---

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549



|FORM 20-F/A
|-----------

|[    ] |  | 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 THEFISCAL YEAR ENDED DECEMBER 31, 2005
|--- |  | -------------------------------------------------------------------------------------------------------------------------------

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 Floor
Montreal, 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 March 15,
2006:

# 14,340,864 Common
Shares

Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the Act

# Yes  ___    No X

If this report is an annual or
transition report, indicate by check mark if the registrant is not required to file
reports pursuantto Section 13 or 15(d) of the Securities Exchange Act of 1934.

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 whether the
registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.
See definition of accelerate filer in Rule 12b of the Exchange Act. (Check
one):

Large Accelerated Filer __    Accelerated
Filer __    Non-Accelerated Filer  X

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

# Item 17 X    Item 18 __

If this is an annual report,
indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act).

# Yes  __    No  X

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.

2

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# EXPLANATORY
NOTE

This Form 20-F/A is being filed by
Mamma.com Inc. (the Company) as Amendment No. 1 to its Annual Report on Form
20-F filed on March 31, 2006 (the Form 20-F). The purpose of this Amendment
No. 1 is (i) to amend and restate the information concerning bonuses in the Summary
Compensation Table and narrative description
in Item 6 to report bonuses earned, as opposed to bonuses paid, in the
applicable fiscal years; (ii) to amend the information under the subheading
Statement of Corporate Governance Practices in Item 6 to include certain
additional disclosures regarding corporate governance practices relative to Ontario that
will be contained in the Companys Management Information Circular pertaining to its
Annual and Special Meeting of Shareholders for 2006; (iii) to amend information under
the subheading Compensation of the President and Chief Executive Officer in
Item 6 to clarify that the bonus paid to the Companys President and Chief Executive
Officer in 2005, which was U.S. $157,484 at applicable 2004 exchange rates, was based on
the Companys 2004 results rather than its 2005 activities, and correctly indicate that the maximum
bonus available to the President and Chief Executive Officer is 96% rather than 95% of salary; (iv) to amend the language in the Report of the
Executive Compensation Committee in Item 6 to describe the issuance of options to Joel Lamantia and
Patrick Hopf; and (v) to correct a typographical error by the Company's Edgar filing agent made while
converting the Form 20-F to Edgar format that omitted to set forth in the Company's Consolidated
 Statements of Operations in Item 17 of the Form 20-F the Company's basic and diluted net earnings (loss) per share from
continuing operations of (0.27) in 2005. This Form 20-F/A
does not change the other disclosures set forth in the Form 20-F as originally filed and,
except as expressly indicated herein, does not reflect events occurring after, or provide
information subsequent to, the original filing date of the Form 20-F. Please read our Exchange
Act Reports filed with or furnished to the Securities and
Exchange Commission since the date of the Form 20-F, which update and
supersede information contained in the Form 20-F and this Amendment No. 1.

# PART 1

# 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.

3

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|Name               | Functions and areas of
experience within the
Company | Present Principal Occupation(s)         | Date first elected
Director or appointed
Senior Officer of the
Company
|------------------ | ---------------------------------------------------- | --------------------------------------- | ----------------------------------------------------------------------
|                  
|Guy Fauré          | Director and Officer                                 | President & CEO, Mamma.com Inc.         | May 23, 2002                                                          
|                  
|Claude E. Forget   | Director                                             | Consultant                              | October 11, 1999                                                      
|                   |                                                      | Formerly CEO, Intasys Billing          
|                   |                                                      | Technologies                           
|                  
|David Goldman      | Director and Officer                                 | Executive Chairman, Mamma.com Inc.      | May 24, 2001                                                          
|                  
|Irwin Kramer       | Director                                             | President, iCongo, Inc.                 | May 24, 2001                                                          
|                  
|Dr. David Schwartz | Director                                             | Associate Professor, Bar Ilan           | May 23, 2002                                                          
|                   |                                                      | University                             
|                   |                                                      | School of Business Administration      
|                  
|Daniel Bertrand    | Officer                                              | Executive Vice-President and Chief      | July 8, 1999                                                          
|                   |                                                      | Financial Officer                      
|                   |                                                      | Mamma.com Inc.                         
|                  
|Martin Bouchard    | Officer                                              | Executive Vice-President,               | December 22, 2005                                                     
|                   |                                                      | Chief Strategist and Technology Officer
|                  
|Patrick Hopf       | Officer                                              | Vice-President-Business Development     | January 12, 2004                                                      
|                   |                                                      | Mamma.com Inc.                         
|                  
|Joel Lamantia      | Officer                                              | Vice-President-Operations               | January 12, 2004                                                      
|                   |                                                      | Mamma.com Inc.                         
|                  
|Eric Bouchard      | Officer                                              | Vice-President-Products                 | December 22, 2005                                                     
|                  

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

With the exception of Martin Bouchard
and Eric Bouchard who are brothers, 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.

4

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STATEMENT OF CORPORATE
GOVERNANCE PRACTICES

The directors of the Company 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 Company:

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 set forth the responsibilities for the Board and these
two committees. This document was revised and approved by the Board of Directors on March
29, 2006. It was prepared in response to certain corporate governance concerns. This
document includes the Companys insider trading policy and code of ethics. In
accordance with the policies and guidelines outlined in this document, the Board of
Directors constantly strives to promote a culture of ethical conduct in an effort to meet
the highest industry standards. All decisions are carefully considered from this point of
view and the Board does not act until all factors have been adequately considered. This
approach is demanded of management and, to a relevant degree, all employees of the
Company.

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

More than fifty percent of the
directors of the Company 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 Company, as required by the standards of the NASDAQ Stock
Market and the Ontario Securities Commission. The directors consider the following
nominees to be unrelated to the Company: Claude E. Forget, Irwin Kramer, Dr. David
Schwartz and W. Brian Edwards. Unrelated directors meet regularly through in camera
sessions conducted after or during each meeting of the Board. The Chairman of the Board of
Directors is David Goldman, who is not an unrelated director. The Board feels strongly
that Mr. Goldmans abilities and role in the Company make him best suited to this
position. The Board will continue to consider whether or not the position of Chairman
should be occupied by an unrelated director and, if circumstances change, will take action
to adjust the composition of the Board accordingly.

In an effort to ensure that the Board
of Directors is performing adequately, the Nominating, Human Resource and Governance
Committee regularly assesses the performance of the Board, committees of the Board and
each director and, if necessary, makes appropriate recommendations. The Board is kept well
apprised of all activities at the Company and, as resources allow, the Company will
provide each director with opportunities to advance their skills as relevant to their role
on the Board. New directors are carefully integrated and briefed on the ongoing business
of the Company and any relevant history.

5

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

Composition of the Audit
and Finance Committee

As at the date hereof, the members of
the Audit and Finance Committee are Irwin Kramer, David Schwartz and Claude Forget. On
March 29, 2006, the Board approved a new Charter. The Charter provides that the Audit and
Finance Committee shall assist the Board in fulfilling its responsibilities relating to
corporate accounting and reporting practices of the Company and in the quality and
integrity of financial reports of the Company. The Audit and Finance Committee meets with
the financial officers of the Company, 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 Companys independent auditors. In 2005, the Audit and
Finance Committee met 8 times and the Companys independent auditors were present at
6 of them.

Composition of the
Nominating, Human Resource and Governance Committee

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

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

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

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

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

| | (v) |  | the
recommendation of new candidates as potential directors of the Company 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
 corporategovernance guidelines.
| | ---- |  | -----------------------------------------------------------------------------------------------------------

From January 1, 2005 to August 17,
2005, the members of the Nominating, Human Resource and Governance Committee, wereDavid Goldman, Claude Forget, Irwin Kramer and David Schwartz. David Goldman who is
Executive Chairman of the Company, resigned from this Committee on August 17, 2005. During
2000 up to October 2, 2001, Claude Forget was Chief Executive Officer of Intasys Billing
Technologies, a subsidiary of the Company, whose business was subsequently sold.

As part of its ongoing review of
corporate governance matters, on March 29, 2006 the Companys Board of Directors
approved a Charter constituting a Compensation Committee and a Nominating and Governance
Committee to segregate the nominating and executive compensation functions into separate
Charters as contemplated by the listing standards of the National Association of
Securities Dealers. The Nominating, Human Resources and Governance Committee discharges
the functions under each Charter. Copies of the Compensation Committee Charter and
Nominating and Governance Committee Charter are attached as Exhibits 15.4 and 15.5 to this
Annual Report on Form 20-F Currently the Nominating, Human Resources and Governance
Committee discharges the functions under each Charter.

6

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Report on Executive
Compensation

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

Consistent with the Companys
objectives, and in order to further align shareholder and executive interests, the
Compensation 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 Company is composed of three major components: (i) base salary
and benefits, (ii) short-term incentive compensation, (iii) retention compensation and
(iv) long-term incentive compensation.

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

Salary and benefits policies of the
Company are determined by looking at similar businesses in the Internet sector and are
targeted at the mid range in the industry, taking into account the economic trends, the
Companys competitive position and performance and extraordinary contributions to the
Company.

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

The Company provides cash bonuses
tothose individuals of its senior management and its subsidiaries whose
responsibilities and attainment of personal and Company objectives exceed established
expectations, based on individual contributions, operating results, and financial
performance. The amount of these payments are approved by the Compensation Committee and
are based on specific goals in these areas. Compensation and target bonuses for each
individual are set at the beginning of each year. At the end of the year the Compensation
Committee determines the bonus for each executive based on the attainment of the
performance measures and individual contributions.

For the year ending December 31, 2005,
none of the operating and financial performance objectives were met, but officers were
awarded bonuses for their individual contribution recognizing the extraordinary efforts
they made during the year to respond to and overcome damage to the Companys business
resulting from the SEC investigation and consolidated class action lawsuit.

In the case of Named Executive
Officers, targeted incentive bonuses vary in proportion to base salary, depending
primarily on the level of responsibility of the individual. Generally when operating
results and financial performance objectives are exceeded bonuses are higher; when the
objectives are not met the incentive bonuses are lower or nil depending on the
circumstances and the individuals contribution to the Company.

7

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In making compensation decisions with
respect to each of these components, the Compensation Committee considers external market
data for executives. Towers Perrin was retained by the Chair of the Compensation Committee
in the most recent fiscal year to assist with preparing information and providing advice
on officer and Board of Director compensation arrangements. Materials prepared by Towers
Perrin have been presented by the Chair to the Compensation Committee for review and
decisions. Towers Perrins scope of services in the fiscal year included providing
advice and market data related to Board of Director and officer compensation arrangements,
assisting with the design of special compensation programs, and other general executive
compensation assistance. Towers Perrin does not provide any other services to the Company.

The Compensation Committee uses the
compensation data from Towers Perrin as one of several factors in determining the
appropriate levels of base salary, short-term and long-term incentives that fairly
compensate the Companys executive officers.

In setting the compensation package
for executives, the Compensation Committee balances consideration of base salary with
short-term incentive compensation so that a significant proportion of executive
officers compensation is linked to objectives aligned with the interests of the
Companys shareholders.

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

In view of the current circumstances
confronting the Company including the pending status of the SEC investigation, the
securities class action lawsuit, and defection of several of the Companys Ad network
sales employees to form a competing business, a retention compensation program was
initiated. In April 2005, the Compensation Committee recommended and the Board resolved
that Guy Fauré, Daniel Bertrand, Patrick Hopf 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 Company which provides for the issuance of
options to executive officers and other employees, directors or consultants to purchase
common shares of the Company. The stock option plan of the Company is described below
under the heading Stock Option Plan.

