----

----

|   |   |
|--------|--------|

----

----

| Copernic Inc.                                                 |   |   |        |   |   |   |
|---------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| Consolidated Balance Sheets                                   |   |   |        |   |   |   |
| As at December 31, 2009 and 2008                              |   |   |        |   |   |   |
|                                                          |   |   |        |   |   |   |
| (expressed in U.S. dollars)                                   |   | 2009   |        |   | 2008   |   |
|                                                          |   | $      |        |   |   | $      |   |   |
| Assets                                                        |   |   |        |   |   |   |   |   |
| Current assets                                                |   |   |        |   |   |   |   |   |
| Cash                                                          |   |   | 465,949     |   |   |   | 1,066,817 |   |
| Temporary investments (Note 5)                                |   |   | 3,504,930   |   |   |   | 4,006,115 |   |
| Accounts receivable  (Note 6)                       |   |   | 256,110     |   |   |   | 907,560 |   |
| Income taxes receivable                                       |   |   | 337,802     |   |   |   | 110,121 |   |
| Balance of sale receivable (Note 4)                           |   |   | 655,131     |   |   |   | - |   |
| Prepaid expenses                                              |   |   | 118,149     |   |   |   | 170,864 |   |
|                                                          |   |   | 5,338,071   |   |   |   | 6,261,477 |   |
| Balance of sale receivable (Note 4)                           |   |   | 3,694,060   |   |   |   | - |   |
| Property and equipment  (Note 7)                         |   |   | 115,110     |   |   |   | 240,094 |   |
| Intangible assets  (Note 8)                         |   |   | 202,597     |   |   |   | 918,485 |   |
| Goodwill  (Note 8)                                  |   |   | 3,362,003   |   |   |   | 3,362,003 |   |
|                                                          |   |   | 12,711,841  |   |   |   | 10,782,059 |   |
| Liabilities                                                   |   |   |        |   |   |   |   |   |
| Current liabilities                                           |   |   |        |   |   |   |   |   |
| Accounts payable and accrued liabilities  (Note 9)  |   |   | 1,010,140   |   |   |   | 991,142 |   |
| Deferred revenue                                              |   |   | 103,668     |   |   |   | 156,789 |   |
| Deferred rent                                                 |   |   | 1,534       |   |   |   | 4,805 |   |
| Current portion of obligations under capital leases (Note 10) |   |   | 50,630      |   |   |   | 57,267 |   |
|                                                          |   |   | 1,165,972   |   |   |   | 1,210,003 |   |
| Obligations under capital leases (Note 10)                    |   |   | 7,906       |   |   |   | 39,992 |   |
| Future income taxes (Note 11)                                 |   |   | 45,146      |   |   |   | 259,848 |   |
| Commitments (Note 12)                                         |   |   |        |   |   |   |   |   |
| Shareholders’ Equity                                    |   |   |        |   |   |   |   |   |
| Capital stock (Note 13)                                       |   |   |        |   |   |   |   |   |
| Authorized                                                    |   |   |        |   |   |   |   |   |
| Unlimited number of common shares, no par value               |   |   |        |   |   |   |   |   |
| Issued and outstanding                                   |   |   |        |   |   |   |   |   |
| 2,091,437 common shares                                       |   |   | 96,556,485  |   |   |   | 96,556,485 |   |
| Contributed Surplus                                           |   |   | 5,853,737   |   |   |   | 5,747,028 |   |
| Accumulated other comprehensive income                        |   |   | 561,137     |   |   |   | 561,137 |   |
| Accumulated deficit                                           |   |   | (91,478,542 | )      |   |   | (93,592,434 | ) |
|                                                          |   |   | 11,492,817  |   |   |   | 9,272,216 |   |
|                                                          |   |   | 12,711,841  |   |   |   | 10,782,059 |   |
|                                                          |   |   |        |   |   |   |   |   |
| See accompanying notes.                                       |   |   |        |   |   |   |   |   |

----

| Copernic Inc.                                                                           |   |   |       |   |   |   |       |   |   |
|-----------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
| Consolidated Statements of Operations                                                   |   |   |       |   |   |   |       |   |   |
| For the years ended December 31                                                         |   |   |       |   |   |   |       |   |   |
|                                                                                    |   |   |       |   |   |   |       |   |   |
| (expressed in U.S. dollars)                                                             |   |   |       |   |   |   |       |   |   |
|                                                                                    |   | 2009   |       |   | 2008   |   |       | 2007   |   |
|                                                                                    |   | $      |       |   |   | $      |       |   |   | $ |   |   |
| Revenues (Note 14)                                                                 |   |   | 1,653,026  |   |   |   | 2,218,264  |   |   |   | 1,702,256 |   |
| Cost of revenues                                                                        |   |   | 62,304     |   |   |   | 105,338    |   |   |   | 106,511 |   |
| Gross Margin                                                                            |   |   | 1,590,722  |   |   |   | 2,112,926  |   |   |   | 1,595,745 |   |
| Expenses                                                                                |   |   |       |   |   |   |       |   |   |   |   |   |
| Marketing, sales and services                                                           |   |   | 625,243    |   |   |   | 386,486    |   |   |   | 806,791 |   |
| General and administration                                                              |   |   | 2,329,947  |   |   |   | 2,907,964  |   |   |   | 4,691,572 |   |
| Product development and technical support (Note 15)                                     |   |   | 1,125,102  |   |   |   | 1,836,986  |   |   |   | 2,198,673 |   |
| Amortization of property and equipment                                             |   |   | 117,909    |   |   |   | 89,169     |   |   |   | 138,515 |   |
| Amortization of intangible assets                                                       |   |   | 720,729    |   |   |   | 980,285    |   |   |   | 1,941,771 |   |
| Write-downs and settlement costs (Note 16)                                              |   |   | 10,924     |   |   |   | 4,381,840  |   |   |   | 9,300,001 |   |
| Restructuring charges (Note 17)                                                         |   |   | 33,677     |   |   |   | 101,012    |   |   |   | - |   |
| Interest and other income                                                               |   |   | (333,979   | )      |   |   | (162,880   | )      |   |   | (401,183 | ) |
| Gain on disposal of an investment (Note 16)                                             |   |   | (169,239   | )      |   |   | -          |   |   |   | - |   |
| Loss (gain) on foreign exchange                                                         |   |   | 70,772     |   |   |   | (24,440    | )      |   |   | 115,071 |   |
|                                                                                    |   |   | 4,531,085  |   |   |   | 10,496,422 |   |   |   | 18,791,211 |   |
|                                                                                    |   |   |       |   |   |   |       |   |   |   |   |   |
| Loss from continuing operations before income taxes and discontinued operations         |   |   | (2,940,363 | )      |   |   | (8,383,496 | )      |   |   | (17,195,466 | ) |
|                                                                                    |   |   |       |   |   |   |       |   |   |   |   |   |
| Current income taxes                                                                    |   |   | 1,498      |   |   |   | 522        |   |   |   | 1,479 |   |
| Future income taxes                                                                     |   |   | (656,347   | )      |   |   | (854,914   | )      |   |   | (1,735,769 | ) |
| Recovery of income taxes (Note 11)                                                      |   |   | (654,849   | )      |   |   | (854,392   | )      |   |   | (1,734,290 | ) |
| Loss from continuing operations                                                         |   |   | (2,285,514 | )      |   |   | (7,529,104 | )      |   |   | (15,461,176 | ) |
| Results of discontinued operations, net of income taxes (Note 4)                        |   |   | 4,399,406  |   |   |   | 1,038,400  |   |   |   | 1,030,350 |   |
| Net earnings (loss) for the year                                                        |   |   | 2,113,892  |   |   |   | (6,490,704 | )      |   |   | (14,430,826 | ) |
| Basic and diluted loss / share - continuing operations   (Note 18)       |   |   | (1.09      | )      |   |   | (3.60      | )      |   |   | (7.43 | ) |
| Basic and diluted earnings / share - discontinued operations   (Note 18) |   |   | 2.10       |   |   |   | 0.50       |   |   |   | 0.50 |   |
| Basic and diluted net earnings (loss) / share                                           |   |   | 1.01       |   |   |   | (3.10      | )      |   |   | (6.93 | ) |
|                                                                                    |   |   |       |   |   |   |       |   |   |   |   |   |
| See accompanying notes.                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |

