Catuity Provides Guidance for the Remainder of 2002.Business & Technology Editors Catuity, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CTTY CTTY Control Teletype CTTY Console Teletype ; ASX ASX See: Australian Stock Exchange : CAT) today released a mid-year review of its forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. and projections for 2002. Catuity last provided market guidance in its Annual Report on form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filed with the SEC in March 2002. Catuity is now updating and revising these forecasts based on management's review of its business at the halfway point of the year and following recent discussions with customers. Michael V
Michael V the Caulker or Kalaphates (Greek: Μιχαήλ Ε΄ Καλαφάτης, . Howe, President and Chief Executive Officer of Catuity, stated, "Catuity continues to be very positive about its future with a high level of market and sales activity and our proven capacity to deliver product on time. We are not changing our view of the future and we are projecting a breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations position with positive cash flows from operations for the second half of 2002. However, we recognize that factors largely beyond our control are now expected to cause the timing of a portion of our previously projected revenues and cash flow to be delayed several months. The effect is that recognizable revenues for the second half of 2002 will not be sufficient to recover the operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. incurred in the first half of 2002. Second half net cash inflow from operations will be positive but will not completely recover the cash used in operating activities in the first half." Second Half 2002 Catuity is projecting that it will breakeven in the second half of 2002 with net revenues of $3.2 million and operating costs operating costs npl → gastos mpl operacionales (before non-cash stock compensation expense) of $3.2 million. Net cash inflows from operating activities for the period are projected to be approximately $1.1 million. These projections compare favorably to net revenues of $1.3 million and a loss of $1.3 million in the corresponding 2001 period. The revenue projections are based on recent discussions with customers and the Company's estimate that 1.5 million smart cards Example of widely used contactless smart cards are Hong Kong's Octopus card, Paris' Calypso/Navigo card and Lisbon' LisboaViva card, which predate the ISO/IEC 14443 standard. The following tables list smart cards used for public transportation and other electronic purse applications. will be activated with loyalty by December 31, 2002. Catuity anticipates there will be more than 20 million cards issued with Catuity's software pre-loaded on the card by the end of 2002. As of the end of May 2002, an estimated 12 million of these cards have already been issued. Catuity's estimate of 1.5 million cards activated with its loyalty application by the end of 2002 represents 7.5 percent of the projected issued cards that have its software pre-loaded on them. The activation of cards is a timing issue beyond the Company's control and a significant number of additional cards are expected to be issued, with a significantly higher percentage of activation to occur, progressing into 2003. If more cards with the Catuity software are activated in 2002, the Company's revenues could be higher than currently projected, and vice versa VICE VERSA. On the contrary; on opposite sides. . Up to the present time, Catuity has received a significant majority of its revenues from software customization projects for its customers. In recent quarters the value of revenues from integration, support, installation and training services has been increasing as customers move closer to their launches using Catuity's loyalty software to implement their reward programs. Catuity believes license revenue will start to become a significant component of its total revenues in the fourth quarter of this year, with significant further growth in 2003. Catuity's business model for license revenue is based on cards issued, cards activated with loyalty or card transactions. As the number of, and usage of, cards with loyalty software capability increases, the license fees Catuity receives are also expected to increase. Catuity has no control over issuance, card usage, or the timing and extent of the retail incentive programs that promote card usage. Although the company sees great interest in loyalty software programs from retailers and card issuers, it cannot at this early adopter stage easily project the timing of license revenues. First Half 2002 Catuity is projecting net revenues of $1.9 million, operating costs (before non-cash stock compensation expense) of $3.1 million and a loss of $1.2 million for the first half of 2002. These projections compare favorably to net revenues of $322,000 and a loss of $3.1 million in the corresponding 2001 period, ending June 30. Full Year 2002 Catuity projects net revenues for 2002 of $5.1 million, operating costs (before non-cash stock compensation expense) of $6.3 million and a loss of $1.2 million for the year. These projections compare favorably to net revenues of $1.6 million and a loss of $4.5 million in 2001. The company projects net cash used in operating activities to be approximately $650,000 for 2002 (compared to $3.95 million in 2001). The Company anticipates that as of December 31, 2002, its balance sheet will show deferred revenue of approximately $1.2 million. This represents invoices rendered for license fees and services performed that under US GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). cannot be recognized as revenue even though no additional costs are expected to be incurred in earning such revenue. Catuity projects cash reserves Cash reserves See: Cash investments cash reserves Investment funds that are held in short-term assets such as Treasury bills and certificates of deposit until more permanent investment opportunities are available. to be $3.6 million as of December 31, 2002 compared with $4.4 million as of December 31, 2001. General The above projections do not include any revenues, costs or cash flow related to the data aggregation and analytics business that the Company intends to pursue. All projections are based on US GAAP. Catuity has reviewed recent market developments and current market trends. Some of the market factors that are impacting or may impact revenues and cash flow are: -- Card usage in the fourth quarter is generally higher because of higher US retail sales due to holiday spending; -- Card issuance in the fourth quarter tends to be lower than in other quarters due to the US holiday season and consumers tendency to use existing cards during this period. -- A number of yearly customer budgets commence in the fourth quarter. This results in some uncertainty until late in the third quarter, regarding future expenditures of customers. In 2001 Catuity received 60 percent of its total revenue in the fourth quarter of the year. -- While offering a distinct competitive advantage, integrating Catuity's loyalty software to customers' legacy systems is complex and can take a significant amount of time. -- The implementations in North America projected to be completed later this year are the world's first major implementations of multi-program card systems and the market is watching closely. -- The issuance of smart cards remains in its infancy, and while activity and interest continues to be strong, some major potential customers are waiting for completion and implementation of existing major projects. Catuity has released this information in order to ensure that shareholders and markets generally are aware of the challenges and uncertainties inherent in forecasting revenues and cash flows for the current year. About Catuity, Inc. Catuity, Inc. is a leading provider of application software that allows merchants, transaction processors and payment card issuers to establish and administer customer incentive and loyalty programs integrated to the payment system at the point of sale. Catuity Loyalty Software can be used by a broad range of sellers of goods and services In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility (unless the "good" is a "bad"). It is often used when referring to a Goods and Services Tax. , particularly those who sell through both store locations and over the Internet. Catuity's software has been included on millions of credit, charge and debit cards debit card, card that allows the cost of goods or services that are purchased to be deducted directly from the purchaser's checking account. They can also be used at automated teller machines for withdrawing cash from the user's checking account. , and works on both magnetic stripe A small length of magnetic tape adhered to credit cards, badges, permits, passes and tokens. The tape is read by magnetic stripe readers incorporated into ATMs, identification readers and payment terminals. or chip or "smart" cards. With Catuity's loyalty solution, merchants can offer their customers valuable benefits, thereby attracting and retaining customers as well as encouraging increased purchases. More information on Catuity is available at its website: http://www.catuity.com. In conjunction with the provisions of the "Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " section of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, this release may contain forward-looking statements pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to future anticipated projected plans, performance and developments, as well as other statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc future operations. All such forward-looking statements are necessarily only estimates of future results and there can be no assurance that actual results will not materially differ from expectations. Further information on potential factors that could affect Catuity, Inc. is included in the Company's Form 10-K, which is filed with the U.S. Securities & Exchange Commission. |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion