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SECURITIES AND EXCHANGE
COMMISSIONWashington, DC 20549

FORM 20-F

|[    ] |  | REGISTRATION
STATEMENT PURSUANT TO SECTION 12(b) or (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|------ |  | ----------------------------------------------------------------------------------------------

OR

|[X] |  | ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF           1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------

OR

|[    ] |  | TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|------ |  | ----------------------------------------------------------------------------------------

0-17164 (Commission file number)

MAMMA.COM INC.(Exact name of
registrant as specified in its charter)



(FORMERLY INTASYS
CORPORATION)

PROVINCE OF ONTARIO
(CANADA)(Jurisdiction of
incorporation or organization)

388 St. Jacques Street
West, 9th FloorMontreal, QuebecCanada, H2Y 1S1(Address of principal
executive offices)

Securities registered or to be
registered pursuant to Section 12(b) of the Act.

None

Securities registered or to be registered
pursuant to Section 12(g) of the Act.

Common Shares, no par
value(Title of Class)

Securities for which there is a
reporting obligation pursuant to Section 15(d) of the Act.

None

Indicate the number of outstanding
shares of each of the issuers classes of capital or Common Shares, as of May 12,
2005:

12,263,029 Common Shares

Indicate by a check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes                   
     X               
No

Indicate by check mark which
financial statement item the registrant has elected to follow.

Item 17           
     X               
Item 18

Indicate by check mark whether the
registrant has filed all documents and reports required to be filed by Sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court.

NOT APPLICABLE.

1

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EXPLANATORY
NOTES

On January 6, 2004, the Company
changed its name from Intasys Corporation to Mamma.com Inc. At the same time, its
subsidiary changed its name from Mamma.com Inc. to Mamma.com Enterprises Inc. Therefore,
in order to avoid any confusion in this document, the Company will use the name Mamma.com
Inc. in reference to the parent company and Mamma.com Enterprises Inc. for its subsidiary.
On May 31, 2004, the wholly owned subsidiary, Mamma.com Enterprises Inc. was wound up into
the Company.

In this Annual Report on Form 20-F,
unless otherwise indicated or the context otherwise requires, all monetary amounts are
expressed in United States dollars.

On July 11, 2001, Mamma.com Inc.
(Mamma or the Company) filed articles of amendment consolidating
its issued and outstanding Common Shares on the basis of one (1) post-consolidation common
share for every ten (10) pre-consolidation Common Shares. In this Annual Report on Form
20-F, unless otherwise indicated or the context otherwise requires, all references to the
Companys Common Shares, including those relating to prices of the Companys
Common Shares, have been adjusted to reflect this consolidation.

SPECIAL
NOTE ON
FORWARD-
LOOKING
STATEMENTS

INFORMATION CONTAINED IN THIS ANNUAL
REPORT ON FORM 20-F INCLUDES FORWARD-LOOKING STATEMENTS, WHICH CAN BE IDENTIFIED BY THE
USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS BELIEVES, EXPECTS,
MAY, DESIRES, WILL, SHOULD,
PROJECTS, ESTIMATES, CONTEMPLATES,
ANTICIPATES, INTENDS, OR ANY NEGATIVE SUCH AS DOES NOT
BELIEVE OR OTHER VARIATIONS THEREOF OR COMPARABLE TERMINOLOGY. NO ASSURANCE CAN BE
GIVEN THAT POTENTIAL FUTURE RESULTS OR CIRCUMSTANCES DESCRIBED IN THE FORWARD-LOOKING
STATEMENTS WILL BE ACHIEVED OR OCCUR. SUCH INFORMATION MAY ALSO INCLUDE CAUTIONARY
STATEMENTS IDENTIFYING IMPORTANT FACTORS WITH RESPECT TO SUCH FORWARD-LOOKING STATEMENTS,
INCLUDING CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO VARY
MATERIALLY FROM THE PROJECTIONS AND OTHER EXPECTATIONS DESCRIBED IN SUCH FORWARD-LOOKING
STATEMENTS. PROSPECTIVE INVESTORS, CUSTOMERS, VENDORS AND ALL OTHER PERSONS ARE CAUTIONED
THAT FORWARD-LOOKING STATEMENTS ARE NOT ASSURANCES, FORECASTS OR GUARANTEES OF FUTURE
PERFORMANCE DUE TO RELATED RISKS AND UNCERTAINTIES, AND THAT ACTUAL RESULTS MAY DIFFER
MATERIALLY FROM THOSE PROJECTED. FACTORS WHICH COULD CAUSE RESULTS OR EVENTS TO DIFFER
FROM CURRENT EXPECTATIONS INCLUDE, AMONG OTHER THINGS: THE SEVERITY AND DURATION OF THE
ADJUSTMENTS IN OUR BUSINESS SEGMENTS; THE EFFECTIVENESS OF OUR RESTRUCTURING ACTIVITIES,
INCLUDING THE VALIDITY OF THE ASSUMPTIONS UNDERLYING OUR RESTRUCTURING EFFORTS;
FLUCTUATIONS IN OPERATING RESULTS; THE IMPACT OF GENERAL ECONOMIC, INDUSTRY AND MARKET
CONDITIONS; THE ABILITY TO RECRUIT AND RETAIN QUALIFIED EMPLOYEES; FLUCTUATIONS IN CASH
FLOW; INCREASED LEVELS OF OUTSTANDING DEBT; EXPECTATIONS REGARDING MARKET DEMAND FOR
PARTICULAR PRODUCTS AND SERVICES AND THE DEPENDENCE ON NEW PRODUCT/SERVICE DEVELOPMENT;
THE ABILITY TO MAKE ACQUISITIONS AND/OR INTEGRATE THE OPERATIONS AND TECHNOLOGIES OF
ACQUIRED BUSINESSES IN AN EFFECTIVE MANNER; THE IMPACT OF RAPID TECHNOLOGICAL AND MARKET
CHANGE; THE IMPACT OF PRICE AND PRODUCT COMPETITION; THE UNCERTAINTIES IN THE MARKET FOR
INTERNET-BASED PRODUCTS AND SERVICES; STOCK MARKET VOLATILITY; THE TRADING VOLUME OF OUR
STOCK; THE POSSIBILITY THAT OUR STOCK MAY NOT SATISFY OUR REQUIREMENTS FOR CONTINUED
LISTING ON THE NASDAQ SMALLCAP MARKET INCLUDING WHETHER THE MINIMUM BID PRICE FOR THE
STOCK FALLS BELOW $1; AND THE ADVERSE RESOLUTION OF LITIGATION. DEVELOPMENTS IN THE SEC
INQUIRY, PURPORTED CLASS ACTION LITIGATION OR RELATED EVENTS COULD HAVE A NEGATIVE IMPACT
ON THE COMPANY, INCREASE COMPANY EXPENSES OR CAUSE EVENTS OR RESULTS TO DIFFER FROM
CURRENT EXPECTATIONS. FOR ADDITIONAL INFORMATION WITH RESPECT TO THESE AND CERTAIN OTHER
FACTORS THAT MAY AFFECT ACTUAL RESULTS, SEE THE REPORTS AND OTHER INFORMATION FILED OR
FURNISHED BY THE COMPANY WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION
(SEC) AND/OR THE ONTARIO SECURITIES COMMISSION (OSC) RESPECTIVELY
ACCESSIBLE ON THE INTERNET AT WWW.SEC.GOV AND WWW.SEDAR.COM, OR THE COMPANYS WEBSITE
AT WWW.MAMMAINC.COM. ALL INFORMATION CONTAINED IN THIS ANNUAL REPORT ON FORM 20-F IS
QUALIFIED IN ITS ENTIRETY BY THE FOREGOING AND REFERENCE TO THE OTHER INFORMATION THE
COMPANY FILES WITH THE OSC AND SEC. UNLESS OTHERWISE REQUIRED BY APPLICABLE SECURITIES
LAWS, THE COMPANY DISCLAIMS ANY INTENTION OR OBLIGATION TO UPDATE OR REVISE ANY
FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR
OTHERWISE.

PERIOD-TO-
PERIOD
COMPARISONS

A VARIETY OF FACTORS MAY CAUSE
PERIOD-TO-PERIOD FLUCTUATIONS IN THE COMPANYS OPERATING RESULTS, INCLUDING BUSINESS
ACQUISITIONS, REVENUES AND EXPENSES RELATED TO THE INTRODUCTION OF NEW PRODUCTS AND
SERVICES OR NEW VERSIONS OF EXISTING PRODUCTS, NEW OR STRONGER COMPETITORS IN THE
MARKETPLACE AS WELL AS CURRENCY FLUCTUATIONS, ECONOMIC RECESSIONS AND RECOVERIES.
HISTORICAL OPERATING RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS AND PERFORMANCE.

2

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PART I



ITEM 1.     IDENTITY OF
DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

NOT APPLICABLE.

ITEM 2.     OFFER STATISTICS
AND EXPECTED TIMETABLE

NOT APPLICABLE.

3

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ITEM 3.     KEY INFORMATION

Consolidated statements of operations
data for the years ended December 31, 2004, 2003 and 2002, and consolidated balance sheet
data as at December 31, 2004 and 2003 is derived from the audited consolidated financial
statements included in item 17, all other financial information below is not included in
item 17.

# CANADIAN GAAPYEAR ENDED DECEMBER 31ST

|                                   |  |             |   |             |   |             |   |             |   |             |  
|---------------------------------- |  | ----------- | - | ----------- | - | ----------- | - | ----------- | - | ----------- | -
|Consolidated Statement of          |  | 2004        |   | 2003        |   | 2002        |   | 2001        |   | 2000        |  
|Operation Data                     |  | $           |   | $           |   | $           |   | $           |   | $           |  
|Revenue                            |  | 15,808,999  |   | 8,938,863   |   | 4,222,352   |   | 4,195,342   |   | 7,672,270   |  
|Earnings (loss) from continuing    | 
|operations                         |  | 60,411      |   | 88,990      |   | (782,878    | ) | (14,874,318 | ) | (27,499,869 | )
|Results of discontinued operations |  | 1,043,996   |   | (300,053    | ) | 465,884     |   | 267,635     |   | (4,736,623  | )
|Net earnings (loss) for the year   |  | 1,104,407   |   | (211,063    | ) | (316,994    | ) | (14,606,683 | ) | (32,236,492 | )
|Basic and diluted earnings         | 
|(loss) per share from              | 
|continuing operations              |  | 0.01        |   | 0.01        |   | (0.18       | ) | (4.63       | ) | (10.21      | )
|Basic and diluted earnings         | 
|(loss) per share from              | 
|discontinued operations            |  | 0.09        |   | (0.04       | ) | 0.11        |   | 0.08        |   | (1.76       | )
|Basic and diluted net earnings     | 
|(loss) per share                   |  | 0.10        |   | (0.03       | ) | (0.07       | ) | (4.55       | ) | (11.97      | )
|Weighted average number of         | 
|shares - basic                     |  | 10,758,604  |   | 6,207,360   |   | 4,356,751   |   | 3,206,996   |   | 2,692,364   |  
|Weighted average number of         | 
|shares - diluted                   |  | 11,209,906  |   | 8,041,236   |   | 4,356,751   |   | 3,206,996   |   | 2,692,364   |  
|                                   | 
|Consolidated Balance               |  | 2004        |   | 2003        |   | 2002        |   | 2001        |   | 2000        |  
|Sheet Data                         |  | $           |   | $           |   | $           |   | $           |   | $           |  
|Total assets                       |  | 35,166,098  |   | 11,736,414  |   | 9,971,214   |   | 7,139,984   |   | 23,642,904  |  
|Total liabilities                  |  | 3,130,526   |   | 3,716,276   |   | 3,270,019   |   | 2,704,141   |   | 6,842,333   |  
|Net Assets                         |  | 32,035,572  |   | 8,020,138   |   | 6,701,195   |   | 4,435,843   |   | 16,800,571  |  
|Working capital                    |  | 27,528,003  |   | 4,351,746   |   | 3,357,422   |   | 2,202,718   |   | 5,898,756   |  
|Capital stock                      |  | 90,496,088  |   | 70,522,179  |   | 69,873,994  |   | 68,077,781  |   | 63,502,772  |  
|Additional paid-in capital         |  | 5,255,249   |   | 1,166,814   |   | 750,111     |   | 339,550     |   | 2,180,976   |  
|Deferred stock-based               | 
|compensation                       |  | (1,333,443  | ) | (262,806    | ) | (10,667     | ) | (418,727    | ) | --          |  
|Cumulative translation             | 
|adjustment                         |  | 360,884     |   | 441,564     |   | (275,693    | ) | (243,205    | ) | (170,304    | )
|Accumulated deficit                |  | (62,743,206 | ) | (63,847,613 | ) | (63,636,550 | ) | (63,319,556 | ) | (48,712,873 | )
|Shareholders' equity               |  | 32,035,572  |   | 8,020,138   |   | 6,701,195   |   | 4,435,843   |   | 16,800,571  |  
|                                   | 
|Other                              | 
|Cash Dividends                     |  | None        |   | None        |   | None        |   | None        |   | None        |  

4

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# 

# U.S. GAAPYEAR ENDED DECEMBER 31st

|                                   |  |             |   |             |   |             |   |             |   |             |  
|---------------------------------- |  | ----------- | - | ----------- | - | ----------- | - | ----------- | - | ----------- | -
|Consolidated Statement of          |  | 2004        |   | 2003        |   | 2002        |   | 2001        |   | 2000        |  
|Operation Data                     |  | $           |   | $           |   | $           |   | $           |   | $           |  
|Revenue                            |  | 15,808,999  |   | 8,938,863   |   | 4,222,352   |   | 4,195,342   |   | 7,672,270   |  
|Earnings (loss) from               | 
|continuing operations              |  | 60,411      |   | 88,990      |   | (1,720,774  | ) | (16,811,300 | ) | (25,662,681 | )
|Results of discontinued operations |  | 1,043,996   |   | (300,053    | ) | 465,884     |   | 267,635     |   | (4,736,623  | )
|Net earnings (loss) for the year   |  | 1,104,407   |   | (211,063    | ) | (1,254,890  | ) | (16,543,665 | ) | (30,399,304 | )
|Basic and diluted earnings         | 
|(loss) per share from              | 
|continuing operations              |  | 0.01        |   | 0.01        |   | (0.40       | ) | (5.24       | ) | (9.53       | )
|Basic and diluted earnings         | 
|(loss) per share from              | 
|discontinued operations            |  | 0.09        |   | (0.04       | ) | 0.11        |   | 0.08        |   | (1.76       | )
|Basic and diluted net              | 
|earnings (loss) per share          |  | 0.10        |   | (0.03       | ) | (0.29       | ) | (5.16       | ) | (11.29      | )
|Weighted average number of         | 
|shares - basic                     |  | 10,758,604  |   | 6,207,360   |   | 4,356,751   |   | 3,206,996   |   | 2,692,364   |  
|Weighted average number of         | 
|shares - diluted                   |  | 11,209,906  |   | 8,041,236   |   | 4,356,751   |   | 3,206,996   |   | 2,692,364   |  
|                                   | 
|Consolidated Balance               |  | 2004        |   | 2003        |   | 2002        |   | 2001        |   | 2000        |  
|Sheet Data                         |  | $           |   | $           |   | $           |   | $           |   | $           |  
|Total assets                       |  | 35,166,098  |   | 11,736,414  |   | 9,971,214   |   | 7,139,984   |   | 23,130,477  |  
|Total liabilities                  |  | 3,130,526   |   | 3,716,276   |   | 3,270,019   |   | 2,704,141   |   | 6,206,329   |  
|Net assets                         |  | 32,035,572  |   | 8,020,138   |   | 6,701,195   |   | 4,435,843   |   | 16,924,148  |  
|Working capital                    |  | 27,528,003  |   | 4,351,746   |   | 3,357,422   |   | 2,202,718   |   | 5,898,756   |  
|Capital stock                      |  | 107,265,658 |   | 87,291,749  |   | 86,643,564  |   | 84,847,351  |   | 80,272,344  |  
|Additional paid-in capital         |  | 6,292,939   |   | 2,204,504   |   | 1,787,801   |   | 1,469,240   |   | 3,854,670   |  
|Deferred stock-based compensation  |  | (1,333,443  | ) | (262,806    | ) | (10,667     | ) | (418,727    | ) | --          |  
|Accumulated other comprehensive    | 
|gain (loss)                        |  | 360,884     |   | 441,564     |   | (275,693    | ) | (1,273,101  | ) | (3,557,609  | )
|Accumulated deficit                |  | (80,550,466 | ) | (81,654,873 | ) | (81,443,810 | ) | (80,188,920 | ) | (63,645,257 | )
|Shareholders' equity               |  | 32,035,572  |   | 8,020,138   |   | 6,701,195   |   | 4,435,843   |   | 16,924,148  |  
|                                   | 
|Other                              | 
|Cash dividends                     |  | None        |   | None        |   | None        |   | None        |   | None        |  

5

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Capitalization and
Indebtedness

NOT APPLICABLE.

Reasons for the Offer and Use of
Proceeds

NOT APPLICABLE.

Risk Factors

You should consider carefully the
following risk factors inherent in and affecting the Companys business, as well as
all other information set forth in this Annual Report on Form 20-F and in the reports and
other information that the Company files or furnishes with the SEC and/or OSC.

Our revenues depend to a high degree
on our relationship with two customers, the loss of which would adversely affect our
business and results of operations.

For the year ended December 31, 2004,
approximately 29% and 11% respectively of our revenues were derived from agreements with
our two largest customers. Revenues from these customers represented 33% and 8% of our
revenues in 2003 and 16% and 8% of our revenues in 2002. Although we monitor our accounts
receivable for credit risk deterioration and these customers have been paying their
payables to Mamma.com in accordance with the terms of their agreements with the Company,
there can be no assurance that they will continue to do so or that they will continue to
do so at the volume of business they have done historically. Our loss of these
customers business would adversely affect our business and results of operations.

We are the subject of an SEC
investigation which could depress the market price for our Common Shares, reduce the
liquidity of the Common Shares trading market and negatively affect our results of
operations.

We are the subject of an SEC
investigation described in Item 8 below under the heading FINANCIAL INFORMATION
 SEC Investigation. The scope, focus and subject matter of the SEC
investigation may change from time to time. Adverse developments in connection with the
investigation or our internal fact finding could have a negative impact on our company and
on how it is perceived by investors and potential investors and negatively impact our
results of operations. In addition, the management effort and attention required to
respond to the investigation and any such developments could have a negative impact on our
business operations. An adverse determination by the SEC in its investigation could result
in negative consequences for the Company, including initiation of enforcement proceedings,
fines, penalties and possibly other sanctions that could harm the Companys business,
reduce the market value of its Common Shares and negatively affect its results of
operations.

6

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Expenses relating to the SEC
investigation and the activities of our Special Independent Committee could negatively
affect our results of operations.

Our legal, public relations and
accounting expenses have increased considerably with estimated additional expenses in the
first quarter of 2005 of approximately $1 million reflecting costs associated with
responding to the SEC investigation. In addition, the independent investigation by our
Special Independent Committee incurred costs of approximately one-half million dollars.
These expenses will adversely impact our first quarter 2005 results. While we are not able
to estimate, at this time, the amount of the expenses that we will incur in future
connection with the investigation, we expect that they may continue to be significant.

Adverse Results in purported
securities class action lawsuits could result in significant damages and adversely affect
the Companys financial condition and results of operation.

On February 22, 2005, the first of
several purported securities class action lawsuits was filed in the United States District
Court, Southern District of New York against the Company, and certain of the
Companys current officers and directors. The plaintiffs allege, among other things,
violations of the Securities Exchange Act of 1934 for purportedly failing to disclose and
misrepresenting certain allegedly material facts relative the market for and trading in
the Companys stock, and seek unspecified damages. The purported class actions appear
to be based on unsubstantiated rumors and newspaper reports. The Company denies the
allegations against it, believes that the purported claims are without merit, and intends
to defend itself vigorously. Nevertheless, a finding of liability of the Company in any of
these class action lawsuits could result in significant damages and materially adversely
affect the Companys financial condition and results of operations.

We rely on our co-branded web site
partners for significant portion of our net revenues, and otherwise benefit from our
association with them. The loss of these co-branded web site partners could prevent us
from receiving the benefits from our association with these co-branded web site partners,
which could adversely affect our business.

We provide advertising, web search
and other services to members of our co-branded partner web sites. We expect the
percentage of our net revenues generated from this network to increase in the future. We
consider this network to be critical in the future growth of our net revenues. However,
some of the participants in this network may compete with us in one or more areas.
Therefore, they may decide in the future to terminate their agreements with us. If our
co-branded web site partners decide to use a competitors or their own web search or
advertising services, our net revenues would decline.

7

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We face competition from other
Internet companies, including web search providers, Internet advertising companies and
destination web sites that may also bundle their services with Internet access.

In addition to Microsoft, Yahoo and
Google, we face competition from other web search providers, including companies that are
not yet known to us. We compete with Internet advertising companies, particularly in the
areas of pay-for-performance and keyword-targeted Internet advertising. Also, we may
compete with companies that sell products and services online because these companies,
like us, are trying to attract users to their web sites to search for information about
products and services. The other main competitors are Ask Jeeves, Findwhat, Value Click,
FastClick, Burst Media and Tribal Fusion.

We also compete with destination web
sites that seek to increase their search-related traffic. These destination web sites may
include those operated by Internet access providers, such as cable and DSL service
providers. Because our users need to access our services through Internet access
providers, they have direct relationships with these providers. If an access provider or a
computer or computing device manufacturer offers online services that compete with ours,
the user may find it more convenient to use the services of the access provider or
manufacturer. In addition, the access provider or manufacturer may make it hard to access
our services by not listing them in the access providers or manufacturers own
menu of offerings. Also, because the access provider gathers information from the user in
connection with the establishment of a billing relationship, the access provider may be
more effective than we are in tailoring services and advertisements to the specific tastes
of the user.

There has been a trend toward
industry consolidation among our competitors, and so smaller competitors today may become
larger competitors in the future. If our competitors are more successful than we are at
generating traffic and advertising, our revenues may decline.

We face competition from traditional
media companies, and we may not be included in the advertising budgets of large
advertisers, which could harm our operating results.

In addition to Internet companies, we
face competition from companies that offer traditional media advertising opportunities.
Most large advertisers have set advertising budgets, a very small portion of which is
allocated to Internet advertising. We expect that large advertisers will continue to focus
most of their advertising efforts on traditional media. If we fail to convince these
companies to spend a portion of their advertising budgets with us, or if our existing
advertisers reduce the amount they spend on our programs, our operating results would be
harmed.

We expect our growth rates to decline
and anticipate downward pressure on our operating margin in the future.

We expect that in the future our
revenue growth rate will decline and anticipate that there will be downward pressure on
our operating margin. We believe our revenue growth rate will decline as a result of
anticipated changes to our advertising program revenue mix, increasing competition and the
inevitable decline in growth rates as our net revenues increase to higher levels. We
believe our operating margin will decline as a result of increasing competition and
increased expenditures for all aspects of our business as a percentage of our net
revenues, including product development and sales and marketing expenses. We also expect
that our operating margin may decline as a result of increases in the proportion of our
net revenues generated from our co-branded partner web sites. The margin on revenue we
generate from our co-branded partner web sites is generally significantly less than the
margin on revenue we generate from advertising on our web sites. Additionally, the margin
we earn on revenue generated from our co-branded partner web sites could decrease in the
future if our co-branded partners require a greater portion of the advertising fees.

8

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If we do not continue to innovate and
provide products and services that are useful to users, we may not remain competitive, and
our revenues and operating results could suffer.

Our success depends on providing
products and services that people use for a high quality Internet experience. Our
competitors are constantly developing innovations in web search, online advertising and
providing information to people. As a result, we must continue to invest significant
resources in research and development in order to enhance our web search technology and
our existing products and services and introduce new high-quality products and services
that people will use. If we are unable to predict user preferences or industry changes, or
if we are unable to modify our products and services on a timely basis, we may lose users,
advertisers and co-branded web site partners. Our operating results would also suffer if
our innovations are not responsive to the needs of our users, advertisers and co-branded
web site partners, are not appropriately timed with market opportunity or are not
effectively brought to market. As search technology continues to develop, our competitors
may be able to offer search results that are, or that are perceived to be, substantially
similar or better than those generated by our search services. This may force us to
compete on bases in addition to quality of search results and to expend significant
resources in order to remain competitive.

We generate all of our revenue from
advertising, and the reduction of spending by or loss of advertisers could seriously harm
our business.

We generated all of our net revenues
in 2004 from our advertisers. Our advertisers can generally terminate their contracts with
us at any time. Advertisers will not continue to do business with us if their investment
in advertising with us does not generate sales leads, and ultimately customers, or if we
do not deliver their advertisements in an appropriate and effective manner. If we are
unable to remain competitive and provide value to our advertisers, they may stop placing
ads with us, which could negatively affect our net revenues and business.

Our operating results may be subject
to fluctuations.

Our operating results may fluctuate as
a result of many factors related to our business, including the competitive conditions in
the industry, loss of significant customers, delays in the development of new services and
usage of the Internet, as described in more detail below, and general factors such as size
and timing of orders and general economic conditions.

9

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Volatility of stock price and trading
volume could adversely affect the market price and liquidity of the market for our Common
Shares.

Our Common Shares are subject to
significant price and volume fluctuations some of which result from various factors
including (a) changes in our business, operations, and future prospects, (b) general
market and economic conditions, and (c) other factors affecting the perceived value of our
Common Shares. Significant price and volume fluctuations have particularly impacted the
market prices of equity securities of many technology companies including without
limitation those providing communications software or Internet-related products and
services. Some of these fluctuations appear to be unrelated or disproportionate to the
operating performance of such companies. The market price and trading volume of our Common
Shares has been, and may likely continue to be, volatile, experiencing wide fluctuations.
During the sixteen-month period ended April 30, 2005, the closing per share price of our
Common Shares has varied from $3.26 to $15.90. During that same period, the daily trading
volume of our Common Shares has varied between 27,000 and 68,314,304 with an average daily
trading of 2,806,539 Common Shares. Future market conditions may adversely affect the
market price and trading volume of our Common Shares. Furthermore, should the market price
of our Common Shares drop below the $1.00 per share minimum bid price requirement, our
Common Shares risk being delisted from the NASDAQ SmallCap Market®, which would have
an adverse effect on our business and liquidity of our Common Shares. Brokerage firms may
not provide a market for low-priced stock, may not recommend low-priced stock to their
clients and may charge a greater percentage commission on low-priced stock than that which
they would charge on a transaction of a similar dollar amount but fewer shares. These
circumstances may adversely impact trading in our Common Shares and may also adversely
affect our ability to access capital.

Infringement and liability claims
could damage our business.

We may be subject to infringement or
liability claims. From time to time, we have been, and expect to continue to be, subject
to third party claims in the ordinary course of business. Any such claims may damage our
business, including by (i) subjecting us to significant liability for damages, (ii)
resulting in invalidation of our proprietary rights, (iii) being time-consuming and
expensive to defend even if such claims are not meritorious; and (iv) resulting in the
diversion of managements time and attention. Liability claims may also arise in
relation to business conducted via and information retrieved from the Internet, including
claims for defamation, negligence, copyright or trademark infringement, personal injury or
other theories based on the nature, content, publication and distribution of materials or
the transaction of business via the Internet. Although we, via their contractual
arrangements, seek to limit the scope of potential claims, there can be no assurance that
any such contractual arrangements will adequately protect us against such claims.

Historical net results include net
earnings in 2004 and net losses in the previous four years; working capital may be
inadequate.

We have reported net earnings in 2004
and net losses in the previous four years. We have been financing operations mainly from
funds obtained in several private placements, from exercised warrants and options, and
from positive cash flow from continuing operations in 2004. Management considers that cash
and cash equivalents as at December 31, 2004 will be sufficient to meet normal operating
requirements throughout fiscal 2005. In the longer term, however, the Company may need
additional liquidity to fund growth, which could include additional equity offerings or
debt financing in the future. We cannot assure you that we will be successful in obtaining
any such additional required funding in the future.

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Goodwill may be written-down in the
future.

Goodwill is evaluated for impairment
annually, or when events or changed circumstances indicate impairment may have occurred.
Management monitors goodwill for impairment by considering estimates including discount
rate, future growth rates, amounts and timing of estimated future cash flows, general
economic, industry conditions and competition. Future adverse changes in these factors
could result in losses or inability to recover the carrying value of the goodwill
consequently, our goodwill, which amounts to approximately $1.4M as at December 31, 2004,
may be written-down in the future which could adversely effect our financial position.

Long-lived assets may be written-down
in the future.

The Company assesses the carrying
value of its long-lived assets, which include property, plant and equipment and intangible
assets, for future recoverability when events or changed circumstances indicate that the
carrying value may not be recoverable. Management monitors long-lived assets for
impairment by considering estimates including discount rate, future growth rates, general
economic, industry conditions and competition. Future adverse changes in these factors
could result in losses or inability to recover the carrying value of the long-lived
assets. Consequently, our long-lived assets, which amounts to approximately $2.4M as at
December 31, 2004, may be written-down in the future.

Minority interest in LTRIM
Technologies Inc. may be written-down in the future.

During the past years, we acquired
minority interests in companies that develop and market analog integrated circuit
products, new media and telecommunications sectors as a technology incubator. In February
2001,we announced a moratorium on new incubator activities. On a regular basis, we
reassess our minority interests to determine if there is other than temporary decline in
its value. All our minority interests except the investment in LTRIM Technologies Inc.
(LTRIM) have been written-down to nil as of December 31,2002. LTRIM is a
corporation in the development stage. As at December 31, 2004, based on its assessment of
the fair value of the Companys investment in LTRIM Technologies Inc., the Company
concluded that its investment had suffered a loss in value other than a temporary decline
and therefore recorded a write-down of $365,286. Consequently, our investment in LTRIM,
which has been written-down to $720,000 in 2004, may be written-down again in the future.

Reduced Internet use may adversely
affect our results.

Our business is based on Internet
driven products and services including direct on-line Internet marketing. The emerging
nature of the commercial uses of the Internet makes predictions concerning a significant
portion of our future revenues difficult. As the industry is subject to rapid changes, we
believe that period-to-period comparisons of its results of operations will not
necessarily be meaningful and should not be relied upon as indicative of our future
performance. It is also possible that in some fiscal quarters, our operating results will
be below the expectations of securities analysts and investors. In such circumstances, the
price of our Common Shares may decline. The success of a significant portion of our
operations depends greatly on increased use of the Internet by businesses and individuals
as well as increased use of the Internet for sales, advertising and marketing. It is not
clear how effective Internet related advertising is or will be, or how successful
Internet-based sales will be. Our results will suffer if commercial use of the Internet,
including the areas of sales, advertising and marketing, fails to grow in the future.

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Security breaches and privacy
concerns may negatively impact our business.

Consumer concerns about the security
of transmissions of confidential information over public telecommunications facilities is
a significant barrier to increased electronic commerce and communications on the Internet
that are necessary for growth of the Companys business. Many factors may cause
compromises or breaches of the security systems we use or other Internet sites use to
protect proprietary information, including advances in computer and software functionality
or new discoveries in the fields of cryptography and processor design. A compromise of
security on the Internet would have a negative effect on the use of the Internet for
commerce and communications and negatively impact our business. Security breaches of their
activities or the activities of their customers and sponsors involving the storage and
transmission of proprietary information, such as credit card numbers, may expose our
operating business to a risk of loss or litigation and possible liability. We cannot
assure that the measures in place are adequate to prevent security breaches.

Increased regulation of the Internet
may adversely affect our business.

If the Internet becomes more strongly
regulated, a significant portion of our operating business may be adversely affected. For
example, there is increased pressure to adopt laws and regulations relating to Internet
unsolicited advertisements, privacy, pricing, taxation and content. In particular, the
United States government recently enacted the CAN SPAM Act of 2003 that, among other
matters, regulates certain aspects of e-mail marketing, such as the opt-in e-mail
marketing our Digital Arrow subsidiary engages in. The enactment of any additional laws or
regulations may impede the growth of the Internet and our Internet-related business, and
could place additional financial burdens on us and our Internet-related business.

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Changes in key personnel, labour
availability and employee relations could disrupt our business.

Our success is dependent upon the
experience and abilities of our senior management and our ability to attract, train,
retain and motivate other high-quality personnel, in particular for our technical and
sales teams. There is significant competition in our industries for qualified personnel.
Labour market conditions generally and additional companies entering industries which
require similar labour pools could significantly affect the availability and cost of
qualified personnel required to meet our business objectives and plans. Although we have
implemented certain compensatory, retention incentives for several of our key employees,
there can be no assurance that we will be able to retain our existing personnel or that we
will be able to recruit new personnel to support our business objectives and plans. We
believe our employee relations are good. Currently, none of our employees are unionized.
There can be no assurance, however, that a collective bargaining unit will not be
organized and certified in the future. If certified in the future, a work stoppage by a
collective bargaining unit could be disruptive and have a material adverse effect on us
until normal operations resume.

Possible future exercise of warrants
and options could dilute existing and future shareholders.

As at April 30, 2005, we had 646,392 warrants
and 461,334 stock options outstanding. As at April 30, 2005, the exercise prices of all
our outstanding warrants and 83% of our outstanding options issued pursuant to our stock
option plan are higher than the market price of our Common Shares. While the market value
of the Common Shares is below the bulk of the respective exercise prices of some or all
the warrants and options, the exercise at April 30, 2005 of all such options with such
lower exercise prices could result in the issuance of up to an additional 78,334 Common
Shares. To the extent such shares are issued, the percentage of our Common Shares held by
our existing stockholders will be reduced. Under certain circumstances the conversion or
exercise of any or all of the warrants or stock options might result in dilution of the
net tangible book value of the Common Shares held by existing Company stockholders. For
the life of the warrants and stock options, the holders are given, at prices that may be
less than fair market value, the opportunity to profit from a rise in the market price of
the shares of Common Shares, if any. The holders of the warrants and stock options may be
expected to exercise them at a time when the Company may be able to obtain needed capital
on more favourable terms. In addition, we reserve the right to issue additional shares of
Common Shares or securities convertible into or exercisable for shares of Common Shares,
at prices, or subject to conversion and exercise terms, resulting in reduction of the
percentage of outstanding Common Shares held by existing stockholders and, under certain
circumstances, a reduction in the net tangible book value of existing stockholders
Common Shares.

Strategic acquisitions and market
expansion present special risks.

The Company seeks to grow its
business and expand its markets both internally and by future appropriate acquisitions. A
future decision to expand our business through acquisitions of other businesses and
technologies presents special risks. Acquisitions entail a number of particular problems,
including (i) difficulty integrating acquired technologies, operations, and personnel with
the existing businesses, (ii) diversion of managements attention in connection with
both negotiating the acquisitions and integrating the assets as well as the strain on
managerial and operational resources as management tries to oversee larger operations,
(iii) exposure to unforeseen liabilities relating to acquired assets, and (iv) potential
issuance of debt instruments or securities in connection with an acquisition possessing
rights that are superior to the rights of holders of the our currently outstanding
securities, any one of which would reduce the benefits expected from such acquisition
and/or might negatively affect our results of operations. We may not be able to
successfully address these problems. We also face competition from other acquirers, which
may prevent us from realizing certain desirable strategic opportunities.

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We do not plan to pay dividends on
the Common Shares.

We have never paid dividends on any
class of our shares. Our management anticipates that any earnings generated from our
operations will be used to finance our working capital and potential market expansion
opportunities and that for the foreseeable future cash dividends will not be paid to
holders of the Common Shares.

Rapidly evolving marketplace and
competition may adversely impact our business.

The markets for our products and services
are characterized by (i) rapidly changing technology, (ii) evolving industry standards,
(iii) frequent new product and service introductions, (iv) shifting distribution channels,
and (v) changing customer demands. The success of the Company will depend on its ability
to adapt to its rapidly evolving marketplaces. There can be no assurance that the
introduction of new products and services by others will not render our products and
services less competitive or obsolete. We expect to continue spending funds in an effort
to enhance already technologically complex products and services and develop or acquire
new products and services. Failure to develop and introduce new or enhanced products and
services on a timely basis might have an adverse impact on our results of operations,
financial condition and cash flows. Unexpected costs and delays are often associated with
the process of designing, developing and marketing enhanced versions of existing products
and services and new products and services. The market for our products and services is
highly competitive, particularly the market for Internet products and services which lacks
significant barriers to entry, enabling new businesses to enter this market relatively
easily. Competition in our markets may intensify in the future. Numerous well-established
companies and smaller entrepreneurial companies are focusing significant resources on
developing and marketing products and services that will compete with the Companys
products and services. Many of our current and potential competitors have greater
financial, technical, operational and marketing resources. We may not be able to compete
successfully against these competitors. Competitive pressures may also force prices for
products and services down and such price reductions may reduce our revenues.

An inability to protect our
intellectual property rights could damage our business.

We rely upon a combination of trade
secret, copyright, trademark and other laws to protect our intellectual property assets.
We have entered into confidentiality agreements with our management and key employees with
respect to such assets and limit access to, and distribution of, these and other
proprietary information. However, the steps we take to protect our intellectual property
assets may not be adequate to deter or prevent misappropriation. We may be unable to
detect unauthorized uses of and take appropriate steps to enforce and protect our
intellectual property rights. Although senior management believes that our services and
products do not infringe on the intellectual property rights of others, we nevertheless
are subject to the risk that such a claim may be asserted in the future. Any such claims
could damage our business.

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To the extent our net revenues are
paid in foreign currencies, and currency exchange rates become unfavourable, we may lose
some of the economic value of the net revenues in U.S. dollar terms.

Although we currently transact a
majority of our business in U.S. dollars, as we expand our operations more of our
customers may pay us in foreign currencies. Conducting business in currencies other than
U.S. dollars subjects us to fluctuations in currency exchange rates. If the currency
exchange rates were to change unfavorably, the value of net receivables we receive in
foreign currencies and later convert to U.S. dollars after the unfavorable change would be
diminished. This could have a negative impact on our reported operating results. We do not
currently engage in hedging strategies, such as forward contracts, options and foreign
exchange swaps related to transaction exposures to mitigate this risk. If we determine to
initiate such hedging activities in the future, there is no assurance these activities
will effectively mitigate or eliminate our exposure to foreign exchange fluctuations.
Additionally, such hedging programs would expose us to risks that could adversely affect
our operating results, because we have limited experience in implementing or operating
hedging programs. Hedging programs are inherently risky and we could lose money as a
result of poor trades.

Higher inflation could adversely
affect our results of operations and financial condition.

We do not believe that the relatively
moderate rates of inflation experienced in the United States and Canada in recent years
have had a significant effect on our revenues or profitability. Although higher rates of
inflation have been experienced in a number of foreign countries in which we might
transact business, we do not believe that such rates have had a material effect on our
results of operations, financial condition and cash flows. Nevertheless, in the future,
high inflation could have a material, adverse effect on the Companys results of
operations, financial condition and cash flows.

Period-to-period comparisons may not
be indicative of future results and performance.

A variety of factors may cause
period-to-period fluctuations in the Companys operating results, including business
acquisitions, revenues and expenses related to the introduction of new products and
services or new versions of existing products, new or stronger competitors in the
marketplace as well as currency fluctuations. Historical operating results are not
indicative of future results and performance.