----

| Copernic Inc.                                         |   |                  |      |   |         |   |       |                |   |   |                                |   |   |               |    |             |        |   |
|-------------------------------------------------------|--------|-----------------------|-----------|--------|--------------|--------|------------|---------------------|--------|--------|-------------------------------------|--------|--------|--------------------|---------|------------------|-------------|--------|
| Consolidated Statements of Shareholders’ Equity |   |                  |      |   |         |   |       |                |   |   |                                |   |   |               |    |             |
| For the years ended December 31                       |   |                  |      |   |         |   |       |                |   |   |                                |   |   |               |    |             |
|                                                  |   |                  |      |   |         |   |       |                |   |   |                                |   |   |               |    |             |        |   |
| (expressed in U.S. dollars)                           |   |                  |      |   |         |   |       |                |   |   |                                |   |   |               |    |             |        |   |
|                                                  |   |                  |      |   |         |   |       |                |   |   |                                |   |   |               |    |             |        |   |
|                                                  |   | Number ofCommonShares |      |   | CommonShares |   |       | Contributed Surplus |   |   | AccumulatedOtherComprehensiveIncome |   |   | AccumulatedDeficit |    |             | Total       |   |
|                                                  |   |                  |      |   | $            |   |       |                | $      |   |                                |   | $      |               |    |             | $           |   |   |   | $ |   |   |
|                                                  |   |                  |      |   |         |   |       |                |   |   |                                |   |   |               |    |             |        |   |   |   |   |   |   |
| Balance, December 31, 2006                            |   |                  | 2,049,049 |   |         |   | 95,298,234 |                |   |   | 5,706,183                           |   |   |               | 561,137 |             |        |   | (72,670,904 | ) |   |   | 28,894,650 |   |
| Stock-based compensation                              |   |                  |      |   |         |   |       |                |   |   | 407,076                             |   |   |               |    |             |        |   |   |   |   |   | 407,076 |   |
| Comprehensive income:                                 |   |                  |      |   |         |   |       |                |   |   |                                |   |   |               |    |             |        |   |   |   |   |   |   |   |
| Net loss for the year                                 |   |                  |      |   |         |   |       |                |   |   |                                |   |   | (14,430,826        | )       |             | (14,430,826 | )      |
| Comprehensive income                                  |   |                  |      |   |         |   |       |                |   |   |                                |   |   |               |    |             |        |   | (14,430,826 | ) |   |   | (14,430,826 | ) |
| Options exercised                                     |   |                  | 42,388    |   |         |   | 1,258,251  |                |   |   | (581,993                            | )      |   |               |    |             |        |   |   |   |   |   | 676,258 |   |
| Options which conditions have changed (Note 13)       |   |                  |      |   |         |   |       |                |   |   | 253,236                             |   |   |               |    |             |        |   |   |   |   |   | 253,236 |   |
|                                                  |   |                  |      |   |         |   |       |                |   |   |                                |   |   |               |    |             |        |   |   |   |   |   |   |   |
| Balance, December 31, 2007                            |   |                  | 2,091,437 |   |         |   | 96,556,485 |                |   |   | 5,784,502                           |   |   |               | 561,137 |             |        |   | (87,101,730 | ) |   |   | 15,800,394 |   |
| Stock-based compensation                              |   |                  |      |   |         |   |       |                |   |   | (37,474                             | )      |   |               |    |             |        |   |   |   |   |   | (37,474 | ) |
| Comprehensive income:                                 |   |                  |      |   |         |   |       |                |   |   |                                |   |   |               |    |             |        |   |   |   |   |   |   |   |
| Net loss for the year                                 |   |                  |      |   |         |   |       |                |   |   |                                |   |   | (6,490,704         | )       |  (6,490,704 | )           |
| Comprehensive income                                  |   |                  |      |   |         |   |       |                |   |   |                                |   |   |               |    |             |        |   | (6,490,704 | ) |   |   | (6,490,704 | ) |
|                                                  |   |                  |      |   |         |   |       |                |   |   |                                |   |   |               |    |             |        |   |   |   |   |   |   |   |
| Balance, December 31, 2008                            |   |                  | 2,091,437 |   |         |   | 96,556,485 |                |   |   | 5,747,028                           |   |   |               | 561,137 |             |        |   | (93,592,434 | ) |   |   | 9,272,216 |   |
| Stock-based compensation                              |   |                  |      |   |         |   |       |                |   |   | 106,709                             |   |   |               |    |             |        |   |   |   |   |   | 106,709 |   |
| Comprehensive income:                                 |   |                  |      |   |         |   |       |                |   |   |                                |   |   |               |    |             |        |   |   |   |   |   |   |   |
| Net earnings for the year                             |   |                  |      |   |         |   |       |                |   |   |                                |   |   | 2,113,892          |    |  2,113,892  |        |
| Comprehensive income                                  |   |                  |      |   |         |   |       |                |   |   |                                |   |   |               |    |             |        |   | 2,113,892 |   |   |   | 2,113,892 |   |
|                                                  |   |                  |      |   |         |   |       |                |   |   |                                |   |   |               |    |             |        |   |   |   |   |   |   |   |
| Balance, December 31, 2009                            |   |                  | 2,091,437 |   |         |   | 96,556,485 |                |   |   | 5,853,737                           |   |   |               | 561,137 |             |        |   | (91,478,542 | ) |   |   | 11,492,817 |   |
|                                                  |   |                  |      |   |         |   |       |                |   |   |                                |   |   |               |    |             |        |   |   |   |   |   |   |   |
| See accompanying notes.                               |   |                  |      |   |         |   |       |                |   |   |                                |   |   |               |    |             |        |   |   |   |   |   |   |   |

