quarter, the acquisitions contributed to total revenues for
approximately $1.0 million.
    Revenues for the nine-month period reached $35.6 million as compared to
$34.8 million in the corresponding period of last year. The foreign exchange
variation remains the main factor offsetting the organic growth with a
negative impact on the revenues of $1.8 million.
    For the quarter ended December 31, 2007, total operating expenses
amounted to $8.9 million as compared to $7.7 million for the previous year.
General and administrative expenses increased from $2.9 million to
$3.1 million mainly due to the impact of the acquisitions and higher
headcount. Sales and marketing expenses increased from $2.3 million last year
to $2.9 million due to the acquisitions, growing marketing activities and
continued investments in international operations. Technology expenses
increased from $2.0 million to $2.1 million mainly due to the acquisitions.
    For the nine-month period ended December 31, 2007, total operating
expenses amounted to $25.2 million as compared to $21.5 million for the
previous year. General and administrative charges increased from $7.9 million
to $9.1 million, mainly due to the impact of the acquisitions, higher
compensation costs due to increased overall headcount and higher variable
remuneration. Sales and marketing expenses increased from $6.3 million last
year to $7.9 million for the nine months ended December 31, 2007. This
increase is attributable to the impact of our growing investments made as part
of our international expansion strategy, the increase of the marketing
activities and the acquisitions. Technology expenses increased from
$5.8 million to $6.5 million, due to higher headcount in the technology
department.
    As a result, earnings from operations during the quarter amounted to
$0.6 million, as compared to $2.0 million in the corresponding quarter of the
previous year. As for the nine-month period ended December 31, 2007, earnings
from operations amounted to $3.1 million as compared to $6.8 million, due to
higher operating expenses and the negative impact of foreign exchange
variations. Quarterly and year-to-date diluted earnings per share, for the
current year, were $0.04 and $0.14 respectively, as compared to $0.09 and
$0.28 for the same periods last year.
    As of December 31, 2007, our cash and cash equivalents reached
$26.6 million, an increase from $11.2 million as of March 31, 2007 and a
decrease from $61.6 million as of December 31, 2006. As of December 31, 2007,
we had no short-term investments as compared to $53.1 million as of March 31,
2007 and to nil as of December 31, 2006. Free cash flow, defined as cash flow
from operating activities less capital expenditures, was $0.1 million during
the third quarter, as compared to $2.9 million for the previous year, the
variation mainly explained by the variation of earnings and changes in
non-cash working-capital items.
    On March 1, 2007, the Company announced the launch of a normal course
issuer bid whereby it is authorized to purchase for cancellation for the
twelve-month period starting March 5, 2007 up to 1,018,501 common shares. As
such, during the first nine months of the year, the Company purchased
289,541 common shares for cancellation at an average price of $7.21, for total
consideration of $2.1 million. Since the beginning of the program, the Company
purchased 335,641 common shares for cancellation.

    ADDITIONAL INFORMATION:

    Management's Discussion and Analysis of third quarter results, along with
detailed financial results, can be accessed on the Corporation's Web site at
www.mediagrif.com.

    A live Web cast of Mediagrif's third quarter FY2008 financial results
conference call can be heard at 10:00 am EST Wednesday, February 13, at the
following link:
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2160180
    Please note that the Web cast will be available until April 12, 2008 at
the above link.

    To participate to the conference call:

    Local call-in number: (514) 861-1531
    Toll-free call-in number: 1 866 223-7781

    The conference call will also be available for listening until February
20, 2008 at the following number: 1 800 408-3053, access code 3224489#.

    About Mediagrif Interactive Technologies Inc.

    Mediagrif Interactive Technologies Inc. (TSX: MDF) is a world-leading
operator of e-business networks and provider of complete e-business solutions.
Mediagrif's e-business networks allow buyers and sellers within specific
industries to source, purchase or sell products and to exchange documents more
efficiently using the Internet. Mediagrif operates 15 networks, including
industry leaders www.brokerforum.com, www.powersourceonline.com,
www.telecomfinders.com, www.globalwinespirits.com and www.polygon.net.
Mediagrif also owns MERX, www.merx.com, the exclusive provider of e-publishing
services to the Government of Canada, and is a leading provider of government
bid aggregation services and e-procurement services in the U.S. Headquartered
in Longueuil, Mediagrif has various offices in Canada, the U.S, China, India
and Dubai. For more information, please visit us at www.mediagrif.com or call
1 877 677-9088.