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ITEM 4.    INFORMATION ON THE COMPANY

HISTORY
OF THE COMPANY

The Company was incorporated as
Quartet Management Ltd. on July 5, 1985, pursuant to the Business Corporations Act
(Ontario), promulgated under the laws of the Province of Ontario, Canada. The
Companys name was then changed to Health Care Products, Inc. on March 18, 1987, then
to Celltech Media Inc. on March 25, 1994, and again changed on June 28, 1995 to Smartel
Communications Corporation. On July 26, 1996, the Company received shareholder approval to
change its name to Intasys Corporation. On January 6, 2004, the Company received
shareholder approval to change its name to Mamma.com Inc. On May 31, 2004, the wholly
owned subsidiary, Mamma.com Enterprises Inc. was wound up and merged into the Company.

The Company maintains its registered
head office c/o Goodmans LLP, 250 Yonge Street, Suite 2400, Toronto, Ontario, Canada M5B
2M6.

FINANCING

Recent Financings

On June 30, 2004, the Company sold
under a securities purchase agreement an aggregate of 1,515,980 common shares and 606,392
warrants to certain accredited investors for an aggregate price of $16,599,981. Net
proceeds from the offering amounted to $15,541,162, net of issue cost of $1,058,819,
$996,000 of which was paid to Merriman Curhan Ford & Co. (MCF). For this
specific transaction, MCF waived their entitlement to a warrant component of the financing
completion fee. Each warrant entitles the accredited investors to purchase one additional
common share at an exercise price equal to $15.82 per share. The warrants will be
exercisable beginning six months after the closing date, and will have a term of five
years from the closing date.

On December 12, 2002, the Company
entered into subscription agreements to sell 1,893,939 Units, for a purchase price of
$1.32 per Unit or total proceeds of $2.5 million. Each Unit consisted of one share of
Common Shares plus one nontransferable A Warrant that entitled the holder to
purchase one additional Common Share at a price of $1.40 on or before November 30, 2004.
Only in the event and upon the exercise of each respective A Warrant, the holder thereof
was entitled to be issued one B Warrant that would entitle such holder to
purchase one additional Common Share at a price of $1.50 on or before November 30, 2006. A
placement fee of 142,045 Units was paid to a placement agent for arranging this financing
and the A and B warrants attached were exercised in September 2003 and November 2003
respectively. A sum of $5,904,354 accrued to the treasury of the Company and a further
4,071,968 common shares of the Company were issued.

On August 6, 2001, the Company
entered into subscription agreements to sell 600,000 Units, for a purchase price of $1.50
per Unit or total proceeds of $900,000. The Units were comprised of, in the aggregate, (i)
600,000 shares of Common Shares of the Company, (ii) 600,000 non-transferable warrants
which entitled the holders thereof to purchase, until August 14, 2003, an aggregate of
600,000 shares of Common Shares of the Company at a price of US$2.40 per share (the
Class A Warrants) and (iii) on condition that the Class A Warrants had been
exercised, 400,000 non-transferable warrants which would entitle the holders thereof to
purchase, for a period of one year from the exercise of the Class A Warrants, an aggregate
of 400,000 shares of Common Shares of the Company at a price of US$2.50 per share (the
Class B Warrants). A placement fee of 54,000 Units (comprised of, in the
aggregate, 54,000 shares of Common Shares of the Company, 54,000 Class A Warrants and
36,000 Class B Warrants) was paid to a placement agent for arranging this financing. None
of these warrants were exercised and they expired at the close of trading on August 14,
2003.

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Recent agreements

Merriman Curhan Ford
& Co.

On March 16, 2004, the Company
retained Merriman Curhan Ford & Co. (MCF) as a financial advisor and as an
investment banking advisor. The Company then signed two separate agreements. In
consideration for financial services, the Company had committed to pay MCF a monthly fee
of $5,000 for a minimum obligation of $30,000 and 10,000 warrants per month with a minimum
issuance of 60,000 warrants, each warrant give the rights to purchase one common share of
the Company. Warrants are issuable at an exercise price equal to the average closing bid
for the last five trading days at the end of the month of issue, for the duration of the
agreement upon the same terms and conditions. The warrants have a life of five years from
the issuance date. For the investment banking services, the Company had committed to pay a
cash financing completion fee equal to 6% of the total amount of capital received by the
Company from the sale of its equity securities and warrants to purchase common shares of
the Company in an amount equal to 6% of the number of common shares purchased by investors
in capital raising transactions. The warrants are immediately exercisable at the higher of
the price per share at which the investor can acquire common shares or the closing price
of the Companys common shares at the date of the capital raising transaction. For
merger and acquisition, the Company had committed to pay a success fee upon closing equal
to the sum of 4% of up to $10,000,000 transaction value, 3% of $10,000,000 to $15,000,000
transaction value and 2% of greater than $15,000,000 transaction value, provided that MCF
either introduces and/or performs specific services for the transaction. The minimum
success fee for a transaction is $200,000. For a sale transaction, the Company had
committed to pay a success fee with same parameters of an acquisition except for the
minimum fee which is $500,000.

On July 16, 2004, the agreement for
financial services, dated March 16, 2004 was amended. The Company committed to pay MCF a
monthly fee of $5,000 for eight months from July 16, 2004. The agreement for investment
banking services was amended on July 16, 2004 and subsequently amended on September 8,
2004. The Company then is committed to pay a success fee upon closing equal to the sum of
3% of up to $20,000,000 transaction value, 1.5% of the excess of $20,000,000. If an
acquisition transaction is less than 50% interest in the Company or the Target, a fee
shall be payable in cash for 7% of the transaction value. If transaction is not
consummated and the Company is entitled to receive break-up fee and other form of
compensation, the Company then will pay to MCF 30% of Companys entire entitlement.

For the period ended December 31,
2004, 40,000 warrants were issued to MCF at an average price of $12.31.

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Maxim Group, LLC

On January 29, 2003, the Company
retained Maxim Group LLC (Maxim), on a non-exclusive basis, as its investment
banker, strategic advisor and financial advisor. In consideration for these services, the
Company paid a retainer of $25,000 for the first month and a monthly fee of $5,000 for the
duration of the agreement. Upon execution of the agreement, the Company issued a warrant
to purchase 25,000 of the Companys Common Shares at an exercise price of $2.15
expiring on June 30, 2006. Under the agreement, on a monthly basis, commencing 30 days
after execution of the agreement, the Company was obligated to issue additional warrants,
each to purchase 8,000 Common Shares, at an exercise price equal to the market price, for
the duration of the agreement upon the same terms and conditions. For any Transaction
completed by the Company with Maxim Group LLC, the Company agreed to pay a success fee
upon closing equal to the sum of 2 1⁄2% of the aggregate transaction value, provided
that Maxim either introduced and/or performed specific services for the Transaction. The
minimum success fee for any transaction was $200,000. On May 5, 2003, an amendment was
made to the agreement to increase the success fee for a specific Transaction from
21⁄2% to 31⁄2%.

The term of this agreement was
indefinite. However, the Company or Maxim could terminate it upon 30 days written notice.
If such a notice was sent by the Company, the monetary consideration was payable by the
Company for the ensuing five months; however, the warrant consideration would cease after
the 30 days written notice. If Maxim sent such a notice, both the monetary and warrant
consideration will cease immediately. The preceding statements notwithstanding, the
agreement could also be terminated upon 30 days written notice by either party any time
after the 6th month anniversary of the agreement. On October 30, 2003 the Company advised
Maxim of termination of this agreement effective November 30, 2003. In 2003, the Company
granted a total of 105,000 warrants at an average price of $2.50 to Maxim Group LLC for
financial advisory fees.

Maxim Group was paid a $200,000
success fee related to the acquisition of Digital Arrow in June 2004.

As at March 30, 2005, Maxim Group,
LLC had exercised all its warrants.

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Global Capital Securities
Corporation

On August 15, 2001, the Company
retained Global Capital Securities to render financial services for an 18-month period
terminating on January 31, 2003. Consideration paid by the Company for these consulting
services consisted of the issuance of 150,000 unvested common shares and 250,000 unvested
warrants with an exercise price of $2.75 per share. On April 19, 2002, all of these shares
and warrants were transferred by Global to Lomond International Inc., which agreed to
continue providing the services in accordance with the original agreement. On June 19,
2002, the Company and Lomond modified the terms of the agreement and consequently all the
warrants were returned to the Company for cancellation.

ACQUISITIONS

Copernic Technologies Inc.

On November 25, 2004, the Company
announced the execution of a letter of intent to acquire Copernic Technologies Inc.
(Copernic). On April 14, 2005, Copernic advised the Company that it had
decided not to pursue the sale transaction. The Company, which had expected to sign
definitive agreements and close before May 31, 2005, may be entitled to break fees under
the letter of intent of up to $1.5 million and other relief may be available.

Acquisition of Digital Arrow LLC and
High Performance Broadcasting, Inc. by Mamma

On June 10, 2004, the Company
acquired the business of Digital Arrow LLC and High Performance Broadcasting, Inc.,
(Digital Arrow) privately held marketing companies that are engaged in the
distribution of on-line, opt-in e-mail marketing solutions via the Internet. In that
acquisition, the wholly owned subsidiary, Mamma.com USA, Inc., entered into a Securities
Purchase Agreement with Digital Arrow and their equity holders, pursuant to which
Mamma.com USA, Inc. acquired all equity interests in Digital Arrow. The consideration for
the acquisition, including costs directly related to the acquisition, consisted of
$1,264,210 in cash, net of cash acquired, and 90,000 of the Companys common shares.
The fair value of the Company shares issued to owners of Digital Arrow has been determined
to be $8.23 per share. This value has been determined using the average closing price of
the Companys common stock for five days before and five days after March 3, 2004,
the date the significant terms and conditions of the transaction were agreed to and
publicly announced.

Acquisition of focusIN
assets by Mamma

On November 27, 2002, the Company
acquired certain of the assets of the focusIN business of ZAQ Inc. in exchange for a total
cash consideration amounting to $1,625,151, including costs directly related to the
acquisition. This acquisition has been accounted for using the purchase method. The net
earnings of the business have been included in the Companys financial statements
from the above-noted date of acquisition. focusIN is an on-line media placement business
with a current base of over 5,000 client web sites. These sites, with monthly traffic of
25 million unique users and more than 700 million page impressions, cover a wide array of
vertical markets, mostly in the United States.

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Acquisition of Remaining Minority
Shareholder Interests in Mamma.com Enterprises Inc.

On July 5, 2001, the Company acquired
the remaining minority shareholders interests in Mamma.com Enterprises Inc. for a
cash consideration of $1,263,946 and issuance from treasury of 436,898 of the
Companys Common Shares, valued at $2.50 per share. Concurrently with this
transaction, the Company acquired all outstanding options to acquire shares of Mamma.com
Enterprises Inc. for a cash consideration of $158,221 and the issuance of 42,977 options
to acquire shares of the Companys Common Shares, at an exercise price of $1.50 per
share, which are scheduled to expire on July 17, 2011.

INCUBATOR
ACTIVITIES

In February 2001, the Company
announced a moratorium on new incubator activities in its incubator management segment.

LTRIM Technologies Inc.
(LTRIM)

LTRIM is engaged in the design and
development of high-performance analog integrated circuit products. LTRIMs
proprietary core technology consists of a laser-based fine-tuning system designed to set
the electrical characteristics of high-performance analog integrated circuits by precisely
adjusting the resistance of silicon-embedded resistive elements that are fabricated
through standard semiconductor manufacturing processes. It is expected that this
technology will have advantages over conventional circuit fine-tuning techniques, in terms
of manufacturing cost, integration, and time-to-market, when applied to the production of
high-performance analog semiconductor products.

On May 4, 2000, the Company initiated
a series of transactions pursuant to which it subscribed to a CA$850,000 secured debenture
convertible into 12.75% of the equity of LTRIM. On February 23, 2001, the Company started
acquiring preferred shares by step purchase and by May 2001, a total of 207,323 preferred
shares were subscribed to and entirely paid. These shares were subsequently split 10 for
1, resulting in 2,073,230 shares.

On December 13, 2002, LTRIM closed
the first round of an intended two-round financing transaction with new investors. As part
of the transaction, the Company converted all preference shares and the secured debenture
into 4,891,686 Class A Common Shares. Accrued interest on the debenture in the amount of
CA$137,014 (US$80,038) was converted into 359,281 Class A preference shares. On February
11, 2004, LTRIM closed the second round of financing. After this transaction, the Company
owns approximately 12% of LTRIM.

As at December 31, 2004, based on its
assessment of the fair value of the Companys investment in LTRIM Technologies Inc.,
the Company concluded that its investment had suffered a loss in value other than a
temporary decline and therefore recorded a write-down of $365,286. As at December 31,
2004, the investment in LTRIM was then at $720,000.

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interWAVE Communications
International, Ltd. (interWAVE)

interWAVE is a pioneer in the design
of micro cellular wireless network systems and a global provider of cost-effective compact
wireless network solutions for the cellular and PCS (Personal Communications Systems)
market. interWAVE solutions seek to address the competitive needs of todays wireless
communications service providers by offering them innovative solutions to economically
improve and expand their services. interWAVEs all-in-one solution was the first
product of its kind to integrate a GSM (Global System for Mobile Communications) switch,
base station controller and base receiver station in a compact enclosure approximately the
size of a personal computer tower.

In August 1999, Mamma acquired
715,000 preferred shares of interWAVE for $5.05 million. These preferred shares are
convertible into 715,000 Common Shares and share purchase warrants that entitle the
Company to purchase another 715,000 Common Shares at $1 per share. In January 2000, Mamma
exercised its 715,000 warrants and received a corresponding number of Common Shares of
interWAVE. In 2001, the Company purchased an additional 6,000 Common Shares for $5,470. By
March 31, 2002, the Company had sold its entire 1,436,000 Common Shares of interWAVE for a
total cash consideration of $1,956,291. Between August 1999 and March 2002, the Company
wrote-down $4,027,310 of the value of its marketable interWAVE securities due to a decline
in market value.

Tri-Link Technologies
Inc. (Tri-Link)

Tri-Link is a developer of integrated
(voice, video and data) computer telephony solutions. Formed in 1998, it is headquartered
in Vancouver, British Columbia. Tri-Links Vortex was a standard-based, open
platform product that integrates seamlessly with third party applications. It has unique
networking technology that allows it to augment and deliver the advanced high-speed
services of telephone and cable companies, while guaranteeing voice and video quality.
Customers installing Vortex economically deliver three integrated networks over a
single standard copper wire to each user. This includes an advanced PBX telephone network,
a high-quality video conferencing network, and a high-throughput data network.
Vortex also included advanced Internet features, including free IP long distance and
seamless network integration to high-speed services. In September 2000, the Company
subscribed to $1.35 million of convertible preferred shares. Subsequent to this initial
investment, the Company made a total of $158,430 in advances and accrued interests to
temporarily finance Tri-Link during its restructuring period. As at December 31st, 2001,
the entire investment was written down and as at March 31st, 2002 all temporary advances
and accrued interests were also written down when management realized that these temporary
advances would not be reimbursed due to economic reasons. In 2002, the Company acquired
2,553,650 preference shares of Tri-Link Technologies for $1,612 which was a preferred
price due to the fact that the Company made advances in 2001. In 2002, the remaining
balance of $1,612 was written off. We understand that Tri-Link sold the Vortex
technology and products in 2003.

21

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TEC
TechnologyEvaluation.com Corporation (TEC)

TEC is a source of Web-based B2B
information on technology trends, vendors and products. TEC also provides more
comprehensive advice, consultation and evaluation services off-line on a fee or paid
subscription basis.

On March 30, 2000, the Company
acquired a 6% secured debenture of $2.625 million issued by TechnologyEvaluation.com
(TEC.com) for a cash consideration of $1.625 million and in exchange for a
$1.0 million note receivable and accrued interest.

On November 9, 2000, TECE, Inc.
(TECE), a then publicly traded corporation listed on the OTC BB in the United
States under the symbol TENC, acquired a controlling interest in TEC.com from certain of
its major shareholders, including Mamma. As part of the transaction, the Company
transferred its $2.625 million secured convertible debenture plus accrued interest in an
amount of $114,538 in exchange for 6,522,710 shares of TECEs common stock. At the
same time, the Company subscribed to a non-interest-bearing note receivable of $344,914 to
temporarily finance TECE during its restructuring period, the full amount was agreed to be
reimbursed after the financial restructuring was completed. The note receivable was issued
for a cash consideration of $250,000 and a fee of $94,914. During 2001, the investment was
entirely written down due to an other than temporary decline in its value. Moreover, the
advances of $907,227 were written down to nil. We understand that TECE has terminated its
registration under the US Securities Exchange Act and therefore is no longer listed on the
OTC BB.

In 2002, TECE restructured its
capital. As part of this transaction, the Company converted its 6,522,710 shares of
TECEs common stock, its non-interest-bearing note receivable of $344,914 and all
advances into 5,000,000 common shares representing approximately 7% of TECEs new
capital structure.

uPATH.com Inc.
(uPATH)

uPATH is an Internet communications,
commerce and media company, targeting the 18 to 24 year old market and providing a branded
network of services to Internet users. uPATHs mission is to provide cutting-edge
content and technology to on-line users. uPATH had created a focused business model that
targets college and university students and urban youth. uPATH offers them
highly focused on-line content. On May 25, 2000, the Company acquired a 30% equity
interest in uPATH for CA$1 million. As of December 31, 2001, this investment was written
down to its net realizable value of $50,000. The Company then determined to divest itself
of this investment. During 2002, the Company wrote-down the remaining balance of the
investment to nil. On August 28, 2003, the Company sold its entire investment in uPATH for
$32,499.

ESP Media Inc.
(ESP)

In August 2000, the Company agreed to
subscribe to up to CA$4,000,000 in exchange for a 26.7% equity interest in ESP, a startup
wireless service provider offering a sponsored, mobile telephony service that partners
sponsors with specific target markets. By December 31, 2000, the Company had subscribed to
CA$2,200,000 of shares but thereafter ceased its subscription as a result of ESP missing
certain required milestones. Also as of that date, the Company wrote off its entire
investment in ESP. In May 2001, ESP ceased its operations and made a voluntary assignment
of its assets into bankruptcy. ESP no longer had the funds to pursue its business plan.
ESPs success depended in large part on advertising revenues from major clients,
which it failed to obtain.

22

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DIVESTITURE OF
INTASYS
BILLING
TECHNOLOGIES
SUBSIDIARIES (IBT)

In July 2003, the board of directors
of the Company decided to divest of their wireless billing technology business in order to
concentrate exclusively on its profitable and growing metasearch engine and on-line
marketing business, Mamma.com Enterprises Inc. On September 9, 2003, the Company announced
that it had reached a verbal agreement to sell the assets of IBT. Consequently, the
results of operations and cash flows for IBT have been reported separately as discontinued
operations in the consolidated statement of operations and cash flows, and the assets and
liabilities of IBT have been reclassified on the consolidated balance sheets included in
this Annual Report on Form 20-F (Consolidated Balance Sheet). Comparative
figures for the year ended December 31, 2002 have been reclassified in the consolidated
financial statements and for the years ended December 31, 2001 and 2000 in the selected
financial information.

On February 12, 2004, the Company
concluded the sale of IBTs assets which include contracts, customer lists,
intellectual property, fixed assets and tangible and intangible assets relating to the
business.

The proceeds of disposal was
$1,699,185 with a gain on disposal of $1,588,923 which has been included in the
Results of discontinued operations line in the consolidated statements of
operations. The Company may be entitled to additional consideration of up to a maximum of
$250,000 should certain events occur or conditions be met. As of December 31, 2004, an
amount of $100,000 of such contingent consideration had been earned by the Company and
recorded in results of discontinued operations. The Company recorded, for 2004, net costs
for an amount of $544,927 which represented the net of revenue of $621,296 and expenses of
$1,166,223 including closing costs. An amount of $148,000 has been kept in escrow and will
be released in the second quarter of 2005.

IBT developed, marketed, sold,
installed and maintained billing and customer care and mediation software for customers
operating in the telecommunications industry. Customers include cellular operators
(analog, digital, GSM) and fixed line operators. Typical customers purchase network
capacity from network operators for resale. IBT focused on achieving growth by penetrating
projected wireless subscriber growth in emerging markets, particularly the rapidly
developing small network operator market in Asia-Pacific.

RELOCATION OF
PRINCIPAL
EXECUTIVE
OFFICES

In August 2001, the Company relocated
its principal executive offices to 1800 McGill College Avenue, Suite 2811, Montreal,
Quebec, Canada H3A 3G5, where it leased approximately 3,000 square feet of office space.
By January 2002, in its continued effort to reduce operating costs, the Company relocated
its principal executive offices to 388 St. Jacques Street, 8th Floor, Montreal, Quebec,
Canada H2Y 1S1.

23

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NASDAQ® Panel HearingAmendment to Articles of
Incorporation  Consolidation of Companys Common Shares

On April 9, 2001, the Company
received a NASDAQ Staff Determination stating the Company had failed to comply with the
minimum bid price requirement for continued listing and as a result, was subject to
delisting from the NASDAQ SmallCap Market®. On May 24, 2001, at the Companys
Annual and Special Meeting of Shareholders, the shareholders approved a special resolution
conferring authority on the Companys Board of Directors to amend the articles of the
Company in order to consolidate all of the issued and outstanding Common Shares of the
Company on the basis of one post-consolidation common share for every two to ten
pre-consolidation Common Shares at the discretion of the Board of Directors at any time
prior to the next meeting of shareholders. On June 7, 2001, the Company had an oral
hearing before the NASDAQ Listing Qualification Panel (Panel). At this
hearing, the Company presented a plan for achieving long-term compliance with the minimum
bid price requirement, which plan included the above-mentioned consolidation. On July 2,
2001, the Panel issued an order to maintain the Companys listing, provided the
Companys securities evidenced a closing bid price of at least $1.00 per share on or
before July 25, 2001 and for a minimum of ten consecutive trading days immediately
thereafter and provided the Company also demonstrated compliance with all other
requirements for continued listing on the NASDAQ SmallCap Market®. On July 11, 2001,
the Company filed articles of amendment consolidating its issued and outstanding Common
Shares on the basis of one post-consolidation common share for every ten pre-consolidation
Common Shares. The Companys Common Shares started trading on the NASDAQ SmallCap
Market® on a consolidated basis at the opening of the markets on July 13, 2001. As of
that date and for a period of twenty trading days thereafter, a D was appended
to the Companys trading symbol so the trading community would be aware of the
consolidation. On August 6, 2001, the Panel determined that the Company had met the
conditions of its July 2, 2001 order for continued listing on the NASDAQ Small Cap
Market®.

BUSINESS
OVERVIEW

NATURE OF
OPERATIONS AND
PRINCIPAL
ACTIVITIES

Mamma is focused on (i) providing
information retrieval on the Internet through its metasearch engine, www.mamma.com, The
Mother of All Search Engines®. (ii) being a provider of online marketing solutions to
advertisers via keyword search listings and numerous sizes of graphic ad units (banners),
and (iii) delivering targeted e-mail marketing services strategies and campaigns to
advertisiers. Mamma maintains a publisher network on which it distributes search and
graphic ad units for its advertisers. The Company has three types of revenues: Search
services, Banner advertising services and e-mail advertising services with customers
mainly located in the United States and Canada. The Company also holds minority interests
in companies which develop and market analog integrated circuit products, and in the new
media and telecommunication sectors through LTRIM Technologies Inc., Tri-Link Technologies
Inc. and TECE, Inc.

24

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Mammas business model evolved
from a pure banner advertising model on the www.mamma.com metasearch site to a model based
on the publication and distribution of monetized search results (paid listings) and media
advertising (banner advertising). On the distribution side of search results, Mamma
partners with high traffic destination sites to set up private labelled search engines
(portals using Mamma as their Web search feature). This search network is then used as
leverage for distribution deals with the source engines based on referrals.

Through the acquisition of the
focusIN Ad network in 2002, Mamma expanded its presence in the Ad Network industry. The
focusIN Ad network is composed of more than 4,400 online publishers, which are categorized
destination sites that provide access to their advertising banner inventory.

On June 10, 2004, the Company
acquired the businesses of Digital Arrow LLC (Digital Arrow) and High
Performance Broadcasting Inc. (HPB), privately held marketing companies
engaged in the distribution of on-line, opt-in e-mail marketing solutions via the
Internet.

These
services allow Mamma to provide one stop shop advertising campaign solutions for clients.
Mamma maximizes the efficiency of an on-line advertising campaign by offering paid for
placement search results and banner advertising on the Mamma Media Solutions publisher
network. Mammas advertisers are able to benefit from a potential exposure of
approximately 25 million unique users per month and an inventory of more than a billion
pages impressions per month.

Mammas business relies on the
principle of providing high quality search results to its users with the proper mix of
sponsored and non-sponsored content. Mamma believes that a proper mix of sponsored
(paid-for) and non-sponsored content is a key factor in maintaining user loyalty.

Mammas four-part business
strategy relies on a strong organic growth plan supported by an aggressive M&A
strategy that we believe will create a company with a larger critical mass and more market
reach. In order to successfully accomplish this strategy, Mamma has developed a
comprehensive business plan that focuses on the following key areas:

1- Develop its search
property: Mamma

As opposed to pure distribution
players that operate in the search industry, Mamma has developed its own destination site
at www.mamma.com. It is a well-branded and visited site. Advertisements which are placed
by Mammas clients on the Mamma web site generate greater contributions since Mamma
is not required to share these with distribution partners. Mamma therefore believes that
an important element in its business strategy is to increase user traffic to Mammas
web site. Mamma explores and employs a variety of means for increasing user traffic
including on-line marketing and public relations campaigns.

2- Develop its
distribution network

The development of the Companys
distribution network has two objectives: firstly, to increase the level of advertising
inventory that Mamma has access to, thereby increasing its capacity to generate more
revenues, and secondly, being able to integrate the search and ad network publishers
functionalities and services in order to differentiate the Company in the marketplace.

25

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Mamma has developed a comprehensive
paid-for placement offer that allows small and large businesses to purchase keywords that
are relevant to their business model (e.g. travel in California for a travel
agent) and which are used to present their Web sites when a user searches for those
keywords. It is a low-cost and effective way to bring qualified prospects to an Internet
site. Mammas paid-for placement model is somewhat different than the bid-for
placement services offered by most other competitors, whereby clients bid for keywords.
Mamma sells key word searches at a pre-determined fixed price by vertical market, which
enables the advertiser to plan a fixed budget accordingly. Co-branded partnerships have
proven beneficial for Mamma. Co-branded partners are highly visible Web sites that use
Mammas search application within their own interface. When their users perform a
search, the results are supplied by Mamma. This gives Mamma the opportunity to build more
traffic and to distribute its advertisers campaigns through search results of the
co-branded partners.

Through the Ad Network, Mamma
represents more than 4,400 Internet media properties where Mamma has an agreement to sell
their advertising inventory. These ventures allow Mamma to offer a wide range of on-line
advertising services through a broad network of sites. Through categorization technology,
Mamma can target the campaign to a specific demographic, which in turn would augment the
conversion rate of prospects to the advertiser. Through these services and through other
offerings being developed by Mamma, Mamma expects to develop additional expertise in the
on-line direct marketing area and provide better targeted campaigns to its clients.

3- Complete its one stop shop
strategy by entering the email marketing space

This third service offerings being
integrated into Mammas one-stop shop approach to advertisers to complete its
services and deliver search, ad network and now email marketing solutions to advertisers.
The Company believes that it will not only be able to cross-sell these services to the
three existing customer bases, but that it will be able to deploy more efficient
advertising campaigns to its clients. The Company should be able to propose the best
tailored solution that will enable the advertiser to use our portfolio of services in
order to reach their targeted demographic. The results will be better usage of the
marketing budget for the advertiser and a better ROI on their campaigns. We believe this
efficiency will help attract a high quality publishers that will want to participate in
the revenue sharing opportunities of this efficient blend of services.

4- Accelerate growth by appropriate
mergers and acquisitions

With a strong balance sheet and
sufficient cash on hand, Mamma believes that it can pursue its growth by acquiring other
companies that operate in one of the three main markets targeted by Mamma: 1) Search
space, 2) Ad Network and 3) Email marketing. These acquisitions were part of the business
plan that was developed to differentiate the Company from other larger players, by
offering a portfolio of services to advertisers. The Company is concentrating on these
three areas and seeking additional acquisitions that will add revenue and earnings.

PRINCIPAL
MARKETS

Media Solutions Principal
Markets

Although Mamma operates in the global
on-line market, the majority of its users are concentrated in the U.S. Its total revenues
can be divided into three main categories: search advertising, banner advertising services
and e-mail advertising services. The following table gives a breakdown of the
total revenues by category for the last five financial years.

26

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|     |  |                 |  |                    |  |                             | 
|---- |  | --------------- |  | ------------------ |  | --------------------------- | 
|    
|YEAR |  | SEARCH SERVICES |  | BANNER ADVERTISING |  | E-MAIL
ADVERTISING
SERVICES | 
|    
|     |  | US$             |  | US$                |  | US$                         | 
|    
|2004 |  | 9,676,181       |  | 5,250,066          |  | 882,752                     | 
|    
|2003 |  | 5,787,980       |  | 3,150,883          |  | --                          | 
|    
|2002 |  | 2,733,953       |  | 1,488,399          |  | --                          | 
|    
|2001 |  | 2,870,878       |  | 1,324,464          |  | --                          | 
|    
|2000 |  | 3,533,915       |  | 4,138,355          |  | --                          | 
|    

Seasonality

The Company is subject to seasonal
fluctuations affecting its operations and results. Historically, the first and third
quarters have shown significant decreases in operating revenues, which the Company
believes are respectively attributable to decreased advertising and Internet use during
the post-Christmas lull and the Summer holiday season.

Marketing Channels and
Sales Methods

The Company maintains its own sales
and marketing staff and has its own experienced direct sales force to address
the new and evolving requirements of its target markets. Although the Company itself
does not expend significant resources on public relations, Mamma markets itself through
public relations campaigns, on-line advertising, press releases, internally sponsored
events and trade shows.

Mamma solicits banner sales by
telephone or e-mail directly to the end client, through advertising agencies or network
distribution business associates who are mainly specialized in the on-line advertising
market. Search listings are solicited either directly and through on-line marketing
campaigns from the end client or through specialized search engines.

Dependence on
Intellectual Property and Other Matters Material to Profitability

The Company regards its intellectual
property rights, including its trademarks, software systems and databases as proprietary.
The Company relies upon a combination of trade secret, copyright, trademark and other
relevant laws to protect its intellectual property assets. It has entered into
confidentiality agreements with its management and key employees with respect to such
assets and limits access to, and distribution of, these and other proprietary information.
However, the steps the Company takes to protect its intellectual property may not be
adequate to deter or prevent misappropriation of the Companys proprietary
information. In addition, the Company may be unable to detect unauthorized uses of and
take appropriate steps to protect and enforce its intellectual property rights. Although
senior management believes that the Companys services and products do not infringe
on the intellectual property rights of others, the Company is subject to the risk that
such a claim may be asserted in the future, which may have a material adverse effect on
the Companys business, prospects, financial condition and results of operations.

27

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Government Regulation

To the knowledge of the Company,
Mamma.com Enterprises Inc. and other Internet-related activities undertaken by the
Company, are generally not regulated other than pursuant to laws applicable to businesses
in general and there are currently few laws or regulations directly applicable to commerce
on the Internet. It is possible that various laws and regulations may be adopted with
respect to Internet related issues such as export controls, content regulation, consumer
protection, advertising, intellectual property, privacy, electronic commerce, and
taxation, tariff and other trade barriers. If the Internet becomes more stringently
regulated, a significant portion of our operating business may be adversely affected. For
example, there is increased pressure to adopt laws and regulations relating to Internet
unsolicited advertisements, privacy, pricing, taxation and content. In particular, the
United States government recently enacted the CAN SPAM Act of 2003 that, among other
matters, regulates certain aspects of e-mail marketing, such as the opt-in e-mail
marketing our Digital Arrow subsidiary engages in. The adoption of any such laws or
regulations may decrease the growth of the Internet, decrease the demand for the
Companys products or services, and increase its cost of doing business or otherwise
have a material adverse effect on its business, prospects, financial condition, or results
of operations.

Competition

The Company primarily competes in the
area of on-line advertising and marketing. The market for these services are in a constant
state of flux and competition is intense.

Mamma faces intense competition and
the Company expects competition will continue to intensify. Mammas market is subject
to rapid changes in technology and marketing strategies and is significantly affected by
new product introductions and other market activities of its existing and potential
competitors. The Company believes the principal competitive factors in this market are
name recognition, product performance and functionality, ease of use, size of the Web
index, user traffic, the speed with which search results return and the relevance of
results, pricing and quality of customer support. Many of Mammas current and
potential competitors, including Google, Ask Jeeves, Findwhat, Microsoft, Yahoo!, Value
Click, FastClick, Burst Media and Tribal Fusion have significant operating histories,
larger customer bases, greater brand name recognition, greater access to proprietary
content and significantly greater financial, marketing and other resources which give them
a competitive advantage.

The markets for our products and
services are characterized by (i) rapidly changing technology, (ii) evolving industry
standards, (iii) frequent new product and service introductions, (iv) shifting
distribution channels, and (v) changing customer demands. The success of the Company will
depend on its ability to adapt to its rapidly evolving marketplaces. There can be no
assurance that the introduction of new products and services by others will not render our
products and services less competitive or obsolete. We expect to continue spending funds
in an effort to enhance already technologically complex products and services and develop
or acquire new products and services. Failure to develop and introduce new or enhanced
products and services on a timely basis might have an adverse impact on our results of
operations, financial condition and cash flows. Unexpected costs and delays are often
associated with the process of designing, developing and marketing enhanced versions of
existing products and services and new products and services. The market for our products
and services is highly competitive, particularly the market for Internet products and
services which lacks significant barriers to entry, enabling new businesses to enter this
market relatively easily. Competition in our markets may intensify in the future. Numerous
well-established companies and smaller entrepreneurial companies are focusing significant
resources on developing and marketing products and services that will compete with the
Company s products and services. Many of our current and potential competitors have
greater financial, technical, operational and marketing resources. We may not be able to
compete successfully against these competitors. Competitive pressures may also force
prices for products and services down and such price reductions may reduce our revenues.

28

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Organizational Structure

On May 31, 2004, the wholly owned
subsidiary, Mamma.com Enterprises Inc. was wound up and merged into the Company. The
transaction will allow the Company to use carry forward tax losses. As at May 12, 2005 the
Company had these operating subsidiaries: Operating subsidiary Mamma.com USA, Inc. who
owned Digital Arrow and Non-operating subsidiaries Intasys Billing Technologies
(Asia-Pacific) Pty Ltd, Intasys Billing Technologies (Canada) Inc., Intasys Billing
Technologies Limited and Intasys Online limited.

The Company has three office
locations. They are in Montreal, Canada with 7,000 square feet, Toronto, Canada with 600
square feet and Florida, United States with 2,400 square feet.

29

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ITEM 5.     OPERATING AND FINANCIAL
REVIEW AND PROSPECTS

Managements Discussion and Analysis
of Financial Condition and Results of Operations

The following discussion and analysis
of the consolidated financial condition and results of operations of Mamma.com Inc.
(formerly Intasys Corporation) for the three years ended December 31, 2004, 2003 and 2002
should be read in conjunction with its consolidated financial statements and the related
notes. All statements in the following discussion, which are not reports of historical
information or descriptions of current accounting policy, are forward-looking statements.
Please consider our forward-looking statements in the light of the risks referred to in
this Managements Discussion and Analysis of Financial Condition and Results of
Operations cautionary note. The Companys consolidated financial statements are
reported in US dollars and have been prepared in accordance with generally accepted
accounting principles as applied in Canada (Canadian GAAP). As a registrant
with the Securities and Exchange Commission in the United States, the Company is required
to reconcile its financial results for significant measurement differences between
Canadian GAAP and generally accepted accounting principles as applied in the United States
(U.S. GAAP) as they specifically relate to the Company as described in note 28
to its consolidated financial statements. This Managements Discussion and Analysis
of Financial Condition and Results of Operations is dated May 13, 2005.

Business overview

Mamma.com provides information
retrieval on the Internet through its metasearch engine, Mamma.com, The Mother of
All Search Engines®. The Company also provides advertising solutions to online
advertisers through keyword search listings, numerous sizes of graphic ad units and email
advertising. The ad solutions are distributed on a publisher network maintained by
Mamma.com Inc. The Company provides three types of revenues: Search advertising, Graphic
advertising and E-mail advertising from customers mainly located in the United States and
Canada. The Company also holds minority interests in companies which develop and market
analog integrated circuit products, and in the new media and telecommunication sectors
through LTRIM Technologies Inc., Tri-Link Technologies Inc. and TECE, Inc.

The revenue model of the Company is
based on:

Pay-Per-Click search listing
placement  advertisers bid or pay a fixed price for position on search listing
advertisements on www.mamma.com and within the Mamma Media Solutions Publisher
Network.

Graphic Ad Units are priced on a CPM
(Cost-Per-Thousand) basis and are distributed through the Mamma Media Solutions
Publisher Network.

E-mail advertising services are
priced on a CPM (Cost-Per-Thousand) or CPA (Cost-Per-Lead) basis. Advertiser messages are
distributed to selected consumer or business email lists. We also partner with other list
owners.

Mamma Media Solutions Publisher
Network has over 4,400 publishers (combined search and graphic ad publishers).

30

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Search

Approximately 61% of Mamma.com
Inc.s revenues come from our search base business. The revenue model in this sector
is simply a pay-per-click fee that is charged to the advertiser when a user clicks on a
sponsored link. The business model consists of advertisers buying keywords. When these
keywords are searched by a user, the advertisers web site will be listed in a
premium position in the search results (and is identified as a sponsored result). The
Company aggregates advertisers from other search-based businesses and from its own
direct sales efforts (through direct sales and automated on-line marketing initiatives).
The Company then distributes these search advertisements onto its search publisher network
which consists of its own search property (Mamma.com The Mother of All Search
Engines) and third party search properties. Advertising revenues generated through
third party search properties have associated payout costs; these payout costs represent a
percentage of the revenues generated from the distribution of search advertisements onto
third party search property. Higher margins are obtained through our own property because
no payout costs are associated.

Ad Network

Approximately 33% of our revenues
come from our Ad Network business. The revenue model is CPM based (cost per one
thousand impressions published). The business model is based on advertisers buying
impressions for ad campaigns (these are creative based campaigns: different size banners,
pop-ups, rich media advertising) and can target them through our network of publishers.
These campaigns can be targeted in several ways: geo-targeting (by region), by site
category (ex: travel, entertainment, finance, etc.). The publisher network consists of
about 5,000 small to medium sized web sites that subscribe to our service (through an
on-line or direct representation contract) and give us access to their advertising
inventory on their property. Mamma.com Inc. recruits publishers through a direct sales
force and through on-line initiatives. Publishers receive payouts for campaigns published
on their websites; these payouts represent a percentage of the revenues generated from
these campaigns.

