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Copernic Inc. Announces 2010 Second Quarter Results

Quebec City, Canada, August 10, 2010 - Copernic Inc., (the “Company”), (NASDAQ: CNIC), a leading software development company in the technology sector, specializing in internet, desktop and mobile search products, today reported its financial results for the second quarter ended June 30, 2010 (‘‘Q2 2010’’). Unless otherwise stated, all figures in this release are in US dollars.

Financial Highlights

§	Revenues from continuing operations were $0.41 million for Q2 2010, the same as for Q2 2009.

§	Gross margin from continuing operations in Q2 2010 was 98% compared to 96% for Q2 2009.

Expenses from continuing operations in the second quarter of 2010 were at $0.87 million compared to 1.2 million in the comparable period in 2009. During Q2 2010, an amount of $0.12 million was spent in relation with potential business acquisitions. Excluding these fees, expenses for Q2 2010 amounted to 0.75 million. The Company continues its effort to reduce its costs and maintains its cost reduction plan.

§	Net loss from continuing operations in Q2 2010 was $0.5 million ($0.22 per share) compared to a net loss of $0.38 million ($0.18 per share) for the same period in 2009.

§	Liquidities sufficient to meet normal operating requirements until end of 2010 were at $2.5 million as of June 30, 2010, compared to $4.8 million as of June 30, 2009.

Recent Highlights

As announced on March 26, 2010, Copernic Inc. entered into a letter of intent with Fanotech Manufacturing Group (‘‘Fanotech’’) with respect to the proposed acquisition by Copernic of the assets of Fanotech Manufacturing Group comprised of Fanotech Enviro Inc., Fanotech Waste Equipment Inc. and 1099958 Ontario Limited currently operating as FanoCore. This transaction was conditional amongst other things to the closing of the Sunbay transaction and the private placement previously announced on January 29, 2010, which did not closed on April 30, as previously agreed. Therefore the Company announced on June 3, 2010 that discussions involving the acquisition of Fanotech, Sunbay Canada and the private placement were terminated.

On June 30, 2009, the Company concluded a $5,000,000 transaction for the disposal of its search / media segment with Empresario. The payment terms of this transaction were renegotiated and signed on November 12, 2009 to 36 equal monthly instalments of the greater of $100,000 or 85% of the revenues at an annual interest rate of 13.6%, compounded monthly, and calculated on the outstanding balance of sale. During Q1 and Q2 2010, the purchaser was $300,000 short on the $600,000 payments scheduled for these quarters and was in default in his obligations. Based on this failure to pay, management renegotiated a new agreement with the purchaser. On August 10, 2010, Copernic and Empresario signed an agreement to convert the existing balance of sale into a debenture which shall mature on August 10, 2011. The debenture will not bear interest until maturity or upon default and no instalment payments would be required to be made during its term. Upon maturity, if the outstanding amounts due under the debenture are not paid in full, the

Company will have the right to require the liquidation of Empresario. Under the terms of the debenture, Empresario has the right to redeem the debenture for an amount equal to $2,500,000 if redeemed by February 10, 2011, or for an amount equal to $3,000,000 if redeemed after February 10, 2011 but prior to August 10, 2011 or for an amount of all the outstanding principal if redeemed thereafter. Interest at the rate of 13.6% will be earned on the outstanding balance from the maturity date or upon a default. The new debenture has a fair market value of $2,835,000 while the book value of the balance of sale was $4,273,287. A write down of $1,438,287 was accounted for in June 2010.

“Unfavorable economic conditions have also impacted on Empresario’s ability to pay, thereby necessitating a change of payment terms offset by an improvement in our security instruments. However in the last 12 months, Empresario did manage to pay $700,000. In addition, our unfavourable sales results continue to mitigate against our cost improvement programs, leading management to explore other alternatives to improve shareholder value”, stated Mr. Marc Ferland, President and CEO of Copernic.

About Copernic Inc.