The Compensation Committee determine
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 Company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.

8

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The Compensation Committee may, in 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.

Unless otherwise stipulated by the
terms of a stock option grant, which terms are approved by the Compensation Committee,
options granted pursuant to the stock option plan will lapse thirty (30) days after the
holders ceases to be employed by the Company. In the event of death, any vested option of
a 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 vested
options for one (1) year after the date of termination of employment. If the holder is
terminated for cause, vested options terminate immediately.

In 2005, grants of options to
named Executive Officers were made in favour of Mr. Goldman, Mr. Fauré, Mr.
Bertrand, Mr. Hopf and Mr. Lamantia. During the first quarter of 2005, Messrs Goldman, Fauré, and Bertrand
also voluntarily surrendered their entitlement to options granted on November 2, 2004 and
these options were cancelled.

Compensation of the
President and Chief Executive Officer

Prior to January 12, 2004, the
Chairman and Chief Executive Officer of the Company was David Goldman who is now the
Companys Executive Chairman. On January 12, 2004, Guy Fauré was appointed
President and Chief Executive Officer of the Company. On August 12th, 2004, the Company
amended the employment arrangement of the President and Chief Executive Officer. As a
result, should there be a change of control in the Company, Guy Fauré will be
entitled to a lump sum payment equal to 200% of 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 Compensation Committee.
The President and Chief Executive Officer does not participate in the Committees
decisions relating to his Compensation.

The aggregate compensation of the
President and Chief Executive Officer consists of three components: base salary, annual
cash bonus and equity incentives. The Committee strives to balance the compensation among
these three components to stay competitive in the market and align the compensation with
shareholder interests.

In 2005, Mr. Faurés base
salary was $199,520 US and he received a bonus of $157,484 US based upon 2004 results and
related criteria. In 2006 Mr. Fauré was paid a bonus of $49,573 US based upon
individual contribution and extraordinary efforts during 2005 in overcoming the negative
effect on the Companys business resulting from an SEC investigation, class action
lawsuit and the defection of several of the Companys Ad network sales force to a
competing business. In 2005, he also received taxable benefits of $3,980 US. In
establishing Mr. Faurés salary, the Compensation Committee assesses his
overall contribution as well as the publicly disclosed compensation of chief executive
officers of companies in the Internet sector, taking into account the factors described
above under Salary and Benefits.

9

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Conclusion

The Companys executive
compensation policy links executive compensation to corporate results and individual
contribution, as well as stock performance and long-term results. The Compensation
Committee regularly reviews the various executive compensation components to ensure that
they maintain their competitiveness in the industry and continue to focus on the
Companys objectives, values and business strategies.

Depending on specific circumstances,
the Compensation Committee may also recommend employment terms and conditions that deviate
from the above-described policies. The members of the Compensation Committee are:

| | Claude
ForgetIrwin KramerDavid Schwartz
| | ---------------------------------------

Statement of Executive
Compensation

The following summary table, presented
in accordance with applicable securities legislation, sets forth all compensation provided
by the Company and its affiliates for the fiscal years ended December 31, 2003, 2004 and
2005 to:

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

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

| | (iii) |  | each
of the Company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, 2005 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 Company at
the end of December 31, 2005, (collectively, the Named Executive
 Officers).
| | ---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10

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# Summary Compensation Table

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

|                            
|----------------------------
|                            
|                            
|Name and PrincipalOccupation
|                            
|Guy Fauré                   
|President & CEO             
|                            
|                            
|David Goldman(2)            
|Executive Chairman          
|                            
|                            
|Daniel Bertrand             
|Executive Vice-President and
|Chief Financial Officer     
|                            
|Patrick Hopf                
|VP of Business Development  
|                            

|(1) |  | Represents
bonuses earned during the relevant fiscal year. Summary compensation tables in
past management information circulars have reported bonuses actually paid in
the relevant fiscal year. Going forward management has determined that bonuses
will be reported by period earned although actually paid in the next fiscal
year.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | David
Goldman receives compensation indirectly through a consulting agreement between
the Company and Dave Goldman Advisors Ltd. See Management Contracts.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------

Annual compensation is paid in
Canadian dollars and converted at the applicable exchange rates. Exchange rate conversions
were 0.71629 in 2003, 0.77014 in 2004 and 0.82622 in 2005.

11

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|                        
|------------------------
|
|                        
|
|                        
|
|                        
|Guy Fauré               
|President & CEO         
|                        
|                        
|David Goldman           
|Executive Chairman      
|                        
|                        
|Daniel Bertrand         
|Executive Vice-President
|and Chief Financial     
|Officer                 
|                        
|Patrick Hopf(2)         
|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 under the Companys
stock option plan.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

Employment Agreements and
Change of Control Provisions

The Company has entered into
employment arrangements and agreements with the following Named Executive Officers who
remain in the employment of the Company. 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, for the year 2006 Mr. Bertrand is paid an annual salary of
CA$174,000. 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 under the Companys stock option plan.

12

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On August 12, 2004, the Company
amended the employment arrangement of the Executive Vice-President and Chief Financial
Officer. As a result, if there is a change of control of the Company, Mr. Bertrand will
receive a lump sum payment equal to the greater of the past 18 months salary 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, for the year 2006 Mr.
Fauré is entitled to an annual salary of CA$255,000 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 96% for far exceeding expected performance levels. Mr.
Fauré is also entitled to receive stock options under the Companys stock
option plan.

On August 12, 2004, the Company
amended the employment arrangement of the President and Chief Executive Officer. As a
result, if there is a change of control of the Company, 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.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

David Goldman was Chairman and CEO of
the Company until January 12, 2004 when he became the Executive Chairman of the Company.
During the year ended 2003, Mr. Goldman was not paid any salary or benefits by the Company
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 Company.

13

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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$250. These
consulting arrangements may be terminated on sixty (60) days notice by either party.

On August 12, 2004, the Company
amended the employment arrangement of the Executive Chairman. As a result, if there is
change of control of the Company, 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
Mr. Goldman:

| | (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.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

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.

Following the completion of the
Copernic acquisition, Martin Bouchard and Eric Bouchard became officers of the Company.
Martin Bouchard, who is the Companys Executive Vice-President, Chief Strategist and
Technology Officer, is paid for the year 2006 an annual salary of CA$200,000 and is also
entitled to a target bonus of 50% of base salary for meeting targeted financial
performance ranging from a minimum of 25% of base salary at minimal acceptable financial
performance and operating results levels, to a maximum of 75% for far exceeding targeted
performance levels. Similarly, Eric Bouchard, who is the Companys
Vice-President-Products, is paid for the year 2006 an annual salary of CA$170,000 and is
also entitled to a target bonus of 40% of base salary ranging from a minimum of 20% of
base salary for meeting minimum acceptable performance levels to a maximum of 60% for far
exceeding targeted performance levels. Consistent with its executive compensation
practices, the Compensation Committee will also take into account the individual
contributions of Martin Bouchard and Eric Bouchard to the Companys business in
determining the total bonus paid to either of them

14

---

Stock Option Plan

In 1999, the Company adopted a new
stock option plan (the Plan), replacing all previous stock option plans of the
Company, to provide eligible officers, directors, employees and consultants of the Company
and its subsidiaries compensation opportunities that will encourage share ownership and
enhance the Company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 Company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
Company (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 Company 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 Company, and (ii) at no time may any optionee hold more than 5% of the outstanding
common shares of the Company under option.

The current 1 million share maximum
was approved at the 2002 AGM and Special Annual Meeting when there were 4,058,858 shares
issued. As there are now 14,340,800 shares issued, the Companys Compensation
Committee has recommended and the Board has approved for submission to the Companys
stockholders at the 2006 Annual General Meeting an amendment to the Stock Option Plan to
increase the aggregate maximum number of shares reserved for issuance under the Plan to
1,400,000, an amount less than 10% of the Companys issued and outstanding shares of
Common Stock.

The following table discloses
individual grants of options to the Named Executive Officers to purchase or acquire common
shares of the Company pursuant to the Plan for the financial year ended December 31, 2005.

15

---

Option Grants During the
Most Recently Completed Financial Year

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

In February 2005, David Goldman, Guy
Fauré and Daniel Bertrand voluntarily surrendered 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 Company by the Named Executive Officers during the financial year ended December
31, 2005.

16

---

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

|Name            | Securities Acquired on Exercise(#) |     | AggregateValueRealized(U.S. $) |     | Unexercised Options atFY-End (#)Exercisable/Unexercisable |                  | Value of Unexercisedin-the-Money Options at FY-End (U.S. $) Exercisable/Unexercisable
|--------------- | ---------------------------------- | --- | ------------------------------ | --- | --------------------------------------------------------- | ---------------- | -------------------------------------------------------------------------------------
|               
|David Goldman   |                                    | Nil |                                | Nil |                                                           | 27,000 / 92,000  |                                                                                      
|               
|Guy Fauré       |                                    | Nil |                                | Nil |                                                           | 38,667 / 199,333 |                                                                                      
|               
|Daniel Bertrand |                                    | Nil |                                | Nil |                                                           | 18,667 / 97,833  |                                                                                      
|               
|Patrick Hopf    |                                    | Nil |                                | Nil |                                                           | 9,084 / 50,050   |                                                                                      
|               
|Joel Lamantia   |                                    | Nil |                                | Nil |                                                           | 4,750 / 21,950   |                                                                                      
|               

# Option and SAR Repricing

No options were repriced during the
year ended December 31, 2005

17

---

Securities Under Option to
Directors and Named Executive Officers as at December 31, 2005

|Names            | SecuritiesUnderOptionsGranted(#) | Exercise orBase Price(US$/Security) | Market Value of Securities Underlying Options on the Date of Grant (US$/Security) | Expiration Date
|---------------- | -------------------------------- | ----------------------------------- | --------------------------------------------------------------------------------- | ---------------
|                
|Daniel Bertrand  | 10,000                           | 2.57                                | 2.57                                                                              | 4/30/2013      
|                
|Daniel Bertrand  | 5,000                            | 1.99                                | 1.99                                                                              | 1/16/2013      
|                
|Daniel Bertrand  | 12,500                           | 6.28                                | 6.28                                                                              | 2/15/2012      
|                
|Daniel Bertrand  | 75,000                           | 2.28                                | 2.28                                                                              | 11/8/2010      
|                
|Daniel Bertrand  | 14,000                           | 3.58                                | 3.58                                                                              | 11/5/2010      
|                
|Guy Fauré        | 25,000                           | 2.57                                | 2.57                                                                              | 4/30/2013      
|                
|Guy Fauré        | 7,500                            | 1.99                                | 1.99                                                                              | 1/16/2013      
|                
|Guy Fauré        | 26,500                           | 6.28                                | 6.28                                                                              | 2/15/2012      
|                
|Guy Fauré        | 150,000                          | 2.28                                | 2.28                                                                              | 11/8/2010      
|                
|Guy Fauré        | 29,000                           | 3.58                                | 3.58                                                                              | 11/5/2010      
|                
|Claude E. Forget | 25,000                           | 2.28                                | 2.28                                                                              | 11/18/2010     
|                
|David Goldman    | 7,500                            | 2.57                                | 2.57                                                                              | 4/30/2013      
|                
|David Goldman    | 7,500                            | 1.99                                | 1.99                                                                              | 1/16/2013      
|                
|David Goldman    | 75,000                           | 2.28                                | 2.28                                                                              | 11/8/2010      
|                
|David Goldman    | 29,000                           | 3.58                                | 3.58                                                                              | 11/5/2010      
|                
|Irwin Kramer     | 25,000                           | 2.28                                | 2.28                                                                              | 11/8/2010      
|                
|David Schwartz   | 25,000                           | 2.28                                | 2.28                                                                              | 11/8/2010      
|                
|Joel Lamantia    | 2,500                            | 1.99                                | 1.99                                                                              | 1/16/2013      
|                
|Joel Lamantia    | 4,700                            | 6.28                                | 6.28                                                                              | 2/15/2012      
|                
|Joel Lamantia    | 15,000                           | 2.28                                | 2.28                                                                              | 11/8/2010      
|                
|Joel Lamantia    | 4,500                            | 3.58                                | 3.58                                                                              | 11/5/2010      
|                
|Patrick Hopf     | 2,500                            | 1.99                                | 1.99                                                                              | 1/16/2013      
|                
|Patrick Hopf     | 6,800                            | 6.28                                | 6.28                                                                              | 2/15/2012      
|                
|Patrick Hopf     | 40,000                           | 2.28                                | 2.28                                                                              | 11/8/2010      
|                
|Patrick Hopf     | 6,500                            | 3.58                                | 3.58                                                                              | 11/5/2010      
|                
|Patrick Hopf     | 3 ,334                           | 1.53                                | 1.53                                                                              | 2/25/2009      
|                