E-mail advertising services

Approximately 6% of our revenues come
from our e-mail advertising service business. The revenue model is either CPM based (cost
per one thousand impressions published) or CPA based (cost per valid leads to our
advertisers). The business model is based on performing e-mail drops of our advertisers
products based on our business or consumer e-mails lists. The lists can target a specific
niche or have a broad scope approach. All of our lists are 100% opt-in. Businesses and
consumers must sign-in through our website in order to receive our clients offer. We
also partner with other list owners where we exclusively assist with marketing and
managing data that has been compiled through an extensive opt-in process.

Trends of the industry have been
released in recent publications such as:

| | 1. |  | US
Online Advertising Spending is expected to increase by 85% over the next 4
               years increasing from $9.4 billion (projected 2004) to $17.4 billion in
2008                (eMarketer, November 2004)
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. |  | Search
advertising increased 55% from 2003 to 2004 from $2.5 billion to $3.9
               billion and Graphic advertising increased 10% from 2003 to 2004 from $1.5
               billion to $1.7 billion (eMarketer, November 2004)
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. |  | Search
industry will reach $13.7 billion by 2007. US Bancorp Piper Jaffray                Senior
Analyst, Safa Rashtchy (US Bancorp Piper Jaffray, November 2004)
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

31

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Recent events

Functional currency

During the first quarter of 2004, due
to a significant increase in the generation of cash flows from sales in United States
dollars and an increasing amount of United States dollar denominated costs as a percentage
of overall costs, the Company determined that the functional currency of its wholly owned
subsidiary, Mamma.com Enterprises Inc., had clearly changed from the Canadian dollar to
the U.S. dollar as at the beginning of the quarter. As a result of this change, which has
been applied prospectively from January 1, 2004, transactions entered into by Mamma.com
Enterprises Inc. which are denominated in currencies other than the U.S. dollar are now
translated into U.S. dollars using the temporal method. Under this method, monetary assets
and liabilities are translated into U.S. dollars at the exchange rate in effect on the
balance sheet date. Non-monetary assets and liabilities are translated into U.S. dollars
at historical exchange rates. Revenues and expenses are translated into U.S. dollars at
the exchange rates prevailing at the dates of the respective transactions. Gains and
losses resulting from translation of monetary assets and liabilities into U.S. dollars are
reflected in the consolidated statement of operations.

Prior to this change, the functional
currency of Mamma.com Enterprises Inc. was the Canadian dollar. Accordingly, the financial
statements of Mamma.com Enterprises Inc. were translated from Canadian dollars into U.S.
dollars using the current rate method. Gains and losses resulting from translation of
these financial statements were included in the cumulative translation adjustment in
shareholders equity. The translated amounts for non-monetary items as at January 1,
2004 are the historical basis for those items in subsequent periods.

Informal SEC inquiry to formal
investigation

On March 18, 2004, the United States
Securities and Exchange Commission (SEC) notified the Company that the SEC had
begun an informal inquiry relating to trading activity in the Companys securities.
During March of 2004, trading in the Companys common stock had been intense and the
market price of the common stock had risen sharply. The Company has cooperated completely
with the SECs informal investigation, including instructing its current directors,
officers and former independent auditors to do so as well.

The SEC has since issued a formal
order of investigation in this matter. As a part of its investigation, the Company
believes the SEC may consider matters related to trading in the Companys securities
and whether an individual and persons acting jointly or in concert with him may have had a
significant influence on the Company in the past as a result of undisclosed shareholdings.
(See Special Investigation of Independent Committee below.) The Company also
believes that the Commission staff may consider matters relating to the Companys
financial reporting and internal controls. The scope, focus and subject matter of the SEC
investigation may change from time to time and the Company may be unaware of matters under
consideration by the SEC. The Company intends to continue cooperating with the SEC in its
investigation.

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Purported Securities
Class Action Lawsuits

On February 22, 2005, the first of
several purported securities class action lawsuits was filed in the United States District
Court, Southern District of New York against the Company, and certain of the
Companys current officers and directors. The plaintiffs allege, among other things,
violations of the Securities Exchange Act of 1934 for purportedly failing to disclose and
misrepresenting certain allegedly material facts relative the market for and trading in
the Companys stock, and seek unspecified damages. All of these lawsuits may be
consolidated for pretrial. The purported class actions appear to be based on
unsubstantiated rumors and newspaper reports. The Company denies the allegations against
it, believes that the purported claims are without merit, and intends to defend itself
vigorously.

Special Investigation of
Independent Committee

Following press reports in January
2005 and in response to recommendations made by the Companys former independent
auditor, the Companys Board of Directors initiated an investigation under the
supervision of a Special Independent Committee consisting of independent directors of the
Audit Committee with independent legal counsel to investigate the allegations in the press
reports. Those press reports claimed that Irving Kott and persons acting jointly or in
concert with him may have had a controlling influence on the Company in the past as a
result of undisclosed shareholdings. The Special Committee and its independent counsel
have reviewed the relevant information available at the time of the investigation relating
to the period from January 1, 1999 to December 31, 2004. While the Special Committee did
note some evidence of contacts with and involvement by Mr. Kott and persons with whom he
may have had an association, based on its review, the Special Committee has not found
evidence establishing that Mr. Kott had a controlling influence on the Corporation during
such period.

Wind-up of Mamma.com
Enterprises Inc.

On May 31, 2004, the wholly owned
subsidiary, Mamma.com Enterprises Inc. was wound up into the Company. The wind-up will
allow the Company to use carry forward tax losses.

Business combination

On June 10, 2004, the Company
acquired the business of Digital Arrow LLC and High Performance Broadcasting, Inc.
(Digital Arrow) in Florida, privately held marketing companies that are
engaged in the distribution of on-line, opt-in e-mail marketing solutions via the
Internet. In that acquisition, the Companys wholly owned subsidiary, Mamma.com USA,
Inc., entered into a Securities Purchase Agreement with Digital Arrow and their equity
holders, pursuant to which Mamma.com USA, Inc. acquired all equity interests in Digital
Arrow. The consideration for the acquisition consisted of $1,264,210 in cash and 90,000 of
the Companys common shares.

In the fourth quarter, due to the
performance of Digital Arrow since the acquisition, the Company reviewed the estimated
useful lives of its related intangible assets and reduced them from five to four years.

In the fourth quarter, the Company
changed the fair value of its shares issued to owners of Digital Arrow from $11.60, as
originally set, to $8.23 per share and eliminated its future income tax liability related
to the acquisition. These adjustments reduced the related goodwill by $397,439. The value
of the shares at $8.23 has been determined using the average closing price of the
Companys common stock for five days before and five days after March 3, 2004, the
date the significant terms and conditions of the transaction were agreed to and publicly
announced.

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Since June 1, 2004, the operations of
this newly acquired business were consolidated into the Companys results. Digital
Arrow is located in Delray Beach, Florida.

No significant integration costs were
incurred.

Normal Course Issuer Bid

On September 7, 2004, the Company
filed a notice of intention with the Ontario Securities Commission to make a normal course
issuer bid, to repurchase up to a maximum of 600,000 common shares, representing less than
5% of the issued and outstanding common shares of the Company. According to the Notice,
the normal course issuer bid is scheduled to take place over a twelve-month period ending
on the 7th day of September 2005. The Company had not purchased any of its outstanding
shares as of May 13, 2005. The Company reserves the right to discontinue the normal course
issuer bid at any time.

Granting and cancellation of stock
options

On November 2, 2004, Mamma.com
granted to Officers and Members of the Board of the Company under the Companys stock
option plan, 295,000 stock options at an exercise price of $7.08. The fair value of the
options granted was estimated as of the date of grant using the Black-Scholes option
pricing model with the following assumptions: expected option life 4 years, volatility
88%, risk-free interest rate 3.70% and dividend yield nil. For the year ended December 31,
2004, general and administration expenses include $138,395 of stock-based compensation
costs relating to these stock options.

On February 2, 2005, the Officers and
Members of the Board of Directors of Mamma.com to whom the above-mentioned stock options
had been granted, waived and renounced any and all rights that each had or may have had on
the options. Consequently, the options were cancelled as of that date. The stock-based
compensation costs recorded as of December 31, 2004 pertaining to these options will be
reversed in the first quarter of 2005.

On February 16, 2005, 94,996 options
were granted to the Companys officers and employees vesting over a three and four
year period.

Copernic Technologies Inc.

On November 25, 2004, the Company
announced the execution of a letter of intent to acquire Copernic Technologies Inc.
(Copernic). On April 14, 2005, Copernic advised the Company that it had
decided not to pursue the sale transaction. The Company, which had expected to sign
definitive agreements and close before May 31, 2005, may be entitled to break fees under
the letter of intent of up to $1.5 million and other relief may be available.

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Late filing of 2004
Audited Financial Statements

On February 16, 2005, the Company
announced that PricewaterhouseCoopers LLP would be unable to act as the Companys
independent auditor in connection with the audit of its 2004 annual consolidated financial
statements. On March 18, 2005, the Company announced that it had retained RSM Richter LLP
as its new auditor. As a result of this change of auditor, the audit was delayed and the
Company advised investors that the filing of its annual financial statements would likely
be delayed. On March 31, 2005, the Company confirmed that the filing of its financial
statements for the year ended December 31, 2004 would be delayed. On April 14, 2005, the
Company announced that it would not file its interim financial statements for the first
quarter of 2005 until it had filed its annual financial statements for 2004, which would
be on or before May 31, 2005.

As a result of its failure to file
the Annual Financial Statements on or before March 31, 2005, the Ontario Securities
Commission, consistent with Ontario Securities laws, has imposed a cease trade order
affecting directors, officers and insiders of the Issuer (a management cease trade order).
The Company had, prior to March 31, 2005, advised directors and officers, in accordance
with the Companys insider trading policy, that they were subject to a blackout
period with respect to trading in securities of the Company until such time as all
regulatory filings have been made.

Critical Accounting
Policies and Estimates

The Company prepares its consolidated
financial statements in accordance with accounting principles generally accepted in
Canada. In doing so, management has to make estimates and assumptions that affect reported
amounts of assets, liabilities, revenues and expenses, as well as related disclosure of
contingent assets and liabilities. In many cases, management reasonably has used different
accounting policies and estimates. In some cases, changes in the accounting estimates are
reasonably likely to occur from period to period. Accordingly, actual results could differ
materially from our estimates. To the extent that there are material differences between
these estimates and actual results, our financial condition or results of operations will
be affected. Management bases its estimates on past experience and other assumptions that
it believes are reasonable under the circumstances, and it evaluates these estimates on an
ongoing basis. Management refers to accounting estimates of this type as critical
accounting policies and estimates, which are discussed further below. Management has
reviewed its critical accounting policies and estimates with its board of directors.

Use of estimates

Significant estimates in these
financial statements include the allowance for doubtful accounts, recovery of future
income taxes, goodwill and annual goodwill impairment test, useful lives and impairment of
long-lived assets, stock-based compensation costs, valuation of investments, determination
of the fair value of the intangible assets on recent acquisitions, determination of the
fair value of the warrants issued on the private placement and the resulting impact on the
allocation of the proceeds between the shares and warrants. Each of these critical
accounting policies is described in more detail below.

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Allowance for doubtful accounts

We make judgments as to our ability
to collect outstanding receivables and provide allowances for the portion of receivables
when collection becomes doubtful. Provisions are made based upon a specific review of all
significant outstanding invoices. The allowance provided for doubtful accounts does not
reflect the future ability to collect outstanding receivables, additional provisions for
doubtful accounts may be needed and our future results of operations could be adversely
impacted.

We also record a provision for
revenue adjustments in the same period as the related revenues are recorded. These
estimates are based on historical analysis of credit memo data and other factors. If the
historical data we use to calculate these estimates does not properly reflect future
uncollectible revenue, then a change in the allowances would be made in the period in
which such a determination is made and revenues in that period could be impacted.

For this item, actual results could
differ from those estimates.

Recovery of future income taxes

We use significant judgment in
determining our consolidated recovery of future income taxes. Uncertainties may arise with
respect to the tax treatment of certain transactions. Although we believe our estimates
are reasonable, we cannot be certain that the final tax outcome of these matters will not
be different than that which is reflected in our financial statements. Such differences
could have a material effect on our future income taxes in the period in which such
determination is made.

For this item, actual results could
differ from those estimates.

Goodwill and annual goodwill
impairment test

Goodwill is evaluated for impairment
annually, or when events or changed circumstances indicate impairment may have occurred.
In connection with the goodwill impairment test, if the carrying value of the
Companys reporting unit to which goodwill relates exceeds its estimated fair value,
the goodwill related to that reporting unit is tested for impairment. If the carrying
value of such goodwill is determined to be in excess of its fair value, an impairment loss
is recognized in the amount of the excess of the carrying value over the fair value.
Management monitors goodwill for impairment by considering estimates including discount
rate, future growth rates, amounts and timing of estimated future cash flows, general
economic, industry conditions and competition. Future adverse changes in these factors
could result in losses or inability to recover the carrying value of the goodwill, thereby
possibly requiring an impairment charge in the future.

For this item, actual results could
differ from those estimates.

Useful lives and impairment of
long-lived assets

The Company assesses the carrying
value of its long-lived assets, which include property, plant and equipment and intangible
assets, for future recoverability when events or changed circumstances indicate that the
carrying value may not be recoverable. Useful lives of long-lived assets are regularly
reviewed for their appropriateness. An impairment loss is recognized if the carrying value
of a long-lived asset exceeds the sum of its estimated undiscounted future cash flows
expected from its use. The amount of impairment loss, if any, is determined as the excess
of the carrying value of the assets over their fair value. Management monitors long-lived
assets for impairment by considering estimates including discount rate, future growth
rates, general economic, industry conditions and competition. Future adverse changes in
these factors could result in losses or inability to recover the carrying value of the
long-lived assets, thereby possibly requiring an impairment charge in the future.

For this item, actual results could
differ from those estimates.

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Stock-based compensation costs

In the fourth quarter of 2003, the
Company adopted, retroactive to January 1, 2003, the fair value method of accounting for
stock options granted to employees. Under this method, the fair value of options granted
to employees is charged to expense over the future vesting period. In accordance with the
transitional provisions of the Canadian Institute of Chartered Accountants
(CICA) Handbook Section 3870, Stock-Based Compensation and Other
Stock-Based Payments, the Company has elected to apply this new method prospectively
to options granted to employees on or after January 1, 2003.

Valuation of investments

The Company holds interests in
various companies. Management records an investment impairment charge when it believes an
investment has experienced a decline in value that is judged to be other than temporary.
Management monitors its investments for impairment by considering current factors
including economic environment, market conditions and operational performance and other
specific factors relating to the business underlying the investment, and records
reductions in carrying values when necessary. The fair value for privately held securities
is estimated using the best available information as of the valuation date, including the
quoted market prices of comparable public companies, recent financing rounds of the
investee and other investee specific information.

For this item, actual results could
differ from those estimates.

Determination of the fair value of
the intangible assets on the Digital Arrow acquisition

The acquisition of Digital Arrow made
on June 10, 2004 resulted in intangible assets totalling $1,442,831 and goodwill of
$556,196. The determination of the fair value of the acquired intangible assets and
goodwill requires management to estimate the discount rate to be used in the calculations,
the amounts and timing of estimated future net cash flows, royalty rate, tax rate,
weighted average cost of capital, residual growth rate, general economic and industry
conditions. If any of these estimates change, the results could be materially different.

Determination of the fair value of
the warrants issued on the private placement and the resulting impact on the allocation of
the proceeds between the shares and warrants

The amounts allocated to the shares
and warrants totalled $13,158,329 and $3,441,652, respectively for the private placement
closed as at June 30, 2004. These amounts have been allocated based upon the relative fair
values of the shares and warrants at the date they were issued. The estimated fair values
of the warrants have been determined using the Black-Scholes pricing model. Management
used estimates such as volatility, expected life of warrants and risk free rate.

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Revenue recognition

Search advertising, graphic
advertising and e-mail advertising revenues are recognized when services are rendered,
provided there is persuasive evidence of an arrangement, the fee is fixed or determinable,
collection is considered probable and fees are not subject to forfeiture, refund or other
concessions.

With respect to search advertising,
graphic advertising and e-mail advertising revenues, insertion orders or signed contracts
are generally used as evidence of an arrangement.

Collection is based on a number of
factors, including past transaction history with the customer and the credit-worthiness of
the customer. If it is determined that collection of a fee is not probable, management
defers the fee and recognizes revenues at the time collection becomes probable, which is
generally upon receipt of cash.

Recent accounting changes

a)    
For changes affecting 2003

Stock-based compensation and other
stock-based payments

During the fourth quarter of 2003, the
Company adopted, retroactive to January 1, 2003, the fair value method of accounting for
stock options granted to employees. Under this method, the fair value of options granted
to employees is charged to expense over the future vesting period. In accordance with the
transitional provisions of the CICA Handbook section 3870, Stock-Based Compensation
and Other Stock-Based Payments, the Company has elected to apply this new method
prospectively to options granted to employees on or after January 1, 2003. Consequently,
prior period financial statements have not been restated; however, the Company continues
to provide pro forma disclosures for these prior years as if the fair value method of
accounting had been applied.

Impairment of long-lived assets

CICA Handbook section 3063,
Impairment of Long-Lived Assets, provides guidance on the recognition,
measurement and disclosure of the impairment of long-lived assets. It replaces the
write-down provisions in Section 3061, Property, Plant and Equipment. The
provisions of the Section require an impairment loss for a long-lived asset to be held and
used to be recognized when its carrying amount exceeds the sum of the undiscounted cash
flows expected from its use and eventual disposition. The impairment loss is measured as
the amount by which its carrying amount exceeds its fair value. The adoption of this
section did not have a significant impact on the financial statements.

Disposal of Long-Lived
Assets and Discontinued Operations

CICA Handbook section 3475,
Disposal of Long-Lived Assets and Discontinued Operations, provides guidance
on recognizing, measuring, presenting and disclosing long-lived assets to be disposed of
and replaces the disposal provisions in Section 3475, Discontinued Operations
and Section 3061, Property, Plant and Equipment. The Section provides criteria
for classifying assets as held for sale to be measured at the lower of carrying value and
fair value less costs to sell, provides criteria for classifying a disposal as a
discontinued operation and specifies presentation and disclosure for discontinued
operations and other disposals of long-lived assets. The adoption of this section did not
have a significant impact on the financial statements.

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b)    
For changes affecting 2004

Asset Retirement
Obligations

CICA Handbook section 3110,
Asset Retirement Obligations, focuses on the recognition and measurement of
liabilities for obligations associated with the retirement of property, plant and
equipment when those obligations result from the acquisition, construction, development or
normal operation of the assets. The adoption of this section did not have a significant
impact on the financial statements.

c)    Future Accounting
Changes

Consolidation of Variable
Interest Entities

CICA Accounting Guideline 15,
Consolidation of Variable Interest Entities, provides clarification on the
consolidation of those entities defined as variable interest entities, when
equity investors are not considered to have a controlling financial interest or they have
not invested enough equity to allow the entity to finance its activities without
additional subordinated financial support from other parties. Variable interest entities
are commonly referred to as special purpose entities. The guideline comes into effect for
interim periods beginning on or after November 1, 2004. The adoption of this guideline
will not have a significant impact on our financial statements.

Financial Instruments

On April 1, 2005, the CICA issued
three new Handbook sections: Section 1530 Comprehensive Income, Section 3855
Financial Instruments  Recognition and Measurement, and Section 3865
Hedges. These new sections apply to fiscal years beginning on or after October
1, 2006 with earlier adoption permitted as of the beginning of a fiscal year ending on or
after December 31, 2004.

Section 3855 Financial
Instruments  Recognition and Measurement requires all financial instruments to
be classified as either Held to Maturity, Loans and Receivables, Held for Trading, or
Available for Sale. The Held to Maturity classification is restricted to fixed maturity
instruments that the Company intends and is able to hold to maturity. Loans and
Receivables and Held to Maturity investments are accounted for at amortized cost.
Securities that are acquired for selling in the near term are classified as Held for
Trading are accounted for at fair value with realized and unrealized gains and losses
reported in net income. The remaining financial instruments are classified as Available
for Sale and are measured at fair value with unrealized gains and losses, not affecting
income, but reported in a new category in Shareholders equity called Other
Comprehensive Income.

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Section 3865 Hedges which
replaces Accounting Guideline 13 Hedging Relationships requires that all
derivatives, including hedges, be measured at fair value. Changes in the fair value of a
derivative which hedges the Companys exposure that the fair value of an asset or
liability will change due to a particular risk are recognized in net income together with
those of the respective offsetting hedged item. However, changes in the fair value of a
derivative which hedges the Companys exposure to changing cash flows are accumulated
in Other Comprehensive Income until the transaction being hedged affects net income.

Section 1530 Other
Comprehensive Income, a new category in the Shareholders equity section,
includes in addition to the items mentioned above, unrealized foreign currency translation
gains and losses, net of hedging activities.

The Company is in the process of
assessing the impact of these new recommendations on its financial position, results of
operations and cash flows.

Results of Operations

Revenue

2004 as compared to 2003

During the financial year ended
December 31, 2004, the Company generated revenues of $15,808,999, an increase of 77% from
revenues of $8,938,863 during the previous year.

Search revenues contributed the most
to our growth in 2004; they increased by 67% to reach $9,676,181, as compared to
$5,787,980 in the previous year. The search revenues were favourably affected by the
Companys positioning strategy and the industrys strong growth. However our
level of business with a major customer decreased steadily throughout 2004. Revenues from
this customer totalled more than 2 million dollars in the first quarter of 2004, whereas
they declined to approximately $325,000 in the last quarter of the year. This client has
lost a significant business relation, which has in turn directly impacted our level of
business with our client.

Ad Network revenues, excluding
revenues from Digital Arrow, increased to $4,960,137, a 57% growth as compared to
$3,150,883 in 2003. The growth is primarily due to an increase in unit pricing, a better
product mix and an increase in the number of significant clients.

Finally, the increase in revenues for
2004 is also derived from our Digital Arrow subsidiary acquired on June 10, 2004. The
sales for the seven-month period from June 1, 2004 to the end of 2004 amounted to
$1,172,681.

The Company has two major customers
from which 10% or more of total revenues are derived. In 2004, revenues from these
customers represented 40% as compared to 41% and 24% in 2003 and 2002 respectively. As
noted above, following the loss of a significant business relation of one of our major
customers, our level of revenue with this customer has declined significantly throughout
2004. Although we believe that the sales volume with our client has stabilized in the last
quarter of 2004, there can be no assurance that the Company will be able to retain either
of these customers in the future. As at the date of these audited financial statements,
with the exception of the above-mentioned item, there has been no other negative impact
with these specific customers.

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2003 as compared to 2002

Total revenues for 2003 grew by
$4,716,511 or 112% from $4,222,352 in 2002 to $8,938,863 in 2003.

In 2003, the Internet electronic
market conditions improved and the Companys main two types of revenues increased;
search services increased by $3,054,027 or 112% to $5,787,980 in 2003 compared to
$2,733,953 in 2002. Graphic advertising increased also by $1,662,484 or 112% to $3,150,883
in 2003 compared to $1,488,399 in 2002 by fully integrating its acquisition of the assets
of the focusIN business of ZAQ Inc. made on November 27, 2002.

Expenses

Search, graphic ad and e-mail serving

Search, graphic ad and e-mail
serving, which represent exclusively the bandwidth costs to deliver our services, stand at
$309,854, or 2% over revenues, compared with $305,951 in 2003 and $127,394 in 2002, each
representing 3% over revenues for their respective years. The reduction in the percentage
of expenses over revenues for 2004 is mainly due to the volume discount renegotiation of
ISP fees following the integration of our search and graphic ad services. For 2003, the
percentage of costs over revenues is similar to the previous year.

Marketing, sales and services

Marketing, sales and services consist
primarily of partner payouts and media purchases, the salaries, commissions and related
personnel expenses of our sales force, advertising and promotional expenses as well as the
provision for doubtful account.

For the year ended December 31 2004,
marketing, sales and services expense stands at $9,496,150, of which $7,178,125 or 45%
over revenues is composed of partner payouts whereas for 2003 and 2002, these expense
respectively stand at $5,285,957, of which $3,685,314 or 41% over revenues, is composed of
partner payouts and $2,555,387, of which $1,478,917 or 35% over revenues is composed of
partner payouts. In 2004, the increase of 4% of partner payout and media purchases expense
over revenues reflects both the increase in outsourced e-mail marketing campaigns
subsequent to the termination of an important business relationship with a supplier in the
last quarter of 2004 and the competitive landscape for which business partners require
higher payouts in order to maintain their relationship by providing user traffic or
content on the Companys online media properties. The increase of 6% of partner
payout and media purchases expense over revenues from 2002 to 2003 is due to this
competitive landscape as detailed above.

Marketing, sales and services,
excluding partner payouts and media purchases totalled $2,318,025 or 15% over revenues for
the year ended December 31, 2004 as compared with $1,600,643 or 18% over revenues the
previous year and $1,076,470 or 25% over revenues for 2002. The improvement of the
percentage of costs over revenues for 2004 as compared to the previous year as well as for
2003 as compared to 2002 mainly reflects the absorption of fixed costs over a higher
revenue base. On a dollar basis, the increase in 2004 as compared to 2003 reflects
primarily higher sales commission due to the growth of revenues, marketing and sales
expense for Digital Arrow, which represents costs incurred for the seven months of
operations, an increase in on-line marketing campaigns focused on attracting traffic to
our metasearch engine as well as an increase in the charges paid for algorithmic content
from other Search engines; a direct impact of the increased traffic to the Mamma.com
metasearch engine.

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In 2003, the increase on a dollar
basis as compared to the previous year mainly reflects additions to our sales force
personnel and therefore a raise in the cost of salaries and employment related expenses,
increased commissions due to the growth in sales volume, and a higher allowance for
doubtful account, also a consequence of the greater sales volume. In 2003, we also
increased marketing efforts through attendance to various trade shows and, finally, due to
our new partnership with an important content supplier, we incurred charges for
algorithmic content to enhance the search results of our metasearch engine.

General and administrative

General and administrative expenses
include the salaries and associated costs of employment of executive management and
finance personnel, including stock-based compensation. These costs also include facility
charges, investor relations related costs as well as legal, tax and accounting, consulting
and professional service fees associated with operating our business.

General and administrative expenses
increased to $3,771,658 as compared to $2,255,099 in the previous year and $1,978,130 in
2002. In 2004, the increase of $1,516,559 as compared to 2003 is mainly due to the
following items: professional fees of approximately $410,000 incurred for the SEC inquiry;
$260,000 of non-cash expense related to issued warrants to the investment banker, an
increase of approximately $245,000 in stock-based compensations costs mainly due to the
issuance of new options; an increase in salaries and benefits of approximately $132,000
which mainly reflects the normal raise in salaries, increased incentive compensation since
the Company attained required performance and new headcount in order to meet SOX 404
requirements; an increase of approximately $100,000 in the compensation for the board
members, mainly due to the costs of fringe benefits on stock options exercised in 2004 and
additional consulting fees paid to our Executive Chairman; an increase in annual audit
fees and review of quarterly financial statements for approximately $210,000 compensated
by a decline in legal fees of $119,000 following the conclusion of two legal claims
against the Company in 2002; and finally $204,000 of general and administrative expenses
for Digital Arrow, which represents costs incurred for the seven months of operations.

In 2003, general and administrative
expenses increased by $276,969 as compared to 2002. The rise in expenses is primarily
attributable to salaries and other benefits which increased by $291,000 mainly due to an
increase in incentive compensation due to the improvement of the financial results as
compared to 2002 and expensing of stock-based compensation in 2003. Consulting fees
increased by approximately $130,000 reflecting a full years compensation for the
board members in 2003 and an increase of the CEOs fee. Directors and officers
insurance increased by $41,000 in 2003 due to higher risk for corporations listed on the
NASDAQ. These increases were partially off set by non-recurring elements in 2002 such as
the inclusion of $410,000 in legal fees in 2002 due to settlements of two outstanding
legal claims partially offset by a reduction of expenses of the master option agreement
for $195,000.

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Product development and technical
support

Product development and technical support
costs include the salaries and associated costs of employment of our technical team
including administrative related functions involved in the development and maintenance of
our metasearch engine and other IT systems. These charges also include the costs of
technical support and license maintenance. Research and development (R&D) tax credits
and future benefit of non-refundable tax credits are also recorded against product
development and technical support expenses.

Product development and technical
support expenses reached $891,540 in 2004, as compared to $599,383 in the previous year
and $534,324 in 2002. The increase of $292,157 in 2004 as compared to 2003 primarily
includes additional salary and benefits from the growth in headcount, increased benefits
due to the exercise of stock options and consulting fees incurred to enhance our
metasearch engine. For the year ended December 31, 2004, we recorded R&D tax credits
and future benefit of non-refundable tax credits of $85,639 as compared to $113,516 and
$1,297 in 2003 and 2002 respectively.

In 2003, the increase of $65,059 as
compared to 2002 is attributable primarily to an increase in salaries due to increased
needs on improving new features and normal salary increase.

Amortization of property, plant and
equipment

Amortization of property, plant and equipment
stands at $146,621 for the year ended December 31, 2004 compared to $140,090 in 2003 and
$148,435 in 2002. The slight increase in 2004 reflects the amortization of the assets of
Digital Arrow partially offset by the normal decrease of the assets net book value.
Acquisition of property, plant and equipment, excluding those acquired through business
acquisitions, total $70,284 in 2004, $47,432 in 2003 and $48,875 in 2002. The increase in
2004 mainly reflects the purchase of computer equipment for the renewal of our local
network.

Amortization of intangible assets

Amortization of intangible assets
increased to $377,583 in 2004 compared with $178,509 in 2003 and $38,196 in 2002. The
increase of $199,074 in 2004 relates to the acquisition of the intangible assets of
Digital Arrow acquired on June 10, 2004. The intangible assets total $1,442,831 and they
are being amortized on a straight-line basis over 4 years.

The increase of $140,313 from 2002 to
2003, relates to the acquisition of the focusIN Brand name, technology and customer lists
on November 27, 2002. The intangible assets total $894,539 and they are being amortized on
a straight-line basis over 5 years for brand names and acquired technology whereas the
customer lists are amortized over 10 years.

Interest income

Interest income increased in 2004 to
$233,059 from $15,869 in 2003 and $54,170 in 2002. The increase for the current year
primarily reflects the interest earned on cash and cash equivalents following the issuance
of capital stock. On June 30, 2004, the Company realized a private placement where the net
proceeds totalled $15,541,162. The remaining issuance of capital stock relates to the
exercise of employee stock options and warrants.

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The small decrease of interest of
$38,301 for 2003 as compared to 2002 is mainly due a decline in annual interest rates and
fluctuations of average cash and cash equivalents.

Loss on foreign exchange

Loss on foreign exchange stands at
$68,275 for the year ended December 31, 2004 compared to $210,888 in 2003 and $12,536 in
2002. The improvement in 2004 as compared to the previous year mainly reflects the change
in functional currency, from the Canadian dollar to the U.S. dollar, for the
Companys wholly owned subsidiary, Mamma.com Enterprises Inc. The details of the
change in functional currency are described in note 4 of the present audited financial
statements. The increase in the loss on foreign exchange for 2003 as compared to 2002 is a
factor of the sharp decline in the U.S. dollar exchange rate from the beginning of 2003 as
compared to the end of the year.

Restructuring charges
(recovery)

In 2002, $70,453 of charges related
to the restructuring of the investment management segment, segment which existed as of
that date, were reversed due to an over-accrual of estimated sub-leasing charges of the
principal executive offices that were not needed due to the cancellation of corporate
obligations.

Segment information

Beginning on the first quarter of
2004, the Company has changed the way in which it evaluates the performance of the
business such that the Company now has only one reporting segment. Prior to this year, the
Company had two reportable segments: Investment Management and Media Solutions. In 2003,
the Company decided to concentrate exclusively on its Media Solutions service,
consequently in 2003, the Company divested its interest in IBT, its wireless billing
subsidiary, which is presented as discontinued operations since the third quarter of 2003
and the Company no longer performs investment activities, our remaining investments
reflect minority interest in Companies which were acquired prior to 2003.

Unrealized loss on investments and
write-down of advances

As at December 31, 2004, based on its
assessment of the fair value of the Companys investment in LTRIM Technologies Inc.,
the Company concluded that its investment had suffered a loss in value other than a
temporary decline and therefore recorded a write-down of $365,286.

In 2002, based on its assessment of
the economic value of its marketable securities and an other than temporary decline in the
value of its long-term investments, the Company recorded an unrealized loss on marketable
securities, investments and write-down of advances totalling $82,616.

As at December 31, 2004, all
marketable securities had been sold and all investments and advances had been written-down
to nil except for the investment of $720,000 in LTRIM Technologies Inc.

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Income taxes (recovery)

The provision for current and future
income taxes is $554,680 in 2004 as compared to a recovery of income taxes of $77,636 in
2003 and $273,782 in 2002.

The provision for income taxes is due
to the utilization of non-capital losses for which future income taxes have been
previously recorded.

In 2003, the media solutions segment
which represented a separate legal entity (Mamma.com Enterprises Inc.) recorded a net
future recovery of income taxes of $77,636 which included a standard tax provision on
earnings of $460,456 (representing earnings for 2003 of $1,466,909 at a current taxable
rate of 31.4%) and a tax recovery of $538,092 which represented the total outstanding
amount of prior year losses that the media solutions segment expects to use in the future.
In 2003, after two consecutive years of profitability for the segment and profitability
expectations forecasted for 2004, management determined that it was more likely than not
that the future tax assets would be realized.

In 2002, the media solutions segment
recorded a future recovery of income taxes of $271,464, which represented the tax value of
prior year losses that the segment expected to realize in the next twelve months based on
the 2003 budget. These losses were finally absorbed against the tax provision of 2003
mentioned in the previous paragraph. It is appropriate under Canadian and US GAAP to
record this asset if the more likely than not criteria is met.

Results of discontinued operations

In July 2003, the board of directors
of the Company approved and committed to a plan to divest its telecommunications segment
in order to concentrate exclusively on its profitable and growing media solutions segment.
Therefore, since this date, IBT is presented as discontinued operations and the results of
operations and cash flows for IBT have been reported separately as discontinued operations
in the consolidated statements of operations, cash flows under a one line.

On February 12, 2004, the Company
concluded the sale of IBTs assets which include contracts, customer lists,
intellectual property, fixed assets and tangible and intangible assets relating to the
business. The remaining assets and liabilities consist primarily of trade accounts
receivable and payable existing at the date of the disposal. The Company expects to
collect these accounts receivables and pay its liabilities of IBT and has segregated them
on the consolidated balance sheets.

In 2004 the results of discontinued
operations totalling $1,043,996 primarily consists of the gain on disposal of the assets
of IBT. In 2003, IBT generated revenues of $6,493,986 and had expenses before taxes of
$6,526,206 compared to revenues of $7,602,630 and expenses before taxes of $7,136,746 in
2002. In 2003, no new contract had been signed explaining the reduction of revenues and
during the same year, IBT terminated employees and reduced expenses in response to lower
revenue activities. In 2003, IBT recorded a tax provision of $267,833 to reflect a likely
reassessment of R&D deductions claimed by the UK operation in prior years.

The Company may be entitled to
additional consideration of up to a maximum of $250,000 should certain events occur or
conditions be met. As of December 31, 2004, an amount of $100,000 of such contingent
consideration had been earned by the Company and recorded in results of discontinued
operations.

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Earnings (loss) for the year

In accordance with Canadian GAAP,
earnings from continuing operations total $60,411 ($0.01 per share) in 2004, $88,990
($0.01 per share) in 2003, compared with a loss from continuing operations of $782,878
($0.18 per share) in 2002. For 2004 and 2003, there is no difference between earnings
(loss) from continuing operations or earnings (loss) under US GAAP as compared to Canadian
GAAP. For 2002, differences between Canadian GAAP and US GAAP arise from different
accounting treatments of stock-based compensation costs and unrealized losses on
marketable securities.

Liquidity and capital resources

As at December 31, 2004, the Company
had liquidities of $27,631,244 which were composed of $20,609,089 in cash and cash
equivalents, $148,000 of restricted cash and $6,874,155 in temporary investments compared
to $4,489,077 in 2003 which consisted mainly of cash and cash equivalents of $4,465,901
with temporary investments of $23,176. For the year ended December 31, 2004, working
capital stood at $27,528,003 compared to $4,351,746 for the previous year.

Operating activities generated cash
of $1,006,093 in 2004 compared to requiring cash of $61,957 in 2003, and generating cash
of $729,090 in 2002. In 2004, adjustments for non-cash items such as future income taxes
of $400,855, amortization of intangible assets and amortization of property, plant and
equipment of $377,583 and $146,621 respectively, write-down of investment of $365,286,
stock-based compensation costs of $281,367 and financial fees paid by issuance of capital
stock and warrants of $260,301 mainly explain the positive cash flows. The net change in
non-cash working capital items partially offset the above-mentioned items mainly due to an
increase in our accounts receivable, a direct result of the growth of our sales. However,
discontinued operations partially offset positive cash flows from continuing operations by
$838,668. The cash used for operating activities from discontinued operations is primarily
generated by the net change in non-cash working capital items mainly due to a decrease in
accounts payable and accrued liabilities and income taxes payable.

In 2003, operating activities used
cash of $61,957 mainly due to the fact that the accounts receivable increased by
$1,033,078 during the year due to increased revenues offset by cash flow from operating
activities of discontinued operations of $479,852.

Investing activities required cash of
$6,495,722, $95,167 and $1,774,315 in 2004, 2003 and 2002 respectively. The use of cash in
2004 mainly reflects the net increase in short-term investments of $6,850,979 composed of
commercial paper with maturity dates in excess of 90 days and the acquisition of Digital
Arrow on June 10, 2004 for a cash consideration of $1,264,210, partially compensated by
cash from discontinued operations of $1,699,185, which reflects the cash consideration for
the sale of the assets of IBT. The cash required for investing activities in 2002 is
primarily due to the acquisition of focusIN assets for a cash consideration of $1,625,151.

Financing activities generated
$21,701,442 in 2004 compared to $585,598 in 2003 and $2,475,251 in 2002. Financing
activities consisted mainly of issuance of common shares and warrants through several
private placements and exercised options.

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The Company considers that cash and
cash equivalents as at December 31, 2004 will be sufficient to meet normal operating
requirements throughout 2005. Cash and cash equivalent balances may be used to fund
strategic acquisitions of other companies that are complementary to our business. In the
long term, the Company may require additional liquidity to fund growth, which could
include additional equity offerings or debt financing.

The Company has no line of credit
available.

Concentration of credit risk with customers

As at December 31, 2004, four
customers represented 33% of net trade accounts receivable compared with 57% for the
previous year resulting in a significant concentration of credit risk. Management monitors
closely the evolution of these customers in order to be rapidly informed of any potential
problems. These customers generally have paid receivables as per the commercial agreement,
however we cannot assure that they will continue to do so in the future. The Company also
monitors the other accounts receivable and there is no indication of material credit risk
deterioration.

Off balance sheet arrangements

As at December 31, 2004, the Company
has no off balance sheet arrangements.