----

| Copernic Inc.                                                                                       |   |   |       |   |   |   |       |   |   |
|-----------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
| Consolidated Statements of Cash Flows                                                               |   |   |       |   |   |   |       |   |   |
| For the years ended December 31                                                                     |   |   |       |   |   |   |       |   |   |
|                                                                                                |   |   |       |   |   |   |       |   |   |
| (expressed in U.S. dollars)                                                                         |   |   |       |   |   |   |       |   |   |
|                                                                                                |   | 2009   |       |   | 2008   |   |       | 2007   |   |
|                                                                                                |   | $      |       |   |   | $      |       |   |   | $ |   |   |
| Cash flows from (used for)                                                                          |   |   |       |   |   |   |       |   |   |   |   |   |
| Operating activities                                                                                |   |   |       |   |   |   |       |   |   |   |   |   |
| Loss from continuing operations                                                                     |   |   | (2,285,514 | )      |   |   | (7,529,104 | )      |   |   | (15,461,176 | ) |
| Adjustments for                                                                                     |   |   |       |   |   |   |       |   |   |   |   |   |
| Amortization of property and equipment                                                              |   |   | 117,909    |   |   |   | 89,169     |   |   |   | 138,515 |   |
| Amortization of intangible assets                                                                   |   |   | 720,729    |   |   |   | 980,285    |   |   |   | 1,941,771 |   |
| Employee stock-based compensation                                                                   |   |   | 106,709    |   |   |   | 8,249      |   |   |   | 617,723 |   |
| Write‐down of  goodwill (Note 16)                                                   |   |   | -          |   |   |   | 3,995,000  |   |   |   | 8,060,841 |   |
| Write‐down of  intangible assets (Note 16)                                          |   |   | 1,462      |   |   |   | 343,768    |   |   |   | 1,139,160 |   |
| Write‐down of investment                                                                      |   |   | -          |   |   |   | -          |   |   |   | 150,000 |   |
| Write‐down of  property and equipment (Note 16)                                     |   |   | 9,462      |   |   |   | 43,072     |   |   |   | - |   |
| Gain on disposal of an investment                                                                   |   |   | (169,239   | )      |   |   | -          |   |   |   | - |   |
| Future income taxes                                                                                 |   |   | (656,347   | )      |   |   | (854,914   | )      |   |   | (1,735,769 | ) |
| Accreted interest on balance of sale receivable                                                     |   |   | (200,823   | )      |   |   | -          |   |   |   | - |   |
| Unrealized loss (gain) on foreign exchange                                                          |   |   | 10,529     |   |   |   | (25,201    | )      |   |   | 12,813 |   |
| Net change in non-cash working capital items (Note 19)                                              |   |   | 130,297    |   |   |   | (391,011   | )      |   |   | 65,905 |   |
| Cash used for operating activities from continuing operations                                       |   |   | (2,214,826 | )      |   |   | (3,340,687 | )      |   |   | (5,070,217 | ) |
| Cash provided by discontinued operations (Note 4)                                                   |   |   | 1,051,219  |   |   |   | 1,620,116  |   |   |   | 3,536,074 |   |
| Cash used for operations                                                                            |   |   | (1,163,607 | )      |   |   | (1,720,571 | )      |   |   | (1,534,143 | ) |
|                                                                                                |   |   |       |   |   |   |       |   |   |   |   |   |
|                                                                                                |   |   |       |   |   |   |       |   |   |   |   |   |
|                                                                                                |   |   |       |   |   |   |       |   |   |   |   |   |
| Investing activities                                                                                |   |   |       |   |   |   |       |   |   |   |   |   |
| Proceeds on the disposal of an investment                                                           |   |   | 169,239    |   |   |   | -          |   |   |   | - |   |
| Purchase of intangible assets                                                                       |   |   | (14,373    | )      |   |   | (5,054     | )      |   |   | (68,433 | ) |
| Purchase of property and equipment                                                                  |   |   | (30,627    | )      |   |   | (15,879    | )      |   |   | (149,658 | ) |
| Net decrease in temporary investments                                                               |   |   | 3,005,227  |   |   |   | 960,157    |   |   |   | 1,626,458 |   |
| Cash provided by (used for) continuing operations                                                   |   |   | 3,129,466  |   |   |   | 939,224    |   |   |   | 1,408,367 |   |
| Cash used in discontinued operations (Note 4)                                                       |   |   | (579       | )      |   |   | -          |   |   |   | - |   |
| Cash provided from (used for) investing activities                                                  |   |   | 3,128,887  |   |   |   | 939,224    |   |   |   | 1,408,367 |   |
|                                                                                                |   |   |       |   |   |   |       |   |   |   |   |   |
| Financing activities                                                                                |   |   |       |   |   |   |       |   |   |   |   |   |
| Issuance of capital stock                                                                           |   |   | -          |   |   |   | -          |   |   |   | 676,258 |   |
| Repayment of obligations under capital leases                                                       |   |   | (62,106    | )      |   |   | (57,976    | )      |   |   | (23,071 | ) |
| Cash provided from (used for) financing activities                                                  |   |   | (62,106    | )      |   |   | (57,976    | )      |   |   | 653,187 |   |
|                                                                                                |   |   |       |   |   |   |       |   |   |   |   |   |
| Net change in cash during the year                                                                  |   |   | 1,903,174  |   |   |   | (839,323   | )      |   |   | 527,411 |   |
| Cash and cash equivalents – Beginning of year                                                 |   |   | 2,067,705  |   |   |   | 2,907,028  |   |   |   | 2,379,617 |   |
| Cash and cash equivalents – End of year                                                       |   |   | 3,970,879  |   |   |   | 2,067,705  |   |   |   | 2,907,028 |   |
| Cash and cash equivalents comprise:                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Cash                                                                                                |   |   | 465,949    |   |   |   | 1,066,817  |   |   |   | 596,493 |   |
| Temporary investments (Note 5)                                                                      |   |   | 3,504,930  |   |   |   | 4,006,115  |   |   |   | 5,468,451 |   |
| Less: temporary investments with maturity date in excess of 3 months from date of issuance (Note 5) |   |   | -          |   |   |   | (3,005,227 | )      |   |   | (3,695,384 | ) |
|                                                                                                |   |   | 3,970,879  |   |   |   | 2,067,705  |   |   |   | 2,369,560 |   |
| Restricted cash                                                                                     |   |   | -          |   |   |   | -          |   |   |   | 807,468 |   |
|                                                                                                |   |   | 3,970,879  |   |   |   | 2,067,705  |   |   |   | 2,907,028 |   |
| Supplemental cash flow information - continuing operations                                          |   |   |       |   |   |   |       |   |   |   |   |   |
| Cash paid for interest                                                                              |   |   | 9,597      |   |   |   | 17,314     |   |   |   | 7,426 |   |
| Cash paid for income taxes                                                                          |   |   | 1,498      |   |   |   | 522        |   |   |   | 1,479 |   |
|                                                                                                |   |   |       |   |   |   |       |   |   |   |   |   |
| See accompanying notes                                                                              |   |   |       |   |   |   |       |   |   |   |   |   |

----

| 1 | Nature of Business |
|---|--------------------|

| 2 | Significant Accounting Policies |
|---|---------------------------------|

| a) | Basis of Presentation |
|----|-----------------------|

| b) | Use of Estimates |
|----|------------------|

| c) | Cash and Cash Equivalents |
|----|---------------------------|

| d) | Income Tax Credits |
|----|--------------------|

----

| e) | Financial Instruments |
|----|-----------------------|

| f) | Transaction Costs |
|----|-------------------|

| g) | Property and Equipment |
|----|------------------------|

| Computer equipment     | Declining balance | 50%               |
|------------------------|-------------------|-------------------|
| Furniture and fixtures | Declining balance | 33%               |
| Leasehold improvements | Straight-line     | Duration of lease |

----

| h) | Intangible Assets |
|----|-------------------|

| Trade names            | Straight-line     | 14% |
|------------------------|-------------------|-----|
| Technology             | Straight-line     | 25% |
| Customer relationships | Straight-line     | 33% |
| Patents                | Straight-line     | 10% |
| Software               | Declining balance | 50% |

| i) | Goodwill |
|----|----------|

| j) | Impairment of Long-Lived Assets |
|----|---------------------------------|

----

| k) | Revenue Recognition |
|----|---------------------|

| l) | Income Taxes |
|----|--------------|

----

| m) | Foreign Currency Translation |
|----|------------------------------|

| n) | Foreign Currency Transactions |
|----|-------------------------------|

| o) | Stock-based Compensation |
|----|--------------------------|

| p) | Earnings (loss) per Share |
|----|---------------------------|

----

| q) | Comparative Figures |
|----|---------------------|

| 3 | Change in Accounting Policies |
|---|-------------------------------|

| a) | Changes Affecting 2009 |
|----|------------------------|

----

| Level 1: | This level includes assets and liabilities measured at fair value based on unadjusted quoted prices for identical assets and liabilities in active markets that are accessible at the measurement date. |
|----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Level 2: | This level includes valuations determined using directly or indirectly observable inputs other than quoted prices included within Level 1. |
|----------|--------------------------------------------------------------------------------------------------------------------------------------------|

| Level 3: | This level includes valuations based on inputs which are less observable, unavailable or where the observable data does not support a significant portion of the instruments’ fair value. |
|----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b) | Future Accounting Changes |
|----|---------------------------|

----

| 4 | Discontinued Operations |
|---|-------------------------|

|                                               |   | $      | 2009      |   |   | $      | 2008 |   |   | $      | 2007 |   |
|----------------------------------------------------|--------|--------|-----------|--------|--------|--------|------|--------|--------|--------|------|--------|
| Selling price                                      |   |   | 4,447,230 |   |   |   | -    |   |   |   | -    |   |
| Transaction fees                                   |   |   | 299,441   |   |   |   | -    |   |   |   | -    |   |
| Gain on disposal of assets net of transaction fees |   |   | 4,147,789 |   |   |   | -    |   |   |   | -    |   |