18

---

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 Officers and 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 February 28, 2006.

|Director/Named Executive Officer | Number of Company Shares Held | % of Total Number of Shares Outstanding
|-------------------------------- | ----------------------------- | ---------------------------------------
|                                

|Guy Fauré, President & CEO, Director          | 3,500   |  | 0.02% | 
|--------------------------------------------- | ------- |  | ----- | 
|Mamma.com Inc.                               
|                                             
|Claude E. Forget, Director                    | 30,000  |  | 0.21% | 
|                                             
|David Goldman, Executive Chairman, Director   | 75,000  |  | 0.52% | 
|Mamma.com Inc.                               
|                                             
|Irwin Kramer, Director                        | 2,000   |  | 0.01% | 
|                                             
|Dr. David Schwartz, Director                  | 7,000   |  | 0.05% | 
|                                             
|Martin Bouchard, Executive Vice-President,    | 669,706 |  | 4.67% | 
|Chief Strategist and Technology Officer      
|                                             
|Daniel Bertrand, Executive Vice-President and | Nil     |  | Nil   | 
|Chief Financial OfficerMamma.com Inc.        
|                                             
|Patrick Hopf, Vice-President-Business         | Nil     |  | Nil   | 
|DevelopmentMamma.com Inc.                    
|                                             
|Eric Bouchard, Vice-President-Products        | 334,853 |  | 2.33% | 
|                                             

19

---

Employees

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

|    
|----
|
|    
|
|    
|2005
|    
|2004
|    
|2003
|    
|2002
|    
|2001
|    

Pension and Retirement
Benefits

The Company does not set aside nor
accrue any amounts to provide pension, retirement or similar benefits. Copernic has a
Structured Group Registered Retirement Savings Plan which manages the employees
contribution to a maximum of 2% of their base salaries. Copernic matches the
employees contribution through a Deferred Profit Sharing Plan.

Compensation of Directors

During the fiscal year ended December
31, 20056, directors were each paid $6,250 quarterly. Effective April 1, 2005 the Chair of
the Board received $12,500/annum and the Chair of the Audit Committee received a payment
of $10,000/annum and the Chair of the Compensation and the Nominating, and Governance
Committees received a payment of $5,000/annum. The directors received a combined fee of
$1,000 for attending board and committee meetings on the same day and members of the
Audit, Compensation and Nominating and Governance committees receive a $1,000 payment if a
committee meeting is held on a day other than the day of a Board meeting and, if a board
or committee meetings is held via teleconference, directors received a payment of $500.

Robert
Raich was a director of the Company until March 11, 2005 and is a partner of Spiegel
Sohmer, a general partnership of attorneys. In 2005, Spiegel Sohmer billed the Company for
the amount of $233,134 for legal services and other expenses.

20

---

Directors and Officers
Insurance

The
Company has purchased liability insurance covering each director and officer of the
Company. The present insurance policy provides coverage for the directors, officers and
the Company for liability up to $10,000,000 and expires on March 28, 2007. 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 Company 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 Company or any of its subsidiaries.

21

---

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 26 to our consolidated financial statements.

| | RSM
Richter S.E.N.C.R.L./LLP
Comptables agréés
Chartered Accountants2, Place
Alexis Nihon
Montréal (Quebec) H3Z 3C2
Téléphone: / Telephone :
(514) 934-3400
Télécopieur / Facsimile : (514) 934-3408
www.rsmrichter.com
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Independent Registered Public Accounting
Firms Reports

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

We have audited the accompanying consolidated balance sheets of Mamma.com Inc. as at December 31, 2005 and 2004 and the related consolidated statements of operations, shareholders
equity and cash flows for the years then ended. 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 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 audits 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 audits provide 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, 2005 and 2004 and the results
of its operations and its cash flows for the years then ended in accordance with Canadian generally accepted accounting principles.

Montreal, CanadaMarch 15, 2006, except for note 27 which is dated March 28, 2006

| | RSM Richter S.E.N.C.R.L. est un cabinet indépendant membre de RSM
International, association de cabinets indépendants d'expertise comptable
et de
services conseils. | RSM Richter LLP is an independent member firm of RSM International, an
affiliation of independent accounting and consulting firms. | 
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------- | 

22

---



23

---

|Mamma.com
 Inc                                      |  |              |  |             
|--------------------------------------------------- |  | ------------ |  | ------------
|Consolidated Balance
 Sheets                        |  |              |  |             
|As at December 31, 2005 and
 2004                   |  |              |  |             
|                                                   
|                                                   
|(Expressed in
 U.S. dollars)                        |  | 2005         |  | 2004        
|                                                    |  | $            |  | $           
|Assets                                              |  |              |  |             
|Current
 assets                                     |  |              |  |             
|Cash and cash
 equivalents                          |  | 4,501,201    |  | 20,609,089  
|Restricted cash (note
 5)                           |  | -            |  | 148,000     
|Temporary investments
 (note 7)                     |  | 4,013,312    |  | 6,874,155   
|Accounts receivable (note
 8)                       |  | 2,623,940    |  | 2,502,535   
|Income taxes
 receivable                            |  | 606,226      |  | 120,590     
|Prepaid
 expenses                                   |  | 295,288      |  | 129,390     
|Future income taxes (note
 20)                      |  | 33,505       |  | -           
|Current assets of
 discontinued operations (note 5) |  | 9,694        |  | 274,770     
|                                                    |  |              |  |             
|                                                    |  | 12,083,166   |  | 30,658,529  
|Future income
 taxes(note 20)                       |  | 13,483       |  | -           
|Income tax
 credit                                  |  | 54,912       |  | -           
|Assets of
 discontinued operations(note 5)          |  | -            |  | 1,882,857   
|Investments(note
 9)                                |  | 720,000      |  | 720,000     
|Property,
 plant and equipment(note 10)             |  | 598,758      |  | 304,624     
|Intangible assets
(note 11)                         |  | 8,601,848    |  | 753,778     
|Goodwill(note
 11)                                  |  | 16,255,031   |  | 846,310     
|                                                    |  |              |  |             
|                                                    |  | 38,327,198   |  | 35,166,098  
|                                                    |  |              |  |             
|Liabilities                                         |  |              |  |             
|Current
 liabilities                                |  |              |  |             
|Accounts payable and
 accrued liabilities (note 12) |  | 2,690,943    |  | 2,244,958   
|Deferred
 revenue                                   |  | 249,953      |  | 233,459     
|Income tax
 payable                                 |  | 8,062        |  | -           
|Liabilities of
 discontinued operations (note 5)    |  | 189,223      |  | 652,109     
|                                                    |  |              |  |             
|                                                    |  | 3,138,181    |  | 3,130,526   
|                                                    |  |              |  |             
|Future income
 taxes(note 20)                       |  | 2,672,036    |  | -           
|                                                    |  |              |  |             
|Contingencies
 and commitments(note 24)             |  |              |  |             
|                                                    |  |              |  |             
|                                                   
|Shareholders
 Equity                               |  |              |  |             
|Capital stock(note
 13)                             |  |              |  |             
|Authorized                                          |  |              |  |             
|Unlimited common shares, no par value               |  |              |  |             
|Issued and
 outstanding                             |  |              |  |             
|14,340,864 common shares (2004-12,263,029)          |  | 95,298,234   |  | 90,496,088  
|Additional
 paid-in capital(note 14)                |  | 5,985,077    |  | 5,255,249   
|Deferred
 stock-based compensation(note 14)         |  | (735,175)    |  | (1,333,443) 
|Cumulative
 translation adjustment                  |  | 370,369      |  | 360,884     
|Accumulated
 deficit                                |  | (68,401,524) |  | (62,743,206)
|                                                    |  |              |  |             
|                                                    |  | 32,516,981   |  | 32,035,572  
|                                                    |  |              |  |             
|                                                    |  | 38,327,198   |  | 35,166,098  
|                                                    |  |              |  |             



|See accompanying
 notes.
|------------------------

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

24

---

|Mamma.com Inc                                                    |  |             |  |            |  |          
|---------------------------------------------------------------- |  | ----------- |  | ---------- |  | ---------
|Consolidated Statements of Operations                            |  |             |  |            |  |          
|For the years ended December
31                                  |  |             |  |            |  |          
|                                                                
|                                                                
|                                                                
|                                                                
|(Expressed in U.S. dollars)                                      |  | 2005        |  | 2004       |  | 2003     
|                                                                 |  | $           |  | $          |  | $        
|                                                                
|Revenues(note 16)                                                |  | 9,464,560   |  | 14,636,318 |  | 8,938,863
|                                                                 |  |             |  |            |  |          
|                                                                
|Cost of revenues(note 17)                                        |  | 4,204,030   |  | 6,539,213  |  | 3,991,265
|                                                                 |  |             |  |            |  |          
|                                                                
|Gross Margin                                                     |  | 5,260,530   |  | 8,097,105  |  | 4,947,598
|                                                                 |  |             |  |            |  |          
|                                                                
|Expenses                                                         |  |             |  |            |  |          
|Marketing, sales and services                                    |  | 2,023,925   |  | 2,188,488  |  | 1,600,643
|General and administration                                       |  | 5,692,092   |  | 3,567,247  |  | 2,255,099
|Product development and technical support (note 21)              |  | 1,286,345   |  | 891,541    |  | 599,383  
|Amortization of property, plant and equipment                    |  | 106,788     |  | 133,123    |  | 140,090  
|Amortization of intangible assets                                |  | 242,031     |  | 191,218    |  | 178,509  
|Realized gain on disposal of investment (note 9)                 |  | -           |  | -          |  | (32,499) 
|Write-down of investment (note 9)                                |  | -           |  | 365,286    |  | -        
|Interest and other income                                        |  | (768,738)   |  | (233,506)  |  | (15,869) 
|Loss on foreign exchange                                         |  | 47,080      |  | 68,275     |  | 210,888  
|                                                                 |  |             |  |            |  |          
|                                                                
|                                                                 |  | 8,629,523   |  | 7,171,672  |  | 4,936,244
|                                                                 |  |             |  |            |  |          
|                                                                
|Earnings (loss) from continuing operations                       |  |             |  |            |  |          
|before income taxes                                              |  | (3,368,993) |  | 925,433    |  | 11,354   
|                                                                
|Provision for (recovery of) income taxes (note 20)               |  | (26,010)    |  | 554,680    |  | (77,636) 
|                                                                 |  |             |  |            |  |          
|                                                                
|Earnings (loss) from continuing operations                       |  | (3,342,983) |  | 370,753    |  | 88,990   
|                                                                
|Results of discontinued operations, net of income taxes (note 5) |  | (2,315,335) |  | 733,654    |  | (300,053)
|                                                                 |  |             |  |            |  |          
|                                                                
|Net earnings (loss) for the year                                 |  | (5,658,318) |  | 1,104,407  |  | (211,063)
|                                                                 |  |             |  |            |  |          
|Basic and diluted earnings (loss) per share from continuing      |  |             |  |            |  |          
|operations                                                       |  | (0.27)      |  | 0.03       |  | 0.01     
|Basic and diluted earnings (loss) per share from                 |  |             |  |            |  |          
|discontinued operations                                          |  | (0.19)      |  | 0.07       |  | (0.04)   
|                                                                 |  |             |  |            |  |          
|Basic and diluted net earnings (loss) per share                  |  | (0.46)      |  | 0.10       |  | (0.03)   
|                                                                 |  |             |  |            |  |          
|                                                                
|                                                                
|See accompanying notes.                                          |  |             |  |            |  |          

