Mediagrif Reports Q1 FY2008 Financial Results



    

    -  Revenues of $11.3 million compared to $11.5 million in the previous
       year
    -  Net earnings of $0.8 million compared to $1.7 million in the previous
       year
    -  EPS of $0.05 compared to $0.10 in the previous year
    

    LONGUEUIL, QC, Aug. 7 /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 first quarter of fiscal year 2008 ended June 30, 2007.
    Revenues for the first quarter amounted to $11.3 million, as compared to
$11.5 million in the corresponding quarter of the previous year. Most of
Mediagrif's major e-business networks experienced good organic growth,
especially the US government e-publishing sector which grew by 15%. Such
growth was partly offset by a decrease in Carrus Technologies due to lower
non-recurring revenues as well as a decrease in Power Source On-Line, caused
by net additional members generating lower average revenue.
    Operating expenses increased to $7.7 million during the first quarter
from $6.9 million in the corresponding quarter of the previous year mainly due
to the impact of Construction BidBoard inc. ("CBI") acquisition, higher
headcount, expansion of the corporate marketing group and growing investments
as part of our international expansion strategy.
    Earnings from operations amounted to $1.3 million as compared to
$2.5 million for the corresponding period of the previous year. Net earnings
and basic earnings per share for the first quarter amounted to $0.8 million or
$0.05 per share, as compared to $1.7 million or $0.10 per share for the
corresponding quarter of the previous year.
    "We are implementing the growth plan initiated in the previous quarter
and we continue to invest in a structure that will allow us to achieve the
objectives set by this plan. As part of this plan, we successfully completed
the acquisition of Market Velocity and the partnership agreement with
McGraw-Hill Construction as announced yesterday. Market Velocity is a natural
extension of our current revenue model and provides additional competitive
advantage to Power Source On-Line. As for our partnership with McGraw-Hill
Construction, it will certainly enhance the value of MERX's offering, our well
established e-publishing network and open new collaboration opportunities,"
commented Denis Gadbois, President and Chief Executive Officer of Mediagrif
Interactive Technologies. "On the operational side, our major networks
continue to show healthy growth and we are confident that the additional
investments made in the new structure will provide positive results,"
concluded Mr. Gadbois.

    KEY OPERATING HIGHLIGHTS OF Q1 FY2008 AND SUBSEQUENT EVENTS:

    On July 11th, the Company purchased Market Velocity Inc. ("MVI"), the
leading service and technology provider for equipment and trade-in, recycle,
and donation program in the US. MVI is well respected for its expertise in
developing compelling solutions for the trade-in market and will strategically
complement our Parts Exchange division. The acquisition of MVI will solidify
Mediagrif's position as one of the predominant player in this segment and
accelerate its  expansion throughout North America.
    On August 6th, the Company announced a strategic partnership with
McGraw-Hill Construction, the premier provider of construction information and
intelligence in North America and part of The McGraw-Hill Companies (NYSE:  
MHP). MERX and McGraw-Hill Construction will work together on the publishing
of construction project data to provide additional value to both the Building
Products Manufacturers and Contractor markets.

    KEY FINANCIAL HIGHLIGHTS OF Q1 FY2008:

    Revenues for the quarter reached $11.3 million, as compared to
$11.5 million in the corresponding quarter of the previous year. The foreign
exchange fluctuation negatively impacted the quarterly revenues by
$0.4 million.
    For the quarter ended June 30, 2007, total operating expenses amounted to
$7.7 million as compared to $6.9 million in the first quarter of 2006. General
and administrative expenses increased from $2.4 million to $2.8 million mainly
due to the impact of the CBI acquisition and higher headcount. Sales and
marketing expenses increased from $2.0 million last year to $2.5 million due
to the CBI acquisition, growing marketing activities and continued investments
in international operations. Technology expenses slightly increased from
$2.0 million to $2.1 million mainly due to higher headcount.
    As a result, earnings from operations during the quarter amounted to
$1.3 million, as compared to $2.5 million in the corresponding quarter of the
previous year. Quarterly net earnings and basic earnings per share amounted to
$0.8 million and $0.05 respectively as compared to $1.7 million and $0.10 for
the same period of the previous year. Net earnings for the quarter were
affected by the foreign exchange variations and higher expenses, as mentioned
above, but some adjustments to the provision for income taxes also negatively
impacted the results. These adjustments include approximately $0.2 million
related to non-deductible foreign exchange loss on future income taxes.
    As of June 30, 2007, our cash and cash equivalents reached $44.3 million,
an increase from $11.2 million as of March 31, 2007 and also from
$38.2 million as of June 30, 2006. As of June 30, 2007, our short-term
investments amounted to $17.9 million as compared to $53.1 million as of March
31, 2007 and to $20.0 million as of June 30, 2006. Free cash flow, defined as
cash flow from operating activities less capital expenditures, was negative
$1.2 million during the first quarter, as compared to a positive $0.7 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 quarter, the Company purchased 68,600 common shares for
cancellation at an average price of $9.41, for total consideration of
$0.6 million. Since the beginning of the program, the Company purchased
114,700 common shares for cancellation.