    This press release contains certain forward-looking statements with
respect to the Company. These forward-looking statements, by their nature,
necessarily involve risks and uncertainties that could cause actual results to
differ materially from those contemplated by these forward-looking statements.
We consider the assumptions on which these forward-looking statements are
based to be reasonable, but caution the reader that these assumptions
regarding future events, many of which are beyond our control, may ultimately
prove to be incorrect since they are subject to risks and uncertainties that
affect us. We disclaim any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by applicable securities legislation.
All amounts are in Canadian dollars.


    
    MEDIAGRIF INTERACTIVE TECHNOLOGIES INC.
    CONSOLIDATED BALANCE SHEETS

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (Canadian dollars in Thousands)                  December 31,   March 31,
                                                            2007        2007
                                                      (Unaudited)    (Note 1)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                               $           $
    ASSETS
      Cash and cash equivalents                           26,618      11,221
      Short-term investments                                   -      53,099
      Accounts receivable                                  8,576       4,685
      Tax credits receivable                               2,722       1,672
      Prepaid expenses                                       685         741
      Future income taxes                                    254         254
    -------------------------------------------------------------------------
                                                          38,855      71,672

      Premises and equipment                               2,906       2,644
      Intangible assets                                    4,891       5,054
      Acquired intangible assets                           8,418       4,754
      Goodwill                                            28,166      22,261
      Other assets                                            91         156
      Future income taxes                                  1,065         831
    -------------------------------------------------------------------------
                                                          84,392     107,372
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES
      Accounts payable and accrued liabilities             8,334       5,425
      Income taxes payable                                 2,557       2,751
      Deferred revenue                                     7,716       8,371
      Current portion of purchase price payable              108         262
      Current portion of deferred gain on licenses           647         676
      Future income taxes                                    560         476
    -------------------------------------------------------------------------
                                                          19,922      17,961

      Deferred gain on licenses                                -         479
    -------------------------------------------------------------------------

                                                          19,922      18,440
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY
      Capital stock (note 6)                              50,669      60,912
      Share purchase options (Note 6)                      2,226       2,803
      Contributed surplus (Note 6)                           875           -
      Retained earnings                                   11,259      25,476
      Accumulated other comprehensive
       income (loss) (Note 7)                               (559)       (259)
    -------------------------------------------------------------------------
                                                          64,470      88,932
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                                          84,392     107,372
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    MEDIAGRIF INTERACTIVE TECHNOLOGIES INC.
    CONSOLIDATED STATEMENTS OF RETAINED EARNINGS - UNAUDITED
    FOR THE NINE MONTHS ENDED DECEMBER 31,

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (Canadian dollars in Thousands)                         2007        2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                               $           $

    Retained earnings - Beginning of period               25,476      23,245

    Net earnings for the period                            2,269       4,981

    Premium on purchase of common shares for
     cancellation (note 6)                               (16,486)     (2,551)
    -------------------------------------------------------------------------

    Retained earnings - End of period                     11,259      25,675
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    MEDIAGRIF INTERACTIVE TECHNOLOGIES INC.
    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - UNAUDITED

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (Canadian dollars in          Three months ended       Nine months ended
     Thousands)                       December 31,            December 31,
                                    2007        2006        2007        2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                       $           $           $           $

    Net earnings for the period      590       1,625       2,269       4,981

    Other comprehensive
     income (loss)
      Change in foreign
       currency translation of
       self-sustaining foreign
       subsidiaries                  (48)        211        (699)        (56)
      Change in fair value of
       foreign exchange forward
       contracts designated as
       cash flow hedges, net of
       related income taxes         (249)          -         644           -
      Change in fair value of
       short-term investments, net
       of related income taxes         -           -         (89)          -
    -------------------------------------------------------------------------

    Other comprehensive
     income (loss)                  (297)        211        (144)        (56)
    ------------------------------------------------- -----------------------