----

|                                                    |   | $      | 2009      |   |   | $      | 2008      |   |   | $      | 2007      |   |
|---------------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|
|                                                    |   |   |      |   |   |   |      |   |   |   |      |   |
| Revenues                                                |   |   | 1,594,946 |   |   |   | 4,793,367 |   |   |   | 6,414,152 |   |
| Cost of revenues                                        |   |   | 701,124   |   |   |   | 2,425,570 |   |   |   | 2,529,899 |   |
| Gross Margin                                            |   |   | 893,822   |   |   |   | 2,367,797 |   |   |   | 3,884,253 |   |
|                                                    |   |   |      |   |   |   |      |   |   |   |      |   |
| Expenses                                                |   |   |      |   |   |   |      |   |   |   |      |   |
|    Marketing, sales and services              |   |   | 120,861   |   |   |   | 552,125   |   |   |   | 1,091,031 |   |
|    Product development and technical support  |   |   | 30,535    |   |   |   | 101,738   |   |   |   | 217,737   |   |
|    Amortization of property and equipment     |   |   | 3,707     |   |   |   | 121,887   |   |   |   | 163,994   |   |
|    Amortization of intangible assets          |   |   | 8,070     |   |   |   | 38,874    |   |   |   | 49,515    |   |
|    Write-down of property and equipment       |   |   | 37,387    |   |   |   | 50,424    |   |   |   | 846,310   |   |
|                                                    |   |   | 200,560   |   |   |   | 865,048   |   |   |   | 2,368,587 |   |
|                                                    |   |   |      |   |   |   |      |   |   |   |      |   |
| Income from operations                                  |   |   | 693,262   |   |   |   | 1,502,749 |   |   |   | 1,515,666 |   |
|                                                    |   |   |      |   |   |   |      |   |   |   |      |   |
| Gain on disposal of assets net of transaction fees      |   |   | 4,147,789 |   |   |   | -         |   |   |   | -         |   |
|                                                    |   |   |      |   |   |   |      |   |   |   |      |   |
| Results of discontinued operations, net of income taxes |   |   | 4,841,051 |   |   |   | 1,502,749 |   |   |   | 1,515,666 |   |
| Income taxes                                            |   |   | 441,645   |   |   |   | 464,349   |   |   |   | 485,316   |   |
| Net income from discontinued operations                 |   |   | 4,399,406 |   |   |   | 1,038,400 |   |   |   | 1,030,350 |   |

|                                                              |   | $      | 2009       |   |   | $      | 2008      |   |   | $      | 2007            |   |
|-------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|-----------|--------|--------|--------|-----------------|--------|
| Net income from discontinued operations                           |   |   | 4,399,406  |   |   |   | 1,038,400 |   |   |   | 1,030,350       |   |
| Adjustment for:                                                   |   |   |       |   |   |   |      |   |   |   |            |   |
|    Write-down of property and equipment                 |   |   | 37,387     |   |   |   | 50,424    |   |   |   | 846,310         |   |
|    Gain on disposal of assets net of transaction fees   |   |   | (4,147,789 | )      |   |   | -         |   |   |   | -               |   |
|    Amortization of property and equipment               |   |   | 3,707      |   |   |   | 121,887   |   |   |   | 163,994         |   |
|    Amortization of intangible assets                    |   |   | 8,070      |   |   |   | 38,874    |   |   |   | 49,515          |   |
|    Employee stock-based compensation               |   |   | -          |   |   |   | (45,723   | )      |   |   | 42,589          |   |
|    Future income taxes                             |   |   | 441,645    |   |   |   | 464,349   |   |   |   | 485,316         |   |
|    Net change in non-cash working capital items         |   |   | 308,793    |   |   |   | (48,095   | )      |   |   | 918,000         |   |
| Cash provided by discontinued operations for operating activities |   |   | 1,051,219  |   |   |   | 1,620,116 |   |   |   |  3,536,074 |   |

----

|                                                          |   | $      | 2009     |   |   | $      | 2008 |   |   | $      | 2007    |   |
|---------------------------------------------------------------|--------|--------|----------|--------|--------|--------|------|--------|--------|--------|---------|--------|
| Transaction fees                                              |   |   | (299,441 | )      |   |   | -    |   |   |   | -       |   |
| Capital payment on balance of sale receivable                 |   |   | 298,862  |   |   |   | -    |   |   |   | -       |   |
| Cash used by discontinued operations for investing activities |   |   | (579     | )      |   |   | -    |   |   |   |  - |   |

| 5 | Temporary Investments |
|---|-----------------------|

| 6 | Accounts Receivable |
|---|---------------------|

|                            |   | $      | 2009    |   |   | $      | 2008    |   |
|---------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|
|                            |   |   |    |   |   |   |    |   |
| Trade accounts receivable       |   |   | 237,688 |   |   |   | 839,245 |   |
| Allowance for doubtful accounts |   |   | (190    | )      |   |   | (1,185  | )      |
|                            |   |   | 237,498 |   |   |   | 838,060 |   |
|                            |   |   |    |   |   |   |    |   |
| Other                           |   |   | 18,612  |   |   |   | 69,500  |   |
|                            |   |   |    |   |   |   |    |   |
|                            |   |   | 256,110 |   |   |   | 907,560 |   |

| 7 | Property and Equipment |
|---|------------------------|

|                   |   |   |      |   |                     |   |    | 2009   |   |
|------------------------|--------|--------|-----------|--------|--------------------------|--------|---------|--------|--------|
|                   |   | Cost$  |      |   | Accumulatedamortization$ |   |    | Net$   |   |
| Computer equipment     |   |   | 841,719   |   |                     |   | 749,385 |   |   |   | 92,334 |   |
| Furniture and fixtures |   |   | 73,136    |   |                     |   | 54,876  |   |   |   | 18,260 |   |
| Leasehold improvements |   |   | 101,999   |   |                     |   | 97,483  |   |   |   | 4,516 |   |
|                   |   |   |      |   |                     |   |    |   |   |   |   |   |
|                   |   |   | 1,016,854 |   |                     |   | 901,744 |   |   |   | 115,110 |   |

----

|                   |   |   |      |   |                     |   |    | 2008   |   |
|------------------------|--------|--------|-----------|--------|--------------------------|--------|---------|--------|--------|
|                   |   | Cost$  |      |   | Accumulatedamortization$ |   |    | Net$   |   |
|                   |   |   |      |   |                     |   |    |   |   |
| Computer equipment     |   |   | 916,169   |   |                     |   | 735,421 |   |   |   | 180,748 |   |
| Furniture and fixtures |   |   | 152,575   |   |                     |   | 119,603 |   |   |   | 32,972 |   |
| Leasehold improvements |   |   | 95,691    |   |                     |   | 69,317  |   |   |   | 26,374 |   |
|                   |   |   |      |   |                     |   |    |   |   |   |   |   |
|                   |   |   | 1,164,435 |   |                     |   | 924,341 |   |   |   | 240,094 |   |

| 8 | Intangible Assets and Goodwill |
|---|--------------------------------|

| a) | Intangible Assets |
|----|-------------------|

|        |   |   |      |   |                     |   |      |                 |   |   | 2009   |   |
|-------------|--------|--------|-----------|--------|--------------------------|--------|-----------|----------------------|--------|--------|--------|--------|
|        |   | Cost$  |      |   | Accumulatedamortization$ |   |      | Impairmentprovision$ |   |   | Net$   |   |
| Trade names |   |   | 377,833   |   |                     |   | 219,282   |                 |   |   | -      |   |   |   | 158,551 |   |
| Technology  |   |   | 2,614,790 |   |                     |   | 2,614,790 |                 |   |   | -      |   |   |   | - |   |
| Software    |   |   | 265,823   |   |                     |   | 221,777   |                 |   |   | -      |   |   |   | 44,046 |   |
|        |   |   |      |   |                     |   |      |                 |   |   |   |   |   |   |   |   |
|        |   |   | 3,258,446 |   |                     |   | 3,055,849 |                 |   |   | -      |   |   |   | 202,597 |   |