    ADDITIONAL INFORMATION:

    Management's Discussion and Analysis of first 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 first quarter FY2008 financial results
conference call can be heard at 2:00 pm EST Tuesday, August 7 at the following
link: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=1892440
    Please note that the Web cast will be available until October 6, 2007 at
the above link.

    To participate to the conference call:

    Local call-in number: (514) 868-2590
    Toll-free call-in number: 1 866 540-8136

    The conference call will also be available for listening until August 14,
2007 at the following number: 1 800 408-3053, access code  3224486#.

    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 14 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)                      June 30,   March 31,
                                                            2007        2007
                                                      (Unaudited)    (Note 1)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                               $           $
    ASSETS
      Cash and cash equivalents                           44,260      11,221
      Short-term investments                              17,903      53,099
      Accounts receivable                                  4,945       4,685
      Tax credits receivable                               1,945       1,672
      Prepaid expenses                                       707         741
      Future income taxes                                    254         254
    -------------------------------------------------------------------------
                                                          70,014      71,672

      Premises and equipment                               2,657       2,644
      Intangible assets                                    4,945       5,054
      Acquired intangible assets                           4,646       4,754
      Goodwill                                            22,261      22,261
      Other assets                                           158         156
      Future income taxes                                    845         831
    -------------------------------------------------------------------------
                                                         105,526     107,372
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES
      Accounts payable and accrued liabilities             4,003       5,425
      Income taxes payable                                 2,427       2,751
      Deferred revenue                                     8,001       8,371
      Current portion of purchase price payable              262         262
      Current portion of deferred gain on licenses           676         676
      Future income taxes                                    366         476
    -------------------------------------------------------------------------
                                                          15,735      17,961

      Deferred gain on licenses                              310         479
    -------------------------------------------------------------------------

                                                          16,045      18,440
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY
      Capital stock (note 6)                              61,022      60,912
      Share purchase options (Note 6)                      2,016       2,803
      Contributed surplus (Note 6)                           735           -
      Retained earnings                                   25,874      25,476
      Accumulated other comprehensive income (loss)
       (Note 7)                                             (166)       (259)
    -------------------------------------------------------------------------
                                                          89,481      88,932
    -------------------------------------------------------------------------

    SUBSEQUENT EVENTS (Note 9)
    -------------------------------------------------------------------------
                                                         105,526     107,372
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    MEDIAGRIF INTERACTIVE TECHNOLOGIES INC.
    CONSOLIDATED STATEMENTS OF RETAINED EARNINGS - UNAUDITED
    FOR THE THREE MONTHS ENDED JUNE 30,

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

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

    Net earnings for the period                              811       1,730

    Premium on purchase of common shares for
     cancellation (note 6)                                  (413)     (2,551)
    -------------------------------------------------------------------------

    Retained earnings - End of period                     25,874      22,424
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    MEDIAGRIF INTERACTIVE TECHNOLOGIES INC.
    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - UNAUDITED
    FOR THE THREE MONTHS ENDED JUNE 30,

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

    Net earnings for the period                              811       1,730

    Other comprehensive income (loss)
      Change in foreign currency translation of
       self-sustaining foreign subsidiaries                 (384)       (270)
      Change in fair value of foreign exchange
       forward contracts designated as cash flow
       hedges, net of related income taxes                   709           -
      Changes in fair value of short-term investments,
       net of related income taxes                           (77)          -
    -------------------------------------------------------------------------

    Other comprehensive income (loss)                        248        (270)
    -------------------------------------------------------------------------

    Comprehensive income (loss)                            1,059       1,459
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    MEDIAGRIF INTERACTIVE TECHNOLOGIES INC.
    CONSOLIDATED STATEMENTS OF ACCUMULATED OTHER COMPREHENSIVE INCOME -
    UNAUDITED
    FOR THE THREE MONTHS ENDED JUNE 30,

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

    Balance - Beginning of period                           (259)       (165)

    Cumulative impact of accounting changes (Note 1)        (155)          -
    Other comprehensive income (loss)                        248        (270)
    -------------------------------------------------------------------------

    Accumulated Other Comprehensive Income (Note 7)         (166)       (435)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    MEDIAGRIF INTERACTIVE TECHNOLOGIES INC.
    CONSOLIDATED STATEMENTS OF EARNINGS - UNAUDITED

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (Canadian dollars in Thousands,                       Three months ended
     except per share amounts)                                  June 30,
                                                            2007        2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                               $           $