    Comprehensive income (loss)      293       1,836       2,125       4,925
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    MEDIAGRIF INTERACTIVE TECHNOLOGIES INC.
    CONSOLIDATED STATEMENTS OF ACCUMULATED OTHER COMPREHENSIVE INCOME -
    UNAUDITED
    FOR THE NINE MONTHS ENDED DECEMBER 31,

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (Canadian dollars in Thousands)                         2007        2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                               $           $

    Balance - Beginning of period                           (259)       (165)

    Cumulative impact of accounting changes (Note 1)        (155)          -
    Other comprehensive income (loss)                       (145)        (56)
    -------------------------------------------------------------------------

    Accumulated Other Comprehensive Income (Note 7)         (559)       (221)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    MEDIAGRIF INTERACTIVE TECHNOLOGIES INC.
    CONSOLIDATED STATEMENTS OF EARNINGS - UNAUDITED

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (Canadian dollars in          Three months ended       Nine months ended
     Thousands, except per            December 31,            December 31,
     share amounts)                 2007        2006        2007        2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                       $           $           $           $

    Revenues                      12,242      11,859      35,615      34,843

    Cost of Revenues               2,686       2,174       7,281       6,455
    -------------------------------------------------------------------------

    Gross Margin                   9,556       9,685      28,334      28,388
    -------------------------------------------------------------------------

    Operating expenses
    General and Administrative     3,146       2,885       9,102       7,906
    Sales and Marketing            2,931       2,315       7,926       6,335
    Technology                     2,097       2,026       6,504       5,824
    Amortization of acquired
     intangible assets               554         317       1,240         947
    Stock-based compensation         199         128         448         527
    -------------------------------------------------------------------------
                                   8,927       7,671      25,220      21,539
    -------------------------------------------------------------------------
    Earnings from operations         629       2,014       3,114       6,849

    Other income, net (note 3 b))    218         679       1,062       1,525
    -------------------------------------------------------------------------

    Earnings before income taxes     847       2,693       4,176       8,374

    Provision for income taxes       257       1,068       1,907       3,393
    -------------------------------------------------------------------------

    Net earnings for the period      590       1,625       2,269       4,981
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share
      Basic                         0.04        0.09        0.14        0.28
                             ------------ ----------- ----------- -----------
                             ------------ ----------- ----------- -----------
      Diluted                       0.04        0.09        0.14        0.28
                             ------------ ----------- ----------- -----------
                             ------------ ----------- ----------- -----------

    Weighted average
     number of shares
     outstanding (note 6 c))
      Basic                   14,817,161  17,492,484  16,724,383  17,558,310
                             ------------ ----------- ----------- -----------
                             ------------ ----------- ----------- -----------
      Diluted                 14,845,063  17,796,922  16,800,379  17,880,996
                             ------------ ----------- ----------- -----------
                             ------------ ----------- ----------- -----------

    Number of shares
     outstanding - End of
     period (note 6 b))
      Basic                   14,719,241  17,533,266  14,719,241  17,533,266
                             ------------ ----------- ----------- -----------
                             ------------ ----------- ----------- -----------


    MEDIAGRIF INTERACTIVE TECHNOLOGIES INC.
    CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (Canadian dollars in          Three months ended       Nine months ended
     Thousands)                       December 31,            December 31,
                                    2007        2006        2007        2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                       $           $           $           $
    CASH FLOWS FROM

    OPERATING ACTIVITIES
    Net earnings for the period      590       1,625       2,269       4,981
    Adjustments for
      Amortization of premises
       and equipment                 421         355       1,220       1,056
      Amortization of intangible
       assets                        748         637       2,167       1,892
      Amortization of acquired
       intangible assets             554         317       1,240         947
      Amortization of gains on
       licenses                     (169)       (169)       (507)       (507)
      Stock-based compensation       199         128         448         527
      Future income taxes           (267)         18        (574)        619
    Changes in non-cash working
     capital items (note 3 a))      (707)        844      (5,642)       (292)
    -------------------------------------------------------------------------

    Cash flows from (used in)
     operating activities          1,369       3,755         621       9,223
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Business acquisition (note 4)    (53)        (11)     (6,414)     (2,468)
    Acquisition of premises and
     equipment and intangible
     assets                       (1,279)       (839)     (3,192)     (2,510)
    Short-term investments, net      130       2,234      53,099      36,354
    Long-term receivable               -           -           -         290
    -------------------------------------------------------------------------