25

---

|Mamma.com
 Inc                                        |  |            |  |             |  |             |  |              |  |             |  |             
|----------------------------------------------------- |  | ---------- |  | ----------- |  | ----------- |  | ------------ |  | ----------- |  | ------------
|Consolidated
 Statements of Shareholders Equity      |  |            |  |             |  |             |  |             
|For the
 years ended December 31, 2005, 2004 and 2003 |  |            |  |             |  |            
|                                                     
|(Expressed in U.S. dollars)                           |  | Number of  |  |             |  | Additional  |  | Deferred     |  | Cumulative  |  |             
|                                                      |  | common     |  | Common      |  | paid-in     |  | stock-based  |  | translation |  | Accumulated 
|                                                      |  | shares     |  | shares      |  | capital     |  | compensation |  | adjustment  |  | deficit     
|                                                      |  |            |  | $           |  | $           |  | $            |  | $           |  | $           
|                                                     
|Balance,
 December 31, 2002                           |  | 6,094,842  |  | 69,873,994  |  | 750,111     |  | (10,667)     |  | (275,693)   |  | (63,636,550)
|                                                     
|Effect of changes on
 shares and warrants             |  |            |  |             |  |             |  |              |  |             |  |             
|issued for financial services                         |  | -          |  | 6,333       |  | -           |  | 10,667       |  | -           |  | -           
|Warrants issued for
 financial services               |  | -          |  | -           |  | 84,566      |  | -            |  | -           |  | -           
|Options
 granted                                      |  | -          |  | -           |  | 388,391     |  | (376,171)    |  | -           |  | -           
|Amortization of deferred
 stock-based                 |  |            |  |             |  |             |  |              |  |             |  |             
|compensation                                          |  | -          |  | -           |  | -           |  | 113,365      |  | -           |  | -           
|Options
 exercised                                    |  | 129,678    |  | 185,887     |  | (12,220)    |  | -            |  | -           |  | -           
|Warrants
 exercised                                   |  | 284,090    |  | 455,965     |  | (44,034)    |  | -            |  | -           |  | -           
|Translation adjustment for the year                   |  | -          |  | -           |  | -           |  | -            |  | 717,257     |  | -           
|Net loss for the
 year                                |  | -          |  | -           |  | -           |  | -            |  | -           |  | (211,063)   
|                                                      |  |            |  |             |  |             |  |              |  |             |  |             
|                                                     
|Balance,
 December 31, 2003                           |  | 6,508,610  |  | 70,522,179  |  | 1,166,814   |  | (262,806)    |  | 441,564     |  | (63,847,613)
|                                                     
|Warrants issued for
 financial services               |  | -          |  | -           |  | 260,301     |  | -            |  | -           |  | -           
|Options
 granted                                      |  | -          |  | -           |  | 1,378,787   |  | (1,378,787)  |  | -           |  | -           
|Amortization of deferred
 stock-based                 |  |            |  |             |  |             |  |              |  |             |  |             
|compensation                                          |  | -          |  | -           |  | -           |  | 301,944      |  | -           |  | -           
|Options
 exercised                                    |  | 255,561    |  | 483,593     |  | (82,127)    |  | -            |  | -           |  | -           
|Warrants
 exercised                                   |  | 3,892,878  |  | 6,430,500   |  | (671,687)   |  | -            |  | -           |  | -           
|Forfeited
 options                                    |  | -          |  | -           |  | (18,967)    |  | 6,206        |  | -           |  | -           
|Shares issued for
 acquisition of Digital             |  |            |  |             |  |             |  |              |  |             |  |             
|Arrow                                                 |  | 90,000     |  | 740,782     |  | -           |  | -            |  | -           |  | -           
|Shares and warrants issued
 on private                |  |            |  |             |  |             |  |              |  |             |  |             
|placement                                             |  | 1,515,980  |  | 13,158,329  |  | 3,441,652   |  | -            |  | -           |  | -           
|Share issue
 cost                                     |  | -          |  | (839,295)   |  | (219,524)   |  | -            |  | -           |  | -           
|Translation adjustment for
 the year                  |  | -          |  | -           |  | -           |  | -            |  | (80,680)    |  | -           
|Net earnings for the
 year                            |  | -          |  | -           |  | -           |  | -            |  | -           |  | 1,104,407   
|                                                      |  |            |  |             |  |             |  |              |  |             |  |             
|                                                     
|Balance,
 December 31, 2004                           |  | 12,263,029 |  | 90,496,088  |  | 5,255,249   |  | (1,333,443)  |  | 360,884     |  | (62,743,206)
|                                                     
|Redemption of common
 shares (note 13)                |  | (304,665)  |  | (2,248,302) |  | 1,195,147   |  | -            |  | -           |  | -           
|Options
 granted                                      |  | -          |  | -           |  | 994,908     |  | (994,908)    |  | -           |  | -           
|Options
 exercised                                    |  | 2,500      |  | 10,408      |  | (3,984)     |  | -            |  | -           |  | -           
|Amortization of deferred
 stock-based                 |  |            |  |             |  |             |  |              |  |             |  |             
|compensation                                          |  | -          |  | -           |  | -           |  | 136,933      |  | -           |  | -           
|Options
 forfeited                                    |  | -          |  | -           |  | (1,456,243) |  | 1,456,243    |  | -           |  | -           
|Shares issued for
 acquisition of Copernic            |  |            |  |             |  |             |  |              |  |             |  |             
|(note 6)                                              |  | 2,380,000  |  | 7,040,040   |  | -           |  | -            |  | -           |  | -           
|Translation adjustment for
 the year                  |  | -          |  | -           |  | -           |  | -            |  | 9,485       |  | -           
|Net loss for the
 year                                |  | -          |  | -           |  | -           |  | -            |  | -           |  | (5,658,318) 
|                                                      |  |            |  |             |  |             |  |              |  |             |  |             
|                                                     
|Balance,
 December 31, 2005                           |  | 14,340,864 |  | 95,298,234  |  | 5,985,077   |  | (735,175)    |  | 370,369     |  | (68,401,524)
|                                                      |  |            |  |             |  |             |  |              |  |             |  |             
|                                                     
|                                                     
|                                                     
|See accompanying notes.                               |  |            |  |             |  |             |  |              |  |             |  |             

26

---

|Mamma.com
 Inc                                                          |  |              |  |             |  |          
|----------------------------------------------------------------------- |  | ------------ |  | ----------- |  | ---------
|Consolidated Statements of Cash
 Flows                                  |  |              |  |             |  |          
|For the years ended December
 31                                        |  |              |  |             |  |          
|                                                                       
|                                                                       
|(Expressed in U.S. dollars)                                             |  | 2005         |  | 2004        |  | 2003     
|                                                                        |  | $            |  | $           |  | $        
|                                                                       
|Cash flows
 from (used for)                                             |  |              |  |             |  |          
|                                                                       
|Operating
 activities                                                   |  |              |  |             |  |          
|Earnings (loss) from
 continuing operations                             |  | (3,342,983)  |  | 370,753     |  | 88,990   
|Adjustments
 for                                                        |  |              |  |             |  |          
|Amortization of property, plant and equipment                           |  | 106,788      |  | 133,123     |  | 140,090  
|Amortization of intangible assets                                       |  | 242,031      |  | 191,218     |  | 178,509  
|Realized gain on disposal of property, plant and
 equipment             |  | -            |  | -           |  | (455)    
|Realized gain on disposal of investment (note 9)                        |  | -            |  | -           |  | (32,499) 
|Employee stock-based compensation                                       |  | 136,933      |  | 281,367     |  | 94,654   
|Former Board member compensation paid by
 issuance                      |  |              |  |             |  |          
|of capital
 stock                                                       |  | -            |  | -           |  | 12,220   
|Write-down of investment (note 9)                                       |  | -            |  | 365,286     |  | -        
|Financial fees paid by issuance of capital stock and
 warrants          |  | -            |  | 260,301     |  | 101,566  
|Future income taxes                                                     |  | (13,964)     |  | 400,855     |  | (77,636) 
|Income tax credits                                                      |  | -            |  | 81,505      |  | (77,925) 
|Unrealized loss on foreign exchange                                     |  | -            |  | 14,622      |  | -        
|                                                                       
|Net change in non-cash
 working capital items (note 19)                 |  | 1,420,013    |  | (302,567)   |  | (969,323)
|                                                                        |  |              |  |             |  |          
|Cash from (used for)
 operating activities from continuing operations   |  | (1,451,182)  |  | 1,796,463   |  | (541,809)
|Cash from (used for)
 operating activities from discontinued operations |  | (630,288)    |  | (790,370)   |  | 479,852  
|                                                                        |  |              |  |             |  |          
|                                                                        |  | (2,081,470)  |  | 1,006,093   |  | (61,957) 
|                                                                        |  |              |  |             |  |          
|Investing
 activities                                                   |  |              |  |             |  |          
|Business acquisitions
 (note 6)                                         |  | (15,851,922) |  | -           |  | -        
|Purchase of intangible
 assets                                          |  | (54,943)     |  | (9,434)     |  | (3,026)  
|Purchase of property,
 plant and equipment                              |  | (85,687)     |  | (70,284)    |  | (47,432) 
|Net decrease (increase) in
 temporary investments                       |  | 2,860,843    |  | (6,850,979) |  | (6,217)  
|Proceeds on disposal of
 investments                                    |  | -            |  | -           |  | 32,499   
|Proceeds on disposal of
 property, plant and equipment                  |  | -            |  | -           |  | 1,199    
|                                                                        |  |              |  |             |  |          
|Cash used for investing
 activities from continuing operations          |  | (13,131,709) |  | (6,930,697) |  | (22,977) 
|Cash from (used for)
 investing activities from discontinued operations |  | -            |  | 434,975     |  | (72,190) 
|                                                                        |  |              |  |             |  |          
|                                                                        |  | (13,131,709) |  | (6,495,722) |  | (95,167) 
|                                                                        |  |              |  |             |  |          
|Financing
 activities                                                   |  |              |  |             |  |          
|Issuance of capital
 stock                                              |  | 6,424        |  | 22,760,261  |  | 585,598  
|Share issue
 costs                                                      |  | -            |  | (1,058,819) |  | -        
|Redemption of common
 shares                                            |  | (1,053,155)  |  | -           |  | -        
|                                                                        |  |              |  |             |  |          
|                                                                        |  | (1,046,731)  |  | 21,701,442  |  | 585,598  
|                                                                        |  |              |  |             |  |          
|Effect of
 foreign exchange rate changes on cash and cash
 equivalents  |  | 4,022        |  | 79,375      |  | 250,063  
|                                                                        |  |              |  |             |  |          
|Net change in
 cash and cash equivalents and restricted cash during the |  |              |  |             |  |          
|year                                                                    |  | (16,255,888) |  | 16,291,188  |  | 678,537  
|Cash and cash
 equivalents  Beginning of year                          |  | 20,757,089   |  | 4,465,901   |  | 3,787,364
|                                                                        |  |              |  |             |  |          
|Cash and cash
 equivalents and restricted cash  End of year            |  | 4,501,201    |  | 20,757,089  |  | 4,465,901
|                                                                        |  |              |  |             |  |          
|Cash and cash equivalents
 comprise:                                    |  |              |  |             |  |          
|Cash                                                                    |  | 4,501,201    |  | 1,565,600   |  | 2,265,000
|Short-term investments                                                  |  | -            |  | 19,043,489  |  | 2,200,901
|                                                                        |  |              |  |             |  |          
|                                                                        |  | 4,501,201    |  | 20,609,089  |  | 4,465,901
|Restricted
 cash                                                        |  | -            |  | 148,000     |  | -        
|                                                                        |  |              |  |             |  |          
|                                                                        |  | 4,501,201    |  | 20,757,089  |  | 4,465,901
|                                                                        |  |              |  |             |  |          
|Supplemental
 cash flow information                                     |  |              |  |             |  |          
|Cash paid for
 interest                                                 |  | 16,097       |  | 673         |  | 328      
|Cash paid for income
 taxes                                             |  | 17,189       |  | 288,147     |  | -        
|                                                                        |  |              |  |             |  |          
|                                                                       
|See accompanying notes.                                                 |  |              |  |             |  |          

