[LETTERHEAD OF COMTEX]
RELEASE: IMMEDIATE
FOR: COMTEX NEWS NETWORK
(Symbol: CMTX)
CONTACT: AMBER GORDON
agordon@comtex.com
703-797-8011
COMTEX REPORTS THIRD QUARTER FISCAL 2006 FINANCIAL RESULTS
ALEXANDRIA, VA, May 15, 2006- COMTEX NEWS NETWORK, INC. (OTC BB: CMTX), a
leading provider of economically useful electronic real-time news, content and
market alerts, today announced financial results for the quarter and nine months
ended March 31, 2006.
Comtex reported approximately $2 million in revenue for the third
quarter of fiscal 2006 compared to $1.9 million for third quarter fiscal 2005.
For the nine months ended March 31, 2006, Comtex reported revenue of $5.9
million compared to $6 million for the comparative period of the previous year.
The minor increases and decreases in revenue levels are primarily the result of
increased business from certain clients and business consolidations among other
clients.
For the three and nine month periods ended March 31, 2006, Comtex
reported operating losses of ($108,000) and ($166,000), respectively, versus
operating income of $109,000 and $400,000 for the three and nine months ended
March 31, 2005. Comtex reported a net loss of ($125,000), or ($0.01) per share,
for third quarter fiscal 2006, versus net income of $82,000, or $0.01 per share,
for third quarter fiscal 2005. For the nine months ended March 31, 2006 and
2005, respectively, Comtex reported a net loss of ($247,000), or ($0.02) per
share versus net income of $298,000, or $0.02 per share.
The operating and net losses reported by Comtex for the three and nine
month periods ended March 31, 2006 primarily result from the effects of charges
of approximately $319,000 and $757,000 respectively, from reporting stock-based
compensation in accordance with Statement of Financial Accounting Standard No.
123(R), which requires the issuance of stock options be accounted for using
specific new regulations. Comtex adopted this standard on its effective date,
July 1, 2005, and therefore the comparative periods from the prior year do not
reflect such charges.
For the nine month periods ended March 31, 2006 and 2005, EBITDA
excluding the effects of stock-based compensation (as defined and explained in
the accompanying note to the table below) decreased to $832,000 from $905,000.
This change is reflective of decreases in gross profit margins.
"Comtex introduced the new `CSTA(R)Direct' product during the past
quarter and we continue to work to maximize our financial results while
maintaining a focus on new product development and providing superior, targeted
news and financial data products to all our clients," said Chip Brian, Comtex's
President and COO.
More...
Page 2
Comtex Announces 3rd Quarter Financial Results
May 15, 2006
ABOUT COMTEX
Comtex (WWW.COMTEX.COM) provides real-time news, SMARTREND(R) ALERTS and
economically useful information to businesses whose customers need more than
just facts. Comtex customers receive select content from key sources which is
further enhanced with stock tickers and an extended lexicon of relevant terms.
With a specialization in the financial news and content marketplace, Comtex
receives, enhances, combines and filters news and content received from national
and international news bureaus, agencies and publications, and distributes more
than one million total stories per day. Comtex's state-of-the-art technology
delivers this RELEVANT content and RELIABLE service in REAL-TIME. Comtex (OTC
BB: CMTX) has offices in New York City and Alexandria, Virginia.
SMARTREND(R) AND CSTA(R) ARE REGISTERED TRADEMARKS OF COMTEX NEWS NETWORK, INC.
PLEASE NOTE: Except for the historical information contained herein, this press
release contains forward-looking statements within the meaning of Section 21E of
the Securities and Exchange Act of 1934, as amended, that involve a number of
risks and uncertainties. These forward-looking statements may be identified by
reference to a future period by use of forward-looking terminology such as
"anticipate," "expect," "could," "intend," "may" and other words of a similar
nature. These statements involve risks and uncertainties that could cause actual
results to differ materially from those contemplated herein, including the
occurrence of unanticipated events or circumstances relating to the fact that
Comtex is in a highly competitive industry subject to rapid technological,
product and price changes. Other factors include the possibility that demand for
the Company's products may not occur or continue at sufficient levels, changing
global economic and competitive conditions, technological risks and other risks
and uncertainties, including those detailed in the Company's filings with the
Securities and Exchange Commission. Comtex undertakes no obligation to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.
FINANCIAL TABLE FOLLOWS
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Page 3
Comtex Announces 3rd Quarter Financial Results
May 15, 2006
Comtex News Network, Inc.
Selected Financial Data
(unaudited)
(amounts in thousands, except per share amounts)
Three Months Ended Nine Months Ended
March 31 March 31
----------------------- -----------------------
2006 2005 2006 2005
-------- -------- -------- --------
Revenues $ 1,967 $ 1,927 $ 5,896 $ 6,000
Operating (Loss) / Income (108) 109 (166) 400
Net (Loss) / Income $ (125) $ 82 $ (247) $ 298
-------- -------- -------- --------
Net (Loss) / Earnings Per Share
Basic and Diluted $ (0.01) $ 0.01 $ (0.02) $ 0.02
======== ======== ======== ========
Weighted Avg. # Shares:
Basic 13,700 13,600 13,633 13,600
======== ======== ======== ========
Diluted 13,700 14,746 13,633 14,736
======== ======== ======== ========
Reconciliation to EBITDA
(excluding the effects of stock-based
compensation):
Net (Loss) / Income $ (125) $ 82 $ (247) $ 298
Stock-based compensation 319 -- 757 --
Depreciation & Amortization 60 147 242 505
Interest/Other Expense 17 27 102 64
Income Taxes -- -- 16 --
======== ======== ======== ========
EBITDA $ 271 $ 256 $ 832 $ 905
PLEASE NOTE: EBITDA consists of earnings before stock-based compensation,
interest and other expense, interest and other income, income taxes,
depreciation and amortization and impairment charges. EBITDA is not a term
defined by generally accepted accounting principles, and as a result, our
measure of EBITDA might not be comparable to similarly titled measures used by
other companies. However, we believe that EBITDA is relevant and useful
information, which is often reported and widely used by analysts, investors and
other interested parties in our industry. Accordingly, we are disclosing this
information to permit a more comprehensive analysis of our operating
performance.
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