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Mediagrif Reports Q3 FY2008 Financial Results
Feb 12, 2008 (12:02 PM EST)


LONGUEUIL, QC, Feb. 12 /PRNewswire-FirstCall/ - Mediagrif Interactive Technologies Inc. , 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, 2008.

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. www.brokerforum.com www.powersourceonline.com www.telecomfinders.com www.globalwinespirits.com www.polygon.net www.merx.com www.mediagrif.com 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 , , , and . Mediagrif also owns MERX, , 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 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.

CONTACT: Mediagrif Interactive Technologies Inc.: Catherine Allard, Chief callard@mediagrif.comFinancial Officer, (450) 677-8797 ext. 2133, ; KathyRoberge, Director, Communications, (450) 677-8797 ext. 3014,