27

---



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

Mamma.com
Inc. is a provider of search technology for both the Web and desktop space,
delivered through its properties, www.mamma.com and www.copernic.com,
respectively. The Company, through its Mamma Media Solutions brand, is also a
provider of online marketing solutions to advertisers, providing keyword and
graphic ad placement on its publisher network.

Mamma.com
The Mother of All Search Engines® is a metasearch engine for the Internet; it
makes it easier and faster for people to find information by gathering results
from the Internet.

Through its
Copernic Desktop Search product, Copernic Technologies Inc. (Copernic)
develops cutting edge search solutions bringing the power of a sophisticated,
yet easy-to-use search engine right to the users PC. It allows for instant
searching of files, emails, and email attachments stored anywhere on a PC hard
drive.

|2   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 26.



|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, bank balances available, and highly
liquid investments with an initial term of three months or less that are stated
at cost, which approximates market value.



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

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

28

---



|e)   Income tax credits
|-----------------------

Income 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 statements 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:

|Trade names             |  | 14% |  | to |  | 25%
|----------------------- |  | --- |  | -- |  | ---
|Technology              |  | 20% |  | to |  | 25%
|Customer
 relationships |  | 10% |  | to |  | 33%
|Software and
 patents   |  | 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

29

---

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.



|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 services, sale
of software and support 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.

The majority
of arrangements for all types of revenue have terms of 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.

30

---

Support
revenue is recognized on a straight-line basis over the term of the
agreements.

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.

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, 2005 and 2004.



|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, except for
Copernic, have been translated into the reporting currency as follows: monetary
assets and liabilities have been translated at the exchange rate in effect at
the balance sheet date, non-monetary assets and liabilities have been translated
at the historical exchange rate. 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 net earnings (loss) for
the year.

Copernic
follows the current rate method of accounting for translation of foreign
currency amounts into Canadian dollars. Under this method, all assets and
liabilities denominated in foreign currencies are translated at the exchange
rate in effect at the balance sheet date. Revenues and expenses denominated in
foreign currencies are translated at the exchange rate in effect at the time of
the transaction. Exchange gains or losses resulting from translation 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.

31

---



|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.



|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 15).

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.



|3   Change in accounting policiesa)   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 as if the fair value method of accounting had been applied
retroactively.



|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

32

---



|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.



|b)   For
 changes affecting 2004Asset 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)For changes affecting 2005
 and future yearsConsolidation 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 did 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

33

---

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.

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
will adopt these recommendations for its fiscal year 2007.



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

Digital
Arrow LLC and High Performance Broadcasting, Inc.

In September
2005, following the poor performance of Digital Arrow LLC and High Performance
Broadcasting, Inc. (Digital Arrow) located in Florida, management decided to
discontinue its subsidiarys operations. The Company has therefore not renewed
the lease in Florida and recorded closing costs.

Consequently, the results of the operations of Digital Arrow were
recorded as discontinued operations and the results of the Company for the years
ended December 31, 2005 and 2004 were reclassified to account for the
closure

34

---

of the
subsidiarys operations. The Company had acquired Digital Arrow on June 10,
2004, a privately held marketing company that was 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, 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 was 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.

This
acquisition has been accounted for using the purchase method. The fair value of
the net assets acquired was $1,535,744 and goodwill of $556,196, for a total
purchase price of $2,091,940. From this purchase price, $740,782 was paid by
issuance of the Companys common shares, $86,948 was cash acquired at the
transaction for a cash paid net of cash acquired of $1,264,210.



|IBT
|---

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
year ended December 31, 2004 and 2003 have been reclassified in order to comply
with this presentation.

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 was 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 has
been released in 2005. In 2005, no events occurred or conditions were met for
the remaining contingent consideration of $150,000.

35

---

|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,
|                                                               |  |             |  | 2005                |  | 2004     
|                                                               |  |             |  | $                   |  | $        
|Current assets                                                 |  |             |  |                     |  |          
|Accounts receivable                                            |  |             |  | 9,694               |  | 268,246  
|Other
 current assets                                          |  |             |  | -                   |  | 6,524    
|                                                               |  |            
|                                                               |  |             |  | 9,694               |  | 274,770  
|                                                               |  |            
|Assets                                                         |  |             |  |                     |  |          
|Property, plant and equipment                                  |  |             |  | -                   |  | 70,195   
|Intangible assets                                              |  |             |  | -                   |  | 1,256,466
|Goodwill                                                       |  |             |  | -                   |  | 556,196  
|                                                               |  |            
|                                                               |  |             |  | -                   |  | 1,882,857
|                                                               |  |            
|Liabilities                                                    |  |             |  |                     |  |          
|Accounts payable and accrued liabilities                       |  |             |  | 189,223             |  | 543,584  
|Deferred revenue                                               |  |             |  | -                   |  | 23,525   
|Income
 taxes payable                                          |  |             |  | -                   |  | 85,000   
|                                                               |  |            
|                                                               |  |             |  | 189,223             |  | 652,109  
|                                                               |  |            
|                                                              
|Summary of
 discontinued operations                            |  |             |  |                     |  |          
|                                                              
|                                                               |  | 2005        |  | 2004                |  | 2003     
|                                                               |  | $           |  | $                   |  | $        
|                                                              
|Revenues                                                       |  | 474,409     |  | 1,793,977           |  | 6,493,986
|                                                               |  |            
|Earnings (loss) before income taxes                            |  | (2,315,335) |  | 733,654             |  | (32,220) 
|                                                               |  |            
|Net earnings (loss)                                            |  | (2,315,335) |  | 733,654             |  | (300,053)
|                                                               |  |            

36

---

For the years 2005 and 2004,
earnings (loss) before income taxes are the same as net earnings (loss). In 2004, this
was due to benefits arising to 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.



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



|Copernic Technologies
Inc.
|--------------------------

On December
22, 2005, the Company acquired 100% of the issued and outstanding securities of
Copernic including an amount to cover Copernic's outstanding stock appreciation
right obligations.

Copernic
develops cutting-edge search and information management solutions that enable
home and business PC users to maximize their information assets and become more
efficient and proactive in their daily activities. Copernic is dedicated to
providing its customers with cost-effective Web and desktop search technology
that enables better decision-making and increased productivity.

The
consideration for the acquisition, including costs directly related to the
acquisition, consisted of $15,851,922 in cash including $3,297,007 paid to
settle Copernics stock appreciation right and severance obligations net of cash
acquired. The Company also issued 2,380,000 common shares as part of the
consideration paid. The fair value of the Company shares issued to owners of
Copernic has been determined to be $2.958 per share. This value has been
determined using the average closing price of the Companys common stock for two
days before and after August 17, 2005, the date the significant terms and
conditions of the transaction were agreed to and publicly announced.

This
acquisition has been accounted for using the purchase method and the results of
operations have been included in the statement of operations from the date of
acquisition. The purchase price allocation was finalized upon receipt of a
valuation report.

This
acquisition has been accounted for using the purchase method. The fair value of
the net assets acquired is summarized below:

Copernic2005$Cash
 
 851,130Accounts
 receivable
 
 1,383,228Prepaid
 
 65,994Income tax
 receivable
 
 496,219Future income taxes
 (current)
 
 33,403Future income taxes
 (long-term)
 
 13,442Income tax
 credit
 
 54,746Property, plant and
 equipment
 
 314,284Software
 
 65,220


37

---

|Patents                                              |  | 69,527    
|---------------------------------------------------- |  | ----------
|Trade names                                          |  | 2,500,000 
|Customer relationships                               |  | 2,000,000 
|Technology                                           |  | 3,400,000 
|                                                     |  |           
|                                                    
|Total assets acquired                                |  | 11,247,193
|                                                    
|Accounts payable and accrued liabilities             |  | 226,822   
|Future income taxes                                  |  | 2,686,000 
|                                                     |  |           
|Total liabilities assumed                            |  | 2,912,822 
|                                                    
|Net identifiable assets acquired                     |  | 8,334,371 
|Goodwill                                             |  | 15,408,721
|                                                     |  |           
|                                                    
|Purchase price                                       |  | 23,743,092
|Less:                                                |  |           
|Common shares issued                                 |  | 7,040,040 
|Cash acquired                                        |  | 851,130   
|                                                     |  |           
|Consideration paid net of cash acquired              |  | 15,851,922
|                                                     |  |           
|                                                    
|Goodwill is not deductible
 for income tax purposes. |  |           



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

Temporary
investments consist of commercial paper bearing a weighted average interest rate
4.09% per annum (2004  2.29%) and maturing on various dates up to April 2006.
The market value of the commercial paper as at December 31, 2005 and 2004
approximates its book value.

|8   Accounts receivable                      |  |           |  |          
|-------------------------------------------- |  | --------- |  | ---------
|Accounts receivable
 comprise the following: |  |           |  |          
|                                             |  | 2005      |  | 2004     
|                                             |  | $         |  | $        
|Trade accounts receivable                    |  | 2,689,648 |  | 2,578,745
|Allowance for doubtful accounts              |  | (276,402) |  | (205,223)
|                                             |  |           |  |          
|                                             |  | 2,413,246 |  | 2,373,522
|Other                                        |  | 210,694   |  | 129,013  
|                                             |  |           |  |          
|                                             |  | 2,623,940 |  | 2,502,535
|                                             |  |           |  |          

38

---

|9      Investments                                             |  |         |  |        
|-------------------------------------------------------------- |  | ------- |  | -------
|Investments comprise the
 following:                           |  |         |  |        
|                                                               |  | 2005    |  | 2004   
|                                                               |  | $       |  | $      
|LTRIM Technologies Inc.
(4,891,686 Class A                   |  |         |  |        
|common shares
 and 359,281 Class A preference shares) (i)    |  | 720,000 |  | 720,000
|Tri-Link Technologies Inc. (4,054,874 Preference shares)
 (ii) |  | -       |  | -      
|TECE, Inc. (5,000,000 Common shares) (ii)                      |  | -       |  | -      
|                                                               |  |         |  |        
|                                                               |  | 720,000 |  | 720,000
|                                                               |  |         |  |        