Contractual obligations, contingent
liabilities and commitments

The following table summarizes our
contractual obligations as at December 31, 2004, and the effect such obligations are
expected to have on our liquidity and cash flows in future periods:

|           |  |                  | 
|---------- |  | ---------------- | 
|Years:     |  | Operatingleases$ | 
|2005       |  | 154,000          | 
|2006       |  | 114,000          | 
|2007       |  | 114,000          | 
|2008       |  | 114,000          | 
|2009       |  | 114,000          | 
|Thereafter |  | 19,000           | 
|          

The Company maintains director and
officer insurance, which may cover certain liabilities arising from its obligation to
indemnify its directors, and officers and former directors, officers and employees of
acquired companies, in certain circumstances. It is not possible to determine the maximum
potential amount under these indemnification agreements due to the limited history of
prior indemnification claims and the unique facts and circumstances involved in each
particular agreement. Such indemnification agreements may not be subject to maximum loss
clauses. Historically, the Company has not incurred material costs as a result of
obligations under these agreements and it has not accrued any liabilities related to such
indemnification obligations in its financial statements.

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Risks and uncertainties

While Mamma.coms Management has
confidence in the Companys long-term performance prospects, the following factors,
among others, should be considered in evaluating its future results of operations.

Our revenues depend to a high degree
on our relationship with two customers, the loss of which would adversely affect our
business and results of operations.

For the year ended December 31, 2004,
approximately 29% and 11% respectively of our revenues were derived from agreements with
our two largest customers. Revenues from these customers represented 33% and 8% of our
revenues in 2003 and 16% and 8% of our revenues in 2002. Although we monitor our accounts
receivable for credit risk deterioration and these customers have been paying their
payables to Mamma.com in accordance with the terms of their agreements with the Company,
there can be no assurance that they will continue to do so or that they will continue to
do so at the volume of business they have done historically. Our loss of these
customers business would adversely affect our business and results of operations.

We are the subject of an SEC
investigation which may depress the market price for our Common Shares, reduce the
liquidity of the Common Shares trading market and negatively affect our results of
operations.

We are the subject of an SEC
investigation. The scope, focus and subject matter of the SEC investigation may change
from time to time. Adverse developments in connection with the investigation or our
internal fact finding could have a negative impact on our Company and on how it is
perceived by investors and potential investors and negatively impact our results of
operations. In addition, the management effort and attention required to respond to the
investigation and any such developments could have a negative impact on our business
operations. An adverse determination by the SEC in its investigation could result in
negative consequences for the Company, including initiation of enforcement proceedings,
fines, penalties and possibly other sanctions that could harm the Companys business,
reduce the market value of its Common Shares and negatively affect its results of
operations.

Expenses relating to the SEC
investigation and the activities of our Special Independent Committee could negatively
affect our results of operations.

Our legal, public relations and
accounting expenses have increased considerably with estimated additional expenses in the
first quarter of 2005 of approximately $1 million reflecting costs associated with
responding to the SEC investigation. In addition, the independent investigation by our
Special Independent Committee incurred costs of approximately one-half million dollars.
These expenses will adversely impact our first quarter 2005 results. While we are not able
to estimate, at this time, the amount of the expenses that we will incur in future
connection with the investigation, we expect that they may continue to be significant.

Adverse results in purported
securities class action lawsuits could result in significant damages and adversely affect
the Companys financial condition and results of operation.

On February 22, 2005, the first of
several purported securities class action lawsuits was filed in the United States District
Court, Southern District of New York against the Company, and certain of the
Companys current officers and directors. The plaintiffs allege, among other things,
violations of the Securities Exchange Act of 1934 for purportedly failing to disclose and
misrepresenting certain allegedly material facts relative to the market for and trading in
the Companys stock, and seek unspecified damages. The purported class actions appear
to be based on unsubstantiated rumors and newspaper reports. The Company denies the
allegations against it, believes that the purported claims are without merit, and intends
to defend itself vigorously. Nevertheless, a finding of liability of the Company in any of
these class action lawsuits could result in significant damages and materially adversely
affect the Companys financial condition and results of operations.

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We rely on our co-branded web site
partners for a significant portion of our net revenues, and otherwise benefit from our
association with them. The loss of these co-branded web site partners could prevent us
from receiving the benefits we receive from our association with them, which could
adversely affect our business.

We provide advertising, web search
and other services to members of our co-branded partner web sites. We expect the
percentage of our net revenues generated from this network to increase in the future. We
consider this network to be critical in the future growth of our net revenues. However,
some of the participants in this network may compete with us in one or more areas.
Therefore, they may decide in the future to terminate their agreements with us. If our
co-branded web site partners decide to use a competitors or their own web search or
advertising services, our net revenues would decline.

We face competition from other
Internet companies, including web search providers, Internet advertising companies and
destination web sites that may also bundle their services with Internet access.

In addition to Microsoft, Yahoo and
Google, we face competition from other web search providers, including companies that are
not yet known to us. We compete with Internet advertising companies, particularly in the
areas of pay-for-performance and keyword-targeted Internet advertising. Also, we may
compete with companies that sell products and services online because these companies,
like us, are trying to attract users to their web sites to search for information about
products and services.

We also compete with destination web
sites that seek to increase their search-related traffic. These destination web sites may
include those operated by Internet access providers, such as cable and DSL service
providers. Because our users need to access our services through Internet access
providers, they have direct relationships with these providers. If an access provider or a
computer or computing device manufacturer offers online services that compete with ours,
the user may find it more convenient to use the services of the access provider or
manufacturer. In addition, the access provider or manufacturer may make it hard to access
our services by not listing them in the access providers or manufacturers own
menu of offerings. Also, because the access provider gathers information from the user in
connection with the establishment of a billing relationship, the access provider may be
more effective than we are in tailoring services and advertisements to the specific tastes
of the user.

There has been a trend toward
industry consolidation among our competitors, and so smaller competitors today may become
larger competitors in the future. If our competitors are more successful than we are at
generating traffic and advertising, our revenues may decline.

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We face competition from traditional
media companies, and we may not be included in the advertising budgets of large
advertisers, which could harm our operating results.

In addition to Internet companies, we
face competition from companies that offer traditional media advertising opportunities.
Most large advertisers have set advertising budgets, a very small portion of which is
allocated to Internet advertising. We expect that large advertisers will continue to focus
most of their advertising efforts on traditional media. If we fail to convince these
companies to spend a portion of their advertising budgets with us, or if our existing
advertisers reduce the amount they spend on our programs, our operating results would be
harmed.

We expect our growth rates to decline
and anticipate downward pressure on our operating margin in the future.

We expect that in the future our
revenue growth rate will decline and anticipate that there will be downward pressure on
our operating margin. We believe our revenue growth rate will decline as a result of
anticipated changes to our advertising program revenue mix, increasing competition and the
inevitable decline in growth rates as our net revenues increase to higher levels. We
believe our operating margin will decline as a result of increasing competition and
increased expenditures for all aspects of our business as a percentage of our net
revenues, including product development and sales and marketing expenses. We also expect
that our operating margin may decline as a result of increases in the proportion of our
net revenues generated from our co-branded partner web sites. The margin on revenues we
generate from our co-branded partner web sites is generally significantly less than the
margin on revenues we generate from advertising on our web sites. Additionally, the margin
we earn on revenues generated from our co-branded partner web sites could decrease in the
future if our co-branded partners require a greater portion of the advertising fees.

If we do not continue to innovate and
provide products and services that are useful to users, we may not remain competitive, and
our revenues and operating results could suffer.

Our success depends on providing
products and services that people use for a high quality Internet experience. Our
competitors are constantly developing innovations in web search, online advertising and
providing information to people. As a result, we must continue to invest significant
resources in research and development in order to enhance our web search technology and
our existing products and services and introduce new high-quality products and services
that people will use. If we are unable to predict user preferences or industry changes, or
if we are unable to modify our products and services on a timely basis, we may lose users,
advertisers and co-branded web site partners. Our operating results would also suffer if
our innovations were not responsive to the needs of our users, advertisers and co-branded
web site partners are not appropriately timed with market opportunity, effectively brought
to market or well received in the market place. As search technology continues to develop,
our competitors may be able to offer search results that are, or that are perceived to be,
substantially similar or better than those generated by our search services. This may
force us to compete on bases in addition to quality of search results and to expend
significant resources in order to remain competitive.

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We generate all of our revenues from
advertising, and the reduction of spending by or loss of advertisers could seriously harm
our business.

We generated all of our revenues from
our advertisers. Our advertisers can generally terminate their contracts with us at any
time. Advertisers will not continue to do business with us if their investment in
advertising with us does not generate sales leads, and ultimately customers, or if we do
not deliver their advertisements in an appropriate and effective manner. If we are unable
to remain competitive and provide value to our advertisers, they may stop placing ads with
us, which could negatively affect our net revenues and business.

Our operating results may be subject
to fluctuations.

Our operating results may fluctuate
as a result of many factors related to our business, including the competitive conditions
in the industry, loss of significant customers, delays in the development of new services
and usage of the Internet, as described in more detail below, and general factors such as
size and timing of orders and general economic conditions.

We face significant competition from
Microsoft, Yahoo and Google.

We face formidable competition in
every aspect of our business, and particularly from other companies that seek to connect
people with information on the web and provide them with relevant advertising. Currently,
we consider our primary competitors to be Microsoft, Yahoo and Google. Microsoft has
announced plans to develop a new web search technology that may make web search a more
integrated part of the Windows operating system. We expect that Microsoft will
increasingly use its financial and engineering resources to compete with us. Yahoo has
become an increasingly significant competitor, having acquired Overture Services, which
offers Internet advertising solutions that compete with our advertising programs.

Microsoft, Yahoo and Google have more
employees and cash resources than we do. These companies also have longer operating
histories and more established relationships with customers. They can use their experience
and resources against us in a variety of competitive ways, including by making
acquisitions, investing more aggressively in research and development and competing more
aggressively for advertisers and web sites. Microsoft and Yahoo also may have a greater
ability to attract and retain users than we do because they operate Internet portals with
a broad range of products and services. If Microsoft, Yahoo or Google are successful in
providing similar or better web search results compared to ours or leverage their
platforms to make their web search services easier to access than ours, we could
experience a significant decline in user traffic. Any such decline in traffic could
negatively affect our net revenues.

Volatility of stock price and trading
volume could adversely affect the market price and liquidity of the market for our Common
Shares.

Our Common Shares are subject to
significant price and volume fluctuations, some of which result from various factors
including (a) changes in our business, operations, and future prospects, (b) general
market and economic conditions, and (c) other factors affecting the perceived value of our
Common Shares. Significant price and volume fluctuations have particularly impacted the
market prices of equity securities of many technology companies including without
limitation those providing communications software or Internet-related products and
services. Some of these fluctuations appear to be unrelated or disproportionate to the
operating performance of such companies. The market price and trading volume of our Common
Shares have been, and may likely continue to be, volatile, experiencing wide fluctuations.
During the twelve-month period ended December 31, 2004, the closing per share price of our
Common Shares has varied from $3.26 to $15.90. During that same period, the daily trading
volume of our Common Shares has varied between 27,000 and 68,314,304 with an average daily
trading of 2,806,539 Common Shares. Future market conditions may adversely affect the
market price and trading volume of our Common Shares. Furthermore, should the market price
of our Common Shares drop below the $1.00 per share minimum bid price requirement, our
Common Shares risk being delisted from the NASDAQ SmallCap Market®, which would have
an adverse effect on our business and liquidity of our Common Shares. Brokerage firms may
not provide a market for low-priced stock, may not recommend low-priced stock to their
clients and may charge a greater percentage commission on low-priced stock than that which
they would charge on a transaction of a similar dollar amount but fewer shares. These
circumstances may adversely impact trading in our Common Shares and may also adversely
affect our ability to access capital.

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Infringement and liability claims
could damage our business.

We and our operating companies may be
subject to infringement or liability claims. From time to time, we have been, and expect
to continue to be, subject to third party claims in the ordinary course of business. Any
such claims may damage our business, including by (i) subjecting us to significant
liability for damages, (ii) resulting in invalidation of our proprietary rights, (iii)
being time-consuming and expensive to defend even if such claims are not meritorious; and
(iv) resulting in the diversion of managements time and attention. Liability claims
may also arise in relation to business conducted via and information retrieved from the
Internet, including claims for defamation, negligence, copyright or trademark
infringement, personal injury or other theories based on the nature, content, publication
and distribution of materials or the transaction of business via the Internet. Although
we, via their contractual arrangements, seek to limit the scope of potential claims, there
can be no assurance that any such contractual arrangements will adequately protect us
against such claims.

Historical net results include net
losses for the years ended December 31, 1999 to December 31, 2003. Working capital may be
inadequate.

Prior to December 31, 2004, we have
reported net losses and net losses per share in each of the previous five years. We have
been financing operations mainly from funds obtained in several private placements, and
from exercised warrants and options. On June 30, 2004, we sold in a $16.6 million private
placement an aggregate of 1,515,980 Common Shares. Investors also received warrants to
purchase an additional 606,392 shares of common stock at a price of $15.82 per share. The
warrants will be exercisable beginning six months after the closing date, and will have a
term of five years from the closing date. Management considers that cash and cash
equivalents as at December 31, 2004 will be sufficient to meet normal operating
requirements throughout 2005. In the long term, we may require additional liquidity to
fund growth, which could include additional equity offerings or debt finance. No assurance
can be given that we will be successful in getting required financing in the future.

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Goodwill may be written-down in the
future.

Goodwill is evaluated for impairment
annually, or when events or changed circumstances indicate impairment may have occurred.
Management monitors goodwill for impairment by considering estimates including discount
rate, future growth rates, amounts and timing of estimated future cash flows, general
economic, industry conditions and competition. Future adverse changes in these factors
could result in losses or inability to recover the carrying value of the goodwill
consequently, our goodwill, which amounts to approximately $1.4M as at December 31, 2004,
may be written-down in the future which could adversely effect our financial position.

Long-lived assets may be written-down
in the future.

The Company assesses the carrying
value of its long-lived assets, which include property, plant and equipment and intangible
assets, for future recoverability when events or changed circumstances indicate that the
carrying value may not be recoverable. Management monitors long-lived assets for
impairment by considering estimates including discount rate, future growth rates, general
economic, industry conditions and competition. Future adverse changes in these factors
could result in losses or inability to recover the carrying value of the long-lived
assets. Consequently, our long-lived assets, which amounts to approximately $2.4M as at
December 31, 2004, may be written-down in the future.

Minority interest in LTRIM may be
written-down in the future.

During the past years, we acquired
minority interests in companies that develop and market analog integrated circuit
products, new media and telecommunications sectors as a technology incubator. In February
2001, we announced a moratorium on new incubator activities. On a regular basis, we
reassess our minority interests to determine if there is other than temporary decline in
its value. All our minority interests, except the investment in LTRIM Technologies Inc.
(LTRIM), have been written-down to nil as of December 31, 2002. LTRIM is a
corporation in the development stage and there is no assurance that it will become
profitable in the future or that we will be able to recover the cost of this minority
interest. Consequently, our investment in LTRIM, which has been written-down to $720,000
in 2004, may be written-down again in the future.

Reduced Internet use may adversely
affect our results.

Our business is based on Internet
driven products and services including direct on-line Internet marketing. The emerging
nature of the commercial uses of the Internet makes predictions concerning a significant
portion of our future revenues difficult. As the industry is subject to rapid changes, we
believe that period-to-period comparisons of its results of operations will not
necessarily be meaningful and should not be relied upon as indicative of our future
performance. It is also possible that in some fiscal quarters, our operating results will
be below the expectations of securities analysts and investors. In such circumstances, the
price of our Common Shares may decline. The success of a significant portion of our
operations depends greatly on increased use of the Internet by businesses and individuals
as well as increased use of the Internet for sales, advertising and marketing. It is not
clear how effective Internet related advertising is or will be, or how successful
Internet-based sales will be. Our results will suffer if commercial use of the Internet,
including the areas of sales, advertising and marketing, fails to grow in the future.

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Security breaches and privacy
concerns may negatively impact our business.

Consumer concerns about the security
of transmissions of confidential information over public telecommunications facilities is
a significant barrier to increased electronic commerce and communications on the Internet
that are necessary for growth of the Companys business. Many factors may cause
compromises or breaches of the security systems we use or other Internet sites use to
protect proprietary information, including advances in computer and software functionality
or new discoveries in the fields of cryptography and processor design. A compromise of
security on the Internet would have a negative effect on the use of the Internet for
commerce and communications and negatively impact our business. Security breaches of their
activities or the activities of their customers and sponsors involving the storage and
transmission of proprietary information, such as credit card numbers, may expose our
operating business to a risk of loss or litigation and possible liability. We cannot
assure that the measures in place are adequate to prevent security breaches.

Increased regulation of the Internet
may adversely affect our business.

If the Internet becomes more strongly
regulated, a significant portion of our operating business may be adversely affected. For
example, there is increased pressure to adopt laws and regulations relating to Internet
unsolicited advertisements, privacy, pricing, taxation and content. In particular, the
United States government recently enacted the CAN SPAM Act of 2003 that, among other
matters, regulates certain aspects of e-mail marketing, such as the opt-in e-mail
marketing our Digital Arrow subsidiary engages in. Among other things, the CAN SPAM Act
requires e-mail marketers to maintain specific procedures as to who can be sent e-mail
solicitations and what must be done when an Internet user opts out of further
e-mailings. The enactment of any additional laws or regulations in Canada or the United
States, or any state or province of either of them may impede the growth of the Internet
and our Internet-related business, and could place additional financial burdens on us and
our Internet-related business.

Changes in key personnel, labour
availability and employee relations could disrupt our business.

Our success is dependent upon the
experience and abilities of our senior management and our ability to attract, train,
retain and motivate other high-quality personnel, in particular for our technical and
sales teams. There is significant competition in our industries for qualified personnel.
Labour market conditions generally and additional companies entering industries which
require similar labour pools could significantly affect the availability and cost of
qualified personnel required to meet our business objectives and plans. There can be no
assurance that we will be able to retain our existing personnel or that we will be able to
recruit new personnel to support our business objectives and plans. We believe our
employee relations are good. Currently, none of our employees are unionized. There can be
no assurance, however, that a collective bargaining unit will not be organized and
certified in the future. If certified in the future, a work stoppage by a collective
bargaining unit could be disruptive and have a material adverse effect on us until normal
operations resume.

Possible future exercise of warrants
and options could dilute existing and future shareholders.

As at December 31, 2004, we had
646,392 warrants and 461,334 stock options outstanding. As at December 31, 2004, the
exercise prices of some of our outstanding options, but none of our outstanding warrants,
issued pursuant to our stock option plan are lower than the market price of our Common
Shares. While the market value of the Common Shares is above the respective exercise
prices of some or all the warrants and options, their exercise could result in the
issuance of up to an additional 1,107,726 Common Shares. To the extent such shares are
issued, the percentage of our Common Shares held by our existing stockholders will be
reduced. Under certain circumstances the conversion or exercise of any or all of the
warrants or stock options might result in dilution of the net tangible book value of the
shares held by existing Company stockholders. For the life of the warrants and stock
options, the holders are given, at prices that may be less than fair market value, the
opportunity to profit from a rise in the market price of the shares of Common Shares, if
any. The holders of the warrants and stock options may be expected to exercise them at a
time when the Company may be able to obtain needed capital on more favourable terms. In
addition, we reserve the right to issue additional shares of Common Shares or securities
convertible into or exercisable for shares of Common Shares, at prices, or subject to
conversion and exercise terms, resulting in reduction of the percentage of outstanding
Common Shares held by existing stockholders and, under certain circumstances, a reduction
in the net tangible book value of existing stockholders Common Shares.

54

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Strategic acquisitions and market
expansion present special risks.

A future decision to expand our
business through acquisitions of other businesses and technologies presents special risks.
Acquisitions entail a number of particular problems, including (i) difficulty integrating
acquired technologies, operations, and personnel with the existing businesses, (ii)
diversion of managements attention in connection with both negotiating the
acquisitions and integrating the assets as well as the strain on managerial and
operational resources as management tries to oversee larger operations, (iii) exposure to
unforeseen liabilities relating to acquired assets, and (iv) potential issuance of debt
instruments or securities in connection with an acquisition possessing rights that are
superior to the rights of holders of the our currently outstanding securities, any one of
which would reduce the benefits expected from such acquisition and/or might negatively
affect our results of operations. We may not be able to successfully address these
problems. We also face competition from other acquirers, which may prevent us from
realizing certain desirable strategic opportunities.

We do not plan to pay dividends on
the Common Shares.

We have never paid dividends on any
class of our shares. Our management anticipates that any earnings generated from our
operations will be used to finance our working capital and potential market expansion
opportunities and that for the foreseeable future cash dividends will not be paid to
holders of the Common Shares.

Rapidly evolving marketplace and
competition may adversely impact our business.

The markets for our products and services
are characterized by (i) rapidly changing technology, (ii) evolving industry standards,
(iii) frequent new product and service introductions, (iv) shifting distribution channels,
and (v) changing customer demands. The success of the Company will depend on its ability
to adapt to its rapidly evolving marketplaces. There can be no assurance that the
introduction of new products and services by others will not render our products and
services less competitive or obsolete. We expect to continue spending funds in an effort
to enhance already technologically complex products and services and develop or acquire
new products and services. Failure to develop and introduce new or enhanced products and
services on a timely basis might have an adverse impact on our results of operations,
financial condition and cash flows. Unexpected costs and delays are often associated with
the process of designing, developing and marketing enhanced versions of existing products
and services and new products and services. The market for our products and services is
highly competitive, particularly the market for Internet products and services which lacks
significant barriers to entry, enabling new businesses to enter this market relatively
easily. Competition in our markets may intensify in the future. Numerous well-established
companies and smaller entrepreneurial companies are focusing significant resources on
developing and marketing products and services that will compete with the Companys
products and services. Many of our current and potential competitors have greater
financial, technical, operational and marketing resources. We may not be able to compete
successfully against these competitors. Competitive pressures may also force prices for
products and services down and such price reductions may reduce our revenues.

55

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An inability to protect our
intellectual property rights could damage our business.

We rely upon a combination of trade
secret, copyright, trademark and other laws to protect our intellectual property assets.
We have entered into confidentiality agreements with our management and key employees with
respect to such assets and limit access to, and distribution of, these and other
proprietary information. However, the steps we take to protect our intellectual property
assets may not be adequate to deter or prevent misappropriation. We may be unable to
detect unauthorized uses of and take appropriate steps to enforce and protect our
intellectual property rights. Although senior management believes that our services and
products do not infringe on the intellectual property rights of others, we nevertheless
are subject to the risk that such a claim may be asserted in the future. Any such claims
could damage our business.

To the extent our net revenues are
paid in foreign currencies, and currency exchange rates become unfavourable, we may lose
some of the economic value of the net revenues in U.S. dollar terms.

Although we currently transact a
majority of our business in U.S. dollars, as we expand our operations more of our
customers may pay us in foreign currencies. Conducting business in currencies other than
U.S. dollars subjects us to fluctuations in currency exchange rates. If the currency
exchange rates were to change unfavourably, the value of net receivables we receive in
foreign currencies and later convert to U.S. dollars after the unfavourable change would
be diminished. This could have a negative impact on our reported operating results. We do
not currently engage in hedging strategies, such as forward contracts, options and foreign
exchange swaps related to transaction exposures to mitigate this risk. If we determine to
initiate such hedging activities in the future, there is no assurance these activities
will effectively mitigate or eliminate our exposure to foreign exchange fluctuations.
Additionally, such hedging programs would expose us to risks that could adversely affect
our operating results, because we have limited experience in implementing or operating
hedging programs. Hedging programs are inherently risky and we could lose money as a
result of poor trades.

Higher inflation could adversely
affect our results of operations and financial condition.

We do not believe that the relatively
moderate rates of inflation experienced in the United States and Canada in recent years
have had a significant effect on our revenues or profitability. Although higher rates of
inflation have been experienced in a number of foreign countries in which we might
transact business, we do not believe that such rates have had a material effect on our
results of operations, financial condition and cash flows. Nevertheless, in the future,
high inflation could have a material, adverse effect on the Companys results of
operations, financial condition and cash flows.

56

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Forward-Looking Statements

Information contained in this
Managements Discussion and Analysis of Financial Condition and Results of Operations
includes forward-looking statements, which can be identified by the use of forward-looking
terminology such as believes, expects, may,
desires, will, should, projects,
estimates, contemplates, anticipates,
intends, or any negative such as does not believe or other
variations thereof or comparable terminology. No assurance can be given that potential
future results or circumstances described in the forward-looking statements will be
achieved or occur. Such information may also include cautionary statements identifying
important factors with respect to such forward-looking statements, including certain risks
and uncertainties that could cause actual results to vary materially from the projections
and other expectations described in such forward-looking statements. Prospective
investors, customers, vendors and all other persons are cautioned that forward-looking
statements are not assurances, forecasts or guarantees of future performance due to
related risks and uncertainties, and that actual results may differ materially from those
projected. Factors which could cause results or events to differ from current expectations
include, among other things: the severity and duration of the adjustments in our business
segments; the effectiveness of our restructuring activities, including the validity of the
assumptions underlying our restructuring efforts; fluctuations in operating results; the
impact of general economic, industry and market conditions; the ability to recruit and
retain qualified employees; fluctuations in cash flow; increased levels of outstanding
debt; expectations regarding market demand for particular products and services and the
dependence on new product/service development; the ability to make acquisitions and/or
integrate the operations and technologies of acquired businesses in an effective manner;
the impact of rapid technological and market change; the impact of price and product
competition; the uncertainties in the market for Internet-based products and services;
stock market volatility; the trading volume of our stock; the possibility that our stock
may not satisfy our requirements for continued listing on the NASDAQ SmallCap Market
including whether the minimum bid price for the stock falls below $1; and the adverse
resolution of litigation. Developments in the SEC inquiry, purported class action
litigation or related events could have a negative impact on the Company, increase Company
expenses or cause events or results to differ from current expectations. For additional
information with respect to these and certain other factors that may affect actual
results, see the reports and other information filed or furnished by the Company with the
United States Securities and Exchange Commission (SEC) and/or the Ontario
Securities Commission (OSC) respectively accessible on the Internet at
www.sec.gov and www.sedar.com, or the Companys website at www.mammainc.com. All
information contained in these audited financial statements and Managements
Discussion and Analysis of Financial Condition and Results of Operations is qualified in
its entirety by the foregoing and reference to the other information the Company files
with the OSC and SEC. Unless otherwise required by applicable securities laws, the Company
disclaims any intention or obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.

57

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Period-to-Period
Comparisons

A variety of factors may cause
period-to-period fluctuations in the Companys operating results, including business
acquisitions, revenues and expenses related to the introduction of new products and
services or new versions of existing products, new or stronger competitors in the
marketplace as well as currency fluctuations. Historical operating results are not
indicative of future results and performance.

58

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Selected Annual
Information

(In thousand of US dollars, except
per share data in accordance with generally accepted accounting principles in Canada)

|                                                       
|-------------------------------------------------------
|For the years ended December 31,                       
|                                                       
|Revenue                                                
|Earnings (loss) from continuing operations             
|Results of discontinued operations, net of income taxes
|Net earnings (loss) for the year                       
|Earnings (loss) per share from continuing operations   
|Basic                                                  
|Diluted                                                
|Net earnings (loss) per share                          
|Basic                                                  
|Diluted                                                
|Total assets                                           
|                                                       

Quarterly Financial
Highlights

(in thousand of US dollars, except
per share data in accordance with generally accepted accounting principles in Canada)

|                                   
|-----------------------------------
|                                   
|                                   
|                                   
|Revenue                            
|Earnings (loss) from continuing    
|operations                         
|Results of discontinued operations,
|net of income taxes                
|Net earnings (loss) for the period 
|Earnings (loss) per share from     
|continuing operations              
|Basic                              
|Diluted                            
|Net earnings (loss) per share      
|Basic                              
|Diluted                            
|                                   

59

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ITEM 6.    DIRECTORS, SENIOR
MANAGEMENT AND EMPLOYEES

Directors and Senior
Management

Following is a table, which discloses
the names, functions, areas of expertise within the Company and present principal
occupation(s) of the Companys directors and senior management.

|                  
|------------------
|Name              
|                  
|Guy Fauré         
|                  
|                  
|Claude E. Forget  
|                  
|                  
|David Goldman     
|                  
|Irwin Kramer      
|                  
|                  
|Dr. David Schwartz
|                  
|                  
|                  
|Daniel Bertrand   
|                  
|                  
|Patrick Gagné     
|                  
|                  
|Patrick Hopf      
|                  
|                  
|Joel Lamantia     
|                  
|                  

Each Directors term of office
expires at the earlier of the next annual meeting of shareholders or his resignation as
Director.

60

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To the knowledge of the Company,
there is no family relationship among any of the persons named in this Item 6 nor were any
such persons selected as directors or members of senior management pursuant to any
arrangement or understanding with major shareholders, customers, suppliers or others.

Statement of Corporate
Governance Practices

The directors of the Corporation
strongly believe that sound corporate governance is essential to produce maximum value to
shareholders. The following is a summary of the governance practices of the Corporation:

On August 1, 2002 the Board of
Directors approved and adopted a document entitled Responsibilities of the Board of
Directors and its Audit and Finance Committee and its Nominating, Human Resource and
Governance Committee which sets forth the responsibilities for the Board and these
two committees. This document was revised and approved by the Board of Directors on May
10, 2004. It was prepared in response to certain corporate governance concerns. This
document includes the Corporations insider trading policy and code of ethics.

| | 1. |  | Composition
of the Board of Directors
| | -- |  | -------------------------------------

Fifty percent of the directors of the
Corporation are unrelated directors. An unrelated director is independent of
management and free of any business or other relationship which could, or could reasonably
be perceived to, materially interfere with the directors ability to act in the best
interest of the Corporation, other than relationships arising from the holding of shares.

The  directors  consider  the
 following  nominees to be  unrelated to the  Corporation:  Claude E. Forget,  Irwin
Kramer and Dr. David Schwartz.

| | 2. |  | Committees
of Directors
| | -- |  | -----------------------

As at the date hereof, the members of
the Audit and Finance Committee are Irwin Kramer, David Schwartz and Claude Forget. On May
10, 2004, the Board approved a new statement of the responsibilities of the Audit and
Finance Committee of the Corporation. These responsibilities provide that the Audit and
Finance Committee shall assist the Board in fulfilling its responsibilities relating to
corporate accounting and reporting practices of the Corporation and in the quality and
integrity of financial reports of the Corporation. The Audit and Finance Committee meets
with the financial officers of the Corporation, including the Chief Financial Officer, who
reports to the Chairman of the Audit Committee, and the independent auditors to review
financial reporting matters, the system of internal accounting controls and the overall
audit plan and examines the quarterly and year-end financial statements before their
presentation to the Board. In addition the Audit Committee fixes the compensation and
other terms of engagement of the Corporations independent auditors. The auditors of
the Corporation are entitled to notice of and to attend all meetings of the Audit and
Finance Committee. In 2004, the Audit and Finance Committee met 9 times.

61

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The Corporation maintains a
Nominating, Human Resource and Governance Committee, which is responsible for overseeing
and making recommendations to the Board on the following matters:

| | (i) |  | the
search for and compensation of all senior executives and management of the
          Corporation and its subsidiaries, including periodic review of same;
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (ii) |  | the
Corporations management structure and succession plans;
| | ---- |  | ------------------------------------------------------------

| | (iii) |  | the
          incentive plans for employees of the Corporation and its subsidiaries; and
| | ----- |  | ----------------------------------------------------------------------------------------

| | (iv) |  | the
Corporations Stock Option Plan and the granting of stock options
          thereunder
| | ---- |  | ------------------------------------------------------------------------------------------

| | (v) |  | the
recommendation of new candidates as potential directors of the Corporation           and
the assessment of the performance of current directors and committees; and
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (vi) |  | the
review and recommendation of procedures to be followed with respect to
          corporate governance guidelines.
| | ---- |  | ---------------------------------------------------------------------------------------------------------------------

Composition of the
Compensation Committee

During the most recently completed
year and as of the date hereof, the members of the Nominating, Human Resource and
Governance Committee are David Goldman, Claude Forget, Irwin Kramer and David Schwartz.
David Goldman is Executive Chairman of the Corporation. Claude Forget was formerly Chief
Executive Officer of Intasys Billing Technologies, a subsidiary of the Corporation, whose
business was subsequently sold.

Report on Executive
Compensation

As part of its ongoing dedication to
creating shareholder value and promoting corporate success, the Nominating, Human Resource
and Governance Committee establishes executive compensation in order to attract, retain
and motivate key executives and to reward significant performance achievements.

Consistent with the
Corporations objectives, and in order to further align shareholder and executive
interests, the Nominating, Human Resource and Governance Committee places emphasis on
bonuses based on performance and granting of stock options in establishing executive
compensation.

Consequently, the standard executive
compensation package of the Corporation is composed of three major components: (i) base
salary and benefits, (ii) short-term incentive compensation and (iii) long-term incentive
compensation.

|i) |  | Salary
and Benefits
|-- |  | -------------------

Salary and benefits policies of the
Corporation are determined by looking at similar businesses in the Internet sector and are
kept at the mid range in the industry, taking into account the economic trends, the
Corporations profitability and return on its investments.

62

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|ii) |  | Short
Term Incentive Compensation
|--- |  | ---------------------------------

The Corporation provides cash bonuses
to those individuals of senior management of the Corporation and its subsidiaries whose
responsibilities and attainment of personal objectives exceed expectations, based on
operating results, budget expectations and financial performance. The amount of these
payments must be approved by the Nominating, Human Resource and Governance Committee and
are based on parameters established at the beginning of each year.

In the case of Named Executive
Officers, incentive bonuses vary in proportion to base salary, depending primarily on the
level of responsibility of the individual. When such objectives are exceeded bonuses are
higher, when objectives are not met the incentive bonuses are lower or nil depending on
the circumstances.

For the year ended December 31, 2004,
the bonus amounts for each Named Executive Officer were as follows: the Executive Chairman
received no bonus; the President and CEO of the Corporation received 88% of his base
salary and the Executive Vice President and Chief Financial Officer of the Corporation
received 52% of his base salary.

|iii) |  | Retention
Compensation
|---- |  | ----------------------

In
view of the current circumstances in which the Company finds itself, in April 2005 the
board resolved that Guy Fauré, Daniel Bertrand, Patrick Hopf, Patrick Gagné,
and Joel Lamantia will receive a lump sum payment (the Award) equivalent to
70% of their base annual salaries at the end of the retention period. The end of the
retention period will be the date of the 2006 Annual General Meeting (but not later than
June 30, 2006). Awards are forfeited if the executive leaves voluntarily before the end of
the retention period, or is terminated for cause.

|iv) |  | Long
Term Incentive Compensation
|--- |  | --------------------------------

The long term incentive component
consists of the stock option plan of the Corporation which provides for the issuance of
options to executive officers and other employees, directors or consultants to purchase
common shares of the Corporation. The stock option plan of the Corporation is described
below under the heading Stock Option Plan.

The Nominating, Human Resource and
Governance Committee determines the executives, employees and directors eligible for the
granting of options pursuant to the stock option plan. It also determines the size of each
grant and the date on which each grant is to become effective. The exercise price of
options granted may not be less than the market price of the Corporations common
shares as traded on the NASDAQ in U.S. dollars determined as of the date the options are
granted. The number of options granted annually to recipients is determined on a
discretionary basis.

The Nominating, Human Resource and
Governance Committee may at its discretion, determine when the options granted under the
stock option plan may be exercised or vested, provided that the term of such options can
not exceed ten (10) years.

63

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Unless otherwise stipulated by the
terms of a stock option grant, which terms are approved by the Nominating, Human Resource
and Governance Committee, options granted pursuant to the stock option plan will lapse
thirty (30) days after the holders ceases to be employed by the Corporation. In the event
of death, any vested option of the holder lapses three (3) months after his or her death.
In the event that the holders employment terminates due to disability, the holder
may exercise the options for one (1) year after the date of termination of employment. If
the holder is terminated for cause, such options terminate immediately.

In
2004, the only grants of options to named Executive Officers were made in favour of Mr.
Goldman, Mr. Fauré and Mr. Bertrand. Note that in the first quarter of 2005, Messrs
Goldman, Fauré, and Bertrand voluntarily withdrew their entitlement to options granted on
November 2, 2004 and these options were cancelled.

Compensation of the Chief
Executive Officer and President

Prior to January 12, 2004, the
Chairman and CEO of the Corporation was David Goldman who is now Executive Chairman. On
January 12, 2004, Guy Fauré was appointed President and Chief Executive Officer of
the Corporation. On August 12th, 2004, the Corporation amended the employment arrangement
of the President and CEO. As a result, should there be a change of control in the
Corporation, Guy Fauré will be entitled to a lump sum payment equal to two times
his annual base salary if he:

| | (i) |  | is
terminated;
| | --- |  | --------------

| | (ii) |  | does not
accept a relocation outside of the greater Montreal area;
| | ---- |  | ------------------------------------------------------------------

| | (iii) |  | does
not accept an offer of employment with reduced levels of responsibility; or
| | ----- |  | --------------------------------------------------------------------------------

| | (iv) |  | does
not accept an offer of compensation (including performance/incentive plan
               targets and long-term compensation) which is less than his current level.
| | ---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

The President and Chief Executive
Officers compensation is considered and determined by the Nominating, Human Resource
and Governance Committee. The Chief Executive Officer and President does not participate
in the Committees decisions relating to his Compensation.

The aggregate compensation of the
Chief Executive Officer and President consists of three components: base salary, annual
cash, bonus and equity incentives. The Committee strives to balance the compensation
amongst these three components.

In 2004, Mr. Faurés base
salary was $167,083 and he received a bonus of $147,097 based upon corporate performance.
He also received taxable benefits of $496,295 related to exercised options. In
establishing the Chief Executive Officer and Presidents salary, the Human Resources,
Nominating and Governance Committee assesses his overall performance as well as the
publicly disclosed compensation of chief executive officers of companies in the Internet
and telecommunications sectors, taking into account the Corporations revenues,
profitability and market capitalization. The Human Resources, Nominating and Governance
Committee considers the bonus provided to senior officers based on the achievement of
certain objectives, namely operating results, budget expectations and financial
performance.

64

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Conclusion

By way of application of the
Corporations executive compensation policy, executive compensation is linked to
corporate and individual performance, as well as stock performance and long-term results.
The Human Resources, Nominating and Governance Committee continuously reviews the various
executive compensation components to ensure that they maintain their competitiveness in
the industry and continue to focus on the Corporations objectives, values and
business strategies.

Depending on specific circumstances,
the Nominating, Human Resource and Governance Committee may also recommend employment
terms and conditions that deviate from the above described policies. Consequently, the
Corporation or its subsidiaries may enter into employment or management contracts on a
case by case basis.