    Cash flows from (used in)
     investing activities         (1,202)      1,384      43,493      31,666
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Purchase of common shares for
     cancellation (note 6 b))     (1,434)          -     (27,342)     (3,942)
    Issuance of common
     shares (note 6 b))              124         205         463         768
    Repayment of purchase price
     payable                        (477)       (297)       (739)       (556)
    -------------------------------------------------------------------------

    Cash flows from (used in)
     financing activities         (1,787)        (92)    (27,618)     (3,730)
    -------------------------------------------------------------------------

    Net increase (decrease) in
     cash and cash equivalents    (1,620)      5,047      16,496      37,159
    -------------------------------------------------------------------------

    Effect of exchange rate
     changes on cash and cash
     equivalents                    (448)        210      (1,099)        (56)

    Cash and cash equivalents -
     Beginning of period          28,686      56,391      11,221      24,545
    -------------------------------------------------------------------------

    Cash and cash equivalents -
     End of period                26,618      61,648      26,618      61,648
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

    December 31, 2007 and 2006

    1) Accounting Policies

    The consolidated interim financial statements have been prepared by the
Company in accordance with Canadian generally accepted accounting principles
("GAAP") applicable to interim financial statements and follow the same
accounting policies and methods of their application found in the audited
financial statements for the year ended March 31, 2007, with the exceptions
for changes mentioned below. The March 31, 2007 balance sheet figures have
been derived from the audited financial statements of the Company for the year
ended March 31, 2007. These interim financial statements are unaudited and
have not been reviewed by the Company's external auditors. The disclosures in
these unaudited interim financial statements do not conform in all material
respects to the requirements of GAAP for annual financial statements;
therefore, these interim financial statements should be read in conjunction
with the audited consolidated financial statements and notes thereto included
in the Company's Annual Report for fiscal year 2007.

    Changes to accounting policies

    a) Financial Instruments

    On April 1, 2007, the Company adopted Section 3855 of the Canadian
Institute of Chartered Accountants (CICA) Handbook, Financial Instruments -
Recognition and Measurement. It establishes standards for recognition and
measurement of financial assets, financial liabilities and non-financial
derivatives. The standard specifies when and at which amount a financial
instrument is to be recorded on the balance sheet. Financial instruments are
to be recorded at fair value in some cases, and at cost in others. The section
also provides guidance for disclosure of gains and losses on financial
instruments. Upon the adoption of this section, the Company has made the
following classification:
    Short-term investments have been classified as available for sale and are
measured at fair value. Resulting gains or losses are recorded in Accumulated
Other Comprehensive Income until realization.

    b) Comprehensive Income

    On April 1, 2007, the Company adopted Section 1530 of the CICA Handbook,
Comprehensive Income. It establishes standards for reporting and display of
comprehensive income. Comprehensive income represents the change in the net
assets of an entity for a period, other than changes attributable to
transactions with shareholders. Comprehensive income has two components - Net
Income and Other Comprehensive Income and its components should be presented
in a financial statement with the same prominence as other financial
statements. The comparative statements have been adjusted to reflect
application of this section for changes in the balances of foreign currency
translation of self-sustaining foreign operations.
    On April 1, 2007, the initial adoption of this standard resulted in an
increase in short-term investments of $131,085, an increase in Accounts
payable of $358,329 and an accumulated other comprehensive loss of $154,640,
net of related income taxes.

    c) Hedges

    On April 1, 2007, the Company adopted Section 3865 of the CICA Handbook,
Hedges. It includes and replaces the guidance on hedging relationships that
was previously contained in AcG-13, mostly those relating to the designation
of hedging relationships and its documentation. The new standard specifies how
to apply hedge accounting and which information has to be disclosed by the
entity.
    Foreign exchange forward contracts represent cash flow hedge of future
anticipated sales denominated in foreign currency. Gains or losses from these
derivatives financial instruments are recorded in Accumulated Other
Comprehensive Income net of related income taxes and are reclassified to
earnings as adjustments to sales in the same period as the respective hedged
item affects earnings.