Copernic Inc. specializes in developing, marketing and selling cutting-edge search technology, providing innovative home and business software products and solutions for desktop, web and mobile users, through its online properties www.copernic.com and www.mycopernic.com. With its award winning Copernic Desktop Search software search engine product, the Company brings the power of a sophisticated, yet easy-to-use search engine to the user's PC.

More information can be found at www.copernic.com.

Statements contained in this press release, which are not historical facts, are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties that can cause actual results to differ materially from estimated results. Such risks and uncertainties are detailed in the Company’s filings with the Securities and Exchange Commission and the Ontario Securities Commission. The Company expressly disclaims any intent or obligation to update any description of the scope, focus or subject matter of the statements in this press release.

FOR INFORMATION PLEASE CONTACT:

Copernic Inc.

Jean-Rock Fournier, CA

Executive Vice President and Chief Financial Officer

Telephone Toll Free: (877) 289-4682

Telephone: (418) 527-0528 ext. 1271

Email: jrfournier@copernic.com

Website: www.copernic.com

Copernic Inc.
Condensed Consolidated Balance Sheet

(expressed in U.S. dollars and in accordance with generally accepted accounting principles in Canada)	As at June 30, 2010			As at December 31, 2009
	(unaudited)			(audited)
		$			$
Assets
Current assets
Cash		594,039			465,949
Temporary investments		1,956,330			3,504,930
Accounts receivable		272,831			256,110
Income taxes receivable		213,305			337,802
Balance of sale receivable		-			655,131
Prepaid expenses		323,945			118,149
Other assets		2,900,637			-
		6,261,087			5,338,071
Balance of sale receivable		-			3,694,060
Property and equipment		93,333			115,110
Intangible assets		165,859			202,597
Goodwill		3,362,003			3,362,003
		9,882,282			12,711,841
Liabilities
Current liabilities
Accounts payable and accrued liabilities		661,424			1,010,140
Deferred revenue		122,723			103,668
Deferred rent		569			1,534
Current portion of obligations under capital leases		15,495			50,630
		800,211			1,165,972
Obligations under capital leases		10,591			7,906
Future income taxes		36,577			45,146
Commitments
Shareholders’ equity
Capital stock
Authorized
Unlimited number of common shares, no par value
Issued and outstanding
2,091,913 (2,091,437 as at December 31, 2009) common shares		96,557,218			96,556,485
Contributed Surplus		5,928,600			5,853,737
Accumulated other comprehensive income		561,137			561,137
Accumulated deficit		(94,012,052	)		(91,478,542	)
		9,034,903			11,492,817
		9,882,282			12,711,841

Copernic Inc.
Condensed Consolidated Statements of Operations
(unaudited)
(expressed in U.S. dollars and in accordance with generally accepted accounting principles in Canada)

	For the six months ended June 30,						For the three months ended June 30,
	2010			2009			2010			2009
		$			$			$			$
Revenues		724,692			926,790			413,057			413,360
Cost of revenues		17,181			29,443			8,939			16,243
Gross Margin		707,511			897,347			404,118			397,117
Expenses
Marketing, sales and services		298,469			285,150			144,175			120,912
General and administration		1,170,976			1,146,610			570,164			531,932
Product development and technical support		461,910			556,941			186,983			280,367
Amortization of property and equipment		31,247			54,231			13,817			28,235
Amortization of intangible assets		38,837			355,864			19,534			178,106
Gain on disposal of property and equipment		(2,827	)		-			(2,827	)		-
Gain on disposal of intangible assets		(9,960	)		-			(9,960	)		-
Restructuring charges		-			25,622			-			5,210
Interest and other income		(223,947	)		(23,682	)		(72,785	)		(9,263	)
Gain on disposal of an investment		-			(169,239	)		-			-
Loss on foreign exchange		41,614			10,008			22,479			17,993
		1,806,319			2,241,505			871,580			1,153,492
Loss from continuing operations before income taxes and discontinued operations		(1,098,808	)		(1,344,158	)		(467,462	)		(756,375	)