For the Nominating, Human Resource
and Governance Committee.

| | Claude
Forget          David Goldman          Irwin Kramer          David Schwartz
| | ----------------------------------------------------------------------------------

65

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Statement of Executive
Compensation

The following summary table,
presented in accordance with applicable securities legislation, sets forth all
compensation provided by the Corporation and its affiliates for the fiscal years ended
December 31, 2002, 2003 and 2004 to:

| | (i) |  | the
Chief Executive Officer;
| | --- |  | ----------------------------

| | (ii) |  | the
Chief Financial Officer;
| | ---- |  | ----------------------------

| | (iii) |  | each
of the Corporations three most highly compensated executive officers,
               other than the Chief Executive Officer and the Chief Financial Officer,
who were                serving as executive officers at the end of December 31, 2004 and
whose total                salary and bonus exceeded CA$150,000; and
| | ----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (iv) |  | such
other individuals for whom the foregoing disclosure would have been made           but
for the fact that such individual was not an officer of the Corporation at           the
end of December 31, 2004, (collectively, the Named Executive           Officers).
| | ---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Summary Compensation Table

Compensation is payable in Canadian
dollars and converted by using the yearly average U.S. exchange rate.

|                             
|-----------------------------
|                             
|                             
|Name and Principal
Occupation
|                             
|Guy Fauré                    
|President & CEO              
|                             
|                             
|David Goldman                
|Executive Chairman           
|                             
|                             
|Daniel Bertrand              
|Executive Vice-President     
|and Chief Financial          
|Officer                      
|                             
|Patrick Hopf                 
|VP of Business               
|Development                  
|                             

66

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|                        
|------------------------
|
|                        
|
|                        
|
|                        
|Guy Fauré               
|President & CEO         
|                        
|                        
|David Goldman           
|Executive Chairman      
|                        
|                        
|Daniel Bertrand         
|Executive Vice-President
|and Chief Financial     
|Officer                 
|                        
|Patrick Hopf2           
|VP of Business          
|Development             
|                        

|1 |  | The
Company and Dave Goldman  Advisors  Ltd.,  a company  controlled  by Mr.  Goldman,
 entered  into a  consulting  agreement      pursuant to which David  Goldman  provides
his services to the Company.  In addition,  as part of the  compensation  paid to David
     Goldman, the Company agreed to grant him options to acquire Common Shares of the
Company.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2 |  | Appointed
officer of the Company in January 2004.
|- |  | -------------------------------------------------

|3 |  | In
February 2005, David Goldman, Guy Fauré and Daniel Bertrand voluntarily withdrew
their entitlement to options granted on November 2, 2004 (expiring November 2, 2009) and
the options were cancelled.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

67

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Termination of Employment

Change in
Responsibilities and Employment

The Corporation has entered into
employment  arrangements and agreements with the following Named Executive  Officers who
remain in the employment of the Corporation.  All sums mentioned herein are in U.S.
Dollars.

On July 8, 1999, Daniel Bertrand,
Executive Vice-President and Chief Financial Officer of the Company entered into an
employment agreement with the Company. Pursuant to the terms and conditions of his
employment agreement, Mr. Bertrand is paid an annual salary of CA$165,000. Mr. Bertrand is
also entitled to a bonus ranging from a minimum of 20% of his base salary for meeting
minimum financial and individual performance levels, to a maximum of 60% for far exceeding
expected performance levels. Mr. Bertrand is also entitled to receive stock options.

On August 12, 2004, the Corporation
amended the employment arrangement of the Executive Vice-President and CFO. As a result,
should there be a change of control in the Corporation, Daniel Bertrand will receive a
lump sum payment equal to the greater of the past 18 months consulting payments, or
CA$225,000 if he:

| | (i) |  | is
terminated;
| | --- |  | --------------

| | (ii) |  | does
not accept a relocation outside of the greater Montreal area;
| | ---- |  | ------------------------------------------------------------------

| | (iii) |  | does
not accept an offer of employment at reduced levels of responsibility; or
| | ----- |  | ------------------------------------------------------------------------------

| | (iv) |  | does
not accept an offer of compensation (including performance/incentive plan
               targets and long-term compensation) which is less than his current level.
| | ---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

On September 10, 2001, Guy
Fauré, entered into an employment agreement with Mamma.com Enterprises Inc.
Pursuant to the terms and conditions of this employment agreement, Mr. Fauré is
entitled to an annual salary of CA$242,000 and an annual bonus ranging from a minimum of
35% of base salary for meeting minimum financial and individual performance levels, to a
maximum of 95% for far exceeding expected performance levels. Mr. Fauré is also
entitled to receive stock options.

On August 12, 2004, the Corporation
amended the employment arrangement of the President and CEO. As a result, should there be
a change of control in the Corporation, Guy Fauré will be entitled to a lump sum
payment equal to two times his annual base salary if he:

| | (i) |  | is
terminated;
| | --- |  | --------------

| | (ii) |  | does
not accept a relocation outside of the greater Montreal area;
| | ---- |  | ------------------------------------------------------------------

| | (iii) |  | does
not accept an offer of employment at reduced levels of responsibility; or
| | ----- |  | ------------------------------------------------------------------------------

| | (iv) |  | does
not accept an offer of compensation (including performance/incentive plan
               targets and long-term compensation) which is less than his current level.
| | ---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

68

---

David Goldman was Chairman and CEO of
the Company until January 12, 2004 when he became the Executive Chairman of the Company.
On August 12, 2004, the Corporation amended the employment arrangement of the Executive
Chairman. As a result, should there be a change of control in the Corporation, Dave
Goldman Advisors Inc. will receive a lump sum payment equal to the greater of the past 24
months consulting payments or CA$300,000 if he:

| | (i) |  | is
terminated;
| | --- |  | --------------

| | (ii) |  | does
not accept a relocation outside of the greater Montreal area;
| | ---- |  | ------------------------------------------------------------------

| | (iii) |  | does
not accept an offer of employment with reduced levels of responsibility; or
| | ----- |  | --------------------------------------------------------------------------------

| | (iv) |  | does
not accept an offer of compensation (including performance/incentive plan
               targets and long-term compensation) which is less than his current level.
| | ---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

Prior to January 12, 2004, the
Chairman and CEO of the Corporation was David Goldman. During the year ended 2003, Mr.
Goldman was not paid any salary or benefits by the Corporation but rather was rewarded
solely through the granting of stock options which are awarded at the discretion of the
Nominating, Human Resource and Governance Committee. This position was not considered as a
full time position and therefore the level of this award was based solely on the overall
achievements and performance of the Corporation.

The Company has a consulting
agreement with David Goldman through Dave Goldman Advisors Ltd. for consulting services
rendered. This company was remunerated for services rendered on an hourly rate of CA$200.
These consulting arrangements may be terminated on sixty (60) days notice by either party.

There are no service contracts in
place between the directors of the Company and the Company or any of its subsidiaries,
save and except for the agreements between the Company and Dave Goldman Advisors Ltd.,
pursuant to which David Goldman, the Executive Chairman of the Company, provides his
services to the Company.

On January 12, 2004, the Corporation
appointed three new officers. Patrick Hopf, Vice-President-Business Development, is paid
an annual salary of CA$125,000. Mr. Hopf is also entitled to a bonus ranging from a
minimum of 25% of base salary for meeting minimum financial and individual performance
levels, to a maximum of 62% for far exceeding expected performance levels. Mr. Hopf is
also entitled to receive stock options. Patrick Gagné, Vice-President-Sales, is
paid an annual salary of CA$97,000. Mr. Gagné is also entitled to a bonus ranging
from a minimum of 25% of base salary for meeting minimum financial and individual
performance levels, to a maximum of 60% for far exceeding expected performance levels. Mr.
Gagné is also entitled to receive stock options. Joel Lamantia,
Vice-President-Operations, is paid an annual salary of CA$87,000. Mr. Lamantia is also
entitled to a bonus ranging from a minimum of 10% of base salary for meeting minimum
financial and individual performance levels, to a maximum of 21% for far exceeding
expected performance levels. Mr. Lamantia is also entitled to receive stock options.

69

---

Compensation of Directors

During the fiscal year ended December
31, 2004, directors were each paid $2,500 quarterly for the first two quarters and $5,000
quarterly for the last two quarters, as well as $1,000 per Board meeting attended.
Effective July 1, 2004 the Chair of the Board received $10,000/annum and the Chair of the
Audit Committee received a payment increase from $4,000/annum to $8,000/annum. The
directors received a combined fee of $1,000 for attending board and committee meetings on
the same day. The directors received no fees for teleconference board meetings nor the
signing of any resolution of directors or documents on half of the Company. Effective
April 1, 2005, director compensation was revised as follows: directors receive $6,250
quarterly, the Chair of the Board receives a payment of $12,500/annum, the Chair of the
Audit Committee receives a payment of $10,000/annum, and the Chair of the Nominating,
Human Resources and Governance Committee receives a payment of $5,000/annum. In addition
to payment of $1,000 for attending board and committee meetings on the same day, effective
April 1, 2005, members of the Audit and Nominating, Human Resources and Governance
committees receive a $1,000 payment if a committee meeting is held on a day other the day
of a board meeting and, if a board meeting is held via teleconference, directors receive a
payment of $500.

Robert Raich was a director of the
Corporation until March 11, 2005 and is a partner of Spiegel Sohmer, a general partnership
of attorneys. The Corporation pays fees to Spiegel Sohmer for legal services rendered.

Directors and Officers
Insurance

The Corporation has purchased
liability insurance in the name of each director and officer of the Corporation. The
present insurance policy provides coverage for the directors and officers of the
Corporation for liability up to $10,000,000 and expires on March 28, 2006. In addition to
this coverage, a supplemental $5,000,000 policy was subscribed for Directors and Officers
on March 28, 2006 effective for twelve months.

Indebtedness of Directors
and Officers

During the most recently completed
financial year, none of the directors and executive officers of the Corporation and none
of the management nominees for election as a director nor any associate of the foregoing
is, or was at any time since the beginning of the most recently completed financial year,
indebted to the Corporation or any of its subsidiaries.

70

---

Stock Option Plan

In 1999, the Corporation adopted a
new stock option plan (the Plan), replacing all previous stock option plans of
the Corporation, to provide eligible officers, directors, employees and consultants of the
Corporation and its subsidiaries compensation opportunities that will encourage share
ownership and enhance the Corporations ability to attract, retain and motivate such
persons and reward significant performance achievements. Options under the Plan may not be
granted with a term exceeding 10 years. The exercise price of the options may not be less
than the market price of the Corporations common shares determined as of the date
the options were granted. Unless the Board determines otherwise, options granted under the
Plan are exercisable within 30 days after an optionee ceases to be employed or retained by
the Corporation (other than for reason of cause in which event they terminate immediately,
death in which event they are exercisable within 3 months and disability in which event
they are exercisable within one year).

The Plan, which was approved by
shareholders on June 30, 1999, and subsequently amended as approved by shareholders on
June 20, 2000 and May 23, 2002, provides that the aggregate number of common shares
reserved for issuance under the Plan shall not exceed 1,000,000 common shares. The
granting of options is subject to the further conditions that: (i) the number of
outstanding common shares of the Corporation reserved for options to optionees or issued
to optionees within any one year period shall not exceed 15% of the outstanding common
shares of the Corporation, and (ii) at no time may any optionee hold more than 5% of the
outstanding common shares of the Corporation under option.

The following table discloses
individual grants of options to the Named Executive Officers to purchase or acquire common
shares of the Corporation pursuant to the Plan for the financial year ended December 31,
2004.

Option Grants During the
Most Recently Completed Financial Year

|               
|---------------
|
|               
|David Goldman  
|               
|Guy Fauré      
|               
|Daniel Bertrand
|               

In
February 2005, David Goldman, Guy Fauré and Daniel Bertrand voluntarily withdrew
their entitlement to options granted on November 2, 2004 (expiring November 2, 2009) and
the options were cancelled.

The following table discloses the
exercise of options to purchase or acquire common shares of the Corporation by the Named
Executive Officers during the financial year ended December 31, 2004.

71

---

Aggregate Options Exercised During
the Most Recently Completed Financial Year and Financial Year-end Option Values

|               
|---------------
|
|               
|David Goldman  
|               
|Guy Fauré      
|               
|Daniel Bertrand
|               
|Patrick Hopf   
|               

Option and Sar Repricing

No
options were repriced during the year ended December 31, 2004.

Securities Authorized For Issuance
Under Equity Compensation Plans

|                           
|---------------------------
|
|                           
|Equity compensation plans  
|approved by securityholders
|                           
|Equity compensation plans  
|not approved by            
|securityholders            
|                           
|Total                      
|                           

72

---

Note: On November 2, 2004, a total of
295,000 options were awarded to directors and officers at an exercise price of $7.08. In
January 2005, all of the individuals awarded these options voluntarily withdrew their
entitlement to these options and the 295,000 options were cancelled.

Securities Under Option to Directors
and Named Executive Officers as at December 31, 2004

|                 |  |                                   |  |                                     |  |                                                                               |  |                   | 
|---------------- |  | --------------------------------- |  | ----------------------------------- |  | ----------------------------------------------------------------------------- |  | ----------------- | 
|Names            |  | SecuritiesUnder OptionsGranted(#) |  | Exercise orBase Price(US$/Security) |  | Market Value ofSecurities UnderlyingOptions on the Dateof Grant(US$/Security) |  | ExpirationDate    | 
|                
|Daniel Bertrand  |  | 5,000                             |  | 1.986                               |  | 1.986                                                                         |  | January 16, 2013  | 
|                
|Daniel Bertrand  |  | 10,000                            |  | 2.57                                |  | 2.57                                                                          |  | April 30, 2013    | 
|                
|Daniel Bertrand  |  | 14,000                            |  | 3.58                                |  | 3.58                                                                          |  | November 5, 2010  | 
|                
|Daniel Bertrand  |  | 50,000                            |  | 7.08                                |  | 7.08                                                                          |  | November 2, 2009  | 
|                
|Guy Fauré        |  | 7,500                             |  | 1.986                               |  | 1.986                                                                         |  | January 16, 2013  | 
|                
|Guy Fauré        |  | 25,000                            |  | 2.57                                |  | 2.57                                                                          |  | April 30, 2013    | 
|                
|Guy Fauré        |  | 29,000                            |  | 3.58                                |  | 3.58                                                                          |  | November 5, 2010  | 
|                
|Guy Fauré        |  | 75,000                            |  | 7.08                                |  | 7.08                                                                          |  | November 2, 2009  | 
|                
|Claude E. Forget |  | 25,000                            |  | 7.08                                |  | 7.08                                                                          |  | November 2, 2009  | 
|                
|David Goldman    |  | 7,500                             |  | 1.986                               |  | 1.986                                                                         |  | January 16, 2013  | 
|                
|David Goldman    |  | 7,500                             |  | 2.57                                |  | 2.57                                                                          |  | April 30, 2013    | 
|                
|David Goldman    |  | 29,000                            |  | 3.58                                |  | 3.58                                                                          |  | November 2, 2010  | 
|                
|David Goldman    |  | 75,000                            |  | 7.08                                |  | 7.08                                                                          |  | November 2, 2009  | 
|                
|Irwin Kramer     |  | 25,000                            |  | 7.08                                |  | 7.08                                                                          |  | November 2, 2009  | 
|                
|David Schwartz   |  | 20,000                            |  | 7.08                                |  | 7.08                                                                          |  | November 2, 2009  | 
|                
|Patrick Hopf     |  | 3,334                             |  | 1.53                                |  | 1.53                                                                          |  | February 25, 2009 | 
|                
|Patrick Hopf     |  | 2,500                             |  | 1.986                               |  | 1.986                                                                         |  | January 16, 2013  | 
|                
|Patrick Hopf     |  | 6,500                             |  | 3.58                                |  | 3.58                                                                          |  | November 5, 2010  | 
|                

73

---

Share Ownership

The information with respect to
shares beneficially owned, controlled or directed by directors of the Company or Named
Executive Officers is in each instance based upon information furnished by the person
concerned. The Companys articles of incorporation provide for Common Shares as the
only authorized class of shares, all of which have the same rights. Options to acquire
shares held by directors or Named Executive Officers, are listed in the above table
entitled Securities Under Option to Directors and Named Executive Officersand not
included in the information below. To the knowledge of the Company, the following
directors and Named Executive Officers hold the following shares of the Company as at May
12, 2005.

|Director/ Named Executive Officer                                                   | Number of Company Shares Held
|----------------------------------------------------------------------------------- | -----------------------------
|                                                                                   
|Guy Fauré, President & CEO, Director
Mamma.com Inc.                                 | 3,500                        
|                                                                                   
|Claude E. Forget, Director                                                          | 30,000                       
|                                                                                   
|David Goldman, Executive Chairman, Director
Mamma.com Inc.                          | 75,000                       
|                                                                                   
|Irwin Kramer, Director                                                              | 2,000                        
|                                                                                   
|Dr. David Schwartz, Director                                                        | 7,000                        
|                                                                                   
|Daniel Bertrand, Executive Vice-President
and Chief Financial OfficerMamma.com Inc. | Nil                          
|                                                                                   
|Patrick Hopf, Vice-President-Business
DevelopmentMamma.com Inc.                     | Nil                          
|                                                                                   

74

---

Employees

The following table provides a
breakdown of persons employed by main category of activity for each of the past five
financial years.

|    
|----
|
|    
|
|    
|2004
|    
|2003
|    
|2002
|    
|2001
|    
|2000
|    

Pension and Retirement
Benefits

The Company does not set aside nor
accrue any amounts to provide pension, retirement or similar benefits. The Company
provides statutory benefits and Group Insurance.

ITEM 7.   MAJOR
SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

Major Shareholders

To the knowledge of the Company, no
shareholder currently owns, directly or indirectly, or exercises control or direction over
voting securities carrying more than 5% of the voting rights attaching to any class of
voting securities of the Company.

The Companys Common Shares are
widely held in the United States, Canada and Europe.

To the knowledge of the Company, the Company
is not directly or indirectly owned or controlled by another corporation(s), by any
foreign government or by any other natural or legal person(s), whether severally or
jointly acting as a group within the meaning of the United States Securities
Exchange Act of 1934, as amended. To the knowledge of the Company, there are no
arrangements, which may at a subsequent date result in a change in control of the Company.

Steve Saviuk, former Chairman and CEO
of the Company, is also Chairman and CEO as well as a significant shareholder of Manitex
Capital Inc. (Manitex), a venture capital company listed on the Canadian
venture exchange (CDNX). The Company and Manitex have participated in certain transactions
summarized below.

As reported in this Annual Report on
Form 20-F, on May 14, 2000, the Company initiated a series of transactions pursuant to
which it subscribed to a CA$850,000 secured debenture convertible into 12.75% of the
equity of LTRIM Technologies Inc. (LTRIM) as well as to 207,323 preferred
shares of LTRIM for a total of CA$900,000 (US$588,594). The preferred shares were
subscribed to and entirely paid for by May 2001 and represent an additional 13.50% of
LTRIMs equity. Mamma assigned to Manitex 15% of its original rights and obligations
under the subscription agreements and secured convertible debenture, including 15% of
original CA$1,000,000 debenture in exchange for CA$150,000. Manitex also participated in
subsequent subscriptions for preferred shares of LTRIM upon the same terms and conditions
as those provided to the Company.

75

---

On March 30, 2000, the Company
acquired a 6% secured debenture of $2.625 million issued by TechnologyEvaluation.com
(TEC.com) for a cash consideration of $1.625 million and in exchange for a
$1.0 million note receivable and accrued interest. Manitex also participated and
subscribed to $375,000 of debt upon the same terms and conditions as those provided to
Mamma.

As of November 10, 2000, a Stock
Exchange Agreement was entered into among Tece Inc., a Nevada corporation listed on the
OTC BB in the United States under the symbol TENC and formerly called Internet Food Co.
Inc. (Tece), its wholly owned subsidiary, 3786137 Canada Inc.
(3786137), TEC, Manitex Capital Inc., the Company and Mr. Don Lobley. Pursuant
to the Share Exchange Agreement, Intasys transferred to 3786137, on a two-for-one basis,
all of the shares and convertible debentures of TEC held by it, equivalent to a total of
13,045,420 Common Shares of TEC, for an aggregate of 6,522,710 exchangeable preferred
shares of 3786137 (the Exchangeable Shares). The Exchangeable Shares are
exchangeable on a share-for-share basis at the option of their holder into shares of
Common Shares, US$.001 par value, of Tece. With regard to their holdings in Tece, Inc.,
the Company and Manitex file their reports with the Securities and Exchange Commission as
a group.

In September 2000, the Company and
Manitex participated in a US$3 million investment in Tri-link Technologies Inc. whereby
the Company subscribed to US$1.35 million of convertible preferred shares. Manitex Capital
Inc. subscribed to US$500,000 of convertible preferred shares, representing a 4.2%
interest in Tri-Link. The shares held by the Company and Manitex in Tri-Link are subject
to a unanimous shareholders agreement among all the shareholders of Tri-Link as well as a
voting trust agreement in favour of the Company.

In January 2002, the Company
relocated its principal executive offices and subleased its former executive offices
(approximately 3,000 square feet) to Manitex. Under the terms of the sublease agreement,
Manitex assumed, as of January 2002, all of the Companys rights and obligations
relating to said premises. The Company remains joint and severally liable with Manitex for
the obligations relating to the lease of said premises for an amount of approximately
CA$98,000, which lease expires July 31, 2004.

Part of the compensation packages
originally offered to the Companys former President and the former CEO and Chairman
was provided under the terms of a Master Option Agreement, dated December 7, 1999, among
Mamma, Intasys Capital Corporation and 3354717 Canada Inc., a company controlled by these
former executives, (the Master Option Agreement). On several occasions, the
terms of the Master Option Agreement for both former executives were amended. In August
2001, the former President assigned and transferred, to the former CEO and Chairman, all
of his rights, title and interest in and to 3354717 Canada Inc. that he had related to the
Master Option Agreement. On October 30, 2001 the former CEO and Chairman agreed to cancel
the Master Option Agreement and the Company granted him an option to purchase up to 15% of
the Companys investment in Tri-Link Technologies Inc. and LTRIM up until December
31, 2002 for total cash consideration of $410,425. Thereafter this percentage and the
exercise price were reduced to 5% and $136,808, respectively through February 28, 2004, at
which time the options expired.

76

---

Interest of Experts and
Counsel

Not
Applicable.

ITEM 8.   FINANCIAL
INFORMATION

Consolidated Financial
Statements and Other Financial Information

The consolidated financial statements
and other financial information of the Company are included under Item 17 of this Annual
Report on Form 20-F.

Legal or Arbitration
Proceedings

See the discussions below under the
headings SEC Investigation and Purported Securities Class Action Lawsuits.

Policy on Dividend
Distributions

The Company has never declared or
paid dividends on its shares of Common Shares. The Company currently intends to retain any
earnings to support its working capital requirements and growth strategy and does not
anticipate paying dividends in the foreseeable future. Payment of future dividends, if
any, will be at the discretion of the Companys Board of Directors after taking into
account various factors, including the Companys financial condition, operating
results, current and anticipated cash needs and plans for expansion.

Significant Changes

Several significant changes have
occurred since the date of the annual financial statements included in this Annual Report
on Form 20-F.

SEC Investigation

On March 18, 2004 the United States
Securities and Exchange Commission (SEC) notified the Company that the SEC had
begun an informal inquiry relating to trading activity in the Companys securities.
During March of 2004 trading in the Companys common stock had been intense and the
market price of the common stock had risen sharply.

The SEC has since issued a formal
order of investigation in this matter. As a part of its investigation, the Company
believes the SEC may consider matters related to trading in the Companys securities
and whether an individual and persons acting jointly or in concert with him may have had a
significant influence on the Company in the past as a result of undisclosed shareholdings.
(See Special Investigation of Independent Committee below.) The Company also
believes that the Commission staff may consider matters relating to the Companys
financial reporting and internal controls. The scope, focus and subject matter of the SEC
investigation may change from time to time and the Company may be unaware of matters under
consideration by the SEC. The Company intends to continue cooperating with the SEC in its
investigation.

77

---

Purported Securities
Class Action Lawsuits

On February 22, 2005, the first of
several purported securities class action lawsuits was filed in the United States District
Court, Southern District of New York against the Company, and certain of the
Companys current officers and directors. The plaintiffs allege, among other things,
violations of the Securities Exchange Act of 1934 for purportedly failing to disclose and
misrepresenting certain allegedly material facts relative the market for and trading in
the Companys stock, and seek unspecified damages. All of these lawsuits may be
consolidated for pretrial purposes. The purported class actions appear to be based on
unsubstantiated rumors and newspaper reports. The Company denies the allegations against
it, believes that the purported claims are without merit, and intends to defend itself
vigorously.

Special Investigation of
Independent Committee.

Following press reports in January
2005 and in response to recommendations made by the Companys former independent
auditor, the Companys Board of Directors initiated an investigation under the
supervision of a Special Independent Committee consisting of independent directors of the
Audit Committee with independent legal counsel to investigate the allegations in the press
reports. Those press reports claimed that an individual and persons acting jointly or in
concert with him may have had a controlling influence on the Company in the past as a
result of undisclosed shareholdings. The Special Committee and its independent counsel
reviewed the relevant information available at the time of the investigation relating to
the period from January 1, 1999 to December 31, 2004. While the Special Committee did note
some evidence of contacts with and involvement by Mr. Kott and persons with whom he may
have had an association, based on its review, the Special Committee has not found evidence
establishing that Mr. Kott had a controlling influence on the Corporation during such
period.

Late filing of 2004
Audited Financial Statements.

On February 16, 2005 the Company
announced that PricewaterhouseCoopers LLP would be unable to act as the Companys
independent auditor in connection with the audit of its 2004 annual consolidated financial
statements. On March 18, 2005 the Company announced that it had retained RSM Richter LLP
as its new auditor. As a result of this change of auditor, the audit was delayed and the
Company advised investors that the filing of its annual financial statements would likely
be delayed. On March 31, 2005, the Company confirmed that the filing of its financial
statements for the year ended December 31, 2004 would be delayed. On April 14, 2005, the
Company announced that it would not file its interim financial statements for the first
quarter of 2005 until it had filed its annual financial statements for 2004, which would
be on or before May 31, 2005.

78

---

As a result of its failure to file
the Annual Financial Statements on or before March 31, 2005, the Ontario Securities
Commission, consistent with Ontario Securities laws, has imposed a cease trade order
affecting directors, officers and insiders of the Company (a management cease trade
order). The Company had, prior to March 31, 2005, advised directors and officers, in
accordance with the Companys insider trading policy, that they were subject to a
blackout period with respect to trading in securities of the Company until such time as
all regulatory filings have been made.

Cancellation of stock options

On November 2, 2004, the Company
granted to Officers and Members of the Board of the Company, 295,000 stock options at an
exercise price of $7.08. The fair value of the options granted were estimated as of the
date of grant using the Black-Scholes option pricing model with the following assumptions:
expected option life 4 years, volatility 88%, risk-free interest rate 3.70% and dividend
yield nil. For the year ended December 31, 2004, general and administration expenses
include $138,395 of stock-based compensation costs relating to these stock options.

On February 7, 2005, the Officers and
Members of the Board of Directors of the Company to whom the above-mentioned stock options
had been granted, waived and renounced any and all rights that each had or may have had on
the options. Consequently, the options were cancelled as of that date. The stock-based
compensations costs recorded as of December 31, 2004 pertaining to these options will be
reversed in the first quarter of 2005.

# ITEM 9.   THE OFFER AND
LISTING

U.S. and German Trading
Markets

The Companys Common Shares are
quoted on the NASDAQ Stock Market®  Small Cap Tier under the symbol
MAMA and on the Third Market Segment of the Frankfurt and Berlin stock
exchanges in Germany under the symbol MAMA.F. Prior to April 1999, the
Companys shares were quoted under various other trading symbols. With a corporate
name change taking effect in August 1996 the Companys common share trading symbol
was changed to INTAF and in April 1999 the symbol was changed to
INTA. On January 12, 2004, following the approval of the change of name of the
Company to Mamma.com Inc. the symbol was changed to MAMA. On July 11, 2001,
the Company filed articles of amendment consolidating its issued and outstanding Common
Shares on the basis of one post-consolidation common share for every ten pre-consolidation
Common Shares. The Companys Common Shares started trading on the NASDAQ Small Cap
Market® on a consolidated basis at the opening of the markets on July 13, 2001. As of
that date, a D was appended to the Companys trading symbol for twenty
trading days so the trading community would be aware of the reverse split, after which
time the D was removed.

The following table sets forth the
price history of the Companys Common Shares reported on the NASDAQ Stock Market®
and on the Third Market Segment of the Frankfurt and Berlin stock exchanges in Germany,
which reflect inter-dealer prices without retail mark-ups or commissions and may not
represent actual transactions. As per the Explanatory Notes to this Annual Report on Form
20-F, all prices referred to below are adjusted to take into account the July 2001
consolidation of the Companys Common Shares on the basis of 1 post-consolidation
common share for every 10 pre-consolidation Common Shares.

79

---

NASDAQ Small Cap
Market®Annual High and Low Market Prices  5 Years Ended December 31, 2004 (based on
closing prices)

|    
|----
|
|    
|2004
|    
|2003
|    
|2002
|    
|2001
|    
|2000
|    

NASDAQ Small Cap
Market® Quarterly High and Low Market Prices  2 Years Ended March 31, 2005 (based on
closing prices)

|        
|--------
|
|        
|03/31/05
|        
|12/31/04
|        
|09/30/04
|        
|06/30/04
|        
|03/31/04
|        
|12/31/03
|        
|09/30/03
|        
|06/30/03
|        
|03/31/03
|        

Monthly High and Low Market Prices
 6 Months Ended April 30, 2005 (based on closing prices)

|             
|-------------
|
|             
|April 2005   
|             
|March 2005   
|             
|February 2005
|             
|January 2005 
|             
|December 2004
|             
|November 2004
|             

80

---

Frankfurt Exchange (based on closing
prices)  High and Low Market Prices  4 Years Ended December 31, 2004 (in
euros)

|    
|----
|
|    
|2004
|    
|2003
|    
|2002
|    
|2001
|    

Frankfurt Exchange (based on closing
prices) Quarterly High and Low Market Prices  2 Years Ended April 30, 2005 and
Latest Quarter (in euros)

|        
|--------
|
|        
|03/31/05
|        
|12/31/04
|        
|09/30/04
|        
|06/30/04
|        
|03/31/04
|        
|12/31/03
|        
|09/30/03
|        
|06/30/03
|        
|03/31/03
|        

Frankfurt Exchange (based on closing
prices) Monthly High and Low Market Prices  6 Months Ended April 30, 2005 (in euros)

|             
|-------------
|
|             
|April 2005   
|             
|March 2005   
|             
|February 2005
|             
|January 2005 
|             
|December 2004
|             
|November 2004
|             

Equity Transfer Services, Inc. of
Toronto, Ontario, Canada acts as registrar and transfer agent for the Companys
common shares.

81

---

ITEM 10.   ADDITIONAL
INFORMATION

Share Capital

Not Applicable.

Memorandum and Articles
of Association

The Company was incorporated under
the laws of the Province of Ontario on July 5, 1985 as Quartet Management
Ltd., and has an Ontario Corporation Number of 630609. By articles of amendment
filed on March 27, 1987, the Company changed its name to Health Care Products
Inc.. By articles of amendment filed on March 28, 1994, the Company changed its name
to Celltech Media Inc.. By articles of amendment filed on June 21, 1995, the
Company changed its name to Smartel Communications Corporation and by articles
of amendment filed on July 29, 1996, the Company changed its name to Intasys
Corporation. On July 11, 2001, the Company filed articles of amendment consolidating
its issued and outstanding Common Shares on the basis of one post-consolidation common
share for every ten pre-consolidation Common Shares. By articles of amendment filed on
January 8, 2004 the Company changed its name to Mamma.com Inc.

Section 5 of the Companys
articles of incorporation indicates that there are no restrictions on the business the
Company may carry on or on the powers it may exercise. Pursuant to Section 15 of the
Business Corporations Act(Ontario) (OBCA), a corporation has the capacity and
the rights, powers and privileges of a natural person.

With respect to a material contract,
proposal or arrangement between the Company and one or more directors thereof or between
the Company and another person of which a director of the Company is a director or in
which a director has a material interest, such material contract, proposal or arrangement,
as the case may be, is neither void nor voidable by reason only of that relationship or by
reason only that a director with an interest in the transaction is present at or is
counted to determine the presence of a quorum at a meeting of directors or committee of
directors that authorized the transaction, if (i) the director disclosed his or her
interest in accordance with the OBCA; (ii) the transaction was approved by the directors
or the shareholders of the Company, as applicable; and (iii) it was reasonable and fair to
the Company at the time it was approved. Generally, the business corporation laws of the
United States vary significantly on this issue from state to state. Delaware Law accords
similar treatment (a) if conditions (i) and (ii) above are satisfied or (b) if (iii),
without regard to conditions (i) and (ii), is satisfied, except that any ratification by
the board must be by a vote of disinterested members.

Neither the Companys articles
of incorporation nor its bylaws restrict the directors from exercising any power (in the
absence of an independent quorum) to approve their compensation.

The directors of the Company may from
time to time, without the authorization of the shareholders:

| | (a) |  | borrow
money upon the credit of the Company;
| | --- |  | --------------------------------------------

| | (b) |  | issue,
re-issue, sell or pledge debt obligations of the Company, including
               without limitation, bonds, debentures, notes or other similar obligations
of the                Company whether secured or unsecured;
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| | (c) |  | subject
to Section 20 of the OBCA, give a guarantee on behalf of the Company to
               secure performance of any present or future indebtedness, liability or
               obligation of any person; or
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (d) |  | charge,
mortgage, hypothecate, pledge or otherwise create a security interest in
               all or any currently owned or subsequently acquired, real or personal,
moveable                or immovable property of the Company, including without
limitation, book debts,                rights, powers, franchises and undertakings, to
secure any present or future                indebtedness, liabilities or other
obligations of the Company.
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Although most progressive U.S. state
corporate codes grant similar powers to corporate boards of directors, some U.S. states
still require shareholder approval of liens in substantially all of a corporations
assets.

The directors may from time to time,
by resolution, delegate any or all of the powers referred to above to a director,
committee of directors or one or more officers of the Company. These powers may be varied
by enacting a new by-law by resolution of the directors, which by-law must then be
subsequently approved at a meeting of shareholders or by shareholder resolution. U.S.
state corporate laws establish no general rule concerning directors ability to
delegate such duties. More progressive U.S. state corporate laws such as Delawares
General Corporation Law allow a board of directors to establish a committee of one or more
directors and delegate such powers to such committee without a by-law or stockholder
approval.

The Companys articles of
incorporation do not contain any provisions for the retirement of directors as the result
of reaching a certain age limit. The Companys by-laws contain a minimum age
requirement of 18 years to be named a director.

Directors need not be shareholders of
the Company.

The Company is authorized to only
issue, and its share capital consists of only, Common Shares. Each common share entitles
the holder to receive notice of, and to vote on the basis of one vote per common share, at
all meetings of shareholders, to receive any dividend declared by the Company on the
Common Shares and to receive the remaining property of the Company on its dissolution,
liquidation or wind-up. The laws of most US states vest Common Shares with similar powers.

In order to change the rights of
holders of Common Shares, an amendment to the Companys articles is required.
Pursuant to Section 168 of the OBCA, such an amendment can be effected at a meeting of
shareholders upon agreement by a majority of the shareholders. Pursuant to Section 170,
the holders of shares of a class are entitled to vote separately as a class upon a
proposal to amend the articles that would have the effect of altering the rights of that
class or altering the rights of that class relative to the other classes of shares.
Progressive U.S. state corporate codes generally require similar procedures except that
corporate laws such as New Yorks Business Corporation Law and Delawares
General Corporation Law permit stockholders to authorize such amendments by majority
consent in writing, without a meeting, subject to certain limitations.

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The annual meeting of shareholders
shall be held at such time, day and place as the Board, Chairman of the Board or the
President may from time to time determine, provided that an annual meeting must be called
not later than 15 months after the holding of the immediately preceding annual meeting.
The Board, the Chairman of the Board, the President, the Managing Director or
Vice-President shall have the power to call a special meeting of shareholders at any time.

In addition, pursuant to Section 105
of the OBCA, the holders of not less than 5% of the issued shares of a corporation that
carry the right to vote at a meeting sought to be held, may requisition the directors to
call a meeting of shareholders for the purposes stated in the requisition. Such
requisition shall state the business to be transacted at the meeting. Although there is no
general rule, progressive U.S. state corporation laws provide that the by-laws shall
determine stockholders rights to call stockholder meetings. The directors of a
corporation shall call a meeting of shareholders upon receiving the requisition unless a
meeting of shareholders has already been called or a record date has been fixed and the
appropriate notice has been provided. If the directors do not, within twenty-one days
after receiving the requisition, call a meeting and if the above-noted exceptions are not
met, any shareholder who signed the requisition may call the meeting.

Notice of the time and place of each
meeting of shareholders shall be given not less than 21 nor more than 50 days before the
date of the meeting to each director and the auditor of the Company and to each
shareholder who, at the close of business on the record date for notice or, if no record
date for notice is fixed, at the close of business on the day proceeding the day on which
notice is given, is entered in the securities register as the holder of one or more shares
of the Company carrying the right to vote at the meeting. For every meeting of
shareholders, the Company shall prepare a list of shareholders entitled to receive notice
of the meeting, arranged in alphabetical order and showing the number of shares entitled
to vote at the meeting held by each shareholder.

The only persons entitled to be
present at a meeting of shareholders shall be those entitled to vote thereat, the
directors and auditors, if any, of the Company and others who, although not entitled to
vote, are entitled or required under the OBCA or the articles or by-laws of the Company to
be present at the meeting. Any other person may be admitted on the invitation of the
Chairman of the meeting or with the consent of the meeting.

There are no restrictions in the
Companys articles or by-laws, nor under the OBCA or the provision of the Securities
Act (Ontario) or Securities Act (Quebec) limiting the right to own, hold or exercise
voting rights on the Companys securities. Most, if not all U.S. states have enacted
some form of takeover disclosure law or business combination act requiring certain
disclosures and/or limiting the right to own or vote shares acquired in certain situations
including hostile business combinations.

There are no provisions in the
Companys articles or by-laws that would have the effect of delaying, deferring or
preventing a change in control of the Company and that would operate only with respect to
a merger, acquisition or corporate restructuring involving the Company.

Pursuant to the Securities Act
(Ontario) (the Securities Act), any shareholder holding or exercising control
over more than 10% of the voting rights attached to all outstanding voting securities of a
Company is considered an insider of that company and among other things is required to
disclose any trades in shares of that company. Similarly, Section 16 and Rule 16(a) of the
U.S. Securities Exchange Act of 1934 (1934 Act), under which the Company is
registered, requires holders of 10% or more of the securities of a 1934 Act registered
company to file reports disclosing ownership and transactions in that companys
securities. The Company, however, currently is deemed a foreign private issuer
and is exempt from these provisions. Section 101 of the Securities Act requires that any
person who acquires beneficial ownership of, or the power to exercise control over, a
total of 10% or more of a companys voting or equity securities in any class shall
issue a news release and file a report containing the particulars and purpose behind the
acquisition. Further reports must be issued every time such person acquires an additional
2% or more of the companys voting or equity securities, or there is a change in any
of the material facts disclosed in the former report. Similarly, Section 13(d) and
Regulation 13D of the 1934 Act requires any person who acquires beneficial ownership or
more than 5% of an equity security of any company registered under the 1934 Act to file a
report disclosing the particulars and purpose behind the acquisition. Amendments must be
filed to this report every time such person acquires or disposes of 1% or more of the
equity security or there is some other material change in the report on file. In addition,
Section 14(d) and Regulation 14D of the 1934 Act imposes certain filing and disclosure
requirements on persons making tender offers for equity securities of a 1934
Act registered company.