|                   |   |   |      |   |                      |   |      |                 |   |   | 2008      |   |
|------------------------|--------|--------|-----------|--------|---------------------------|--------|-----------|----------------------|--------|--------|-----------|--------|
|                   |   | Cost$  |      |   | Accumulated amortization$ |   |      | Impairmentprovision$ |   |   | Net$      |   |
| Trade names            |   |   | 2,560,518 |   |                      |   | 873,091   |                 |   |   | 1,473,415 |   |   |   | 214,012 |   |
| Technology             |   |   | 3,400,000 |   |                      |   | 2,568,630 |                 |   |   | 192,000   |   |   |   | 639,370 |   |
| Customer relationships |   |   | 2,000,000 |   |                      |   | 1,347,945 |                 |   |   | 652,055   |   |   |   | - |   |
| Software               |   |   | 336,378   |   |                      |   | 263,924   |                 |   |   | 7,351     |   |   |   | 65,103 |   |
| Patents                |   |   | 77,622    |   |                      |   | 22,781    |                 |   |   | 54,841    |   |   |   | - |   |
|                   |   |   |      |   |                      |   |      |                 |   |   |      |   |   |   |   |   |
|                   |   |   | 8,374,518 |   |                      |   | 5,076,371 |                 |   |   | 2,379,662 |   |   |   | 918,485 |   |

----

| b) | Goodwill |
|----|----------|

|                              |   |   |       |
|-----------------------------------|--------|--------|------------|
|                              |   | $      |       |
|                              |   |   |       |   |
| Balance – December 31, 2007 |   |   | 7,357,003  |   |
|                              |   |   |       |   |
| Write-down                        |   |   | (3,995,000 | ) |
|                              |   |   |       |   |
| Balance – December 31, 2008 |   |   | 3,362,003  |   |
|                              |   |   |       |   |
| Write-down                        |   |   | -          |   |
|                              |   |   |       |   |
| Balance – December 31, 2009 |   |   | 3,362,003  |   |

| 9 | Accounts Payable and Accrued Liabilities |
|---|------------------------------------------|

|                                     |   | $      | 2009      |   |   | $      | 2008    |   |
|------------------------------------------|--------|--------|-----------|--------|--------|--------|---------|--------|
|                                     |   |   |      |   |   |   |    |   |
| Accounts payable                         |   |   | 155,229   |   |   |   | 332,641 |   |
| Accrued employee costs                   |   |   | 206,286   |   |   |   | 163,019 |   |
| Directors and officers payable (a)       |   |   | 397,686   |   |   |   | 201,982 |   |
| Companies owned by directors (a) (b) (c) |   |   | 9,581     |   |   |   | 7,456   |   |
| Accrued professional fees                |   |   | 165,359   |   |   |   | 153,732 |   |
| Other accrued liabilities                |   |   | 75,999    |   |   |   | 132,312 |   |
|                                     |   |   |      |   |   |   |    |   |
|                                     |   |   | 1,010,140 |   |   |   | 991,142 |   |

----

| 10 | Obligations under Capital Leases |
|----|----------------------------------|

|                                                                             |   | $      | 2009   |   |   | $      | 2008    |   |
|----------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|---------|--------|
| 2009                                                                             |   |   | -      |   |   |   | 65,302  |   |
| 2010                                                                             |   |   | 51,080 |   |   |   | 39,697  |   |
| 2011                                                                             |   |   | 6,952  |   |   |   | 2,188   |   |
| 2012                                                                             |   |   | 2,230  |   |   |   | -       |   |
| 2013                                                                             |   |   | 2,230  |   |   |   | -       |   |
| 2014                                                                             |   |   | 1,673  |   |   |   | -       |   |
|                                                                             |   |   | 64,165 |   |   |   | 107,187 |   |
| Less: Interest (Weighted average rate of 10.76 % in 2009 – 11.20% in 2008) |   |   | 5,629  |   |   |   | 9,928   |   |
|                                                                             |   |   | 58,536 |   |   |   | 97,259  |   |
|                                                                             |   |   |   |   |   |   |    |   |
| Less: Current portion                                                            |   |   | 50,630 |   |   |   | 57,267  |   |
|                                                                             |   |   | 7,906  |   |   |   | 39,992  |   |

----

| 11 | Income Taxes |
|----|--------------|

| a) | A reconciliation of the combined Canadian federal and provincial income tax rate with the Company’s effective income tax rate is as follows: |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                 |   | $      | 2009       |   |   | $      | 2008       |   |   | $      | 2007        |   |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|--------|-------------|--------|
|                                                                                                                                 |   |   |       |   |   |   |       |   |   |   |        |   |
| Loss from continuing operations before incomeTaxes                                                                                   |   |   | (2,940,363 | )      |   |   | (8,383,496 | )      |   |   | (17,195,466 | )      |
| Expected recovery of income taxes at the statutoryRate of 30.90% (2008 – 30.90%, 2007 – 32.02%)                          |   |   | (908,572   | )      |   |   | (2,590,500 | )      |   |   | (5,505,988  | )      |
| Impact of foreign and provincial rates                                                                                               |   |   | 186        |   |   |   | 9,200      |   |   |   | 3,654       |   |
| Change in future income tax balance due to changein rate                                                                             |   |   | -          |   |   |   | 41,582     |   |   |   | 1,316,637   |   |
| Unrecognized benefit of current year tax losses andundeducted research and development expenses, andother temporary differences |   |   | 272,763    |   |   |   | 208,650    |   |   |   | (176,111    | )      |
| Permanent difference:                                                                                                                |   |   |       |   |   |   |       |   |   |   |        |   |
| Impairment of goodwill                                                                                                               |   |   | -          |   |   |   | 1,234,455  |   |   |   | 2,367,218   |   |
| Non-deductible expenses                                                                                                              |   |   | (19,226    | )      |   |   | 242,221    |   |   |   | 260,300     |   |
|                                                                                                                                 |   |   |       |   |   |   |       |   |   |   |        |   |
| Recovery of income taxes                                                                                                             |   |   | (654,849   | )      |   |   | (854,392   | )      |   |   | (1,734,290  | )      |

| b) | The major components of the net future income tax asset classified by the source of temporary differences are as follows: |
|----|---------------------------------------------------------------------------------------------------------------------------|

|                                          |   | $      | 2009       |   |   | $      | 2008       |   |
|-----------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|
|                                          |   |   |       |   |   |   |       |   |
| Assets                                        |   |   |       |   |   |   |       |   |
| Property and equipment                        |   |   | 2,857,726  |   |   |   | 2,343,235  |   |
| Non-capital losses (expiring 2010 - 2029)     |   |   | 4,515,291  |   |   |   | 4,328,865  |   |
| Unrealized impairment losses on investments   |   |   | 468,856    |   |   |   | 748,437    |   |
| Research and development expenses             |   |   | 867,483    |   |   |   | 616,339    |   |
| Financing expenses                            |   |   | -          |   |   |   | -          |   |
| Intangible assets                             |   |   | -          |   |   |   | 382,595    |   |
| Goodwill                                      |   |   | -          |   |   |   | 228,140    |   |
| Other                                         |   |   | 57,665     |   |   |   | 117,331    |   |
|                                          |   |   | 8,767,021  |   |   |   | 8,764,942  |   |
|                                          |   |   |       |   |   |   |       |   |
| Liabilities                                   |   |   |       |   |   |   |       |   |
| Intangible assets                             |   |   | 45,146     |   |   |   | 259,848    |   |
|                                          |   |   |       |   |   |   |       |   |
| Net future income tax assets before valuation |   |   | 8,721,875  |   |   |   | 8,505,094  |   |
| Valuation allowance                           |   |   | (8,767,021 | )      |   |   | (8,764,942 | )      |
|                                          |   |   | (45,146    | )      |   |   | (259,848   | )      |
|                                          |   |   |       |   |   |   |       |   |
| Presented as:                                 |   |   |       |   |   |   |       |   |
| Current asset                                 |   |   | -          |   |   |   | -          |   |
| Long-term asset                               |   |   | -          |   |   |   | -          |   |
| Long-term liability                           |   |   | (45,146    | )      |   |   | (259,848   | )      |
|                                          |   |   | (45,146    | )      |   |   | (259,848   | )      |