    2) Related party transactions

    Details of related party transactions not otherwise disclosed in the
financial statements are as follows:

    (Canadian dollars in Thousands)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                  Three months ended       Nine months ended
                                      December 31,            December 31,
                                    2007        2006        2007        2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                       $           $           $           $
    Revenues
    Joint ventures                   366         337       1,096       1,057

    Accounts receivable
    Joint ventures                   504         171         504         171

    Accounts payable
    Joint ventures                    36           -          36           -

    Balances and transactions with the joint ventures represent the amounts
corresponding to the joint venturers' interest therein. All related party
transactions occurred in the normal course of operations and were measured at
the exchange amount, which is the amount of consideration agreed upon by the
parties.
    Revenues with joint ventures include amortization of gains on licenses
which derive from the creation of Polygon DMCC.


    3) Changes in non-cash working capital items and Other income

    a) Changes in non-cash working capital items are as follows:

    (Canadian dollars in Thousands)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                  Three months ended       Nine months ended
                                      December 31,            December 31,
                                    2007        2006        2007        2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                       $           $           $           $

    Decrease (Increase) in
      Accounts receivable            918          19         657         642
      Tax credits receivable        (382)      1,320      (1,050)        537
      Prepaid expenses                59          26         139          60
    Increase (Decrease) in
      Accounts payable and
       accrued liabilities          (238)       (219)     (3,428)     (2,153)
      Income taxes                  (241)        446        (382)      1,155
      Deferred revenues             (823)       (748)     (1,578)       (533)
    -------------------------------------------------------------------------
                                    (707)        844      (5,642)       (292)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    b) Other income consists of the following:

    (Canadian dollars in Thousands)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                  Three months ended       Nine months ended
                                      December 31,            December 31,
                                    2007        2006        2007        2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                       $           $           $           $

    Interest income                  219         669       1,618       1,834
    Interest expense                (129)       (103)       (298)       (308)
    Foreign exchange gain (loss)      52          71        (204)         87
    Other                             76          42         (54)        (88)
    -------------------------------------------------------------------------
                                     218         679       1,062       1,525
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    4) Business Acquisition

    a) On April 17, 2007, the Company purchased the customer base of Telephone
International ("TI"), an advertising and listing publication focused on the
telecom industry for a cash consideration of US$ 165,480 ($186,893).

    b) On July 11, 2007, the Company purchased Market Velocity Inc. ("MVI"), a
leading service and technology provider for equipment trade-in, recycle, and
donation programs in the US for a cash consideration of $5,650,000
(US$ 5,352,000).

    c) On September 10, 2007, the Company purchased epipeline Inc. ("EPI"), a
leading online source of research for U.S. government contractors for a cash
consideration of $4,132,000 ($US3,926,000), including the repurchase of
long-term notes of $2,030,000, which have been reimbursed at the moment of the
acquisition.
    The fiscal 2008 allocation of the purchase price to the identifiable
assets acquired and liabilities assumed is detailed as follows:

    (Canadian dollars in Thousands)              MVI         EPI       Total
    -------------------------------------------------------------------------

    Current assets                             4,149         351       4,500
    Premises and equipment                       227           6         233
    Future tax assets                          1,140           -       1,140
    Identifiable acquired intangible assets
      Customer base                            2,154         579       2,733
      Other items                                718       1,263       1,981
    -------------------------------------------------------------------------
                                               8,388       2,199      10,587

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Current liabilities                        4,154       3,209       7,363
    Future tax liabilities                       839         538       1,377
    -------------------------------------------------------------------------
                                               4,993       3,747       8,740

    Net identifiable assets acquired           3,395      (1,548)      1,847
    Goodwill                                   2,255       3,650       5,905
    -------------------------------------------------------------------------

    Purchase price, net of long-term notes
     repurchased                               5,650       2,102       7,752
    Less: cash and cash equivalents acquired   1,021          27       1,048
    Less: Balance of purchase price payable       11         466         477
    -------------------------------------------------------------------------

    Net cash paid                              4,618       1,609       6,227
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    With respect to above allocations, the company is currently in the process
of finalizing the amounts to be allocated to intangible assets. Accordingly,
the above allocations are preliminary, the completion of which in the near
future is expected to result in changes to the amounts allocated to the
intangible assets and goodwill. Moreover, adjustments have been made in the
current quarter for an addition of $53,000 of expenses related to business
acquisition.