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The
articles of incorporation and by-laws of the Company do not contain any conditions
governing changes in the Companys capital that are more stringent than the
applicable law.

Material Contracts

Merriman Curhan Ford
& Co.

On March 16, 2004, the Company
retained Merriman Curhan Ford & Co. (MCF) as a financial advisor and as an
investment banking advisor. The Company then signed two separate agreements. In
consideration for financial services, the Company had committed to pay MCF a monthly fee
of $5,000 for a minimum obligation of $30,000 and 10,000 warrants per month with a minimum
issuance of 60,000 warrants, each warrant give the rights to purchase one common share of
the Company. Warrants are issuable at an exercise price equal to the average closing bid
for the last five trading days at the end of the month of issue, for the duration of the
agreement upon the same terms and conditions. The warrants have a life of five years from
the issuance date. For the investment banking services, the Company had committed to pay a
cash financing completion fee equal to 6% of the total amount of capital received by the
Company from the sale of its equity securities and warrants to purchase common shares of
the Company in an amount equal to 6% of the number of common shares purchased by investors
in capital raising transactions. The warrants are immediately exercisable at the higher of
the price per share at which the investor can acquire common shares or the closing price
of the Companys common shares at the date of the capital raising transaction. For
merger and acquisition, the Company had committed to pay a success fee upon closing equal
to the sum of 4% of up to $10,000,000 transaction value, 3% of $10,000,000 to $15,000,000
transaction value and 2% of greater than $15,000,000 transaction value, provided that MCF
either introduces and/or performs specific services for the transaction. The minimum
success fee for a transaction is $200,000. For a sale transaction, the Company had
committed to pay a success fee with same parameters of an acquisition except for the
minimum fee which is $500,000.

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On July 16, 2004, the agreement for
financial services, dated March 16, 2004 was amended. The Company committed to pay MCF a
monthly fee of $5,000 for eight months from July 16, 2004. The agreement for investment
banking services was amended on July 16, 2004 and subsequently amended on September 8,
2004. The Company then is committed to pay a success fee upon closing equal to the sum of
3% of up to $20,000,000 transaction value, 1.5% of the excess of $20,000,000. If an
acquisition transaction is less than 50% interest in the Company or the Target, a fee
shall be payable in cash for 7% of the transaction value. If transaction is not
consummated and the Company is entitled to receive break-up fee and other form of
compensation, the Company then will pay to MCF 30% of Companys entire entitlement.

Maxim Group, LLC

On January 29, 2003, the Company
retained Maxim Group LLC (Maxim), on a non-exclusive basis, as its investment
banker, strategic advisor and financial advisor. In consideration for these services, the
Company paid a retainer of $25,000 for the first month and a monthly fee of $5,000 for the
duration of the agreement. Upon execution of the agreement, the Company issued a warrant
to purchase 25,000 of the Companys Common Shares at an exercise price of $2.15
expiring on June 30, 2006. Under the agreement, on a monthly basis, commencing 30 days
after execution of the agreement, the Company was obligated to issue additional warrants,
each to purchase 8,000 Common Shares, at an exercise price equal to the market price, for
the duration of the agreement upon the same terms and conditions. For any Transaction
completed by the Company with Maxim Group LLC, the Company agreed to pay a success fee
upon closing equal to the sum of 2 1⁄2% of the aggregate transaction value, provided
that Maxim either introduced and/or performed specific services for the Transaction. The
minimum success fee for any transaction was $200,000. On May 5, 2003, an amendment was
made to the agreement to increase the success fee for a specific Transaction from
21⁄2% to 31⁄2%.

The term of this agreement was
indefinite. However, the Company or Maxim could terminate it upon 30 days written notice.
If such a notice was sent by the Company, the monetary consideration was payable by the
Company for the ensuing five months; however, the warrant consideration would cease after
the 30 days written notice. If Maxim sent such a notice, both the monetary and warrant
consideration will cease immediately. The preceding statements notwithstanding, the
agreement could also be terminated upon 30 days written notice by either party any time
after the 6th month anniversary of the agreement. On October 30, 2003 the Company advised
Maxim of termination of this agreement effective November 30, 2003. In 2003, the Company
granted a total of 105,000 warrants at an average price of $2.50 to Maxim Group LLC for
financial advisory fees.

Maxim Group was paid a $200,000
success fee related to the acquisition of Digital Arrow in June 2004.

As at March 30, 2005, Maxim Group,
LLC had exercised all its warrants.

Global Capital Securities
Corporation

On August 15, 2001, the Company
retained Global Capital Securities to render financial services for an 18-month period
terminating on January 31, 2003. Consideration paid by the Company for these consulting
services consisted of the issuance of 150,000 unvested common shares and 250,000 unvested
warrants with an exercise price of $2.75 per share. On April 19, 2002, all of these shares
and warrants were transferred by Global to Lomond International Inc., which agreed to
continue providing the services in accordance with the original agreement. On June 19,
2002, the Company and Lomond modified the terms of the agreement and consequently all the
warrants were returned to the Company for cancellation.

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Recent Financings

On June 30, 2004, the Company sold
under a securities purchase agreement an aggregate of 1,515,980 common shares and 606,392
warrants to certain accredited investors for an aggregate price of $16,599,981. Net
proceeds from the offering amounted to $15,541,162, net of issue cost of $1,058,819,
$996,000 of which was paid to MCF. For this specific transaction, MCF waived their
entitlement to a warrant component of the financing completion fee. Each warrant entitles
the accredited investors to purchase one additional common share at an exercise price
equal to $15.82 per share. The warrants will be exercisable beginning six months after the
closing date, and will have a term of five years from the closing date.

On December 12, 2002, the Company
entered into subscription agreements to sell 1,893,939 Units, for a purchase price of
$1.32 per Unit or total proceeds of $2.5 million. Each Unit consisted of one share of
Common Shares plus one nontransferable A Warrant that entitled the holder to
purchase one additional Common Share at a price of $1.40 on or before November 30, 2004.
Only in the event and upon the exercise of each respective A Warrant, the holder thereof
was entitled to be issued one B Warrant that would entitle such holder to
purchase one additional Common Share at a price of $1.50 on or before November 30, 2006. A
placement fee of 142,045 Units was paid to a placement agent for arranging this financing
and the A and B warrants attached were exercised in September 2003 and November 2003
respectively. A sum of $5,904,354 accrued to the treasury of the Company and a further
4,071,968 common shares of the Company were issued.

On August 6, 2001, the Company
entered into subscription agreements to sell 600,000 Units, for a purchase price of $1.50
per Unit or total proceeds of $900,000. The Units were comprised of, in the aggregate, (i)
600,000 shares of Common Shares of the Company, (ii) 600,000 non-transferable warrants
which entitled the holders thereof to purchase, until August 14, 2003, an aggregate of
600,000 shares of Common Shares of the Company at a price of US$2.40 per share (the
Class A Warrants) and (iii) on condition that the Class A Warrants had been
exercised, 400,000 non-transferable warrants which would entitle the holders thereof to
purchase, for a period of one year from the exercise of the Class A Warrants, an aggregate
of 400,000 shares of Common Shares of the Company at a price of US$2.50 per share (the
Class B Warrants). A placement fee of 54,000 Units (comprised of, in the
aggregate, 54,000 shares of Common Shares of the Company, 54,000 Class A Warrants and
36,000 Class B Warrants) was paid to a placement agent for arranging this financing. None
of these warrants were exercised and they expired at the close of trading on August 14,
2003.

Copernic Technologies Inc.

On November 25, 2004, the Company
announced the execution of a letter of intent to acquire Copernic Technologies Inc.
(Copernic). On April 14, 2005, Copernic advised the Company that it had
decided not to pursue the sale transaction. The Company, which had expected to sign
definitive agreements and close before May 31, 2005, may be entitled to break fees under
the letter of intent of up to $1.5 million and other relief may be available.

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Acquisition of Digital Arrow LLC and
High Performance Broadcasting, Inc. by Mamma

On June 10, 2004, the Company
acquired the business of Digital Arrow LLC and High Performance Broadcasting, Inc.,
(Digital Arrow) privately held marketing companies that are engaged in the
distribution of on-line, opt-in e-mail marketing solutions via the Internet. In that
acquisition, the wholly owned subsidiary, Mamma.com USA, Inc., entered into a Securities
Purchase Agreement with Digital Arrow and their equity holders, pursuant to which
Mamma.com USA, Inc. acquired all equity interests in Digital Arrow. The consideration for
the acquisition, including costs directly related to the acquisition, consisted of
$1,264,210 in cash, net of cash acquired, and 90,000 of the Companys common shares.
The fair value of the Company shares issued to owners of Digital Arrow has been determined
to be $8.23 per share. This value has been determined using the average closing price of
the Companys common stock for five days before and five days after March 3, 2004,
the date the significant terms and conditions of the transaction were agreed to and
publicly announced.

Acquisition of focusIN
assets by Mamma

On November 27, 2002, the Company
acquired certain of the assets of the focusIN business of ZAQ Inc. in exchange for a total
cash consideration amounting to $1,625,151, including costs directly related to the
acquisition. This acquisition has been accounted for using the purchase method. The net
earnings of the business have been included in the Companys financial statements
from the above-noted date of acquisition. focusIN is an on-line media placement business
with a current base of over 5,000 client web sites. These sites, with monthly traffic of
25 million unique users and more than 700 million page impressions, cover a wide array of
vertical markets, mostly in the United States.

Acquisition of Remaining Minority
Shareholder Interests in Mamma.com Enterprises Inc.

On July 5, 2001, the Company acquired
the remaining minority shareholders interests in Mamma.com Enterprises Inc. for a
cash consideration of $1,263,946 and issuance from treasury of 436,898 of the
Companys Common Shares, valued at $2.50 per share. Concurrently with this
transaction, the Company acquired all outstanding options to acquire shares of Mamma.com
Enterprises Inc. for a cash consideration of $158,221 and the issuance of 42,977 options
to acquire shares of the Companys Common Shares, at an exercise price of $1.50 per
share, which are scheduled to expire on July 17, 2011.

Divestiture of Intasys
Billing Technologies Subsidiaries (IBT)

In July 2003, the board of directors
of the Company decided to divest of their wireless billing technology business in order to
concentrate exclusively on its profitable and growing metasearch engine and on-line
marketing business, Mamma.com Enterprises Inc. On September 9, 2003, the Company announced
that it had reached a verbal agreement to sell the assets of IBT. Consequently, the
results of operations and cash flows for IBT have been reported separately as discontinued
operations in the consolidated statement of operations and cash flows, and the assets and
liabilities of IBT have been reclassified on the consolidated balance sheets included in
this Annual Report on Form 20-F (Consolidated Balance Sheet). Comparative
figures for the year ended December 31, 2002 and 2001 have been reclassified in the
consolidated financial statements.

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On February 12, 2004, the Company
concluded the sale of IBTs assets which include contracts, customer lists,
intellectual property, fixed assets and tangible and intangible assets relating to the
business.

The proceeds of disposal was
$1,699,185 with a gain on disposal of $1,588,923 which has been included in the
Results of discontinued operations line in the consolidated statements of
operations. The Company may be entitled to additional consideration of up to a maximum of
$250,000 should certain events occur or conditions be met. As of December 31, 2004, an
amount of $100,000 of such contingent consideration had been earned by the Company and
recorded in results of discontinued operations. The Company recorded, for 2004, net costs
for an amount of $544,927 which represented the net of revenue of $621,296 and expenses of
$1,166,223 including closing costs. An amount of $148,000 has been kept in escrow and will
be released in the second quarter of 2005.

IBT develops, markets, sells,
installs and maintains billing and customer care and mediation software for customers
operating in the telecommunications industry. Customers include cellular operators
(analog, digital, GSM) and fixed line operators. Typical customers purchase network
capacity from network operators for resale. IBT focused on achieving growth by penetrating
projected wireless subscriber growth in emerging markets, particularly the rapidly
developing small network operator market in Asia-Pacific.

Dave Goldman Advisors Ltd.

On October 30, 2001 the Company
entered into a service agreement with David Goldman Advisors Ltd., pursuant to which David
Goldman, the Executive Chairman of the Company, provides his services to the Company at an
hourly rate of CA$200. This agreement was renewed on May 1, 2002 and may be terminated on
a sixty (60) day notice by either party. On August 12th, 2004, the Corporation amended the
employment arrangement of the Executive Chairman. As a result, should there be a change of
control in the Corporation, Dave Goldman Advisors Inc. will receive a lump sum payment
equal to the greater of the past 24 months consulting payments or CA$300,000.

Sam Luft

As of April 1, 2002, the Company
entered into a month-to-month service agreement with Sam Luft, whereby Mr. Luft, in
exchange for a $6,000 monthly fee, serves as a financial advisor to the Company. The
agreement expired on March 1, 2003. On May 5, 2003 Mr. Luft resigned as board member of
the Company.

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Master Option Agreement

Part of the compensation packages
originally offered to the Companys former President and its former CEO and Chairman
was provided under the terms of a Master Option Agreement, dated December 7, 1999, among
Mamma, Intasys Capital Corporation and 3354717 Canada Inc., a company controlled by these
former executives, (the Master Option Agreement). On several occasions, the
terms of the Master Option Agreement for both former executives were amended. In August
2001, the former President assigned and transferred, to the former CEO and Chairman, all
of his rights, title and interest in and to 3354717 Canada Inc. that he had related to the
Master Option Agreement. On October 30, 2001 the former CEO and Chairman agreed to cancel
the Master Option Agreement and the Company granted him an option to purchase up to 15% of
the Companys investment in Tri-Link Technologies Inc. and LTRIM up until December
31, 2002 for total cash consideration of $410,425. Thereafter this percentage and the
exercise price were reduced to 5% and $136,808, respectively through February 28, 2004, at
which time the option expired.

Exchange Controls

There is no Canadian law, government
decree or regulation that restricts the export or import of capital or that affects the
remittance of dividends, interest or other payments to a non-resident holder of Common
Shares other than withholding tax requirements.

There is no limitation imposed by
Canadian law or by the articles or other charter documents of the Company on the right of
a non-resident to hold or vote Common Shares, other than as provided in the Investment
Canada Act, as amended (the Investment Act). The Investment Act generally
prohibits implementation of a reviewable investment by an individual, government or agency
thereof, corporation, partnership, trust, joint venture or other entity that is not a
Canadian, as defined in the Investment Act (a non-Canadian),
unless, after review, the Minister responsible for the Investment Act is satisfied that
the investment is likely to be of net benefit to Canada based on the criteria set out in
the Investment Act. Investment in Common Shares of the Company (or other voting shares) by
a non-Canadian (other than a WTO investor, as defined below) would be
reviewable under the Investment Act if it constitutes an acquisition of control of the
Company, and the value of the assets of the Company were $5,000,000 Canadian or more. Such
an investment in Common Shares of the Company by a WTO investor would be reviewable under
the Investment Act if the value of the assets of the Company equalled or exceeded
$223,000,000 Canadian for investments made in 2003. The Investment Act contains rules to
determine if an investment constitutes an acquisition of control of a particular entity.
For example, any non-Canadian, whether a WTO investor or otherwise, would acquire control
of the Company for purposes of the Investment Act if such non-Canadian acquired a majority
of the Common Shares of the Company. The acquisition of less than a majority but at least
one-third of the Common shares of the Company is presumed to be an acquisition of control
of the Company, unless it could be established that on the acquisition the Company was not
controlled in fact by the acquirer through the ownership of Common Shares. In general, an
individual is a WTO Investor if such individual is a national of a country
(other than Canada) that is a member of the World Trade Organization (WTO
Member) or has a right of permanent residence in relation to that WTO Member. A
corporation or other entity is a WTO investor if it is a WTO Investor-controlled
entity pursuant to detailed rules set out in the Investment Act.

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Certain transactions involving Common
Shares of the Company would be exempt from the Investment Act, including, without
limitation: (a) an acquisition of Common Shares of the Company if the acquisition were
made in connection with the persons business as a trader or dealer in securities;
(b) an acquisition of control of the Companys business in connection with the
realization of a security interest granted for a loan or other financial assistance and
not for any purpose related to the provisions of the Investment Act; and (c) an
acquisition of control of the Companys business by reason of an amalgamation,
merger, consolidation or corporate reorganization, following which the ultimate direct or
indirect control in fact of the Company, through the ownership of voting interests (as
defined in the Investment Act), remains unchanged.

Taxation

The following is a summary of certain
income tax provisions applicable to United States corporations, citizens and resident
alien individuals who purchase Common Shares and who will hold such shares as capital
property for the purpose of the Income Tax Act (Canada) (the ITA). This
discussion does not purport to deal with all relevant aspects of U.S. or Canadian
taxation. Shareholders are advised to consult their own tax advisors regarding the United
States income tax consequences of holding and disposing of the Common Shares as well as
any consequences arising under state and local tax laws or the tax laws of jurisdictions
outside the United States. The summary is based on the assumption that, for Canadian tax
purposes and at all relevant times, a holder of Common Shares (i) is neither resident nor
deemed to be resident in Canada, but is resident in the United States for the purposes of
the Canada  United States Income Tax Convention (1980) (the Treaty);
(ii) deals at arms length with Mamma.c and is not affiliated with Mamma; (iii) does
not use or hold and is not deemed to use or hold the Common Shares in the course of
carrying on a business in Canada; and (iv) is not an insurer or a financial institution .

For United States federal income tax
purposes, a United States corporation, citizen or resident alien generally will realize,
to the extent of the Companys current or accumulated earnings and profits, taxable
ordinary income on the receipt of cash dividends on the Common Shares equal to the gross
amount of such dividends without reduction for any Canadian withholding tax. Subject to
certain limitations, such withholding tax generally may be credited, against the
holders United States federal income tax liability or, alternatively, may be
deducted in computing the holders United States federal taxable income. Dividends
paid on the Common Shares will not be eligible for the dividends received
deduction, available under certain circumstances to United States corporations.

Dividends paid on Common Shares will
be subject to Canadian non-resident withholding tax, which is generally applicable to
dividends paid by a corporation resident in Canada to a resident of the United States.
Under the terms of the Treaty, non-resident withholding tax is generally levied at a rate
of 15%. If, however, the beneficial owner of the dividends is a company resident in the
United States for the purposes of the Treaty that owns at least 10% of the voting stock of
the Company paying the dividends, the rate of withholding tax under the treaty is further
reduced to 5%.

91

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A holder may be subject to Canadian
income tax in respect of any capital gains realized on a disposition or deemed disposition
of Common Shares. However, a holder will be exempt from Canadian tax on a capital gain
realized on an actual or deemed disposition of Common Shares unless the Common Shares are
taxable Canadian property (as defined in the ITA) to the holder at the time of
the disposition. Provided the Common Shares are listed on a prescribed stock exchange for
the purposes of the ITA (the National Association of Securities Dealers Automated
Quotation System is a prescribed exchange under the Regulations to the ITA, the Common
Shares will not be taxable Canadian property to a holder, unless the holder,
together with persons with whom the holder did not deal at arms length for the
purposes of the ITA owned or had interests in or options in respect of 25% or more of the
shares of any class or series of the capital stock of the company at any time during the
five-year period immediately preceding the disposition or deemed disposition of the Common
Shares. The Common Shares may be deemed to be taxable Canadian property where
the holder acquired them in certain circumstances, including upon the disposition of other
taxable Canadian property. In the event that the Common Shares do constitute
taxable Canadian property, any capital gain realized on their disposition by a
holder may be exempt from Canadian tax pursuant to the provisions of the Treaty. Holders
of Common Shares must consult their own tax advisers to determine if any such Canadian
income tax must be paid.

For United States federal income tax
purposes, upon a sale or exchange of a common share, a holder will recognize gain or loss
equal to the difference between the amount realized on such sale or exchange and the
holders tax basis in such common share. For non-corporate taxpayers, the maximum tax
rates imposed are 15% on net capital gains and 35% on ordinary income. US capital gains
may result in additional taxes by application of the Alternative Minimum Tax. As a
taxpayers income rises, US federal income tax law phases-out US personal exemptions
and increasingly limits the availability of itemized deductions which may increase the
effective tax rates. The deduction of net capital losses against ordinary income currently
is severely limited under US federal income tax law. Holders of Common Shares must consult
their own tax advisers to determine the effect of federal, state and local income taxes
upon a sale or exchange of Common Shares.

Documents on Display

Documents concerning the Company
which are referred to in the document and otherwise available for public inspection may be
inspected at the executive offices of the Company as well as the executive or operating
offices of the Companys operating subsidiaries. Any request for inspection must be
made in writing addressed to the Companys executive offices to the attention of Mr.
Daniel Bertrand, Eecutive Vice-President and Chief Financial Officer. Such request must
explicitly identify the person making the request, the documents pertaining to the request
as well as the date and time that the person making such request desires to inspect such
documents. The Company reserves all rights to refuse or limit a request.

92

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# ITEM 11.   QUANTITATIVE
 AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Currency Risk

The Company has employees located in
Canada and the United States where the local currency is used. No forward exchange
contracts are used to sell currencies at fixed forward rates.

Interest Rate Risk

The Company has short term
investments and temporary investments bearing average interest rates between 2.25% and
5.20%. No other financial instruments are used.

# ITEM 12.   DESCRIPTION OF
SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

PART II

ITEM 13.   DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable.

ITEM 14.   MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Not applicable.

ITEM 15.   CONTROLS AND PROCEDURES

(a)    
          Evaluation of Disclosure Controls and Procedures.

We maintain disclosure controls and
procedures that are designed to ensure that information required to be disclosed in our
Exchange Act reports is recorded, processed, summarized and reported within the time
periods specified in the SECs rules and forms, and that such information is
accumulated and communicated to our management, including our Executive Chairman, our
President and Chief Executive Officer, and our Executive Vice-President and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure. Management necessarily applied its judgment in assessing the costs and
benefits of such controls and procedures, which, by their nature, can provide only
reasonable assurance regarding managements control objectives.

93

---

We have carried out an evaluation,
under the supervision and with the participation of our management, including our
Executive Chairman, our President and Chief Executive Officer, and our Executive
Vice-President and Chief Financial Officer, of the effectiveness of the design and
operation of our disclosure controls and procedures as such term is defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of the
end of the period covered by this Annual Report on Form 20-F.

Based upon that evaluation, the
President and Chief Executive Officer and our Executive Vice-President and Chief Financial
Officer concluded that our disclosure controls and procedures were effective as of
December 31, 2004.

(b)    
          Changes in Internal Controls.

There were no changes in the
Companys internal control over financial reporting that occurred during the year
ended December 31, 2004 that have materially affected, or are reasonably likely to
materially affect, the Companys internal control over financial reporting.

ITEM 16.   [RESERVED]

ITEM 16A.   AUDIT COMMITTEE
FINANCIAL EXPERT

The Companys board of directors
has determined that a member of its Audit Committee, Mr. Irwin Kramer, is an Audit
Committee financial expert as defined in Item 16A of Form 20-F.

ITEM
16B.   CODE OF ETHICS

The Companys board of directors
has adopted a Code of Ethics that applies to all of the Companys employees,
including the Executive Chairman, Chief Executive Officer, Chief Financial Officer,
principal accounting officer and persons performing similar functions. A copy of the
Companys Code of Ethics is available on the Companys website at www
mammainc.com.

ITEM 16C.   ACCOUNTANTS
FEES AND SERVICES

PricewaterhouseCoopers LLP has served
as the Companys independent public accountants for each of the fiscal years in the
three year period ended December 31, 2004, for which audited financial statements appear
in this annual report on Form 20-F. The auditors are elected annually by the
Companys shareholders at the Annual General Meeting. In February 2005,
PricewaterhouseCoopers LLP notified the Company that it would not act as the
Companys independent auditor during 2005 in connection with preparation of the
Companys 2004 audited financial statements. In March 2005 the Companys Audit
Committee engaged RSM Richter LLP to audit the Companys financial statements for the
2004 fiscal year.

94

---

The following table presents the
aggregate fees for professional services and other services rendered by
PricewaterhouseCoopers LLP to the Company in 2004 and 2003.

|                  | 2004 | 2003     
|----------------- | ---- | ---------
|                 
|Audit (1)         |      | $150,698 
|                 
|Audit Related (2) |      | $472,724 
|                 
|Tax (3)           |      | $  61,307
|                 
|All Other (4)     |      | --       
|                 
|TOTAL:            |      | $684,729 
|                 

(1)    
          Audit Fees consist of fees billed for the annual audit services engagement and
          other audit services, which are those services that only the external auditor
          reasonably can provide, and include the audit of its financial statements;
          comfort letters and consents; attest services; and services associated with the
          filing of documents with the SEC.

(2)    
          Audit-related Fees consist of fees billed for assurance and related services
          that are reasonably related to the performance of the audit or review of the
          Companys financial statements or that are traditionally performed by the
          external auditor, and include consultations concerning financial accounting and
          reporting standards; due diligence related to acquisitions.

(3)    
          Tax Fees include fees billed for tax compliance services, advice on original and
          amended tax returns and claims for refund, tax consultations (such as assistance
          in connection with tax audits and appeals), tax advice related to mergers and
          acquisitions, transfer pricing, tax planning services and expatriate tax
          planning and services.

ITEM 16D.   EXEMPTIONS
FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

ITEM 16E.   PURCHASES OF
EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

Not applicable.

95

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ITEM 17.   FINANCIAL
STATEMENTS

These consolidated financial
statements have been prepared in accordance with accounting principles generally accepted
in Canada (Canadian GAAP). There are certain measurement differences between
Canadian GAAP and U.S. GAAP. Differences which relate to the Company are summarized in
note 28 to our consolidated financial statements.

96

---

Mamma.com
Inc.(formerly Intasys Corporation)

Consolidated Financial
StatementsDecember 31, 2004 and 2003
(expressed
in U.S. dollars)

97

---

Independent Registered
Public Accounting Firms Reports

To the Shareholders and
Board of Directors of Mamma.com Inc.
(formerly Intasys Corporation)

We have audited the accompanying
consolidated balance sheet of Mamma.com Inc. (formerly Intasys Corporation) as at December
31, 2004 and the related consolidated statements of operations, shareholders equity
and cash flows for the year ended December 31, 2004. These financial statements are the
responsibility of the Companys management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance
with Canadian generally accepted auditing standards and the standards of the Public
Company Accounting Oversight Board (United States). These standards require that we plan
and perform an audit to obtain reasonable assurance whether the financial statements are
free of material misstatement. We were not engaged to perform an audit of the
Companys internal control over financial reporting. Our audit included consideration
of internal control over financial reporting as a basis for designing audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Companys internal control over financial
reporting. Accordingly we express no such opinion. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.

In our opinion, these consolidated
financial statements present fairly, in all material respects, the financial position of
the Company as at December 31, 2004 and the results of its operations and its cash flows
for the year ended December 31, 2004 in accordance with Canadian generally accepted
accounting principles.

s/s RSM Richter LLP

Montreal, Canada
May 13, 2005

98

---

To the Board of Directors and
Shareholders of Mamma.com Inc.:

We have audited the accompanying
consolidated balance sheet of Mamma.com Inc. and its subsidiaries as of December 31, 2003
and the related consolidated statements of operations, of shareholders equity and of
cash flows for the years ended December 31, 2003 and 2002. These financial statements are
the responsibility of the Companys management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance
with Canadian generally accepted accounting principles and the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated
financial statements referred to above present fairly, in all material respects, the
financial position of Mamma.com Inc. and its subsidiaries as at December 31, 2003 and the
results of their operations and their cash flows for the years ended December 31, 2003 and
2002, in conformity with accounting principles generally accepted in Canada.

s/s
PricewaterhouseCoopers LLP

Chartered Accountants
Montreal, Quebec, Canada February 24, 2004

Comments by
Auditors for U.S. Readers on Canada-U.S. Reporting Difference

In the United States of America,
reporting standards for auditors require the addition of an explanatory paragraph
(following the opinion paragraph) when there is a change in accounting principles that has
a material effect on the comparability of the companys financial statements, such as
the changes described in note 2 a) to the consolidated financial statements. Our report to
the Directors and Shareholders dated February 24, 2004 is expressed in accordance
with Canadian reporting standards which do not require a reference to such a change in
accounting principles in the auditors report when the change is properly accounted
for and adequately disclosed in the financial statements.

s/s
PricewaterhouseCoopers LLP

Chartered Accountants
Montreal, Quebec, Canada February 24, 2004

99

---

Mamma.com Inc.(formerly
Intasys Corporation)Consolidated Balance SheetsAs at December 31, 2004 and 2003

|                                                                   
|-------------------------------------------------------------------
|(expressed in U.S. dollars)                                        
|                                                                   
|Assets                                                             
|Current assets                                                     
|Cash and cash equivalents                                          
|Restricted cash (note 5)                                           
|Temporary investments (note 7)                                     
|Accounts receivable (note 8)                                       
|Income taxes receivable                                            
|Prepaid expenses                                                   
|Future income taxes (note 21)                                      
|Current assets of discontinued operations (note 5)                 
|                                                                   
|                                                                   
|Future income taxes(note 21)                                       
|Assets of discontinued operations(note 5)                          
|Investments(note 9)                                                
|Property, plant and equipment(note 10)                             
|Intangible assets(note 11)                                         
|Goodwill(note 11)                                                  
|                                                                   
|                                                                   
|                                                                   
|Liabilities                                                        
|Current liabilities                                                
|Accounts payable and accrued liabilities (note 12)                 
|Deferred revenue                                                   
|Liabilities of discontinued operations (note 5)                    
|                                                                   
|                                                                   
|                                                                   
|Contingencies and commitments(note 25)                             
|Shareholders Equity                                               
|Capital stock(note 14)                                             
|Authorized                                                         
|Unlimited common shares, no par value                              
|Issued and outstanding  12,263,029 common shares (2003  6,508,610)
|Additional paid-in capital(note 15)                                
|Deferred stock-based compensation(note 15)                         
|Cumulative translation adjustment                                  
|Accumulated deficit                                                
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                   

See accompanying notes.Approved by the Board of Directors

|s/s David Goldman                              |  | s/s Irwin Kramer                                        | 
|---------------------------------------------- |  | ------------------------------------------------------- | 
|David Goldman, Executive Chairman of the Board |  | Irwin Kramer, Director and Chair of the Audit Committee | 

100

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Mamma.com Inc.(formerly
Intasys Corporation)Consolidated Statements of OperationsFor the years ended December 31

|                                                                  
|------------------------------------------------------------------
|(expressed in U.S. dollars)                                       
|                                                                  
|                                                                  
|Revenue(note 17)                                                  
|                                                                  
|Expenses                                                          
|Search, graphic ad and e-mail serving                             
|Marketing, sales and services                                     
|General and administration                                        
|Product development and technical support (note 22)               
|Amortization of property, plant and equipment                     
|Amortization of intangible assets                                 
|Recovery of restructuring charges (note 13)                       
|Realized gain on disposal of marketable securities                
|Realized gain on disposal of investment (note 9)                  
|Unrealized loss on investments and write-down of advances(note 18)
|Interest income                                                   
|Loss on foreign exchange                                          
|                                                                  
|                                                                  
|                                                                  
|Earnings (loss) from continuing operations                        
|before income taxes                                               
|Provision for (recovery of) income taxes (note 21)                
|                                                                  
|Earnings (loss) from continuing operations                        
|Results of discontinued operations (note 5)                       
|                                                                  
|Net earnings (loss) for the year                                  
|                                                                  
|Basic and diluted earnings (loss) per share from                  
|continuing operations                                             
|Basic and diluted earnings (loss) per share from                  
|discontinued operations                                           
|                                                                  
|Basic and diluted net earnings (loss) per share                   
|                                                                  

See accompanying
notes.

101

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Mamma.com Inc.(formerly
Intasys Corporation)Consolidated Statements of Shareholders' EquityFor the years ended December 31, 2004, 2003
and 2002

|                                   
|-----------------------------------
|(expressed in U.S. dollars)        
|                                   
|Balance, December 31, 2001         
|Effect of changes on shares        
|and warrants issued for            
|financial services                 
|Shares and warrants issued on      
|private placement                  
|Shares and warrants issued for     
|financial services                 
|Forfeited options                  
|Share issue costs                  
|Translation adjustment for the year
|Net loss for the year              
|                                   
|Balance, December 31, 2002         
|Effect of changes on shares        
|and warrants issued for            
|financial services                 
|Warrants issued for financial      
|services                           
|Options granted                    
|Amortization of deferred           
|stock-based compensation           
|Options exercised                  
|Warrants exercised                 
|Translation adjustment for the year
|Net loss for the year              
|                                   
|Balance, December 31, 2003         
|Warrants issued for financial      
|services                           
|Options granted                    
|Amortization of deferred           
|stock-based compensation           
|Options exercised                  
|Warrants exercised                 
|Forfeited options                  
|Shares issued for acquisition      
|of Digital  Arrow                  
|Shares and warrants issued on      
|private placement                  
|Share issue cost                   
|Translation adjustment for the year
|Net earnings for the year          
|                                   
|Balance, December 31, 2004         
|                                   

See accompanying notes.

102

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Mamma.com Inc.(formerly
Intasys Corporation)Consolidated Statements of Cash FlowsFor the years ended December 31, 2004, 2003 and 2002

|                                                                      
|----------------------------------------------------------------------
|(expressed in U.S. dollars)                                           
|                                                                      
|Cash flows from                                                       
|Operating activities                                                  
|Earnings (loss) from continuing operations                            
|Adjustments for                                                       
|Amortization of property, plant and equipment                         
|Amortization of intangible assets                                     
|Realized loss (gain) on disposal of property, plant and equipment     
|Realized gain on disposal of marketable securities                    
|Realized gain on disposal of investment (note 9)                      
|Employee stock-based compensation                                     
|Former Board member compensation paid by issuance                     
|of capital stock                                                      
|Interest income on investments and management fees                    
|Unrealized loss on investments and write-down of                      
|advances (note 18)                                                    
|Financial fees paid by issuance of capital stock and warrants         
|Future income taxes                                                   
|Tax credits                                                           
|Unrealized loss on foreign exchange                                   
|Net change in non-cash working capital items (note 20)                
|                                                                      
|Cash from (used for) operating activities from continuing operations  
|Cash from (used for) operating activities from discontinued operations
|                                                                      
|                                                                      
|                                                                      
|Investing activities                                                  
|Business acquisitions (note 6)                                        
|Purchase of intangible assets                                         
|Purchase of property, plant and equipment                             
|Investments                                                           
|Net increase in temporary investments                                 
|Proceeds on disposal of investments                                   
|Proceeds on disposal of property, plant and equipment                 
|                                                                      
|Cash used for investing activities from continuing operations         
|Cash from (used for) investing activities from discontinued operations
|                                                                      
|                                                                      
|                                                                      
|Financing activities                                                  
|Issuance of capital stock                                             
|Share issue costs                                                     
|                                                                      
|                                                                      
|                                                                      
|Effect of foreign exchange rate changes on cash                       
|and cash equivalents                                                  
|                                                                      
|Net change in cash and cash equivalents and restricted cash           
|during the year                                                       
|Cash and cash equivalents  Beginning of year                         
|                                                                      
|Cash and cash equivalents and restricted cash  End of year           
|                                                                      
|Cash and cash equivalents comprise:                                   
|Cash                                                                  
|Short-term investments                                                
|                                                                      
|                                                                      
|Restricted cash                                                       
|                                                                      
|                                                                      
|                                                                      
|Supplemental cash flow information                                    
|Cash paid for interest                                                
|Cash paid for income taxes                                            
|                                                                      

See accompanying notes.