----

| c) | As at December 31, 2009, the Company has non-capital loss carryforwards totalling approximately $16,399,000 for federal and provincial income tax purposes which may be used to reduce taxable income in future years. These losses may be claimed no later than fiscal years ending December 31: |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | $      |      |
|--------|--------|--------|-----------|
|   |   |   |      |   |
| 2010   |   |   | 3,796,000 |   |
| 2014   |   |   | 941,000   |   |
| 2015   |   |   | 6,123,000 |   |
| 2026   |   |   | 822,000   |   |
| 2027   |   |   | 4,212,000 |   |
| 2028   |   |   | -         |   |
| 2029   |   |   | 505,000   |   |
|   |   |   |      |   |

| 12 | Commitments |
|----|-------------|

|   |   | $      |   |
|--------|--------|--------|--------|
|   |   |   |   |   |
| 2010   |   |   | 84,790 |   |
| 2011   |   |   | 83,657 |   |
| 2012   |   |   | 28,812 |   |
| 2013   |   |   | 20,684 |   |
|   |   |   |   |   |

| 13 | Capital Stock |
|----|---------------|

----

|                                |   | Options           |    |   | Warrants                       |   |
|-------------------------------------|--------|-------------------|---------|--------|--------------------------------|--------|
|                                |   | Number of options |    |   | Weightedaverageexercise price$ |   |   | Number of warrants |   |   | Weightedaverageexercise price$ |   |
| Outstanding as of December 31, 2008 |   |              | 111,082 |   |                           |   | 12.93 |   |   |   | 92,342 |   |   |   | 109.20 |   |
| Granted                             |   |              | 44,998  |   |                           |   | 2.01 |   |   |   | - |   |   |   | - |   |
| Forfeited                           |   |              | (15,094 | )      |                           |   | (10.40 | ) |   |   | - |   |   |   | - |   |
| Expired                             |   |              | (8,643  | )      |                           |   | (32.75 | ) |   |   | (92,342 | ) |   |   | (109.20 | ) |
| Outstanding as of December 31, 2009 |   |              | 132,343 |   |                           |   | 8.21 |   |   |   | - |   |   |   | - |   |

----

|                                  |   | Number ofoptions |     |   | Weighted averageexercise price$ |   |
|---------------------------------------|--------|------------------|----------|--------|---------------------------------|--------|
| Outstanding – December 31, 2006 |   |             | 97,456   |   |                            |   | 19.88 |   |
|                                  |   |             |     |   |                            |   |   |   |
| Granted                               |   |             | 130,133  |   |                            |   | 17.01 |   |
| Forfeited                             |   |             | (10,173  | )      |                            |   | 28.21 |   |
| Expired                               |   |             | (1,693   | )      |                            |   | 24.99 |   |
| Exercised                             |   |             | (42,381  | )      |                            |   | 15.96 |   |
|                                  |   |             |     |   |                            |   |   |   |
| Outstanding – December 31, 2007 |   |             | 173,342  |   |                            |   | 18.13 |   |
|                                  |   |             |     |   |                            |   |   |   |
| Granted                               |   |             | 50,000   |   |                            |   | 4.13 |   |
| Forfeited                             |   |             | (112,260 | )      |                            |   | 17.01 |   |
|                                  |   |             |     |   |                            |   |   |   |
| Outstanding – December 31, 2008 |   |             | 111,082  |   |                            |   | 12.93 |   |
|                                  |   |             |     |   |                            |   |   |   |
| Granted                               |   |             | 44,998   |   |                            |   | 2.01 |   |
| Forfeited                             |   |             | (15,094  | )      |                            |   | 10.40 |   |
| Expired                               |   |             | (8,643   | )      |                            |   | 32.75 |   |
|                                  |   |             |     |   |                            |   |   |   |
| Outstanding – December 31, 2009 |   |             | 132,343  |   |                            |   | 8.21 |   |

| Outstanding options     |   | Exercisable options                                   |   |
|-------------------------|--------|-------------------------------------------------------|--------|
| Range ofexercise price$ |   | Number of options outstanding as at December 31, 2009 |   | Weighted average remaining life |   | Weighted averageexercise price$ |   | Number of options exercisable as at December 31, 2009 |   | Weighted averageexercise price$ |   |
| 1.01 to                 | 5.00   |                                                  |   | 74,279 |   |   | 4.18 |   |   | 2.49 |   |   | 10,239 |   |   | 3.16 |   |
| 5.01 to                 | 10.00  |                                                  |   | 14,286 |   |   | 3.25 |   |   | 7.00 |   |   | 4,762 |   |   | 7.00 |   |
| 10.01 to                | 15.00  |                                                  |   | 14,500 |   |   | 2.69 |   |   | 11.89 |   |   | 9,788 |   |   | 11.88 |   |
| 15.01 to                | 20.00  |                                                  |   | 16,667 |   |   | 0.85 |   |   | 15.96 |   |   | 16,667 |   |   | 15.96 |   |
| 25.01 to                | 30.00  |                                                  |   | 11,287 |   |   | 1.85 |   |   | 27.98 |   |   | 8,907 |   |   | 27.53 |   |
| 35.01 to                | 36.05  |                                                  |   | 1,324 |   |   | 2.06 |   |   | 36.05 |   |   | 885 |   |   | 36.05 |   |
|   Total       |   |                                                  |   | 132,343 |   |   | 3.28 |   |   | 8.21 |   |   | 51,248 |   |   | 14.15 |   |

----

|                         | 2009    | 2008   | 2007   |
|------------------------------|---------|--------|--------|
| Expected option life (years) | 3.00    | 2.86   | 3.03   |
| Volatility                   | 134.00% | 87.49% | 86.09% |
| Risk-free interest rate      | 1.67%   | 2.85%  | 4.28%  |
| Dividend yield               | nil     | nil    | nil    |

|                                      |   | $      | 2009    |   |   | $      | 2008    |   |   | $      | 2007    |   |
|-------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
| General and administration                |   |   | 79,614  |   |   |   | 50,669  |   |   |   | 478,759 |   |
| Marketing, sales and services             |   |   | 4,917   |   |   |   | (55,601 | )      |   |   | 57,480  |   |
| Product development and technical support |   |   | 22,178  |   |   |   | 13,181  |   |   |   | 81,484  |   |
| Total for continuing operations           |   |   | 106,709 |   |   |   | 8,249   |   |   |   | 617,723 |   |
| Total for discontinued operations         |   |   | -       |   |   |   | (45,723 | )      |   |   | 42,589  |   |
| Total                                     |   |   | 106,709 |   |   |   | (37,474 | )      |   |   | 660,312 |   |

| 14 | Revenues |
|----|----------|

|                                          |   | $      | 2009      |   |   | $      | 2008      |   |   | $      | 2007      |   |
|-----------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|
|                                          |   |   |      |   |   |   |      |   |   |   |      |   |
| Search                                        |   |   | 640,103   |   |   |   | 813,014   |   |   |   | 940,557   |   |
| Software licensing                            |   |   | 574,536   |   |   |   | 951,023   |   |   |   | 415,263   |   |
| Customized development and maintenanceSupport |   |   | 438,387   |   |   |   | 454,227   |   |   |   | 346,436   |   |
|                                          |   |   | 1,653,026 |   |   |   | 2,218,264 |   |   |   | 1,702,256 |   |