The fair
value of LTRIM Technologies Inc. has been established at $720,000 by independent
appraisal and nil for Tri-Link Technologies Inc. and TECE, Inc. as of December
31, 2005.

|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. (Tri-Link) and TECE,
 Inc. In 2005, The Company received $41,878 from Tri-Link, this amount has
 been recorded in other income.                      
|    
|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.
|    

|10 |  | Property, plant and
 equipment |  |           |  |              |  |        
|-- |  | ------------------------------ |  | --------- |  | ------------ |  | -------
|  
|   |  |                                |  |           |  |              |  | 2005   
|   |  |                               
|   |  |                                |  |           |  | Accumulated  |  |        
|   |  |                                |  | Cost      |  | amortization |  | Net    
|   |  |                                |  | $         |  | $            |  | $      
|   |  |                                |  |           |  |              |  |        
|   |  | Computer
 equipment            |  | 1,221,578 |  | 821,160      |  | 400,418
|   |  | Furniture and
 fixtures        |  | 171,485   |  | 62,921       |  | 108,564
|   |  | Leasehold
 improvements        |  | 177,642   |  | 87,866       |  | 89,776 
|   |  |                                |  |           |  |              |  |        
|  
|   |  |                                |  | 1,570,705 |  | 971,947      |  | 598,758
|   |  |                                |  |           |  |              |  |        
|  
|   |  |                                |  |           |  |              |  | 2004   
|   |  |                                |  |           |  |              |  |        
|  
|   |  | Computer
 equipment            |  | 1,022,586 |  | 754,127      |  | 268,459
|   |  | Furniture and
 fixtures        |  | 87,104    |  | 53,825       |  | 33,279 
|   |  | Leasehold
 improvements        |  | 87,181    |  | 84,295       |  | 2,886  
|   |  |                                |  |           |  |              |  |        
|  
|   |  |                                |  | 1,196,871 |  | 892,247      |  | 304,624
|   |  |                                |  |           |  |              |  |        

39

---

|11      Goodwill and other intangible
 assets |  |           |  |              |  |          
|--------------------------------------------- |  | --------- |  | ------------ |  | ---------
|                                             
|Intangible
 assets                            |  |           |  |              |  |          
|                                             
|                                              |  |           |  |              |  | 2005     
|                                             
|                                              |  |           |  | Accumulated  |  |          
|                                              |  | Cost      |  | amortization |  | Net      
|                                              |  | $         |  | $            |  | $        
|                                             
|Trade
 names                                  |  | 2,912,869 |  | 276,148      |  | 2,636,721
|Technology                                    |  | 3,705,217 |  | 211,961      |  | 3,493,256
|Customer
 relationships                       |  | 2,424,985 |  | 149,210      |  | 2,275,775
|Software                                      |  | 181,760   |  | 56,920       |  | 124,840  
|Patents                                       |  | 71,439    |  | 183          |  | 71,256   
|                                              |  |           |  |              |  |          
|                                             
|                                              |  | 9,296,270 |  | 694,422      |  | 8,601,848
|                                              |  |           |  |              |  |          
|                                             
|                                              |  |           |  |              |  | 2004     
|                                             
|                                             
|Trade
 names                                  |  | 412,869   |  | 185,745      |  | 227,124  
|Technology                                    |  | 305,217   |  | 132,289      |  | 172,928  
|Customer
 relationships                       |  | 424,985   |  | 92,100       |  | 332,885  
|Software                                      |  | 63,098    |  | 42,257       |  | 20,841   
|                                              |  |           |  |              |  |          
|                                             
|                                              |  | 1,206,169 |  | 452,391      |  | 753,778  
|                                              |  |           |  |              |  |          

Goodwill

The changes
in the carrying amount of goodwill for the years ended December 31, 2005 and
2004 are as follows:

|                                            |   | Copernic   |   | focusIN |   | Total     
|------------------------------------------- | - | ---------- | - | ------- | - | ----------
|                                            |   |            |   |         |  
|                                            | $ |            | $ |         | $
|                                            |   |            |   |         |  
|Balance    December 
 31, 
 2003 and
 2004 |   | -          |   | 846,310 |   | 846,310   
|Business acquisitions
 (note 6)             |   | 15,408,721 |   | -       |   | 15,408,721
|                                            |   |            |   |         |   |           
|Balance    December 
 31, 
 2005           |   | 15,408,721 |   | 846,310 |   | 16,255,031
|                                            |   |            |   |         |   |           

40

---

|12      Accounts payable and accrued
 liabilities                 |  |           |  |          
|----------------------------------------------------------------- |  | --------- |  | ---------
|                                                                 
|Accounts payable and
 accrued liabilities comprise the following: |  |           |  |          
|                                                                 
|                                                                  |  | 2005      |  | 2004     
|                                                                  |  | $         |  | $        
|                                                                 
|                                                                 
|Trade accounts payable                                            |  | 1,860,183 |  | 1,513,127
|Other                                                             |  |           |  |          
|Accrued employee
 costs                                           |  | 415,942   |  | 285,666  
|Directors and officers
 payable                                   |  | 384,102   |  | 433,401  
|Payable to a company owned
 by a current director (a) (b)         |  | 30,716    |  | 12,764   
|                                                                  |  |           |  |          
|                                                                 
|                                                                  |  | 2,690,943 |  | 2,244,958
|                                                                  |  |           |  |          

| | (a) | The
 amount payable to a company owned by a current director relates to
 consulting agreement between the Company and the company owned by a
 current director.                                                                                                                                                          
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) | Services provided by a director acting as an Executive
 Chairman for 2005 were $202,658 (2004  $182,687; 2003  $171,465). The
 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.
|



|13      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.
At the expiration period, on September 7, 2005, the Company did not file a new
notice.

During the
year ended December 31, 2004, the Company did not purchase any of its
outstanding common shares. During the year ended December 31, 2005, the Company
redeemed 304,665 of its common shares at a weighted average purchase price of
$3.46, for a total amount of $1,053,155. The $1,195,147 excess of stated capital
value over the redemption amount has been credited to additional paid-in
capital.



|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.

41

---

In 2003,
227,500 stock options at exercise prices between $1.99 and $3.58 expiring
between seven and ten years were granted to officers and employees of the
Company.

In 2004,
10,000 stock options were cancelled and granted with new conditions. The fair
value of these new granted options were estimated as the date of grant using the
Black-Scholes option pricing model.

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 expiring in five
years.

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 compensation costs
of $138,395 recorded as of December 31, 2004 pertaining to these options was
reversed in the first quarter of 2005.

On February
16, 2005, 55,800 and 39,196 stock options at an exercise price of $6.28 expiring
in five years were granted to officers and employees of the Company,
respectively.

On November
8, 2005, the Company granted to Officers and Members of Board of the Company,
430,000 stock options at an exercise price of $2.28 expiring in five years.

|Information with respect to stock option activity for, 2003,
 2004 and 2005 is as follows: |  |                  
|------------------------------------------------------------------------------------------ |  | -----------------
|                                                                                          
|                                                                                           |  |                  
|                                                                                           |  | Number of options
|                                                                                           |  |                  
|                                                                                           |  |                  
|Outstanding  December 31,
 2002                                                           |  | 377,180          
|                                                                                          
|Granted                                                                                    |  | 227,500          
|Forfeited                                                                                  |  | (28,357)         
|Exercised                                                                                  |  | (129,678)        
|                                                                                           |  |                  
|Outstanding  December 31,
 2003                                                           |  | 446,645          
|                                                                                          
|Granted                                                                                    |  | 305,000          
|Forfeited                                                                                  |  | (16,000)         
|Expired                                                                                    |  | (18,750)         
|Exercised                                                                                  |  | (255,561)        
|                                                                                           |  |                  
|Outstanding  December 31,
 2004                                                           |  | 461,334          
|                                                                                           |  |                  
|                                                                                          
|Granted                                                                                    |  | 524,996          
|Forfeited                                                                                  |  | (322,747)        
|Exercised                                                                                  |  | (2,500)          
|                                                                                           |  |                  
|Outstanding  December 31,
 2005                                                           |  | 661,083          
|                                                                                           |  |                  

42

---

|Details of stock options outstanding
as at December 31, 2005
 are as follows: |  |            |  |                    
|----------------------------------------------------------------------------- |  | ---------- |  | -------------------
|                                                                             
|                                                                              |  |            |  | Outstanding options
|                                                                              |  |            |  |                    
|Range
 of                                                                     |  | Number
 of |  | Weighted           
|exercise
 prices                                                              |  | options    |  | average
 remaining 
|$                                                                             |  |            |  | contractual
 life  
|                                                                              |  |            |  | (years)            
|1.50  1.99                                                                   |  | 30,834     |  | 6.51               
|2.38  3.58                                                                   |  | 555,500    |  | 5.05               
|6.28                                                                          |  | 74,749     |  | 6.13               
|                                                                              |  |            |  |                    
|                                                                              |  | 661,083    |  | 5.24               
|                                                                              |  |            |  |                    

As at
December 31, 2004 and 2003 there were 33,667 and 222,478 options exercisable at
weighted average prices of $3.15 and $1.99, respectively.

The fair
values of all options granted during 2005, 2004 and 2003 were estimated as of
the date of grant using the Black-Scholes option pricing model with the
following weighted average assumptions:

|                              |  | 2005  |  | 2004  |  | 2003 
|----------------------------- |  | ----- |  | ----- |  | -----
|                              |  | $     |  | $     |  | $    
|                             
|Expected option life
 (years) |  | 4.21  |  | 4.00  |  | 4.04 
|Volatility                    |  | 79%   |  | 88%   |  | 82%  
|Risk-free interest
 rate      |  | 3.78% |  | 3.70% |  | 4.00%
|Dividend
 yield               |  | nil   |  | nil   |  | nil  

The weighted
average grant-date fair values for stock options granted during 2005, 2004 and
2003 were $1.90, $4.61 and $2.71 per option, respectively.

Stock-based
compensation expense recognized in 2005, 2004 and 2003 in regards to the stock
options was $136,933, $301,944 and $113,365, respectively.



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

As described
in note 3, 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 2005, 2004 and
2003 if the Company had applied this change retroactively to all prior
years.

43

---

|   |  |                                                                   |  | 2005        |  | 2004      |  | 2003     
|-- |  | ----------------------------------------------------------------- |  | ----------- |  | --------- |  | ---------
|   |  |                                                                   |  | $           |  | $         |  | $        
|   |  | Net earnings (loss) for the year                                  |  | (5,658,318) |  | 1,104,407 |  | (211,063)
|   |  | Additional compensation costs                                     |  | 17,496      |  | 17,496    |  | 14,203   
|   |  |                                                                   |  |             |  |           |  |          
|   |  | Pro forma net earnings (loss)                                     |  | (5,675,814) |  | 1,086,911 |  | (225,266)
|   |  |                                                                   |  |             |  |           |  |          
|   |  | Pro forma net earnings (loss) per share:                          |  |             |  |           |  |          
|   |  | Basic                                                             |  | (0.47)      |  | 0.10      |  | (0.04)   
|   |  | Diluted                                                           |  | (0.47)      |  | 0.10      |  | (0.04)   
|   |  |                                                                   |  |             |  |           |  |          
|  
|  
|14 |  | 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 mergers and acquisitions, 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, on September 8, 2004 and subsequently on October 12, 2005. 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

44

---

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. In the event that the Board deems it necessary or appropriate for a
fairness opinion to be rendered in connection with an acquisition transaction,
MCF will receive a Fairness Opinion Fee of $200,000 for rendering its opinion,
payable upon delivery of the Fairness Opinion and will be credited against the
M&A Completion Fee due to MCF.