103

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Mamma.com Inc.(formerly
Intasys Corporation)Notes to Consolidated Financial
StatementsFor the years ended December 31, 2004 and 2003

---

(expressed in U.S. dollars)

|1 |  | Nature
of business
|- |  | ------------------

| | Mamma.com
Inc. (formerly Intasys Corporation) (the Company) is focused on innovative
direct on-line Internet electronic marketing solutions to advertisers through keyword
search listings and graphic ad units. The Company also offers on-line, opt-in e-mail
marketing services through its wholly owned subsidiary, Mamma.com USA, Inc. and its newly
acquired subsidiaries, Digital Arrow LLC and High Performance Broadcasting, Inc. (see
note 6). The Companys customers are mainly located in the United States. The Companys
wholly owned subsidiary, Intasys Billing Technologies (IBT), formerly
provided global wireless Internet-compatible billing and customer care information
systems with customers located in the United Kingdom, Australia, Asia, the United States
and Canada. The Company decided to sell IBT in 2003 and the divestiture was completed on
February 12, 2004. Therefore, IBT has been presented as discontinued operations (see
note 5). The Company also holds minority interests in companies operating in the
analog-integrated circuit products, new media and telecommunications sectors.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
January 6, 2004, the Company changed its name from Intasys Corporation to Mamma.com Inc.
| | -------------------------------------------------------------------------------------------

| | On
May 31, 2004, the wholly owned subsidiary, Mamma.com Enterprises Inc., which was
originally focused on innovative direct on-line Internet electronic marketing solutions
to advertisers through keyword search listings and graphic ad units, was wound up into
the Company.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2 |  | Change
in accounting policies
|- |  | -----------------------------

| | a) |  | For
changes affecting 2003
| | -- |  | --------------------------

| | Stock-based
compensation and other stock-based payments
| | -------------------------------------------------------

| | During
the fourth quarter of 2003, the Company adopted, retroactive to January 1, 2003, the fair
value method of accounting for stock options granted to employees. Under this method, the
fair value of options granted to employees is charged to expense over the future vesting
period. In accordance with the transitional provisions of the Canadian Institute of
Chartered Accountants (CICA) Handbook Section 3870, Stock-Based
Compensation and Other Stock-Based Payments, the Company has elected to apply this
new method prospectively to options granted to employees on or after January 1, 2003.
Consequently, prior period financial statements have not been restated; however, the
Company continues to provide pro forma disclosures for these prior years as if the fair
value method of accounting had been applied.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Impairment
of long-lived assets
| | -------------------------------

| | CICA
Handbook section 3063, Impairment of Long-Lived Assets, provides guidance on
the recognition, measurement and disclosure of the impairment of long-lived assets. It
replaces the write-down provisions in Section 3061, Property, Plant and Equipment.
The provisions of the Section require an impairment loss for a long-lived asset to be
held and used to be recognized when its carrying amount exceeds the sum of the
undiscounted cash flows expected from its use and eventual disposition. The impairment
loss is measured as the amount by which its carrying amount exceeds its fair value. The
adoption of this section did not have a significant impact on the financial statements.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

104

---

| | Disposal
of long-lived assets and discontinued operations
| | ---------------------------------------------------------

| | CICA
Handbook section 3475, Disposal of Long-Lived Assets and Discontinued Operations,
provides guidance on recognizing, measuring, presenting and disclosing long-lived assets
to be disposed of and replaces the disposal provisions in Section 3475, Discontinued
Operations and Section 3061, Property, Plant and Equipment. The Section
provides criteria for classifying assets as held for sale to be measured at the lower of
carrying value and fair value less costs to sell, provides criteria for classifying a
disposal as a discontinued operation and specifies presentation and disclosure for
discontinued operations and other disposals of long-lived assets. The adoption of this
section did not have a significant impact on the financial statements.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) |  | For
changes affecting 2004 and future years
| | -- |  | -------------------------------------------

| | Asset
retirement obligations
| | ----------------------------

| | CICA
Handbook section 3110, Asset Retirement Obligations, focuses on the
recognition and measurement of liabilities for obligations associated with the retirement
of property, plant and equipment when those obligations result from the acquisition,
construction, development or normal operation of the assets. The adoption of this section
did not have a significant impact on the financial statements.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Consolidation
of variable interest entities
| | -------------------------------------------

| | CICA
Accounting Guideline 15, Consolidation of Variable Interest Entities,
provides clarification on the consolidation of those entities defined as variable
interest entities, when equity investors are not considered to have a controlling
financial interest or they have not invested enough equity to allow the entity to finance
its activities without additional subordinated financial support from other parties.
Variable interest entities are commonly referred to as special purpose entities. The
guideline comes into effect for interim periods beginning on or after November 1, 2004.
The adoption of this section will not have a significant impact on the financial
statements.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Financial
instruments
| | ---------------------

| | On
April 1, 2005, the CICA issued three new Handbook sections: Section 1530 Comprehensive
Income, Section 3855 Financial Instruments Recognition and Measurement,
and Section 3865 Hedges. These new sections apply to fiscal years beginning
on or after October 1, 2006 with earlier adoption permitted as of the beginning of a
fiscal year ending on or after December 31, 2004.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Section
3855 Financial Instruments  Recognition and Measurement requires all
financial instruments to be classified as either Held to Maturity, Loans and Receivables,
Held for Trading, or Available for Sale. The Held to Maturity classification is
restricted to fixed maturity instruments that the Company intends and is able to hold to
maturity. Loans and Receivables and Held to Maturity investments are accounted for at
amortized cost. Securities that are acquired for selling in the near term are classified
as Held for Trading are accounted for at fair value with realized and unrealized gains
and losses reported in net income. The remaining financial instruments are classified as
Available for Sale and are measured at fair value with unrealized gains and losses, not
affecting income, but reported in a new category in Shareholders equity called
Other Comprehensive Income.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

105

---

| | Section
3865 Hedges which replaces Accounting Guideline 13 Hedging Relationships requires
that all derivatives, including hedges, be measured at fair value. Changes in the fair
value of a derivative which hedges the Companys exposure that the fair value of an
asset or liability will change due to a particular risk are recognized in net income
together with those of the respective offsetting hedged item. However, changes in the
fair value of a derivative which hedges the Companys exposure to changing cash
flows are accumulated in Other Comprehensive Income until the transaction being hedged
affects net income.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Section
1530 Other Comprehensive Income, a new category in the Shareholdersequity
section, includes in addition to the items mentioned above, unrealized foreign currency
translation gains and losses, net of hedging activities.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company is in the process of assessing the impact of these new recommendations on its
financial position, results of operations and cash flows.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------

|3 |  | Significant
accounting policies
|- |  | -------------------------------

| | These
consolidated financial statements have been prepared in accordance with accounting
principles generally accepted in Canada (Canadian GAAP). There are certain
measurement differences between Canadian GAAP and United States generally accepted
accounting principles (U.S. GAAP). Differences which relate to the Company
are summarized in note 28.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) |  | Basis
of presentation
| | -- |  | ---------------------

| | These
consolidated financial statements include the accounts of the Company and its
subsidiaries, all of which are wholly owned. All intercompany balances and transactions
have been eliminated on consolidation.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) |  | Use
of estimates
| | -- |  | ----------------

| | The
preparation of financial statements in accordance with generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenue and expenses
during the reporting period. Significant estimates in these financial statements include
the allowance for doubtful accounts, recovery of future income taxes, goodwill and annual
goodwill impairment test, useful lives and impairment of long-lived assets, stock-based
compensation costs, valuation of investments, determination of the fair value of the
intangible assets on recent acquisitions, determination of the fair value of the warrants
issued on the private placement and the resulting impact on the allocation of the
proceeds between the shares and warrants. Actual results could differ from those
estimates.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) |  | Cash
and cash equivalents
| | -- |  | -------------------------

| | Cash
and cash equivalents consist of cash on hand, balances with banks, and highly liquid
investments with original terms to maturity of 90 days or less as of the date of
acquisition.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | d) |  | Temporary
investments
| | -- |  | ---------------------

| | Temporary
investments are valued at the lower of cost and market value.
| | -----------------------------------------------------------------------

106

---

| | e) |  | Tax
credits
| | -- |  | -----------

| | Tax
credits are accounted for using the cost reduction method. Under this method, tax credits
relating to eligible expenditures are deducted from the cost of the related assets
or included in the consolidated statement of operations as a reduction of the related
expenses. Tax credits are recorded in the year in which the expenditures are incurred
provided there is reasonable assurance of realization.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | f) |  | Investments
| | -- |  | -----------

| | The
Company has investments in equity instruments of privately-held companies. These
investments are generally accounted for under the cost method, as the Company does not
have the ability to exercise significant influence over operations. The Company records
an investment impairment charge when it believes an investment has experienced a decline
in value that is judged to be other than temporary. The Company monitors its investments
for impairment by considering current factors including economic environment, market
conditions and operational performance and other specific factors relating to the
business underlying the investment, and records reductions in carrying values when
necessary. The fair value for privately held securities is estimated using the best
available information as of the valuation date, including the quoted market prices of
comparable public companies, recent financing rounds of the investee and other investee
specific information.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | g) |  | Property,
plant and equipment
| | -- |  | -----------------------------

| | Property,
plant and equipment are recorded at cost, less applicable tax credits and accumulated
amortization. Amortization is calculated using the following methods and annual rates or
period:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Computer equipment     |  | Declining balance |  | 30%               | 
| |  | ---------------------- |  | ----------------- |  | ----------------- | 
| |  | Furniture and fixtures |  | Declining balance |  | 20%               | 
| |  | Leasehold improvements |  | Straight-line     |  | Duration of lease | 

| | h) |  | Intangible
assets
| | -- |  | -----------------

| | Intangible
assets with finite useful lives are recorded at cost less accumulated amortization. The
Company provides for the amortization of intangible assets over their estimated useful
lives using the straight-line method at the following annual rates:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Brand names         |  |  |  | 20% to 25% | 
| |  | ------------------- |  |  |  | ---------- | 
| |  | Acquired technology |  |  |  | 20% to 25% | 
| |  | Customer list       |  |  |  | 10% to 25% | 
| |  | Software            |  |  |  | 30%        | 
| |  | E-mail data base    |  |  |  | 25%        | 

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

| | Goodwill
represents the excess of purchase price of businesses acquired over the fair value of the
underlying net identifiable assets acquired. Goodwill related to business combinations is
not amortized.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Goodwill
is evaluated for impairment annually, or when events or changed circumstances indicate
impairment may have occurred. In connection with the goodwill impairment test, if the
carrying value of the Companys reporting unit to which goodwill relates exceeds its
estimated fair value, the goodwill related to that reporting unit is tested for
impairment. If the carrying value of such goodwill is determined to be in excess of its
fair value, an impairment loss is recognized in the amount of the excess of the carrying
value over the fair value.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

107

---

| | j) |  | Impairment
of long-lived assets
| | -- |  | -------------------------------

| | The
Company assesses the carrying value of its long-lived assets, which include property,
plant and equipment and intangible assets, for future recoverability when events or
changed circumstances indicate that the carrying value may not be recoverable. An
impairment loss is recognized if the carrying value of a long-lived asset exceeds the sum
of its estimated undiscounted future cash flows expected from its use. The amount of
impairment loss, if any, is determined as the excess of the carrying value of the assets
over their fair value.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | k) |  | Revenue
recognition
| | -- |  | -------------------

| | The
Company recognizes revenue from search advertising, graphic advertising and e-mail
advertising services when the following criteria are satisfied:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------

| | i)              persuasive
evidence of an arrangement exists;
| | -------------------------------------------------------------

| | ii)              service
is performed;
| | --------------------------------------

| | iii)              the
fee is fixed or determinable;
| | ---------------------------------------------------

| | iv)              collectibility
is reasonably assured.
| | ------------------------------------------------------

| | Search
service revenue is generated as users click on an advertisers sponsored link,
giving rise to direct revenue or a revenue share if the paid placement was provided by a
third party provider (partner). Advertisers buy key words, and when these key
words are searched by a user, the advertisers website will be listed in a premium
position in the search results. Advertisers are charged on a pay-per-click basis. Revenue
from such clicks is recognized as the clicks occur, provided the above criteria are met.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Graphic
advertising revenue is generated from advertising delivered on a Web page, at an agreed
rate per thousand impressions delivered, or based on user clicks on displayed advertising
graphic advertisement. Advertising includes different size banners, pop-ups and rich
media which are targeted through the Companys network of publishers (members).
The publisher network consists of small to medium size websites that subscribe to the
Companys service through an on-line contract. Revenue from advertising arrangements
is recognized as the impressions are delivered or as clicks on displayed graphic
advertisement occur, provided the above criteria are met and that no significant Company
obligations or commitments relating to a minimum number of impressions remain.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | E-mail
advertising revenue is generated from an e-mail drop of the Companys advertisers
products based on its business or consumer e-mails lists. The Company may also partner
with other list owners. The revenue model is either CPM based (cost per one thousand
impressions pushed) or CPA based (cost per valid leads to advertisers). Revenue from
advertising arrangements is recognized as the e-mail drop is delivered or as valid leads
are provided to advertiser, provided the above criteria are met.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
majority of arrangements for these three types of revenue have terms less than one year
and may be terminated at any time by the advertiser. In accordance with Emerging Issues
Committee 123 Reporting Revenue Gross as a Principal versus Net as an Agent,
search and graphic advertising derived from arrangements that involve services supplied
by partners and members respectively is reported gross of the payment to them. This
revenue is reported gross due to the fact that the Company is the primary obligor to the
advertisers who are customers of the advertising service.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

108

---

| | Deferred
revenue is recorded when payments are received in advance of the Companys
performance in the underlying agreement on the accompanying consolidated balance sheets.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | IBT
recognizes revenue from the sale of software licences and related post-contract customer
support and other related services in accordance with Statement of Position (SOP)
97-2, Software Revenue Recognition. Fees from arrangements involving
licences, post-contract customer support and other related services are allocated to the
various elements based on vendor-specific objective evidence of fair value of each of the
elements. Revenue from software licences is recognized when persuasive evidence of an
arrangement exists, the software product has been delivered, there are no uncertainties
surrounding product acceptance, the related fees are fixed or determinable, and
collection is considered probable. Revenue from post-contract customer support elements
is recognized ratably over the related support period. Revenue from other related
services is recognized as the services are performed.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | l) |  | Research
and development costs
| | -- |  | ------------------------------

| | Research
costs are expensed as incurred. Development costs are also expensed as incurred unless
such costs meet the criteria under generally accepted accounting principles for deferral
and amortization. To qualify for deferral, the costs must relate to a technically
feasible, identifiable product which the Company intends to produce and market, there
must be a clearly defined market for the product, and the Company must have the
resources, or access to the resources, necessary to complete the development. The Company
has not deferred any such development costs during the years ended December 31, 2004
and 2003.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | m) |  | Income
taxes
| | -- |  | ------------

| | The
Company provides for income taxes using the liability method of tax allocation. Under
this method, future income tax assets and liabilities are determined based on deductible
or taxable temporary differences between financial statement values and tax values of
assets and liabilities using substantively enacted income tax rates expected to be in
effect for the year in which the differences are expected to reverse.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company establishes a valuation allowance against future income tax assets if, based upon
available information, it is more likely than not that some or all of the future income
tax assets will not be realized.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | n) |  | Foreign
currency translation
| | -- |  | ----------------------------

| | The
functional and reporting currency of the Company is the U.S. dollar. The functional
currency of the Companys subsidiaries is the local currency. Accordingly, the
financial statements of the Companys subsidiaries have been translated into the
reporting currency as follows: assets and liabilities have been translated at the
exchange rate in effect at the balance sheet date and revenue and expenses have been
translated at the average exchange rate for each year. All gains or losses resulting from
the application of this translation method are included in the cumulative translation
adjustment. Changes in the cumulative translation adjustment during the year result
solely from the application of this translation method.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o) |  | Foreign
currency transactions
| | -- |  | -----------------------------

| | Transactions
concluded in currencies other than the functional currency have been translated as
follows: monetary assets and liabilities have been translated at the exchange rate in
effect at the balance sheet date and revenue and expenses have been translated at the
average exchange rate for each period; non-monetary assets and liabilities have been
translated at the rates prevailing at the dates of the respective transactions. Exchange
gains and losses arising from such transactions are included in net earnings (loss) for
the year.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

109

---

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

| | Basic
earnings (loss) per share are calculated using the weighted average number of shares
outstanding during each of the years (note 16).
| | ------------------------------------------------------------------------------------------------------------------------------------------

| | Diluted
earnings (loss) per share are calculated based on the weighted average number of common
shares outstanding in each of the years, plus the effects of dilutive common share
equivalents, such as options and warrants outstanding. This method requires that the
dilutive effect of outstanding options and warrants be calculated using the treasury
stock method, as if all dilutive options and warrants had been exercised at the later of
the beginning of the reporting period or date of issuance, and that the funds obtained
thereby were used to purchase common shares of the Company at the average trading price
of the common shares during the year.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | q) |  | Comparative
figures
| | -- |  | -------------------

| | Certain
comparative figures have been reclassified to conform with the current years
presentation.
| | ---------------------------------------------------------------------------------------------------

|4 |  | Functional
currency
|- |  | -------------------

| | During
the first quarter of fiscal 2004, the Company determined that the functional currency of
its wholly owned subsidiary, Mamma.com Enterprises Inc., had clearly changed from the
Canadian dollar to the U.S. dollar as at the beginning of the quarter. As a result of
this change, which has been applied prospectively from January 1, 2004, transactions
entered into by Mamma.com Enterprises Inc. which are denominated in currencies other than
the U.S. dollar are now translated into U.S. dollars using the temporal method. Under
this method, monetary assets and liabilities are translated into U.S. dollars at the
exchange rate in effect on the balance sheet date.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Non-monetary
assets and liabilities are translated into U.S. dollars at historical exchange rates.
Revenues and expenses are translated into U.S. dollars at the exchange rates prevailing
at the dates of the respective transactions. Gains and losses resulting from translation
of monetary assets and liabilities into U.S. dollars are reflected in the consolidated
statements of operations.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Prior
to this change, the functional currency of Mamma.com Enterprises Inc. was the Canadian
dollar. Accordingly, the financial statements of Mamma.com Enterprises Inc. were
translated from Canadian dollars into U.S. dollars using the current rate method. Gains
and losses resulting from translation of these financial statements were included in the
cumulative translation adjustment in shareholders equity. The translated amounts
for non-monetary items as at January 1, 2004 are the historical basis for those items in
subsequent periods.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5 |  | Discontinued
operations
|- |  | -----------------------

| | On
September 9, 2003, the Company announced that it had received and accepted, subject to
completion of due diligence, an offer for the sale of its wireless billing subsidiary,
IBT. The results of operations and cash flows for IBT have been reported separately as
discontinued operations in the consolidated statements of operations and cash flows, and
the remaining assets and liabilities of IBT have been segregated on the consolidated
balance sheets. Comparative figures for the years ended December 31, 2003 and 2002 have
been reclassified in order to comply with this presentation.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

110

---

| | On
February 12, 2004, the Company concluded the sale of IBTs assets which include
contracts, customer lists, intellectual property, fixed assets and tangible and
intangible assets relating to the business.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
proceeds of disposal was $1,699,185 with a gain on disposal of $1,588,923 which has been
included in the Results of discontinued operations line in the consolidated
statements of operations. The Company may be entitled to additional consideration of up
to a maximum of $250,000 should certain events occur or conditions be met. As of December
31, 2004, an amount of $100,000 of such contingent consideration had been earned by the
Company and recorded in results of discontinued operations. The Company recorded, for
2004, net costs for an amount of $544,927 which represented the net of revenue of
$621,296 and expenses of $1,166,223 including closing costs. An amount of $148,000 has
been kept in escrow and will be released in the second quarter of 2005.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

111

---

The gain on disposal is detailed as
follows:

|                                                              |  | $        
|------------------------------------------------------------- |  | ---------
|Proceeds                                                      |  | 1,699,185
|                                                              |  |          
|Assets disposed and related fees                              | 
|Equipment                                                     |  | 210,916  
|Other assets, net                                             |  | (22,843  
|Legal and other fees                                          |  | 133,579  
|Cumulative translation adjustment related to the sales of IBT |  | (211,390 
|                                                             
|                                                              |  | 110,262  
|                                                             
|Gain on disposal                                              |  | 1,588,923
|                                                             

Summary of assets and liabilities of
discontinued operations

|                                         |  | As at December 31, | 
|---------------------------------------- |  | ------------------ | 
|                                         |  | 2004$              | 
|Current assets                           |  |                    | 
|Accounts receivable                      |  | 81,241             | 
|Other current assets                     |  | 804                | 
|                                        
|                                         |  | 82,045             | 
|                                        
|Assets                                   | 
|Property, plant and equipment            |  | --                 | 
|                                        
|Liabilities                              | 
|Accounts payable and accrued liabilities |  | 142,226            | 
|Deferred revenue                         |  | --                 | 
|Income taxes payable                     |  | 85,000             | 
|                                        
|                                         |  | 227,226            | 
|                                        

Summary of discontinued operations

|                                    |  | 2004$     |  | 2003$     |   | 2002$     | 
|----------------------------------- |  | --------- |  | --------- | - | --------- | 
|Revenue                             |  | 621,296   |  | 6,493,986 |   | 7,602,630 | 
|                                   
|Earnings (loss) before income taxes |  | 1,043,996 |  | (32,220   | ) | 465,884   | 
|                                   
|Net earnings (loss)                 |  | 1,043,996 |  | (300,053  | ) | 465,884   | 
|                                   

For the years 2004 and 2002,
earnings (loss) before income taxes are the same as net earnings (loss). In 2004 and
2002, this is due to benefits arising from prior years tax losses not previously
recognized. In 2003, the Company recorded a provision for income taxes due to a tax
assessment disallowing research and development tax credits claimed in prior years.

112

---

|6 |  | Business
acquisitions
|- |  | ---------------------

| | a) |  | Digital
Arrow LLC and High Performance Broadcasting, Inc.
| | -- |  | ---------------------------------------------------------

| | On
June 10, 2004, the Company acquired the business of Digital Arrow LLC and High
Performance Broadcasting, Inc. (Digital Arrow), privately held marketing
companies that are engaged in the distribution of on-line, opt-in e-mail marketing
solutions via the Internet. In that acquisition, the wholly owned subsidiary, Mamma.com
USA, Inc., entered into a Securities Purchase Agreement with Digital Arrow and their
equity holders, pursuant to which Mamma.com USA, Inc. acquired all equity interests in
Digital Arrow. The consideration for the acquisition, including costs directly related to
the acquisition, consisted of $1,264,210 in cash, net of cash acquired, and 90,000 of the
Companys common shares. The fair value of the Company shares issued to owners of
Digital Arrow has been determined to be $8.23 per share. This value has been determined
using the average closing price of the Companys common stock for five days before
and five days after March 3, 2004, the date the significant terms and conditions of the
transaction were agreed to and publicly announced.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
operations of the business have been included in these financial statements since June 1,
2004.
| | ---------------------------------------------------------------------------------------------------

| | b) |  | focusIN
assets
| | -- |  | --------------

| | On
November 27, 2002, the Company acquired through its subsidiary Mamma.com Enterprises Inc.
certain of the assets of the focusIN business of ZAQ Inc. in exchange for total cash
consideration amounting to $1,625,151, including costs directly related to the
acquisition. The net earnings of the business have been included in these financial
statements from the above-noted date of acquisition. focusIN provides on-line media
placement services.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

113

---

| | These
acquisitions have been accounted for using the purchase price method. The fair value of
the net assets acquired is summarized below:
| | ------------------------------------------------------------------------------------------------------------------------------------------

| |                                          |  | Digital Arrow2004$ |  | focusIN2002$ | 
| | ---------------------------------------- |  | ------------------ |  | ------------ | 
| | Cash                                     |  | 86,948             |  | --           | 
| | Accounts receivable                      |  | 163,203            |  | --           | 
| | Prepaid expenses and other assets        |  | 5,442              |  | --           | 
| | Property, plant & equipment              |  | 83,692             |  | 31,287       | 
| | Intangible assets:                       | 
| | Brand name                               |  | 174,738            |  | 291,156      | 
| | E-mail data base                         |  | 750,000            |  | --           | 
| | Existing technology                      |  | 238,535            |  | 252,208      | 
| | Customer list                            |  | 279,558            |  | 351,175      | 
| |                                         
| | Total assets acquired                    |  | 1,782,116          |  | 925,826      | 
| | Accounts payable and accrued liabilities |  | 246,372            |  | --           | 
| |                                         
| | Total liabilities assumed                |  | 246,372            |  | --           | 
| |                                         
| | Net identifiable assets acquired         |  | 1,535,744          |  | 925,826      | 
| | Goodwill                                 |  | 556,196            |  | 699,325      | 
| |                                         
| | Purchase price                           |  | 2,091,940          |  | 1,625,151    | 
| | Less:                                    | 
| | Common shares issued                     |  | 740,782            |  | --           | 
| | Cash                                     |  | 86,948             |  | --           | 
| |                                         
| | Cash paid net of cash acquired           |  | 1,264,210          |  | 1,625,151    | 
| |                                         

| | For
focusIN, approximately $521,000 of the above-noted goodwill is deductible for income tax
purposes.
| | ------------------------------------------------------------------------------------------------------

|7 |  | Temporary
Investments
|- |  | ---------------------

| | Temporary
investments consist of commercial paper bearing a weighted average interest rate of 2.29%
per annum (2003  5.10%) and maturing on various dates up to May 2005. The market
value of the commercial paper as at December 31, 2004 and 2003 approximates the book
value.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

114

---

|8 |  | Accounts
receivable
|- |  | -------------------

| | Accounts
receivable comprise the following:
| | -------------------------------------------

| |                                 |  | 2004$     |   | 2003$     |  
| | ------------------------------- |  | --------- | - | --------- | -
| | Trade accounts receivable       |  | 2,799,705 |   | 2,433,064 |  
| | Allowance for doubtful accounts |  | (239,177  | ) | (203,129  | )
| |                                
| |                                 |  | 2,560,528 |   | 2,229,935 |  
| | Other                           |  | 129,012   |   | 56,816    |  
| |                                
| |                                 |  | 2,689,540 |   | 2,286,751 |  
| |                                

|9 |  | Investments
|- |  | -----------

| | a) |  | Investments
comprise the following:
| | -- |  | -----------------------------------

| |                                                               |  | 2004$   |  | 2003$     | 
| | ------------------------------------------------------------- |  | ------- |  | --------- | 
| | LTRIM Technologies Inc. (4,891,686 Class "A"                  |  |         |  |           | 
| | common shares and 359,281 Class "A" preference shares) (i)    |  | 720,000 |  | 1,085,286 | 
| | Tri-Link Technologies Inc. (4,054,874 Preference shares) (ii) |  | --      |  | --        | 
| | TECE, Inc. (5,000,000 Common shares) (ii)                     |  | --      |  | --        | 
| |                                                              
| |                                                               |  | 720,000 |  | 1,085,286 | 
| |                                                              

| | The
fair value of LTRIM Technologies Inc. has been established at $720,000 and nil for
Tri-Link Technologies Inc. and TECE, Inc.       as of December 31, 2004.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | i) |  | In
2004, due to a permanent impairment in value, the Company wrote off $365,286
               of its investment in LTRIM Technologies Inc.
| |  | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------

| |  | ii) |  | In
2001 and 2002, due to a permanent impairment in value, the Company wrote off
               its investments in Tri-Link Technologies Inc. and TECE, Inc.
| |  | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | iii) |  | On
August 28, 2003, the Company sold its entire investment in uPath.com Inc. for
               CA$45,000 (US$32,499). As this investment had been written off in its
entirety                in 2002 due to a permanent impairment in value, the gain on
disposal of the                investment amounted to $32,499 in 2003.
| |  | ---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) |  | Master
option agreement
| | -- |  | -----------------------

| | Part
of the compensation packages originally offered to the Companys former President
and former CEO and Chairman was provided under the terms of a Master Option Agreement,
dated December 7, 1999, among Intasys Corporation, Intasys Capital Corporation and
3354717 Canada Inc., a company controlled by these former executives. On several
occasions, the terms of the Master Option Agreement for both former executives were
amended. In August 2001, the former President assigned and transferred to the former CEO
and Chairman all of his rights, title and interest in and to 3354717 Canada Inc. that he
had related to the Master Option Agreement. On October 30, 2001, the former CEO and
Chairman agreed to cancel the Master Option Agreement and the Company granted him an
option to purchase up to 15% of Intasys investment in Tri-Link Technologies Inc.
and LTRIM Technologies Inc. up until December 31, 2002 for a total cash consideration of
$410,425. Thereafter, this percentage and the exercise price are reduced to 5% and
$136,808 respectively through February 28, 2004, at which time the option expired.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

115

---

| | The
fair value of these options was initially estimated using the Black-Scholes option
pricing model and recorded as a liability. Since the terms of these options are variable,
the fair value of these options is re-evaluated at each balance sheet date with any
resulting adjustment to the fair value being included in the statement of operations. As
a result, in 2003, the consolidated statement of operations includes a reversal of
expenses recorded in previous years of $4,866. The consolidated statement of operations
in 2002 includes a reversal of expenses recorded in previous years for an amount of
$195,134.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10 |  | Property,
plant and equipment
|-- |  | -----------------------------

| |                        |  |           |  |                           |  | 2004    | 
| | ---------------------- |  | --------- |  | ------------------------- |  | ------- | 
| |                       
| |                        |  | Cost$     |  | Accumulated amortization$ |  | Net$    | 
| |                       
| | Computer equipment     |  | 1,095,087 |  | 765,025                   |  | 330,062 | 
| | Furniture and fixtures |  | 97,233    |  | 55,362                    |  | 41,871  | 
| | Leasehold improvements |  | 88,243    |  | 85,357                    |  | 2,886   | 
| |                       
| |                        |  | 1,280,563 |  | 905,744                   |  | 374,819 | 
| |                       
| |                        |  |           |  |                           |  | 2003    | 
| |                       
| | Computer equipment     |  | 1,004,476 |  | 695,220                   |  | 309,256 | 
| | Furniture and fixtures |  | 83,712    |  | 45,928                    |  | 37,784  | 
| | Leasehold improvements |  | 87,181    |  | 66,757                    |  | 20,424  | 
| |                       
| |                        |  | 1,175,369 |  | 807,905                   |  | 367,464 | 
| |                       

116

---

|11 |  | Goodwill
and other intangible assets
|-- |  | ------------------------------------

| | a) |  | Intangible
assets
| | -- |  | -----------------

| |                     |  |           |  |                           |  | 2004      | 
| | ------------------- |  | --------- |  | ------------------------- |  | --------- | 
| |                    
| |                     |  | Cost$     |  | Accumulated amortization$ |  | Net$      | 
| |                    
| | Brand names         |  | 587,607   |  | 208,316                   |  | 379,291   | 
| | Acquired technology |  | 543,752   |  | 163,099                   |  | 380,653   | 
| | Customer list       |  | 704,543   |  | 128,209                   |  | 576,334   | 
| | Software            |  | 63,098    |  | 42,257                    |  | 20,841    | 
| | E-mail data base    |  | 750,000   |  | 96,875                    |  | 653,125   | 
| |                    
| |                     |  | 2,649,000 |  | 638,756                   |  | 2,010,244 | 
| |                    
| |                     |  |           |  |                           |  | 2003      | 
| |                    
| | Brand names         |  | 412,869   |  | 103,396                   |  | 309,473   | 
| | Acquired technology |  | 305,217   |  | 71,218                    |  | 233,999   | 
| | Customer list       |  | 424,985   |  | 49,582                    |  | 375,403   | 
| | Software            |  | 53,664    |  | 36,977                    |  | 16,687    | 
| |                    
| |                     |  | 1,196,735 |  | 261,173                   |  | 935,562   | 
| |                    

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

| | The
changes in the carrying amount of goodwill for the years ended December 31, 2004 and
2003 are as follows:
| | -------------------------------------------------------------------------------------------------------------

| |                                 |  | focusIN$ |  | Digital Arrow$ |  | Total$    | 
| | ------------------------------- |  | -------- |  | -------------- |  | --------- | 
| |                                
| | Balance - December 31, 2002     |  | 694,835  |  | --             |  | 694,835   | 
| | Currency translation adjustment |  | 151,475  |  | --             |  | 151,475   | 
| |                                
| | Balance - December 31, 2003     |  | 846,310  |  | --             |  | 846,310   | 
| | Business acquisitions (note 6)  |  | --       |  | 556,196        |  | 556,196   | 
| |                                
| | Balance - December 31, 2004     |  | 846,310  |  | 556,196        |  | 1,402,506 | 
| |                                

117

---

|12 |  | Accounts
payable and accrued liabilities
|-- |  | ----------------------------------------

| | Accounts
payable and accrued liabilities comprise the following:
| | ----------------------------------------------------------------

| |                                                               |  | 2004$     |  | 2003$     | 
| | ------------------------------------------------------------- |  | --------- |  | --------- | 
| | Trade accounts payable                                        |  | 1,868,307 |  | 1,460,631 | 
| | Other                                                         | 
| | Accrued employee costs                                        |  | 363,025   |  | 328,250   | 
| | Directors and officers payable                                |  | 402,220   |  | 225,543   | 
| | Payable to companies owned by current or former directors (a) |  | 12,764    |  | 12,818    | 
| | Other (note 25 a))                                            |  | --        |  | 225,000   | 
| |                                                              
| |                                                               |  | 2,646,316 |  | 2,252,242 | 
| |                                                              

| | (a) |  | The
amount payable to companies owned by current and/or former directors  relates to
consulting agreements between the Company and companies owned by  current and/or former
directors.
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|13 |  | Recovery
of restructuring charges
|-- |  | ---------------------------------

| | In
2000 and 2001, the Company reduced its fixed costs by terminating certain employees and
moving its head office to premises occupied by its subsidiary Mamma.com Enterprises Inc.
In 2002, $70,453 of charges related to the restructuring of the Investment Management
segment were reversed due to an over-accrual of estimated sub-leasing charges of the
principal executive offices that were not needed due to the cancellation of corporate
obligations.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|14 |  | Capital
stock
|-- |  | -------------

| | On
September 7, 2004, the Company filed a Notice of Intention with the Ontario Securities
Commission to make a Normal Course Issuer Bid (the Notice). In the Notice,
the Company stated its intention to purchase on the open market at prevailing market
prices, through the facilities of the NASDAQ stock market, up to a maximum of 600,000 of
its common shares, being approximately 5% of the outstanding common shares, and common
shares comprising the public float, as at December 31, 2004. The Company may purchase
common shares at any time and from time to time until September 7, 2005. The common
shares will be purchased for cancellation.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
the year ended December 31, 2004, the Company did not purchase any of its outstanding
common shares.
| | -----------------------------------------------------------------------------------------------------------

118

---

| | a) |  | Stock
options
| | -- |  | -------------

| | The
Companys stock option plan is administered by the Compensation Committee, which is
a subcommittee of the Board of Directors. The Compensation Committee designates eligible
participants to be included under the plan, and designates the number of options and the
share price pursuant to the new options, subject to applicable securities laws and stock
exchange regulations. The options, when granted, will have an exercise price of no less
than the market price of shares at the date of grant and a life not exceeding 10 years.
The options vest in equal increments over a period of three or four years, commencing one
year from the grant date. The number of options granted in any fiscal year shall not
exceed 15% of the issued and outstanding common shares at the date of the grant.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Information
with respect to stock option activity for 2002, 2003 and 2004 is as follows:
| | ----------------------------------------------------------------------------------------

| |                                 |  | Number of options |   | Weighted averageexercise price$
| | ------------------------------- |  | ----------------- | - | -------------------------------
| | Outstanding  December 31, 2001 |  | 451,750           |   | 2                              
| | Granted                         |  | 135,000           |   | 1                              
| | Forfeited                       |  | (209,570          | ) | 2                              
| |                                
| | Outstanding  December 31, 2002 |  | 377,180           |   | 1                              
| | Granted                         |  | 227,500           |   | 2                              
| | Forfeited                       |  | (28,357           | ) | 1                              
| | Exercised                       |  | (129,678          | ) | 1                              
| |                                
| | Outstanding  December 31, 2003 |  | 446,645           |   | 2                              
| | Granted                         |  | 305,000           |   | 6                              
| | Forfeited                       |  | (16,000           | ) | 1                              
| | Expired                         |  | (18,750           | ) | 8                              
| | Exercised                       |  | (255,561          | ) | 1                              
| |                                
| | Outstanding  December 31, 2004 |  | 461,334           |   | 5                              
| |                                

119

---

| | Details
of stock options outstanding as at December 31, 2004 are as follows:
| | ----------------------------------------------------------------------------

| |                           |  | Outstanding options | Exercisable options
| | ------------------------- |  | ------------------- | -------------------
| |                           | 
| | Range of exercise prices$ |  | Number of options   |                    
| |                          
| | 1.50  1.99               |  | 30,834              |                    
| | 2.57  3.58               |  | 135,500             |                    
| | 7.08                      |  | 295,000             |                    
| |                          
| |                           |  | 461,334             |                    
| |                          

| | As
at December 31, 2003 and 2002, there were 222,478 and 320,429 options exercisable at
weighted average prices of $1.99 and $1.80, respectively.
| | -------------------------------------------------------------------------------------------------------------------------------------------------

| | b) |  | Pro
forma stock-based compensation disclosures
| | -- |  | ----------------------------------------------

| | As
described in note 2, the Company adopted, retroactive to January 1, 2003, the fair value
method of accounting for stock options granted to employees and has applied this new
method on a prospective basis. Following is a summary of what the net earnings (loss) and
related per share figures would have been for 2004, 2003 and 2002 if the Company had
applied this change retroactively to all prior years.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                          |  | 2004$     |  | 2003$    |   | 2002$    |  
| | ---------------------------------------- |  | --------- |  | -------- | - | -------- | -
| |                                         
| | Pro forma net earnings (loss)            |  | 1,086,911 |  | (225,266 | ) | (295,924 | )
| |                                         
| | Pro forma net earnings (loss) per share: | 
| | Basic                                    |  | 0.10      |  | (0.04    | ) | (0.07    | )
| | Diluted                                  |  | 0.10      |  | (0.04    | ) | (0.07    | )
| |                                         

| | The
fair  values  of all  options  granted  during  2004,  2003 and 2002  were  estimated  as
of the date of grant  using  the Black-Scholes option pricing model with the following
weighted average assumptions:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                              |  | 2004$ |   | 2003$ |   | 2002$ |  
| | ---------------------------- |  | ----- | - | ----- | - | ----- | -
| |                             
| | Expected option life (years) |  | 4.00  |   | 4.04  |   | 4.00  |  
| | Volatility                   |  | 88    | % | 82    | % | 76    | %
| | Risk-free interest rate      |  | 3.70  | % | 4.00  | % | 3.09  | %
| | Dividend yield               |  | nil   |   | nil   |   | nil   |  

| | The
weighted average grant-date fair values for stock options granted during 2004, 2003 and
2002 were $4.61, $2.71 and $1.22 per option, respectively.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------

120

---

|15 |  | Additional
paid-in capital and deferred stock-based compensation
|-- |  | ----------------------------------------------------------------

| | On
March 16, 2004, the Company retained Merriman Curhan Ford & Co. (MCF) as
a financial advisor and as an investment banking advisor. The Company then signed two
separate agreements. In consideration for financial services, the Company had committed
to pay MCF a monthly fee of $5,000 for a minimum obligation of $30,000 and 10,000
warrants per month with a minimum issuance of 60,000 warrants, each warrant gives the
rights to purchase one common share of the Company. Warrants are issuable at an exercise
price equal to the average closing bid for the last five trading days at the end of the
month of issue, for the duration of the agreement upon the same terms and conditions. The
warrants have a life of five years from the issuance date. For the investment banking
services, the Company had committed to pay a cash financing completion fee equal to 6% of
the total amount of capital received by the Company from the sale of its equity
securities and warrants to purchase common shares of the Company in an amount equal to 6%
of the number of common shares purchased by investors in capital raising transactions.
The warrants are immediately exercisable at the higher of the price per share at which
the investor can acquire common shares or the closing price of the Companys common
shares at the date of the capital raising transaction. For merger and acquisition, the
Company had committed to pay a success fee upon closing equal to the sum of 4% of up to
$10,000,000 transaction value, 3% of $10,000,000 to $15,000,000 transaction value and 2%
of greater than $15,000,000 transaction value, provided that MCF either introduces and/or
performs specific services for the transaction. The minimum success fee for a transaction
is $200,000. For a sale transaction, the Company had committed to pay a success fee with
the same parameters of an acquisition except for the minimum fee which is $500,000.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | For
the period ended December 31, 2004, 40,000 warrants were issued to MCF at an average
price of $12.31, the fair value of which was $260,301 estimated as of grant date using
the Black-Sholes pricing model, and charged to expense with a corresponding credit to
additional paid-in capital. The following weighted average assumptions were used:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Expected option life    |  | 3.5 years | 
| |  | ----------------------- |  | --------- | 
| |  | Volatility              |  | 86%       | 
| |  | Risk-free interest rate |  | 3.99%     | 
| |  | Dividend yield          |  | nil       | 

| | On
July 16, 2004, the agreement for financial services, dated March 16, 2004 was amended.
The Company committed to pay MCF a monthly fee of $5,000 for eight months from July 16,
2004. The agreement for investment banking services was amended on July 16, 2004 and
subsequently amended on September 8, 2004. The Company then is committed to pay a success
fee upon closing equal to the sum of 3% of up to $20,000,000 transaction value, 1.5% of
the excess of $20,000,000. If an acquisition transaction is less than 50% interest in the
Company or the Target, a fee shall be payable in cash for 7% of the transaction value. If
transaction is not consummated and the Company is entitled to receive break-up fee and
other form of compensation, the Company then will pay to MCF 30% of Companys entire
entitlement.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
June 30, 2004, the Company sold under a securities purchase agreement an aggregate of
1,515,980 common shares and 606,392 warrants to certain accredited investors for an
aggregate price of $16,599,981. Net proceeds from the offering amounted to $15,541,162,
net of issue cost of $1,058,819, $996,000 of which was paid to MCF. For this specific
transaction, MCF waived their entitlement to a warrant component of the financing
completion fee. Each warrant entitles the accredited investors to purchase one additional
common share at an exercise price equal to $15.82 per share. The warrants will be
exercisable beginning six months after the closing date, and will have a term of five
years from the closing date.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