----

| 15 | Product Development and Technical Support Expenses |
|----|----------------------------------------------------|

|                                               |   | $      | 2009      |   |   | $      | 2008      |   |   | $      | 2007      |   |
|----------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|
|                                               |   |   |      |   |   |   |      |   |   |   |      |   |
|                                               |   |   |      |   |   |   |      |   |   |   |      |   |
| Product development and technical support expenses |   |   | 786,202   |   |   |   | 1,618,066 |   |   |   | 1,832,529 |   |
| Research and development expenses                  |   |   | 533,455   |   |   |   | 398,763   |   |   |   | 567,825   |   |
|                                               |   |   | 1,319,657 |   |   |   | 2,016,829 |   |   |   | 2,400,354 |   |
|                                               |   |   |      |   |   |   |      |   |   |   |      |   |
| Less: research and development tax credits         |   |   | 194,555   |   |   |   | 179,843   |   |   |   | 201,681   |   |
|                                               |   |   |      |   |   |   |      |   |   |   |      |   |
|                                               |   |   | 1,125,102 |   |   |   | 1,836,986 |   |   |   | 2,198,673 |   |

| 16 | Write-downs and Settlement Costs |
|----|----------------------------------|

| $                                                                          | 2009   |   | $      | 2008      |   |   | $      | 2007      |   |
|----------------------------------------------------------------------------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|
|                                                                       |   |   |   |      |   |   |   |      |   |
| Write-down of goodwill (Note 8)                                            | -      |   |   | 3,995,000 |   |   |   | 8,060,841 |   |
| Write-down of property and equipment and intangible assets (Notes 7 and 8) | 10,924 |   |   | 386,840   |   |   |   | 1,139,160 |   |
| Write-down of investment                                                   | -      |   |   | -         |   |   |   | 150,000   |   |
| Class action closure costs                                                 | -      |   |   | -         |   |   |   | (50,000   | )      |
|                                                                       |   |   |   |      |   |   |   |      |   |
|                                                                       | 10,924 |   |   | 4,381,840 |   |   |   | 9,300,001 |   |

----

| 17 | Restructuring Charges |
|----|-----------------------|

|                                                                                                 |   | $      | 2009    |   |   | $      | 2008    |   |   | $      | 2007   |   |
|------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|--------|--------|
| Restructuring charges                                                                                |   |   |    |   |   |   |    |   |   |   |   |   |
| Lease termination costs                                                                              |   |   | -       |   |   |   | 31,391  |   |   |   | -      |   |
| Severance                                                                                            |   |   | 9,264   |   |   |   | 18,093  |   |   |   | -      |   |
| Other                                                                                                |   |   | 24,413  |   |   |   | 51,528  |   |   |   | -      |   |
|                                                                                                 |   |   | 33,677  |   |   |   | 101,012 |   |   |   | -      |   |
| Disbursements                                                                                        |   |   | 105,075 |   |   |   | 16,561  |   |   |   | -      |   |
|                                                                                                 |   |   |    |   |   |   |    |   |   |   |   |   |
| Restructuring charges included in accounts payable and accrued liabilitiesBalance, beginning of year |   |   | 84,451  |   |   |   | -       |   |   |   | -      |   |
| Balance, end of year                                                                                 |   |   | 13,053  |   |   |   | 84,451  |   |   |   | -      |   |

| 18 | Earnings (loss) per Share |
|----|---------------------------|

|                                                          |   | 2009   |      |   | 2008   |   |      | 2007   |   |
|---------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|
| Weighted average number of shares –basic / diluted |   |   | 2,091,437 |   |   |   | 2,091,437 |   |   |   | 2,080,699 |   |

| 19 | Consolidated Statement of Cash Flows |
|----|--------------------------------------|

| a) | In 2009, the Company acquired $12,854 (2008 - $18,471) of computer equipment and $0 (2008 - $6,106) of software equipment under capital leases |
|----|------------------------------------------------------------------------------------------------------------------------------------------------|

| b) | Net Change in Non-cash Working Capital Items |
|----|----------------------------------------------|

|                                     |   | $      | 2009     |   |   | $      | 2008     |   |   | $      | 2007     |   |
|------------------------------------------|--------|--------|----------|--------|--------|--------|----------|--------|--------|--------|----------|--------|
|                                     |   |   |     |   |   |   |     |   |   |   |     |   |
| Cash flows increase (decrease)           |   |   |     |   |   |   |     |   |   |   |     |   |
| Accounts receivable                      |   |   | 189,005  |   |   |   | 42,620   |   |   |   | 839,688  |   |
| Income taxes receivable                  |   |   | (227,681 | )      |   |   | 111,084  |   |   |   | (111,203 | )      |
| Prepaid expenses                         |   |   | 52,715   |   |   |   | 37,791   |   |   |   | 53,230   |   |
| Accounts payable and accrued liabilities |   |   | 172,650  |   |   |   | (513,529 | )      |   |   | (698,348 | )      |
| Income taxes payable                     |   |   | -        |   |   |   | (8,100   | )      |   |   | -        |   |
| Deferred revenue                         |   |   | (53,121  | )      |   |   | (54,666  | )      |   |   | (16,205  | )      |
| Deferred rent                            |   |   | (3,271   | )      |   |   | (6,211   | )      |   |   | (1,257   | )      |
|                                     |   |   |     |   |   |   |     |   |   |   |     |   |
|                                     |   |   | 130,297  |   |   |   | (391,011 | )      |   |   | 65,905   |   |

----

| 20 | Capital Management |
|----|--------------------|

|                       |   | $      | 2009       |   |   | $      | 2008       |   |
|----------------------------|--------|--------|------------|--------|--------|--------|------------|--------|
| Cash                       |   |   | (465,949   | )      |   |   | (1,066,817 | )      |
| Temporary investments      |   |   | (3,504,930 | )      |   |   | (4,006,115 | )      |
| Shareholders’ equity |   |   | 11,492,817 |   |   |   | 9,272,216  |   |
|                       |   |   | 7,521,938  |   |   |   | 4,199,284  |   |

| 21 | Financial Instruments |
|----|-----------------------|

| a) | Financial Instrument  – Fair Value |
|----|----------------------------------------------------|

----

| Level 1               |   |   | Level 2   |   |   | Level 3 |   |   | Total$ |   |
|-----------------------|--------|--------|-----------|--------|--------|---------|--------|--------|--------|--------|
| Financial assets:     |   |   |      |   |   |    |   |   |   |   |   |   |
| Cash                  |   |   | 465,949   |   |   |    | -      |   |   |   | - |   |   |   | 465,949 |   |
| Temporary investments |   |   | 3,504,930 |   |   |    | -      |   |   |   | - |   |   |   | 3,504,930 |   |

|                                     |   | Book value        |      |              | Fair value |                  |
|------------------------------------------|--------|-------------------|-----------|-------------------|------------|-----------------------|
|                                     |   | Held for trading$ |      | Held to maturity$ |       | Loans and receivable$ |   |   | Other financial liabilities$ |   |   |   | $ |   |
| Financial assets:                        |   |              |      |              |       |                  |   |   |   |   |   |   |   |   |
| Cash                                     |   |              | 465,949   |              |       |                  |   |   |   |   |   |   |   | 465,949 |   |
| Temporary investments                    |   |              | 3,504,930 |              |       |                  |   |   |   |   |   |   |   | 3,504,930 |   |
| Accounts receivable                      |   |              |      |              |       |                  |   | 256,110 |   |   |   |   |   |   | 256,110 |   |
| Balance of sale receivable               |   |              |      |              |       |                  |   | 4,349,191 |   |   |   |   |   |   | 4,349,191 |   |
|                                     |   |              |      |              |       |                  |   |   |   |   |   |   |   |   |   |   |
| Financial liabilities:                   |   |              |      |              |       |                  |   |   |   |   |   |   |   |   |   |   |
| Accounts payable and accrued liabilities |   |              |      |              |       |                  |   |   |   |   |   | 1,010,140 |   |   |   | 1,010,140 |   |
| Obligations under capital leases         |   |              |      |              |       |                  |   |   |   |   |   | 58,536 |   |   |   | 58,536 |   |