    5) Segmented Information

    Geographical information

    The geographical information is as follows:

    For the three months ended Decemebr 31,
                                                2007                    2006
    -------------------------------------------------------------------------
                                        Premises and            Premises and
    (Canadian dollars in                   equipment,              equipment,
     Thousands)                           intangible              intangible
                                          assets and              assets and
                                Revenues    goodwill    Revenues    goodwill
                                       $           $           $           $
    -------------------------------------------------------------------------
      Canada                       4,017       8,817       4,030       8,118
      United States                5,556      35,457       4,687      26,662
      Europe                         751           -         906           -
      Asia and other               1,918         107       2,236          49
                             ------------------------------------------------

                                  12,242      44,381      11,859      34,829
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    For the nine months ended December 31,
                                                2007                    2006
    -------------------------------------------------------------------------
                                        Premises and            Premises and
                                           equipment,              equipment,
                                          intangible              intangible
                                          assets and              assets and
                                Revenues    goodwill    Revenues    goodwill
                                       $           $           $           $
    -------------------------------------------------------------------------
      Canada                      11,683       8,817      11,991       8,118
      United States               15,773      35,457      13,807      26,662
      Europe                       2,234           -       2,812           -
      Asia and other               5,925         107       6,233          49
                             ------------------------------------------------

                                  35,615      44,381      34,843      34,829
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Revenues are attributed to geographic areas based on the location of the
business places of the customers.


    6) Capital Stock

    (Number in Thousands, Canadian dollars in Thousands, except per share
    amounts)

    a) Authorized, unlimited as to number
          Common shares
          Preferred shares, non-voting, retractable and redeemable

    b) The following table summarizes the common shares activity for the
periods ended December 31:

                             ------------------------------------------------
                             ------------------------------------------------
                                       Nine months ended December 31,
                                                2007                    2006
                                  Number     Amounts      Number     Amounts
                                                   $                       $
                             ------------------------------------------------
                             ------------------------------------------------

    Balance before share
     purchase financing
     agreements -
      Beginning of period         17,802      61,036      18,021      61,069

    Purchased for
     cancellation (i) & (ii)      (3,163)    (10,857)       (416)     (1,392)

    Exercise of stock
     options (iii)                    80         490         154         873
                             ------------------------------------------------

    Balance before share
     purchase financing
     agreements                   14,719      50,669      17,759      60,550

    Share purchase financing
     agreements (iv)                   -           -        (226)       (477)
                             ------------------------------------------------

    Balance - End of period       14,719      50,669      17,533      60,073
                             ------------------------------------------------
                             ------------------------------------------------

    i)   During the nine-month period ending December 31, 2007, the Company
         purchased 289,541 (2007 - 415,600) of its own shares for
         cancellation for a cash consideration totaling $2,078,923
         (2007 - 3,942,147). Capital stock has been reduced by the average
         issue price per share before the buy-back of $3.43 (2007 - $3,35)
         totaling $993,609 (2007 - 1,391,504) and the remaining amounts have
         been recorded against the retained earnings.

    ii)  On September 25, 2007, as part of a substantial issuer bid, the
         Company purchased 2,873,563 of its own common shares for
         cancellation, at a price of $8,70 per share totaling $25M. The
         Company incurred $263,074 of costs in respect of this share buy-
         back, which represents $0.09 per share. Share capital has been
         reduced by the average cost per share before the buy-back of
         $3.43 per share totaling $9,862,509 and the remaining amounts as
         well as costs related to the share buy-back have been recorded
         against the retained earnings.

    iii) During the nine-month period ended December 31, 2007, 80,250
         (2007 - 154,200) stock options were exercised to purchase 80,250
         (2007 - 154,200) common shares for a cash consideration of $339,275
         (2007 - $748,472) or $4.23 per share (2007 - $4.85).
         The balance of $150,268 (2007 - $123,737) credited to capital stock
         represents the stock-based compensation recorded for these options.