121

---

| | The
amounts allocated to the shares and warrants totalled $13,158,329 and $3,441,652,
respectively. These amounts have been allocated based upon the relative fair values of
the shares and warrants at the date they were issued. The estimated fair values of the
warrants have been determined using the Black-Scholes pricing model and the following
weighted average assumptions:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Expected option life    |  | 5 years | 
| |  | ----------------------- |  | ------- | 
| |  | Volatility              |  | 86%     | 
| |  | Risk-free interest rate |  | 4.19%   | 
| |  | Dividend yield          |  | nil     | 

| | In
2003, the Company granted 105,000 warrants at an average price of $2.50 to Maxim Group,
LLC for financial advisory fees, the fair value of which was $84,566 estimated as of the
grant date using the Black-Scholes pricing model, and charged to expense during the year
with a corresponding credit to additional paid-in capital. These warrants vested
immediately and expire after three years.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
December 12, 2002, the Company completed a private placement of 1,893,939 units, each
unit consisting of one common share and one A warrant, for total gross proceeds
amounting to $2,500,000, or $1.32 per unit. Each A warrant vests immediately, expires on
November 30, 2004, and permits the holder to purchase one additional common share of the
Company at an exercise price of $1.40 per share. The private placement agreement provides
for a reload feature, whereby upon exercise of the entire A warrants, the holders are
entitled to receive one new B warrant for each A warrant exercised. The B warrant vests
immediately upon issuance, expires on November 30, 2006, and permits the holder to
purchase an additional common share at an exercise price of $1.50 per share. As at
December 31, 2004, the totality of the A and B warrants had been exercised.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
amounts allocated to the shares and warrants totalled $1,912,879 and $587,121,
respectively. These amounts have been allocated based upon the relative fair values of
the warrants and shares at the date the units were issued. The estimated fair value of
the A and B warrants has been determined using the Binomial option pricing model and the
following weighted average assumptions:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                         |  | A warrants |  | B warrants | 
| | ----------------------- |  | ---------- |  | ---------- | 
| |                        
| | Risk-free interest rate |  | 3.09%      |  | 3.96%      | 
| | Expected volatility     |  | 76%        |  | 76%        | 
| | Expected life           |  | 2 years    |  | 4 years    | 
| | Expected dividend yield |  | nil        |  | nil        | 

122

---

| | In
addition, in connection with this private placement, the Company issued an additional
142,045 units to the principal agent involved in the transaction as compensation for its
services. These additional units have been recorded as share issue costs and charged
against capital stock at their fair value of $187,499, or $1.32 per unit. The fair value
of each unit has been allocated between the shares and warrants, resulting in $143,465
being credited to capital stock and $44,034 being credited to additional paid-in capital
on the same basis as described above.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
August 15, 2001, the Company retained Global Capital Securities to render financial
services for an 18-month period terminating on January 31, 2003. Consideration paid by
the Company for these consulting services consisted of the issuance of 150,000 unvested
common shares and 250,000 unvested warrants with an exercise price of $2.75 per share. On
April 19, 2002, all of these shares and warrants were transferred by Global to Lomond
International Inc., which agreed to continue providing the services in accordance with
the original agreement. On June 19, 2002, the Company and Lomond modified the terms of
the agreement and consequently all the warrants were returned to the Company for
cancellation.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company recognized the cost of the services as the warrants and shares vest, at a rate of
13,889 warrants and 8,333 shares per month, based on the fair value of the Companys
common shares at the end of each month. Upon the cancellation of the warrants, the
expense previously recognized was reversed. Information with respect to warrant activity
for 2002, 2003 and 2004 is as follows:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                 |  | Number of warrants |   | Weighted average exercise price $
| | ------------------------------- |  | ------------------ | - | ---------------------------------
| |                                
| | Outstanding - December 31, 2001 |  | 905,425            |   | 2                                
| | Issued                          |  | 2,035,984          |   | 1                                
| | Expired                         |  | (250,000           | ) | 2                                
| | Forfeited                       |  | (654,000           | ) | 2                                
| |                                
| | Outstanding - December 31, 2002 |  | 2,037,409          |   | 1                                
| | Issued (i)                      |  | 247,045            |   | 1                                
| | Forfeited                       |  | (1,425             | ) | 30                               
| | Exercised                       |  | (284,090           | ) | 1                                
| |                                
| | Outstanding - December 31, 2003 |  | 1,998,939          |   | 1                                
| | Issued - B warrants             |  | 1,893,939          |   | 1                                
| | Issued - Other                  |  | 646,392            |   | 15                               
| | Exercised                       |  | (3,892,878         | ) | 1                                
| |                                
| | Outstanding - December 31, 2004 |  | 646,392            |   | 15                               
| |                                

| | (i) |  | Does
not include warrants to be issued in connection with the B warrant reload
          feature described above.
| | --- |  | -----------------------------------------------------------------------------------------------------------------

123

---

| | For various
price ranges, the weighted average characteristics of warrants outstanding and
exercisable as at December 31, 2004 were as follows:
| | -----------------------------------------------------------------------------------------------------------------------------------------------

| |              
| | -------------
|
| |              
| | 11.34  13.89
| | 15.82        
| |              
| |              
| |              

|16 |  | Earnings (loss) per share
|-- |  | -------------------------

| |                                            
| | -------------------------------------------
|
| |                                            
| | Weighted average number of shares - Basic  
| | Additions to reflect the impacts of:       
| | Exercise of stock options                  
| | Exercise of warrants (i)                   
| |                                            
| | Weighted average number of shares - Diluted
| |                                            

| | (i) | In
2003, includes B warrants issuable upon exercise of the A warrants described in note 15.
| | --- | -------------------------------------------------------------------------------------------

| | Options to purchase 48,361 common
shares (2003  18,750; 2002  377,180), warrants to purchase 327,712 common
shares (2003  16,000, 2002  2,691,409) and 8,333 common shares (in 2002)
issued for brokerage fees have been excluded from the above calculations since they would
have an anti-dilutive effect.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|17 |  | Revenue
|-- |  | -------

| |                    
| | -------------------
|
| |                    
| | Search advertising 
| | Graphic advertising
| | E-mail advertising 
| |                    
| |                    
| |                    

|18 |  | Unrealized loss on investments and write-down of advances
|-- |  | ---------------------------------------------------------

| | In
2004, the Company recorded $365,286 of write-down of investment.
| | -------------------------------------------------------------------

| | In
2002, the Company recorded $51,612 unrealized loss on investments and $31,004 of
write-down of advances, totalling $82,616 for the year.
| | -------------------------------------------------------------------------------------------------------------------------------------------

124

---

|19 |  | Consolidated statement of cash flows
|-- |  | ------------------------------------

| | In
2004, the consideration for the acquisition of Digital Arrow includes 90,000 of the
Companys common shares at a determined fair value of $8.23 per share. Therefore,
$740,782 representing the value of the consideration paid by the issuance of capital stock
is excluded from business acquisitions and issuance of capital stock.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
2003, financial fees paid in shares in lieu of cash amounted to $17,000.
| | ---------------------------------------------------------------------------

| | In
2002, the Companys non-cash investing and financing activities consisted of: shares
issued in lieu of fees related to private placement in the amount of $187,499; shares
issued in lieu of financial fees in the amount of $98,667; interest income in the amount
of $33,477 which was recorded in investments.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|20 |  | Net change in non-cash working
 capital items
|-- |  | ---------------------------------------------

| |                                         
| | ----------------------------------------
|
| |                                         
| | Cash flows from (used for):             
| | Marketable securities                   
| | Accounts receivable                     
| | Income taxes receivable                 
| | Prepaid expenses and other assets       
| | Accounts payable and accrued liabilities
| | Reserve for restructuring               
| | Deferred revenue                        
| |                                         
| |                                         
| |                                         

|21 |  | Income taxes
|-- |  | ------------

| | a) |  | The provision for (recovery of) income taxes is
detailed as follows:
| | -- |  | --------------------------------------------------------------------

| |                    
| | -------------------
|
| |                    
| | Current (recovered)
| | Future             
| |                    
| |                    
| |                    

125

---

| | b) |  | A reconciliation of the combined Canadian
Federal and provincial income tax rate with the Companys effective income tax rate
is as follows:
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------

| |                                                                             
| | ----------------------------------------------------------------------------
|
| |                                                                             
| | Earnings (loss) from continuing     operations
before income taxes          
| |                                                                             
| | Expected provision for (recovery of) income taxes
     at the statutory rate
| |                                                                             
| | Impact of foreign and provincial rates                                      
| | Unrecognized benefit of current year tax losses                             
| | and undeducted research and development                                     
| | expenses, and other temporary differences                                   
| | Benefit of prior years' tax losses not previously                           
| | recognized                                                                  
| | Recognition of future benefit of prior years'                               
| | temporary differences, including tax losses                                 
| | and undeducted research and development                                     
| | expenses                                                                    
| | Permanent difference, including amortization and                            
| | impairment of goodwill and non-controlling                                  
| | interest                                                                    
| |                                                                             
| | Provision for (recovery of) income taxes                                    
| |                                                                             

126

---

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

| |                                            
| | -------------------------------------------
|
| |                                            
| | Canada                                     
| | Property, plant and equipment              
| | Non-capital losses (expiring 2005-2014)    
| | Net capital losses (unlimited)             
| | Unrealized impairment losses on investments
| | Research and development expenses          
| | Financing expenses                         
| | Goodwill                                   
| | Other                                      
| |                                            
| |                                            
| |                                            
| | United Kingdom                             
| | Net operating losses (unlimited)           
| | Property, plant and equipment              
| | Other temporary differences                
| |                                            
| |                                            
| |                                            
| | United States                              
| | Net operating losses (expiring 2012-2024)  
| | Property, plant and equipment              
| | Intangible assets                          
| |                                            
| |                                            
| |                                            
| | Australia                                  
| | Net operating losses (unlimited)           
| | Other temporary differences                
| |                                            
| |                                            
| |                                            
| |                                            
| | Valuation allowance                        
| |                                            
| | Net future income tax asset                
| |                                            
| | Presented as:                              
| | Current asset                              
| | Long-term asset                            
| |                                            
| |                                            
| |                                            

127

---

| | d) |  | As at December 31, 2004, the Company has
non-capital loss carryforwards totalling
approximately $20,197,000 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:
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |     
| | ----
|
| |     
| | 2005
| | 2006
| | 2007
| | 2008
| | 2009
| | 2010
| | 2014
| |     

| | e) |  | As at December 31, 2004, the Companys U.S.
 subsidiary has net operating
               loss carryforwards for Federal income tax purposes totalling approximately
               $4,099,000 which may be used to reduce Federal taxable income in future years.
               These losses may be claimed no later than fiscal years ending December 31:
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |     
| | ----
|
| |     
| | 2012
| | 2018
| | 2019
| | 2020
| | 2021
| | 2022
| | 2023
| | 2024
| |     

|22 |  | Product development and technical support
expenses
|-- |  | --------------------------------------------------

| | The
following details the net product development and technical support expenses included in
the consolidated statements of operations:
| | ---------------------------------------------------------------------------------------------------------------------------------------

| |                                                   
| | --------------------------------------------------
|
| |                                                   
| | Product development and technical support expenses
| | Research and development expenses                 
| |                                                   
| |                                                   
| | Less: research and development tax credits        
| |                                                   
| |                                                   
| |                                                   

128

---

|23 |  | Segment information
|-- |  | -------------------

| | In
previous years, management evaluated the performance of the business based on two
operating segments; in addition to being focused on providing information retrieval on the
Internet through its metasearch engine and being a provider of online marketing solutions
to advertisers through its subsidiary Mamma.com Enterprises Inc., the Company also acted
as an incubator for new technologies, and thus held minority investments in various small
technological companies. These segments were defined as investment management and media
solutions. In the last quarter of 2003, the Company decided to concentrate exclusively on
its profitable and growing metasearch engine and online marketing business and management
proceeded to certain organizational changes in order to reflect the realignment of the
Companys activities. Therefore, commencing in January 2004, management evaluates the
performance of the business such that the Company has only one reporting segment.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Geographic
segment
| | ------------------

| |              
| | -------------
|
| |              
| | Revenues:    
| | Canada       
| | United States
| | Europe       
| | Other        
| |              
| |              
| |              

| | 2004$                           | 2003$ | 2002$    
| | ------------------------------- | ----- | ---------
| |                                
| | Long-lived assets and goodwill: |      
| | Canada                          |       | 1,904,712
| | United States                   |       | 1,882,857
| |                                
| |                                 |       | 3,787,569
| |                                

|24 |  | Major Customers
|-- |  | ---------------

| | Two
customers, each account for more than 10% of the Companys sales. Sales for each of
them represented approximately 29% (2003  33%; 2002  16%) and 11% (2003 
8%; 2002  8%), respectively, of the Companys sales. The outstanding accounts
receivable from these customers as at December 31, 2004 amount to approximately 13% (2003
 7%) and 5% (2003  47%), respectively, of the total accounts receivable.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

129

---

|25 |  | Contingencies and
commitments
|-- |  | -----------------------------

| | a) | Contingencies
| | -- | -------------

| | In
July 2000, Intasys, the Company and its wholly owned Delaware subsidiary, Intasys
Management Systems, Inc., completed a series of transactions with Lamya Management Limited
and related parties pursuant to which, inter alia, the Company acquired rights in certain
software, trademarks and other intellectual property rights. Pursuant to this, Intasys
Management Systems, Inc. hired Sami Shamma as its President and CEO. In October 2000, Mr.
Shamma was terminated for cause and in January 2001, the Company and Intasys Management
Systems, Inc. (the Claimants) initiated arbitration proceedings against Mr.
Shamma and certain other persons and entities related to him (the
Respondents). The Claimants seek damages in excess of $1,472,553 arising out
of Mr. Shammas alleged conduct, alleged breach of various duties and related
matters, and such other relief as the Arbitrator deems appropriate. In addition and
further to Mr. Shammas termination, the Claimants were entitled to and did purchase
the shares previously held by Mr. Shamma in Intasys Management Systems, Inc. As a result
of his termination for cause and pursuant to the agreements entered into with Mr. Shamma,
these shares were purchased at book value, a nominal amount, and the Company is now the
sole shareholder of Intasys Management Systems, Inc.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Respondents have filed a statement of defence denying the Claimants allegations and
counterclaiming for damages in excess of $22,880,000, including punitive damages, and such
other relief as the Arbitrator deems proper. The Respondents also claim that the purchase
of the above-mentioned shares should be at their fair market value.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Arbitration
was held the week of October 21, 2002 and was scheduled to resume and conclude the week of
April 1, 2003. Management believed its positions were meritorious and intended to continue
to prosecute its claim and defend the Respondents counterclaim vigorously.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
January 20, 2004, a memorandum of settlement was signed by both parties and final payment
of $225,000 was made. This amount had been fully provided for in the 2002 consolidated
financial statements in other accounts payable.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
May 6, 1996, a claim in an unspecified amount was filed in Florida in connection with the
Companys previously discontinued operations of disinfectant products. In accordance
with Florida State law, a mediation hearing took place on December 9, 2002 and was
inconclusive. The Companys motion for a Summary Judgment was heard on March 18, 2003
and was denied. The Company re-filed its motion. The case was scheduled for a jury trial
in May 2003. On March 26, 2003, the Company received a letter from the claimant
offering to settle all claims related to this matter in exchange for a payment of
$350,000. Management decided to accept this offer. Accordingly, an amount of $350,000 had
been provided for in the 2002 consolidated financial statements in other accounts payable.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
March 18, 2004, the United States Securities and Exchange Commission (SEC)
notified the Company it was conducting a non-public informal inquiry entitled In the
Matter of Trading in the Securities of Mamma.com Inc..
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company believes that as part of its investigation, the SEC may consider matters related
to trading in the Companys securities and whether an individual and persons acting
jointly or in concert with him may have had a significant influence on the Company in the
past as a result of undisclosed shareholdings. The Company also believes that the
Commission staff may consider matters relating to the Companys financial reporting
and internal controls. The scope, focus and subject matter of the SEC investigation may
change from time to time.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

130

---

| | b) | Commitments
| | -- | -----------

| | The
Company is committed under operating lease agreements. Future minimum payments under these
leases as of December 31, 2004 are as follows:
| | ---------------------------------------------------------------------------------------------------------------------------------------------

| |                          
| | -------------------------
|
| |                          
| | Years ending December 31,
| |                          
| |                          
| |                          
| |                          
| | Thereafter               
| |                          

| | c) | Other
commitments
| | -- | -----------------

| | The
Company maintains director and officer insurance, which may cover certain liabilities
arising from its obligation to indemnify its directors, and officers and former directors,
officers and employees of acquired companies, in certain circumstances. It is not possible
to determine the maximum potential amount under these indemnification agreements due to
the limited history of prior indemnification claims and the unique facts and circumstances
involved in each particular agreement. Such indemnification agreements may not be subject
to maximum loss clauses. Historically, the Company has not incurred material costs as a
result of obligations under these agreements and it has not accrued any liabilities
related to such indemnification obligations in its financial statements.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

131

---

|26 |  | Financial instruments
|-- |  | ---------------------

| | Currency
risk
| | -------------

| | The
Company operates internationally and is exposed to market risks principally from changes
in foreign currency rates. The Company does not hold any financial instruments that
mitigate this risk.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Credit
risk
| | -----------

| | Financial
instruments which potentially subject the Company to credit risk consist principally of
cash, short-term investments, temporary investments and accounts receivable. The
Companys cash, short-term investments and temporary investments are maintained at
major financial institutions; therefore, the Company considers the risk of non-performance
on these instruments to be remote.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company is exposed to credit risk on accounts receivable from its customers. The Company
performs ongoing credit evaluations of its customers financial condition and
generally requires no collateral from its customers. As at December 31, 2004,
approximately 30% of accounts receivable are due from four customers, as compared to 57%
in the previous year.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Fair
value of financial instruments
| | -----------------------------------

| | The
carrying amounts reflected in the consolidated balance sheets for cash and cash
equivalents, temporary investments, accounts receivable and accounts payable and accrued
liabilities approximate their respective fair values due to the short maturities of those
instruments. The fair value of the Companys investments is presented in note 9.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Interest
rate risk
| | ------------------

| | As
at December 31, 2004, the Companys exposure to interest rate risk is summarized as
follows:
| | -----------------------------------------------------------------------------------------------

| | Cash                                                         | Non-interest
bearing to 4.75%
| | ------------------------------------------------------------ | -----------------------------
| | Short-term investments included in cash and cash equivalents | 2.31%                        
| | Temporary investments                                        | From 2.25% to 5.20%          
| | Accounts receivable                                          | Non-interest bearing         
| | Accounts payable and accrued liabilities                     | Non-interest bearing         

132

---

|27 |  | Related party
transactions
|-- |  | --------------------------

| | Details
of related party transactions not otherwise disclosed in the consolidated financial
statements are as follows:
| | ----------------------------------------------------------------------------------------------------------------------

| |                                         
| | ----------------------------------------
|
| |                                         
| | Companies owned by current and/or former
| | directors                               
| | Company subject to significant influence
| |                                         

| | A
director and a former director entered into consulting agreements pursuant to which they
provided services to the Company as an executive chairman and as a financial advisor
respectively. Interest income was recorded in relation with the Companys investment
in LTRIM. These transactions are in the normal course of operations and are measured at
the exchange amount which is the amount of the consideration established and agreed to by
the related parties.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|28 |  | United States generally accepted accounting
 principles
|-- |  | -------------------------------------------------------

| | As
a registrant with the Securities and Exchange Commission in the United States, the Company
is required to reconcile its financial results for significant measurement differences
between Canadian GAAP and U.S. GAAP as they specifically relate to the Company.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

133

---

| | The
following summary sets out the material adjustments to the Companys reported net
earnings (loss) and net earnings (loss) per share which would be made to conform with U.S.
GAAP:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                                  
| | -------------------------------------------------
|
| |                                                  
| | Earnings (loss) from continuing operations in    
| | accordance with Canadian GAAP                    
| | Stock-based compensation costs (a)               
| | Realized portion of prior year unrealized loss on
| | marketable securities (b)                        
| |                                                  
| | Earnings (loss) from continuing operations in    
| | accordance with U.S. GAAP                        
| | Results of discontinued operations               
| |                                                  
| | Net earnings (loss) in accordance with U.S. GAAP 
| |                                                  
| | Basic and diluted earnings (loss) per share from 
| | continuing operations                            
| | Basic and diluted earnings (loss) per share from 
| | discontinued operations                          
| |                                                  
| | Basic and diluted net earnings (loss) per share  
| |                                                  

| | 2004$                                            | 2003$ | 2002$    
| | ------------------------------------------------ | ----- | ---------
| |                                                 
| | Other comprehensive income (loss)                |      
| | Realized portion of prior year unrealized loss   |      
| | on marketable securities (b)                     |       | --       
| | Foreign currency translation adjustment (c)      |       | (80,680  
| |                                                 
| |                                                  |       | (80,680  
| |                                                 
| | Net earnings (loss) in accordance with U.S. GAAP |       | 1,104,407
| |                                                 
| | Comprehensive income (loss)                      |       | 1,023,727
| |                                                 

134

---

| | The
effects of these adjustments on the consolidated balance sheets of the Company are as
follows:
| | --------------------------------------------------------------------------------------------------

| |                                                                   
| | ------------------------------------------------------------------
|
| |                                                                   
| | Capital stock                                                     
| | Capital stock in accordance with Canadian GAAP                    
| | Reduction of stated capital (d)                                   
| |                                                                   
| | Capital stock in accordance with U.S. GAAP                        
| |                                                                   
| | Additional paid-in capital                                        
| | Additional paid-in capital in accordance with Canadian GAAP       
| | Stock-based compensation costs  (a)                               
| | Cumulative effect of prior years                                  
| |                                                                   
| | Additional paid-in capital in accordance with U.S. GAAP           
| |                                                                   
| | Deferred stock-based compensation costs in accordance with        
| | Canadian and U.S. GAAP                                            
| |                                                                   
| | Accumulated other comprehensive gain (loss)(c)                    
| | Cumulative translation adjustment in accordance with Canadian GAAP
| |                                                                   
| | Accumulated deficit                                               
| | In accordance with Canadian GAAP                                  
| | Reduction of stated capital to deficit (d)                        
| | Stock-based compensation costs (a)                                
| | Cumulative effect of prior years                                  
| |                                                                   
| | Accumulated deficit in accordance with U.S. GAAP                  
| |                                                                   
| | Total shareholders' equity in accordance with U.S. GAAP           
| |                                                                   

135

---

| | Consolidated
statement of cash flows
| | ------------------------------------

| | The
consolidated statement of cash flows was prepared under Canadian GAAP. There are no
measurement differences between Canadian GAAP and U.S. GAAP as they specifically apply to
the Company.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) | Stock-based
compensation costs
| | -- | ------------------------------

| | Grant
of options
| | ----------------

| | As
described in note 2, in 2003, the Company prospectively adopted the fair value method of
accounting for stock options granted to employees. As a result of this change, there are
no differences between the Companys net earnings (loss) for 2004 and 2003 under
U.S. GAAP as compared to Canadian GAAP.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | However,
for all fiscal years prior to 2003, under U.S. GAAP, the Company had elected to measure
stock-based compensation costs using the intrinsic value method (APB 25). Under this
method, compensation cost is measured as the difference between the fair value of the
stock at the date of the grant over the exercise price. Compensation cost is amortized to
expense over the appropriate vesting period. Under Canadian GAAP, no such compensation
cost is recognized. Any such adjustment related to the subsidiary of the Company also
creates an adjustment in non-controlling interest, and share of losses of companies
subject to significant influence. In addition, any write-down of equity-accounted
investments would result in a lower write-down under U.S. GAAP as compared to Canadian
GAAP.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | Temporary investments
| | -- | ---------------------

| | Under
U.S. GAAP, temporary investments would be classified as available-for-sale
securities. Consequently, these securities would be carried at fair value, with any
unrealized holding gains or losses at each balance sheet date being reflected in
other comprehensive income (loss) on a net of tax basis. Under Canadian GAAP, marketable
securities are carried at the lower of cost and market value.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) | Comprehensive income (loss)
| | -- | ---------------------------

| | U.S.  GAAP requires disclosures of comprehensive income (loss) which comprises any
          charges or credits to shareholders equity not related to investments or
          distributions to shareholders and not otherwise classified in the consolidated
          statements of operations for the year. Under Canadian GAAP, there is no
          requirement to report comprehensive income (loss).
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | d) | Reduction of stated capital
| | -- | ---------------------------

| | Under
U.S. GAAP, the reduction of stated capital in the amount of $16,769,570 undertaken by the
Company on June 28, 1995 would not be permitted.
| | ------------------------------------------------------------------------------------------------------------------------------------------------

136

---

| | e) | Non-refundable tax credits
| | -- | --------------------------

| | Under
U.S. GAAP, non-refundable tax credits must be presented as a reduction of the provision
for income taxes. Under Canadian GAAP, these tax credits are presented as a reduction of
the related research and development expenses. Under U.S. GAAP, there would be no change
in earnings (loss) from continuing operations and net earnings (loss) for the year;
however, earnings (loss) from continuing operations before income taxes and recovery of
income taxes under U.S. GAAP would be as follows:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                
| | -------------------------------
| |                                
| |                                
| | Earnings (loss) from continuing
| | operations before income taxes 
| | Recovery of income taxes       
| | Current                        
| | Future                         
| |                                

|29 |  | Subsequent events
|-- |  | -----------------

| | a) | Cancellation
of stock options
| | -- | -----------------------------

| | On
November 2, 2004, the Company granted to Officers and Members of the Board of the Company,
295,000 stock options at an exercise price of $7.08. The fair value of the options granted
was estimated as of the date of grant using the Black-Scholes option pricing model with
the following assumptions: expected option life 4 years, volatility 88%, risk-free
interest rate 3.70% and dividend yield nil. For the year ended December 31, 2004, general
and administration expenses include $138,395 of stock-based compensation costs relating to
these stock options.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
February 2, 2005, the Officers and Members of the Board of Directors of the Company to
whom the above-mentioned stock options had been granted, waived and renounced any and all
rights that each had or may have had on the options. Consequently, the options were
cancelled as of that date. The stock-based compensations costs recorded as of December 31,
2004 pertaining to these options will be reversed in the first quarter of 2005.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | Informal
SEC inquiry to formal investigation
| | -- | --------------------------------------------

| | On
March 18, 2004, the United States Securities and Exchange Commission (SEC)
notified the Company that the SEC had begun an informal inquiry relating to trading
activity in the Companys securities. During March of 2004 trading in the
Companys common stock had been intense and the market price of the common stock had
risen sharply.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
SEC has since issued a formal order of investigation in this matter. As a part of its
investigation, the Company believes the SEC may consider matters related to trading in the
Companys securities and whether an individual and persons acting jointly or in
concert with him may have had a significant influence on the Company in the past as a
result of undisclosed shareholdings. (See Special Investigation of Independent
Committeebelow.) The Company also believes that the Commission staff may consider
matters relating to the Companys financial reporting and internal controls. The
scope, focus and subject matter of the SEC investigation may change from time to time and
the Company may be unaware of matters under consideration by the SEC. The Company intends
to continue cooperating with the SEC in its investigation.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

137

---

| | c) | Employee
stock option plan
| | -- | --------------------------

| | On
February 16, 2005, 94,996 options were granted to the Companys officers and
employees vesting over a three and four year period.
| | ------------------------------------------------------------------------------------------------------------------------------------

| | d) | Late filing of 2004 Audited Financial Statements
| | -- | ------------------------------------------------

| | On
February 16, 2005 the Company announced that PricewaterhouseCoopers LLP would be unable to
act as the Companys independent auditor in connection with the audit of its 2004
annual consolidated financial statements. On March 18, 2005 the Company announced that it
had retained RSM Richter LLP as its new auditor. As a result of this change of auditor,
the audit was delayed and the Company advised investors that the filing of its annual
financial statements would likely be delayed. On March 31, 2005, the Company confirmed
that the filing of its financial statements for the year ended December 31, 2004 would be
delayed. On April 14, 2005, the Company announced that it would not file its interim
financial statements for the first quarter of 2005 until it had filed its annual financial
statements for 2004, which would be on or before May 31, 2005.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As
a result of its failure to file the Annual Financial Statements on or before March 31,
2005, the Ontario Securities Commission, consistent with Ontario Securities laws, has
imposed a cease trade order affecting directors, officers and insiders of the Company (a
management cease trade order). The Company had, prior to March 31, 2005, advised directors
and officers, in accordance with the Companys insider trading policy, that they were
subject to a blackout period with respect to trading in securities of the Company until
such time as all regulatory filings have been made.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | e) | Purported Securities Class Action Lawsuits
| | -- | ------------------------------------------

| | On
February 22, 2005, the first of several purported securities class action lawsuits was
filed in the United States District Court, Southern District of New York against the
Company, and certain of the Companys current officers and directors. The plaintiffs
allege, among other things, violations of the Securities Exchange Act of 1934 for
purportedly failing to disclose and misrepresenting certain allegedly material facts
relative the market for and trading in the Companys stock, and seek unspecified
damages. All of these lawsuits may be consolidated for pretrial. The purported class
actions appear to be based on unsubstantiated rumors and newspaper reports. The Company
denies the allegations against it, believes that the purported claims are without merit,
and intends to defend itself vigorously.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

138

---

| | f) | Special Investigation of Independent Committee
| | -- | ----------------------------------------------

| | Following
press reports in January 2005 and in response to recommendations made by the
Companys former independent auditor, the Companys Board of Directors initiated
an investigation under the supervision of a Special Independent Committee consisting of
independent directors of the Audit Committee with independent legal counsel to investigate
the allegations in the press reports. Those press reports claimed that Irving Kott and
persons acting jointly or in concert with him may have had a controlling influence on the
Company in the past as a result of undisclosed shareholdings. The Special Committee and
its independent counsel have reviewed the relevant information available at the time of
the investigation relating to the period from January 1, 1999 to December 31, 2004. While
the Special Committee did note some evidence of contacts with and involvement by Mr. Kott
and persons with whom he may have had an association, based on its review, the Special
Committee has not found evidence establishing that Mr. Kott had a controlling influence on
the Corporation during such period.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | g) | Copernic
Technologies Inc.
| | -- | --------------------------

| | On
November 25, 2004, the Company announced the execution of a letter of intent to acquire
Copernic Technologies Inc. (Copernic). On April 14, 2005, Copernic advised the
Company that it had decided not to pursue the sale transaction. The Company, which had
expected to sign definitive agreements and close before May 31, 2005, may be entitled to
break fees under the letter of intent of up to $1.5 million and other relief may be
available.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | h) | Normal
Course Issuer Bid
| | -- | ------------------------

| | The
Company had not purchased any of its outstanding shares as of May 13, 2005.
| | -------------------------------------------------------------------------------

139

---

|Directors                                      |  | Executive Officers                                   | 
|---------------------------------------------- |  | ---------------------------------------------------- | 
|(as at May 27, 2005)                           | 
|                                               | 
|David Goldman                                  |  | David Goldman                                        | 
|Executive Chairman of the Board                |  | Executive Chairman of the Board                      | 
|Mamma.com Inc.                                 | 
|Montreal, Canada                               |  | Guy Fauré                                            | 
|                                               |  | President and Chief Executive Officer                | 
|Guy Fauré                                      |  | Mamma.com Inc.                                       | 
|President & CEO                                | 
|Mamma.com Inc.                                 |  | Daniel Bertrand                                      | 
|Montreal, Canada                               |  | Executive Vice-President and Chief Financial Officer | 
|                                               | 
|Claude Forget(1)(2)                            |  | Patrick Hopf                                         | 
|Business Consultant                            |  | Vice-President-Business Development                  | 
|Montreal, Canada                               | 
|                                               |  | Patrick Gagné                                        | 
|                                               |  | Vice-President-Sales                                 | 
|Irwin Kramer (1)                               | 
|President and Chief Executive Officer          |  | Joel Lamantia                                        | 
|iCongo.com Inc.                                |  | Vice-President-Operations                            | 
|Montreal, Canada                               | 
|                                               | 
|David Schwartz(1)                              | 
|Senior Lecturer                                | 
|Bar Ilan University Faculty of Social Sciences | 
|Ramat Gan, Israel                              | 

|(1) | Member, Audit and Finance Committee
|--- | -----------------------------------

|(2) | Member, Human Resources, Nominating and
Governance Committee
|--- | ------------------------------------------------------------

140

---

Shareholder Information

|Transfer Agent                    | Annual
Meeting                                      
|--------------------------------- | ----------------------------------------------------
|Equity Transfer Services Inc.     | The annual meeting
of shareholders will be held at  
|120 Adelaide Street West          | 11:00 a.m. EDT on June 28,
2005 at the              
|Suite 420                         | Inter-Continental Hotel,
Banquet Hall Saint-Jacques,
|Toronto, Ontario  M5H 4C3         | 360 St. Antoine Street
West, 3rd Floor, Montreal,   
|Canada                            | Quebec Canada.                                      
|Telephone:  (416) 361-0152        |                                                     
|Fax:  (416) 361-0470              | Public
Marketplaces                                 
|                                  | Small Cap Market® of the
 Nasdaq Stock Market       
|Corporate Counsel  United States | Third Market Segment of the
Frankfurt and           
|Blair & Roach LLP                 | Berlin Stock Exchanges                              
|2645 Sheridan Drive               |                                                     
|Tonawanda, New York 14150         | Trading Symbols                                     
|USA                               | Nasdaq: MAMA                                        
|Telephone:  (716) 834-9181        | Frankfurt and Berlin Stock
Exchanges: MAMA.F        
|Fax:  (716) 834-9197              |                                                     
|                                  | 2004 Stock Listing
and Prices                       
|Corporate Counsel  Canada        | High         Low                                    
|Goodmans LLP                      | 4th Q          8.18
         5.78                   
|250 Yonge Street                  | 3rd Q        12.15
         4.64                    
|Suite 2400                        | 2nd Q       17.49
          9.81                    
|Toronto, Ontario  M5B 2M6         | 1st Q        15.80
          3.11                   
|Canada                            |                                                     
|Telephone:  (416) 979-2211        | Mamma.com Inc.                                      
|Fax:  (416) 979-1234              | 388 St. Jacques
Street West                         
|                                  | 9th Floor                                           
|Independent Auditors              | Montreal, Quebec H2Y 1S1                            
|RSM Richter LLP                   | Canada                                              
|2 Place Alexis Nihon              | Telephone: (514) 844-2700                           
|Suite 1820                        | Fax: (514) 874-0886                                 
|Montreal, Quebec  H3Z 3C2        
|Canada                           
|Telephone:  (514) 934-3400       
|Fax:  (514) 934-3408             

141

---

# ITEM 18.    FINANCIAL
STATEMENTS

Not applicable.    See Item 17 above.

# ITEM 19.    EXHIBITS

The following exhibits are filed in
support of the statements contained herein and are in addition to those exhibits
previously filed with the Commission:

| | 1.1* |  | Articles of Incorporation of Mamma.com Inc, as
amended.                                                                                                                                                                                                                                   
| | ---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 1.2* |  | By laws of Mamma.com Inc., as amended.                                                                                                                                                                                                                                                    
|
| | 4.1* |  | Placement Agreement entered into as of October 30, 2002,
between Intasys Corporation and Lines Overseas Management Limited relating to the arrangement of the financing referred to in
Exhibit 4.2 below.                                                                                 
|
| | 4.2* |  | Form of subscription agreements entered into as of
October 30, 2002 between private investors and Intasys Corporation, including the form of warrants issued pursuant
thereto.                                                                                                            
|
| | 4.3* |  | Asset Purchase Agreement entered into at the city of
Montreal, province of Quebec on the 27 day of November, 2002 between ZAQ Interactive Solutions Inc., ZAQ Inc. and
Mamma.com Inc.                                                                                                     
|
| | 4.4* |  | Consulting Agreement between Dave Goldman Advisors Ltd. and
Intasys Corporation dated October 30, 2001 and renewed on May 1, 2002.                                                                                                                                                        
|
| | 4.5* |  | Consulting Agreement between Maxim Group LLC and Intasys
Corporation dated January 29, 2003, the Amended Agreement dated May 5, 2003 and the termination letter regarding the investment
banking agreement.                                                                               
|
| | 4.6* |  | Consulting Agreement between Sam Luft and Intasys
Corporation dated April 1, 2002 and expired on March 1, 2003.                                                                                                                                                                           
|
| | 4.7* |  | Asset Purchase Agreement dated January 27, 2004 (without
Exhibits and Schedules), the Amendment to Asset Purchase Agreement dated February 12, 2004, the Escrow Agreement dated
February 12, 2004 and the Indemnity Agreement dated February 12, 2004 between Mamma.com Inc. and ACE*COMM.
|
| | 4.8* |  | Merriman Curhan Ford & Co. Advisory Agreement and Engagement
Letter dated March 16, 2004.                                                                                                                                                                                                 
|
| | 4.9* |  | Securities Purchase Agreement among the Company, Chris
Tsistinas, Erik Kretschmar, DigitalArrow LLC and High Performance Broadcasting, Inc. dated June 10, 2004.                                                                                                                          

---

* Filed as an Exhibit to this
Annual Report on Form 20-F.

142

---

| | 4.10* |  | Securities Purchase Agreement among the Company
and the several purchasers thereunder dated June 30, 2004.                                                            
| | ----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 4.11* |  | Revised Merriman Curhan Ford & Co. Advisory  Agreement and
Engagement Letters dated July 16 and September 8, 2004.                                                    
|
| | 4.12* |  | Amendment to Consulting  Agreement by and between
Mamma.com  Inc. and Dave Goldman  Advisors Ltd. and David Goldman dated May 23, 2005.                               
|
| | 8.1*  |  | List of Subsidiaries of Mamma.com Inc.                                                                                                                                
|
| | 11*   |  | Code of Ethics                                                                                                                                                        
|
| | 12.1* |  | Certification of Guy Fauré under Rule 13a-14(a) or
Rule 15d-14(a) of the Securities Exchange Act of 1934.                                                             
|
| | 12.2* |  | Certification  of Daniel  Bertrand under Rule 13a-14(a) or
Rule 15d-14(a) of the Securities  Exchange Act of 1934.                                                    
|
| | 13.1* |  | Certifications  under Rule 13a-14(a) or Rule  15d-14(a) of
the  Securities  Exchange Act of 1934 and Section 1350 of Chapter 18 of Title 18 of the United States Code.
|
| | 15.1* |  | Consent of PricewaterhouseCoopers LLP.                                                                                                                                
|
| | 15.2* |  | Consent of RSM Richter LLP.                                                                                                                                           

---

* Filed as an Exhibit to this Annual Report on Form 20-F.

143

---

# SIGNATURES

Pursuant to the requirements of
Section 12 of the Securities Exchange Act of 1934, the registrant certifies that it meets
all requirements for filing an Annual Report on Form 20-F and has duly caused this Annual
Report to be signed on its behalf.

Dated:  May 27, 2005

| | MAMMA.COM INC.
| | --------------
|
| | By:           
| |               
| |               
|
| |               
| |               
| |               
|
| |               
| |               
| |               

144