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.

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.

45

---

Information
with respect to warrant activity for 2003, 2004 and 2005 is as
follows:

|                                          |  |             |  | Weighted
|----------------------------------------- |  | ----------- |  | --------
|                                          |  |             |  | average 
|                                          |  | Number
 of  |  | exercise
|                                          |  | warrants    |  | price   
|                                          |  |             |  | $       
|                                         
|Outstanding  December 31,
 2002          |  | 2,037,409   |  | 1.42    
|                                         
|Issued (i)                                |  | 247,045     |  | 1.94    
|Forfeited                                 |  | (1,425)     |  | 30.80   
|Exercised                                 |  | (284,090)   |  | 1.45    
|                                          |  |             |  |         
|                                         
|Outstanding  December 31,
 2003          |  | 1,998,939   |  | 1.46    
|                                         
|Issued - B
 warrants                      |  | 1,893,939   |  | 1.50    
|Issued -
 Other                           |  | 646,392     |  | 15.60   
|Exercised                                 |  | (3,892,878) |  | 1.48    
|                                          |  |             |  |         
|                                         
|Outstanding  December 31,
 2004 and 2005 |  | 646,392     |  | 15.60   
|                                          |  |             |  |         

(i) Does not include warrants to be issued
in connection with the B warrant reload feature described above. For various
price ranges, the weighted average characteristics of warrants outstanding and
exercisable as at December 31, 2005 were as follows:

|                 |  |            |  | Weighted
 average |  |                 
|---------------- |  | ---------- |  | ----------------- |  | ----------------
|Range
 of        |  | Number
 of |  | remaining         |  | Weighted average
|exercise
 prices |  | warrants   |  | contractual
 life |  | exercise price  
|$                |  |            |  | (years)           |  | $               
|                
|11.34  13.89    |  | 40,000     |  | 3.41              |  | 12.31           
|15.82            |  | 606,392    |  | 3.50              |  | 15.82           
|                 |  |            |  |                   |  |                 
|                
|                 |  | 646,392    |  | 3.49              |  | 15.60           
|                 |  |            |  |                   |  |                 

15      Earnings (loss) per share

|                                             |  | 2005       |  | 2004       |  | 2003     
|-------------------------------------------- |  | ---------- |  | ---------- |  | ---------
|                                             |  | $          |  | $          |  | $        
|                                            
|Weighted average number of
 shares  Basic   |  | 12,168,117 |  | 10,758,604 |  | 6,207,360
|                                            
|Additions to reflect the
 impacts of:        |  |            |  |            |  |          
|Exercise of stock
 options                   |  | -          |  | 121,195    |  | 93,854   
|Exercise of warrants
 (i)                    |  | -          |  | 330,107    |  | 1,740,022
|                                             |  |            |  |            |  |          
|                                            
|Weighted average number of
 shares  Diluted |  | 12,168,117 |  | 11,209,906 |  | 8,041,236
|                                             |  |            |  |            |  |          

46

---

(i) In 2003,
includes B warrants issuable upon exercise of the A warrants described in note
14.

Options to
purchase 309,895 common shares (2004  48,361; 2003  18,750), warrants to
purchase 646,392 common shares (2004  327,712; 2003  16,000) have been
excluded from the above calculations since they would have an anti-dilutive
effect.

|16 |  | Revenues             |  |           |  |            |  |          
|-- |  | -------------------- |  | --------- |  | ---------- |  | ---------
|  
|   |  |                      |  | 2005      |  | 2004       |  | 2003     
|   |  |                      |  | $         |  | $          |  | $        
|  
|  
|   |  | Search
 advertising  |  | 4,935,617 |  | 9,659,024  |  | 5,787,980
|   |  | Graphic
 advertising |  | 4,456,399 |  | 4,965,198  |  | 3,150,883
|   |  | Other                |  | 72,544    |  | 12,096     |  | -        
|   |  |                      |  |           |  |            |  |          
|  
|   |  |                      |  | 9,464,560 |  | 14,636,318 |  | 8,938,863
|   |  |                      |  |           |  |            |  |          

17      Cost of revenues

| |  |                  |  | 2005      |  | 2004      |  | 2003     
| |  | ---------------- |  | --------- |  | --------- |  | ---------
| |  |                  |  | $         |  | $         |  | $        
| |  |                 
| |  |                 
| |  | Partner
 payouts |  | 1,637,878 |  | 3,940,350 |  | 2,471,927
| |  | Media
 Purchase  |  | 2,264,700 |  | 2,384,262 |  | 1,213,387
| |  | ISP Charges      |  | 279,965   |  | 214,601   |  | 305,951  
| |  | Other            |  | 21,487    |  | -         |  | -        
| |  |                  |  |           |  |           |  |          
| |  |                  |  | 4,204,030 |  | 6,539,213 |  | 3,991,265
| |  |                  |  |           |  |           |  |          

18      Consolidated statement of cash flows

In 2005, the
consideration for the acquisition of Copernic (Digital Arrow in 2004) includes
2,380,000 (90,000 for Digital Arrow) of the Companys common shares at a
determined fair value of $2.958 ($8.23 for Digital Arrow) per share. Therefore,
$7,040,040 ($740,782 for Digital Arrow) representing the value of the
consideration paid by the issuance of capital stock are excluded from business
acquisitions and issuance of capital stock.

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

47

---

19      Net
change in non-cash working capital items

|                                         |  | 2005      |  | 2004      |  | 2003       
|---------------------------------------- |  | --------- |  | --------- |  | -----------
|                                         |  | $         |  | $         |  | $          
|                                        
|Cash flows from (used
 for):             |  |           |  |           |  |            
|                                        
|Accounts receivable                      |  | 1,266,077 |  | (215,782) |  | (1,033,078)
|Income taxes receivable                  |  | 12,100    |  | (104,129) |  | (15,259)   
|Prepaid expenses and other assets        |  | (99,707)  |  | (39,651)  |  | (3,083)    
|Accounts payable and accrued liabilities |  | 227,841   |  | (35,737)  |  | 81,709     
|Deferred revenue                         |  | 13,702    |  | 92,732    |  | 388        
|                                         |  |           |  |           |  |            
|                                        
|                                         |  | 1,420,013 |  | (302,567) |  | (969,323)  
|                                         |  |           |  |           |  |            

20      Income taxes a)      The provision for (recovery of) income taxes is detailed as
follows:

|                    |  | 2005     |  | 2004    |  | 2003    
|------------------- |  | -------- |  | ------- |  | --------
|                    |  | $        |  | $       |  | $       
|                   
|Current             |  | (12,046) |  | 153,825 |  | -       
|Future
 (recovered) |  | (13,964) |  | 400,855 |  | (77,636)
|                    |  |          |  |         |  |         
|                    |  | (26,010) |  | 554,680 |  | (77,636)
|                    |  |          |  |         |  |         

48

---

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

|                                                   |  | 2005        |  | 2004      |  | 2003     
|-------------------------------------------------- |  | ----------- |  | --------- |  | ---------
|                                                   |  | $           |  | $         |  | $        
|                                                  
|Earnings (loss) from
 continuing operations        |  |             |  |           |  |          
|before income taxes                                |  | (3,368,993) |  | 925,433   |  | 11,354   
|                                                   |  |             |  |           |  |          
|Expected provision for
 (recovery of) income       |  |             |  |           |  |          
|taxes at the statutory rate                        |  | (1,070,666) |  | 287,069   |  | 3,749    
|                                                   |  |             |  |           |  |          
|Impact of foreign and
 provincial rates            |  | (348)       |  | 10,965    |  | -        
|Change in future income
 tax balance due to        |  |             |  |           |  |          
|change in rate                                     |  | (947,104)   |  | -         |  | -        
|Unrecognized benefit of
 current year tax losses   |  |             |  |           |  |          
|and undeducted research and development            |  |             |  |           |  |          
|expenses, and other temporary differences          |  | 2,067,696   |  | 500,116   |  | 465,295  
|Benefit of prior years
 tax losses not previously |  |             |  |           |  |          
|recognized                                         |  | (93,681)    |  | (17,178)  |  | -        
|Recognition of future
 benefit of prior years     |  |             |  |           |  |          
|temporary differences, including tax               |  |             |  |           |  |          
|losses and undeducted research and                 |  |             |  |           |  |          
|development expenses                               |  | -           |  | -         |  | (577,482)
|Permanent difference,
 including amortization      |  |             |  |           |  |          
|and impairment of goodwill and write-              |  |             |  |           |  |          
|down of investment                                 |  | 18,093      |  | (226,292) |  | 30,802   
|                                                   |  |             |  |           |  |          
|                                                  
|Provision for (recovery
 of) income taxes          |  | (26,010)    |  | 554,680   |  | (77,636) 
|                                                   |  |             |  |           |  |          

49

---

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

|                                               |  | 2005         |  | 2004        
|---------------------------------------------- |  | ------------ |  | ------------
|                                               |  | $            |  | $           
|                                              
|Assets                                         |  |              |  |             
|Property, plant and
 equipment                 |  | 2,839,093    |  | 2,558,945   
|Non-capital losses
 (expiring 2006-2015)       |  | 8,635,786    |  | 6,443,236   
|Unrealized impairment
 losses on investments   |  | 764,853      |  | 740,295     
|Research and development
 expenses             |  | 362,077      |  | -           
|Financing
 expenses                            |  | 257,648      |  | 341,871     
|Intangible
 assets                             |  | 217,521      |  | -           
|Goodwill                                       |  | 188,693      |  | 116,079     
|Other                                          |  | 39,971       |  | -           
|                                               |  |              |  |             
|                                               |  | 13,305,642   |  | 10,200,426  
|                                               |  |              |  |             
|                                              
|Liabilities                                    |  |              |  |             
|Intangible
 assets                             |  | 2,672,036    |  | -           
|                                               |  |              |  |             
|                                              
|Net future income tax
 assets before valuation |  | 10,633,606   |  | 10,200,426  
|Valuation
 allowance                           |  | (13,258,654) |  | (10,200,426)
|                                               |  |              |  |             
|                                               |  | (2,625,048)  |  | -           
|                                               |  |              |  |             
|                                              
|                                              
|Presented as:                                  |  |              |  |             
|Current asset                                  |  | 33,505       |  | -           
|Long-term
 asset                               |  | 13,483       |  | -           
|Long-term
 liability                           |  | 2,672,036    |  | -           
|                                               |  |              |  |             
|                                               |  | (2,625,048)  |  | -           
|                                               |  |              |  |             

As at
December 31, 2005, the Company also has temporary differences in United Kingdom
of $60,974 (2004-nil), in United States of America for $2,084,346
(2004-$1,088,042) and in Australia for $628,937 (2004- $678,675) with no
expiration date. No future tax assets were recognized in 2005 and in 2004 for
these temporary differences.

In addition,
the Company has capital losses amounting to $14,724,484 in 2005
(2004-$14,107,504) without expiring date. No future tax assets were recognized
in 2005 and in 2004 for these capital losses.