    Revenues                                              11,272      11,500

    Cost of Revenues                                       2,268       2,084
    -------------------------------------------------------------------------

    Gross Margin                                           9,004       9,416
    -------------------------------------------------------------------------

    Operating expenses
    General and Administrative                             2,753       2,369
    Sales and Marketing                                    2,454       2,002
    Technology                                             2,144       1,967
    Amortization of acquired intangible assets               295         313
    Stock-based compensation                                  54         222
    -------------------------------------------------------------------------
                                                           7,700       6,873
    -------------------------------------------------------------------------
    Earnings from operations                               1,304       2,543

    Other income (expenses), net (note 3 b))                 381         294
    -------------------------------------------------------------------------

    Earnings before income taxes                           1,685       2,837

    Provision for income taxes                               874       1,107
    -------------------------------------------------------------------------

    Net earnings for the period                              811       1,730
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share
      Basic                                                 0.05        0.10
                                                      ----------- -----------
                                                      ----------- -----------
      Diluted                                               0.05        0.10
                                                      ----------- -----------
                                                      ----------- -----------

    Weighted average number of shares
     outstanding (note 6 c))
      Basic                                           17,732,406  17,706,462
                                                      ----------- -----------
                                                      ----------- -----------
      Diluted                                         17,853,115  18,058,127
                                                      ----------- -----------
                                                      ----------- -----------

    Number of shares outstanding -
     End of period (note 6 b))
      Basic                                           17,726,809  17,476,931
                                                      ----------- -----------
                                                      ----------- -----------


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

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (Canadian dollars in Thousands,                       Three months ended
     except per share amounts)                                  June 30,
                                                            2007        2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                               $           $
    CASH FLOWS FROM

    OPERATING ACTIVITIES
    Net earnings for the period                              811       1,730
    Adjustments for
      Amortization of premises and equipment                 378         422
      Amortization of intangible assets                      695         577
      Amortization of acquired intangible assets             295         313
      Amortization of gains on licenses                     (169)       (169)
      Stock-based compensation                                54         222
      Future income taxes                                   (348)       (209)
    Changes in non-cash working capital items
     (note 3 a))                                          (1,936)     (1,345)
    -------------------------------------------------------------------------

    Cash flows from (used in) operating activities          (220)      1,541
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Business acquisition (note 4)                           (187)          -
    Acquisition of premises and equipment and
     intangible assets                                      (977)       (862)
    Short-term investments, net                           35,214      16,312
    Long-term receivable                                       -         290
    -------------------------------------------------------------------------

    Cash flows from (used in) investing activities        34,050      15,740
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Purchase of common shares for cancellation
     (note 6 b))                                            (645)     (3,942)
    Issuance of common shares (note 6 b))                    237         537
    -------------------------------------------------------------------------

    Cash flows from (used in) financing activities          (408)     (3,405)
    -------------------------------------------------------------------------

    Net increase in cash and cash equivalents             33,422      13,876
    -------------------------------------------------------------------------

    Effect of exchange rate changes on cash and
     cash equivalents                                       (383)       (269)

    Cash and cash equivalents - Beginning of period       11,221      24,545
    -------------------------------------------------------------------------

    Cash and cash equivalents - End of period             44,260      38,152
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

    June 30, 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 mentionned 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
                                                                June 30,
                                                            2007        2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                               $           $

    Revenues
    Joint ventures                                           386         342

    Accounts receivable
    Joint ventures                                           394          91


    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 have been
measured at the exchange amount, which represents the fair market value.


    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
                                                                June 30,
                                                            2007        2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                               $           $

    Decrease (Increase) in
      Accounts receivable                                    423         376
      Tax credits receivable                                (273)       (516)
      Prepaid expenses                                        35         (84)
    Increase (Decrease) in
      Accounts payable and accrued liabilities            (1,425)     (2,365)
      Income taxes                                          (325)        909
      Deferred revenues                                     (371)        335
    -------------------------------------------------------------------------
                                                          (1,936)     (1,345)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    b) Other income consists of the following:

    (Canadian dollars in Thousands)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                          Three months ended
                                                                June 30,
                                                            2007        2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                               $           $

    Interest income                                          683         581
    Interest expense                                         (87)       (106)
    Foreign exchange loss                                   (150)       (115)
    Other                                                    (65)        (65)
    -------------------------------------------------------------------------
                                                             381         294
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    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).