----

| b) | Foreign Currency Exchange Rate Risk |
|----|-------------------------------------|

|                                     | As at December 31, |
|------------------------------------------|--------------------|
|                                     | 2009               | 2008 |
|                                     | CDN                | GBP | EUR | AUD | CDN | GBP | EUR | AUD |
| Cash                                     | 27,523             |   | - | - | 46,007 | - | - | - |
| Accounts receivable                      | 116,033            | - | 78,758 | - | 49,805 | 127,051 | 72,728 | 29,929 |
| Accounts payable and accrued liabilities | 887,465            | - | - | - | 687,746 | - | - | - |
| Obligations under capital leases         | 58,536             | - | - | - | 97,259 | - | - | - |

|                |   | 2009         |   |   | 2008           |   |
|---------------------|--------|--------------|--------|--------|----------------|--------|
|                |   | Average rate |   |   | Reporting date |   |   | Average rate |   |   | Reporting date |   |
|                |   |         |   |   |           |   |   |   |   |   |   |   |
| $CDN per $US        |   |         | 0.8802 |   |           |   | 0.9532 |   |   |   | 0.9443 |   |   |   | 0.8183 |   |
| $Australian per $US |   |         | 0.7924 |   |           |   | 0.8931 |   |   |   | 0.8531 |   |   |   | 0.6907 |   |
| GBP per $US         |   |         | 1.5659 |   |           |   | 1.5928 |   |   |   | 1.8552 |   |   |   | 1.4470 |   |
| EUR per $US         |   |         | 1.3946 |   |           |   | 1.4333 |   |   |   | 1.4712 |   |   |   | 1.4097 |   |

| c) | Credit Risk |
|----|-------------|

----

|                            |   | $      | 2009    |   |   | $      | 2008    |   |
|---------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|
| Current                         |   |   | 59,319  |   |   |   | 453,445 |   |
| 31-60 days                      |   |   | 76,891  |   |   |   | 303,719 |   |
| 61-90 days (Past due)           |   |   | 26,254  |   |   |   | 36,773  |   |
| Over 91 days (Past due)         |   |   | 75,224  |   |   |   | 45,308  |   |
| Allowance for doubtful accounts |   |   | (190    | )      |   |   | (1,185  | )      |
| Balance as at December 31       |   |   | 237,498 |   |   |   | 838,060 |   |

|       | 2009% of revenue | 2008% of revenue |
|------------|------------------|------------------|
|       |             |             |
| Customer A | 34%              | 28%              |
| Customer B | 11%              | 10%              |

| d) | Interest Rate Risk |
|----|--------------------|

----

|                                                             | 2009                                                             | 2008                               |
|------------------------------------------------------------------|------------------------------------------------------------------|------------------------------------|
|                                                             | Maturity                                                         | Interest rate                      | Interest rate |
| Cash                                                             | Less than 30 days                                                | 0.049% to 0.263%                   | 0.9% to 3.3% |
| Temporary investmentsMutual fundsObligations under capital lease | 120 days and moreWithdrawal at any time5 years (4 years in 2008) | 0.8% to 1.75%0.12%10.41% to 33.45% | 0.9% to 3.3%-10.41% to 13.08%  |

| e) | Liquidity Risk |
|----|----------------|

|   |   | Accounts payable and accrued liabilities |      |   | Obligations under capital leases |   |   | Total$ |   |
|--------|--------|------------------------------------------|-----------|--------|----------------------------------|--------|--------|--------|--------|
| 2010   |   |                                     | 1,010,140 |   |                             |   | 51,080 |   |   |   | 1,061,220 |   |
| 2011   |   |                                     | -         |   |                             |   | 6,952  |   |   |   | 6,952 |   |
| 2012   |   |                                     | -         |   |                             |   | 2,230  |   |   |   | 2,230 |   |
| 2013   |   |                                     | -         |   |                             |   | 2,230  |   |   |   | 2,230 |   |
| 2014   |   |                                     | -         |   |                             |   | 1,673  |   |   |   | 1,673 |   |

| 22 | Segment Information |
|----|---------------------|

| a) | The geographic information for the continuing operations is as follows: |
|----|-------------------------------------------------------------------------|

|          |   | $      | 2009      |   |   | $      | 2008      |   |   | $      | 2007      |   |
|---------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|
| Revenues:     |   |   |      |   |   |   |      |   |   |   |      |   |
| Canada        |   |   | 125,954   |   |   |   | 231,714   |   |   |   | 26,906    |   |
| United States |   |   | 1,330,758 |   |   |   | 1,661,707 |   |   |   | 1,219,358 |   |
| Europe        |   |   | 196,314   |   |   |   | 324,843   |   |   |   | 455,992   |   |
|          |   |   | 1,653,026 |   |   |   | 2,218,264 |   |   |   | 1,702,256 |   |

| b) | The revenues are allocated based on the clients’ location. |
|----|------------------------------------------------------------------|

| c) | All long-lived assets and goodwill are located / associated to Canada. |
|----|------------------------------------------------------------------------|

| d) | As a result of the disposal of the assets of its search / media segment accounted for as discontinued operations, the entity now operates in a single segment and all information related to the discontinued operations has been presented in Note 4. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 23 | United States Generally Accepted Accounting Principles |
|----|--------------------------------------------------------|

|                                                                          |   | December 31,2009$ |         |   | December 31,2008$ |   |
|-------------------------------------------------------------------------------|--------|-------------------|--------------|--------|-------------------|--------|
| Capital stock                                                                 |   |              |         |   |              |   |
|                                                                          |   |              |         |   |              |   |   |   |
| Capital stock in accordance with Canadian GAAP                                |   |              | 96,556,485   |   |              |   | 96,556,485 |   |
| Reduction of stated capital (a)                                               |   |              | 16,769,570   |   |              |   | 16,769,570 |   |
| Capital stock in accordance with U.S. GAAP                                    |   |              | 113,326,055  |   |              |   | 113,326,055 |   |
|  Contributed surplus                                                     |   |              |         |   |              |   |   |   |
| Contributed surplus in accordance withCanadian GAAP                           |   |              | 5,853,737    |   |              |   | 5,747,028 |   |
| Stock-based compensation cost (b)                                             |   |              |         |   |              |   |   |   |
|                                                                          |   |              |         |   |              |   |   |   |
| Cumulative effect of prior years                                              |   |              | 1,037,690    |   |              |   | 1,037,690 |   |
| Contributed surplus in accordance with U.S. GAAP                              |   |              | 6,891,427    |   |              |   | 6,784,718 |   |
|  Accumulated deficit                                                     |   |              |         |   |              |   |   |   |
| In accordance with Canadian GAAP                                              |   |              | (91,478,542  | )      |              |   | (93,592,434 | ) |
| Reduction of stated capital to deficit (a)                                    |   |              | (16,769,570  | )      |              |   | (16,769,570 | ) |
| Stock-based compensation costs (b)                                            |   |              |         |   |              |   |   |   |
| Cumulative effect of prior years                                              |   |              | (1,037,690   | )      |              |   | (1,037,690 | ) |
| Accumulated deficit in accordance with U.S. GAAP                              |   |              | (109,285,802 | )      |              |   | (111,399,694 | ) |
| Accumulated other comprehensive incomeIn accordance with Canadian and US GAAP |   |              | 561,137      |   |              |   | 561,137 |   |
| Total shareholders’ equity in accordance with U.S. GAAP                 |   |              | 11,492,817   |   |              |   | 9,272,216 |   |

----

----

| 24 | Subsequent Events |
|----|-------------------|

----