Current income taxes		-			1,498			-			-
Future income taxes		(8,569	)		(558,645	)		(4,284	)		(379,691	)
		(8,569	)		(557,147	)		(4,284	)		(379,691	)
Loss from continuing operations		(1,090,239	)		(787,011	)		(463,178	)		(376,684	)
Results of discontinued operations, net of income taxes		(1,443,271	)		4,424,926			(1,443,271	)		4,144,769
Net income (loss) for the period		(2,533,510	)		3,637,915			(1,906,449	)		3,768,085
Basic and diluted loss / share - continuing operations		(0.52	)		(0.38	)		(0.22	)		(0.18	)
Basic and diluted earnings (loss) / share - discontinued operations		(0.69	)		2.12			(0.69	)		1.98
Basic and diluted net earnings (loss) / share		(1.21	)		1.74			(0.91	)		1.80

Copernic Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(expressed in U.S. dollars and in accordance with generally accepted accounting principles in Canada)


	For the six months ended June 30,						For the three months ended June 30,
	2010			2009			2010			2009
		$			$			$			$
Cash flows from (used for)
Operating activities
Loss from continuing operations		(1,090,239	)		(787,011	)		(463,178	)		(376,684	)
Adjustments for
Amortization of property and equipment		31,247			54,231			13,817			28,235
Amortization of intangible assets		38,837			355,864			19,534			178,106
Employee stock-based compensation		74,863			55,226			53,651			29,681
Gain on disposal of an investment		-			(169,239	)		-			-
Gain on disposition of intangible		(9,960	)		-			(9,960	)		-
Future income taxes		(8,569	)		(558,645	)		(4,284	)		(379,691	)
Accreted interest on balance of sale receivable		(217,603	)		-			(70,413	)		-
Unrealized loss (gain) on foreign exchange		164			3,706			(955	)		5,744
Net change in non-cash working capital items		(428,646	)		41,371			(410,316	)		(165,588	)
Cash used for operating activities from continuing operations		(1,609,906	)		(1,004,497	)		(872,104	)		(680,197	)
Cash provided by (used for) discontinued operations		(4,984	)		583,704			(4,984	)		303,092
Cash used for operations		(1,614,890	)		(420,793	)		(877,088	)		(377,105	)

Investing activities
Increase in other assets		(65,637	)		-			(65,637	)		-
Proceeds on the disposal of an investment		-			169,239			-			-
Proceeds on the disposal of an intangible		9,960			-			9,960			-
Purchase of intangible assets		(2,099	)		(3,224	)		(326	)		(2,622	)
Purchase of property and equipment		(3,357	)		(23,474	)		(1,007	)		(12,549	)
Net decrease in temporary investments		-			3,005,227			-			4,006,563
Cash provided by (used for) continuing operations		(61,133	)		3,147,768			(57,010	)		3,991,392
Cash provided by discontinued operations		293,507			-			48,390			-
Cash provided by (used for) investing activities		232,374			3,147,768			(8,620	)		3,991,392

Financing activities
Issuance of capital stock		733			-			-			-
Repayment of obligations under capital leases		(38,727	)		(27,543	)		(20,217	)		(14,056	)
Cash used for financing activities		(37,994	)		(27,543	)		(20,217	)		(14,056	)
Net change in cash and cash equivalents during the period		(1,420,510	)		2,699,432			(905,925	)		3,600,231
Cash and cash equivalents – Beginning of period		3,970,879			2,067,705			3,456,294			1,166,906
Cash and cash equivalents – End of period		2,550,369			4,767,137			2,550,369			4,767,137
Cash and cash equivalents comprise:
Cash		594,039			766,782			594,039			766,782
Temporary investments		1,956,330			4,000,355			1,956,330			4,000,355
		2,550,369			4,767,137			2,550,369			4,767,137
Supplemental cash flow information - continuing operations
Cash paid for interest		3,206			4,999			1,539			2,436
Cash paid for income taxes		-			1,498			-			-

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