    5) Segmented Information

    Geographical information

    The geographical information is as follows:

    For the three months ended June 30,
                                                2007                    2006
    -------------------------------------------------------------------------
                                            Premises                Premises
                                                 and                     and
                                           equipment,              equipment,
                                          intangible              intangible
                                          assets and              assets and
                                Revenues    goodwill    Revenues    goodwill
                                       $           $           $           $
    -------------------------------------------------------------------------
      Canada                       3,786       8,638       3,948       8,316
      United States                4,719      25,724       4,673      25,124
      Europe                         715           -         895           -
      Asia and other               2,052         147       1,984          43
    -------------------------------------------------------------------------

                                  11,272      34,509      11,500      33,483
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    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 June 30:

                              -----------------------------------------------
                              -----------------------------------------------
                                         Three months ended June 30,
                                                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)                (69)       (232)       (416)     (1,392)

    Exercise of stock
     options (ii)                     53         342          98         628
                              -----------------------------------------------

    Balance before share
     purchase financing
     agreements                   17,786      61,146      17,703      60,304

    Share purchase financing
     agreements (iii)                (59)       (124)       (226)       (477)
                              -----------------------------------------------

    Balance - End of period       17,727      61,022      17,477      59,827
                              -----------------------------------------------
                              -----------------------------------------------


    i) During the three-month period ending June 30, 2007, the Company
purchased 68,600 (2007 - 415,600) of its own shares for cancellation for a
cash consideration totaling $645,224 (2007 - 3,942,147). Capital stock has
been reduced by the average issue price per share before the buy-back of $3.38
(2007 - $3,35) totaling $231,732 (2007 - 1,391,504) and the remaining amounts
have been recorded against the retained earnings.

    ii) During the three-month period ended June 30, 2007, 53,250 (2007 -
98,500) stock options were exercised to purchase 53,250 (2007 - 98,500) common
shares for a cash consideration of $237,275 (2007 - $517,407) or $4.46 per
share (2007 - $5.25).
    The balance of $104,968 (2007 - $110,207) credited to capital stock
represents the stock-based compensation recorded for these options.

    iii) As at June 30, 2007, the Company had a receivable from its employees
of $123,839 (2007 - $476,835) related to share purchase loans to them under
this plan. At the end of the quarter, there were 58,936 shares (2007 -
226,064) outstanding in respect to employee loans for which the market value
was $529,834(2007 - $2,032,315). 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 $0 for the three months ended June 30, 2007       
(2007 - $19,974), in addition to the exercise price of stock options.

    c) The following table summarizes the share purchase option activity :

                                                      -----------------------
                                                      -----------------------
                                                            2008        2007
                                                      -----------------------
                                                      -----------------------
                                                               $           $

    Balance - Beginning of year                            2,802       2,521
    Compensation expense related to stock options             54         222
    Transfer of accumulated compensation cost upon
     exercise of stock options                              (105)       (110)
    Transfer of accumulated compensation cost upon
     forfeiture of stock options                            (735)          -
                                                      -----------------------

    Balance - End of year                                  2,016       2,632
                                                      -----------------------
                                                      -----------------------


    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 quarter ended June 30, 2007, the Company granted 489,500 stock
options to certain directors and employees at a weighted average exercise
price of $9.50. The estimated fair value of the stock options issued under
this grant amounts to $1,758,961, 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            4.6% 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             $3.59                   $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
                                                                June 30,
                                                            2007        2006
                                                      -----------------------
                                                      -----------------------

    Basic weighted average number of shares
     outstanding                                          17,732      17,706

    Dilutive effect of stock options                          76         173

    Dilutive effect of share purchase financing
     agreements                                               45         179
                                                      -----------------------

    Diluted weighted average number of shares
     outstanding                                          17,853      18,058
                                                      -----------------------
                                                      -----------------------


    Options to purchase 1,070,200 shares (2007 - 516,000) at a weighted
average price of $9.92 per share (2007 - $9.84) were outstanding during the
three-month period ending June 30, 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:

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

    Change in foreign currency translation of
     self-sustaining foreign subsidiaries                   (643)       (435)
    Change in fair value of foreign exchange
     forward contracts designated as cash flow
     hedges, net of related income taxes                     465           -
    Changes in fair value of short-term investments,
     net of related income taxes                              12           -
    -------------------------------------------------------------------------

                                                            (166)       (435)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    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.

    9) Subsequent events

    On July 11, 2007, the Company purchased Market Velocity Inc. ("MVI"), the
leading service and technology provider for equipment trade-in recycle, and
donation program in the US. MVI has offices in Duluth, Georgia and Charlotte,
North Carolina. The total purchase price was approximately $US 5.3 million
(CA$ 5.6 million).
    
    %SEDAR: 00014324EF




For further information:

For further information: Catherine Allard, Chief Financial Officer,
Mediagrif Interactive Technologies Inc., (450) 677-8797, ext. 2233,
callard@mediagrif.com; Kathy Roberge, Director, Communications, Mediagrif
Interactive Technologies Inc., (450) 677-8797, ext. 3014,
kroberge@mediagrif.com


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