50

---

|d) | As
 at December 31, 2005, the Company has non-capital loss carryforwards
 totalling approximately $25,210,000 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:                                                                                                                                               
|  

|     |  | $        
|---- |  | ---------
|    
|2006 |  | 4,438,000
|2007 |  | 4,817,000
|2008 |  | 3,509,000
|2009 |  | 2,558,000
|2010 |  | 3,417,000
|2014 |  | 852,000  
|2015 |  | 5,619,000

21      Product development and technical support expenses

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

|                                                    |  | 2005      |  | 2004    |  | 2003   
|--------------------------------------------------- |  | --------- |  | ------- |  | -------
|                                                    |  | $         |  | $       |  | $      
|                                                   
|Product development and
 technical support expenses |  | 1,276,346 |  | 809,347 |  | 477,634
|Research and development
 expenses                  |  | 31,600    |  | 168,715 |  | 249,906
|                                                    |  |           |  |         |  |        
|                                                    |  | 1,307,946 |  | 978,062 |  | 727,540
|                                                   
|Less: research and
 development tax credits         |  | 21,601    |  | 86,521  |  | 128,157
|                                                    |  |           |  |         |  |        
|                                                   
|                                                    |  | 1,286,345 |  | 891,541 |  | 599,383
|                                                    |  |           |  |         |  |        

22      Segment information

The Company
had a single reporting segment until the acquisition of Copernic on December 22,
2005, resulting in the creation of a second reporting segment from that date
forward. Since the Company reports Copernics operations from the date of the
acquisition transaction (duration of 8 days), revenues of this segment are
included in Other specified in the table below.

51

---

|Geographic
 segment              |  |            |  |            |  |          
|-------------------------------- |  | ---------- |  | ---------- |  | ---------
|                                
|                                 |  | 2005       |  | 2004       |  | 2003     
|                                 |  | $          |  | $          |  | $        
|Revenues:                        |  |            |  |            |  |          
|Canada                           |  | 207,048    |  | 225,773    |  | 238,655  
|United States                    |  | 7,449,614  |  | 13,427,257 |  | 8,499,380
|Europe                           |  | 1,650,907  |  | 873,924    |  | 126,272  
|Other                            |  | 156,991    |  | 109,364    |  | 74,556   
|                                 |  |            |  |            |  |          
|                                 |  | 9,464,560  |  | 14,636,318 |  | 8,938,863
|                                 |  |            |  |            |  |          
|                                
|                                 |  | 2005       |  | 2004       |  | 2003     
|                                 |  | $          |  | $          |  | $        
|Long-lived
 assets and goodwill: |  |            |  |            |  |          
|Canada                           |  | 25,455,637 |  | 1,904,712  |  | 2,149,336
|                                 |  |            |  |            |  |          
|                                 |  | 25,455,637 |  | 1,904,712  |  | 2,149,336
|                                 |  |            |  |            |  |          

23      Major Customers

The Company
has two major customers, each account for more than 10% of the Company's sales.
Sales for each of them represented approximately 14% (2004 - 2%; 2003 - 0%) and
11% (2004 - 11%; 2003 - 8%), respectively, of the Company's sales. The
outstanding accounts receivable from these customers as at December 31, 2005
amount to approximately 8% (2004 - 4%) and 1% (2004 - 14%), respectively, of the
total accounts receivable.

24      Contingencies and commitments

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s 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

52

---



|Purported Securities Class Action
 Lawsuit
|------------------------------------------

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 rumours and newspaper reports. All of these lawsuits
have been consolidated. The Company denies the allegations of wrongdoing against
it, believes that the purported claims are without merit, intends to defend
itself vigorously, and has moved for dismissal of the consolidated
lawsuit.

The
Companys director and officer liability insurance is expected to cover most of
the costs incurred in defending the purported securities class action in excess
of the $250,000 retention paid. The insurer has paid most of the fees and
expenses to date, except an amount of approximately $26,000 which has not been
paid; the insurer is asserting that some fees and expenses of the class action
defense counsel were outside the scope of coverage. The Company does not believe
the insurer will successfully maintain this position with respect to the minimal
unpaid amount of fees and expenses.



|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.

53

---



|Commitments
|-----------

The Company
is committed under operating lease agreements. Future minimum payments under
these leases as of December 31, 2005 are as follows:

|                           |  |      |  | $      
|-------------------------- |  | ---- |  | -------
|                          
|Years ending December
 31, |  |      |  |        
|                           |  | 2006 |  | 329,000
|                           |  | 2007 |  | 218,000
|                           |  | 2008 |  | 182,000
|                           |  | 2009 |  | 106,000
|                           |  | 2010 |  | 71,000 
|Thereafter                 |  |      |  | -      

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.



|25      Financial instrumentsCurrency
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, 2005,
approximately 39% of accounts receivable are due from two customers, as compared
to 30% from four customers in the previous year.

54

---



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

The carrying
amounts reflected in the consolidated balance sheets for cash and cash
equivalents, bank overdraft, 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, 2005, the Companys exposure to interest rate risk is summarized as
follows:

|Cash and cash
 equivalents                |  | Variable interest
 rates
|----------------------------------------- |  | ------------------------
|Temporary
 investments                    |  | From 4.06% to
 4.12%    
|Accounts
 receivable                      |  | Non-interest
 bearing   
|Accounts payable and
 accrued liabilities |  | Non-interest
 bearing   

26     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.

For the
years ended December 31, 2005, 2004 and 2003, the Company does not have any
significant adjustments to record in order to reconcile its reported net
earnings (loss) under Canadian GAAP and U.S. GAAP.

|                                                  |  | 2005        |  | 2004      |  | 2003     
|------------------------------------------------- |  | ----------- |  | --------- |  | ---------
|                                                  |  | $           |  | $         |  | $        
|Other
 comprehensive income (loss)                |  |             |  |           |  |          
|Foreign currency translation adjustment (a)       |  | 9,485       |  | (80,680)  |  | 717,257  
|                                                  |  |             |  |           |  |          
|Net earnings (loss) in
 accordance with U.S. GAAP |  | (5,658,318) |  | 1,104,407 |  | (211,063)
|                                                  |  |             |  |           |  |          
|Comprehensive income
 (loss)                      |  | (5,648,833) |  | 1,023,727 |  | 506,194  
|                                                  |  |             |  |           |  |          

55

---

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

|                                                             |  | 2005         |  | 2004        
|------------------------------------------------------------ |  | ------------ |  | ------------
|                                                             |  | $            |  | $           
|Capital
 stock                                               |  |              |  |             
|Capital stock in
 accordance with Canadian GAAP              |  | 95,298,234   |  | 90,496,088  
|Reduction of stated
 capital (b)                             |  | 16,769,570   |  | 16,769,570  
|                                                             |  |              |  |             
|                                                            
|Capital stock in
 accordance with U.S. GAAP                  |  | 112,067,804  |  | 107,265,658 
|                                                             |  |              |  |             
|                                                            
|Additional
 paid-in capital                                  |  |              |  |             
|Additional paid-in capital
 in accordance with Canadian GAAP |  | 5,985,077    |  | 5,255,249   
|Stock-based compensation
 costs (c)                          |  |              |  |             
|Cumulative effect of prior
 years                            |  | 1,037,690    |  | 1,037,690   
|                                                             |  |              |  |             
|                                                            
|Additional paid-in capital
 in accordance with U.S. GAAP     |  | 7,022,767    |  | 6,292,939   
|                                                             |  |              |  |             
|                                                            
|Deferred
 stock-based compensation costs in accordance with  |  |              |  |             
|Canadian and U.S.
 GAAP                                      |  | (735,175)    |  | (1,333,443) 
|                                                             |  |              |  |             
|                                                            
|Accumulated
 other comprehensive gain (loss)(a)              |  |              |  |             
|Cumulative translation
 adjustment in accordance with        |  |              |  |             
|Canadian GAAP                                                |  | 370,369      |  | 360,884     
|                                                             |  |              |  |             
|                                                            
|Accumulated
 deficit                                         |  |              |  |             
|In accordance with
 Canadian GAAP                            |  | (68,401,524) |  | (62,743,206)
|Reduction of stated
 capital to deficit (b)                  |  | (16,769,570) |  | (16,769,570)
|Stock-based compensation
 costs (c)                          |  |              |  |             
|Cumulative effect of prior
 years                            |  | (1,037,690)  |  | (1,037,690) 
|                                                             |  |              |  |             
|                                                            
|Accumulated deficit in
 accordance with U.S. GAAP            |  | (86,208,784) |  | (80,550,466)
|                                                             |  |              |  |             
|                                                            
|Total
 shareholders equity in accordance with U.S. GAAP     |  | 32,516,981   |  | 32,035,572  
|                                                             |  |              |  |             

56

---



|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)      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).



|b)      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.



|c)      Stock-based compensation costs
|--------------------------------------

As described
in note 3, the Company prospectively adopted the fair value method of accounting
for stock options granted to employees. As a result of this change, there is no
difference between the Companys net earnings (loss) for 2005, 2004 and 2003
under U.S. GAAP as compared to Canadian GAAP.



|d)      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:

|                                                                |  | 2005        |  | 2004    |  | 2003     
|--------------------------------------------------------------- |  | ----------- |  | ------- |  | ---------
|                                                                |  | $           |  | $       |  | $        
|Earnings (loss)
 from continuing operations before income taxes |  | (3,368,993) |  | 871,711 |  | (66,571) 
|Provision for (recovery)
 of income taxes                       |  |             |  |         |  |          
|Current                                                         |  | (12,046)    |  | 153,825 |  | -        
|Future                                                          |  | (13,964)    |  | 347,133 |  | (155,561)

57

---



|27
      Subsequent EventsFees incurred in SEC
 investigation
|-------------------------------------------------------------

On March 28,
2006, the Company's insurance broker advised the Company's that its insurance
carrier was willing to pay an amount up to $460,000 in settlement of claims to
date for the legal representation costs incurred in 2005 for directors and
officers of the Company with respect to their appearance at the SEC
investigation and for legal counsel for named individuals in the securities
class action. The settled amount will be recorded in the first quarter of
2006.



|Purported Securities Class Action
 Lawsuits
|-------------------------------------------

On March 28,
2006, the court in the consolidated case denied a motion the Company filed for
dismissal of the consolidated complaint. The Company denies the allegations
against it, believes that the purported claims are without merit, and intends to
continue defend itself vigorously (see note 24).



58

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|ITEM 19.   EXHIBITS
|-------------------

The
following exhibits are filed in support of the statements contained herein and
are in addition to those exhibits previously filed as Exhibits to the Form 20-F with the
Commission:

| | 12.3* | Certification of Guy Fauré under Rule 13a-14(a) or
Rule 15d-14(a) of the Securities Exchange Act of 1934.                                                         
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 12.4* | Certification of Daniel Bertrand under Rule 13a-14(a) or
Rule 15d-14(a) of the Securities Exchange Act of 1934.                                                   
|
| | 13.2* | 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.
|



|*Filed as an
Exhibit to this Form 20-F/A.
|-----------------------------------------

59

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# SIGNATURES

The
Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F
and that it has duly caused and authorized the undersigned to sign this Amendment No.1 on
its behalf.

|             |  | MAMMA.COM INC.           | 
|------------ |  | ------------------------ | 
|             |  |                          | 
|            
|            
|May 12, 2006 |  | By:  /s/ David Goldman  
|             |  |                          | 
|             |  |                          | 
|            
|            
|             |  | By:  /s/ Guy Fauré      
|             |  |                          | 
|             |  |                          | 
|            
|            
|             | 
|             |  | By:  /s/ Daniel Bertrand
|             |  |                          | 
|             |  |                          | 

60