    iv)  As at December 31, 2007, the Company had no receivable from its
         employees (2007 - $476,835) related to share purchase loans to them
         under this plan. At the end of the period, there was no share
         outstanding in respect to employee loans as compared to 225,929 in
         2007, for which the market value was $2,089,843. The related shares
         are considered to be issued as the loan is repaid by the holder and
         the decrease in the loans has therefore been presented as an
         issuance of shares in the consolidated statement of cash flows, of
         $123,676 for the nine months ended December 31, 2007
         (2007 - $19,974), in addition to the exercise price of stock
         options.


    c) The following table summarizes the share purchase option activity for
the periods ended December 31 :

                                                     ------------------------
                                                     ------------------------
                                                            2007        2006
                                                     ------------------------
                                                     ------------------------
                                                               $           $

    Balance - Beginning of year                            2,803       2,521
    Compensation expense related to stock options            448         527
    Transfer of accumulated compensation cost upon
     exercise of stock options                              (150)       (124)
    Transfer of accumulated compensation cost upon
     forfeiture of stock options                            (875)          -
                                                     ------------------------

    Balance - End of year                                  2,226       2,924
                                                     ------------------------
                                                     ------------------------


    Stock-based compensation plan

    The Company has a stock option plan as described in note 9 to the
consolidated financial statement in the 2007 Annual Report.
    During the nine-month period ended December 31, 2007, the Company granted
499,500 stock options to certain directors and employees at a weighted average
exercise price of $9.45. The estimated fair value of the stock options issued
under this grant amounts to $1,634,903, and will be expensed over their
vesting period which do not exceed three years.
    For stock options granted to employees and directors, the fair value of
share purchase options was estimated using the Black-Scholes option pricing
model with the following assumptions:

                                         Fiscal 2008             Fiscal 2007
                             ------------------------------------------------
      Risk-free interest rate            4.2% to 4.7%            3.9% to 4.2%
      Expected life of
       options                      3.0 to 5.0 years        3.0 to 5.0 years
      Volatility                       33.8% to 33.9%          37.3% to 37.9%
      Dividend rate                                0%                      0%
      Weighted average fair
       value of options
       granted per unit                        $3.27                   $3.31


    d) Weighted average number of shares outstanding

    The following table outlines the weighted average number of shares used in
the calculations of the basic and diluted net earnings per share:

                             ------------------------------------------------
                             ------------------------------------------------
                                  Three months ended       Nine months ended
                                      December 31,               December 31,
                                    2007        2006        2007        2006
                             ------------------------------------------------
                             ------------------------------------------------

    Basic weighted average
     number of shares
     outstanding                  14,817      17,492      16,724      17,558

    Dilutive effect of stock
     options                          17         134          43         150

    Dilutive effect of share
     purchase financing
     agreements                       11         171          33         173
                             ------------------------------------------------

    Diluted weighted average
     number of shares
     outstanding                  14,845      17,797      16,800      17,881
                             ------------------------------------------------
                             ------------------------------------------------

    Options to purchase 1,018,200 shares (2007 - 796,000) at a weighted
average price of $9.88 per share (2007 - $10.36) were outstanding during the
nine-month period ending December 31, 2007, but were not included in the
calculation of diluted earnings per share because the options' exercise price
was greater than the average price of the shares.


    7) Accumulated Other Comprehensive Income (loss)

    Details of Accumulated Other Comprehensive Income are as follows:

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                           Nine months ended
                                                              December 31,
    (Canadian dollars in Thousands)                         2007        2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                               $           $

    Change in foreign currency translation of
     self-sustaining foreign subsidiaries                   (959)       (221)
    Change in fair value of foreign exchange forward
     contracts designated as cash flow hedges, net of
     related income taxes                                    400           -
    -------------------------------------------------------------------------

                                                            (559)       (221)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    8) Comparative figures

    Certain figures for fiscal 2007 have been reclassified in order to comply
with the basis of presentation adopted in the current year.
    




For further information:

For further information: Mediagrif Interactive Technologies Inc.:
Catherine Allard, Chief Financial Officer, (450) 677-8797 ext. 2133,
callard@mediagrif.com; Kathy Roberge, Director, Communications, (450) 677-8797
ext. 3014, kroberge@mediagrif.com


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