Commtouch Issues First Quarter 2005 Results; Highlighted by the Seventh Consecutive Quarter of Revenue Growth.MOUNTAIN VIEW, Calif. -- Commtouch(R) (Nasdaq:CTCHC), the developer of ground breaking RPD RPD Rapid RPD Radiation Protection Dosimetry RPD Rapid Product Development RPD Rochester Police Department RPD Recurrent Pattern Detection (Commtouch anti-spam engine) RPD Relative Percent Difference RPD Removable Partial Denture (TM) technology for real time anti-spam Spam elimination. See spam filter, spambot and e-mail obfuscator. and zero-hour virus protection, today announced its first quarter results for 2005. Revenues for the quarter grew by 25%, from $590,000 for the prior quarter to $740,000 during the first quarter of 2005. In comparison, revenues for the first quarter 2004 were $160,000. Deferred revenues as at March 31, 2005 were $1,478,000, as compared to deferred revenues of $1,200,000 as at December December: see month. 31, 2004. Net loss for the quarter was $1,072,000 compared to $2,554,000 in the prior quarter, and $1,612,000 in the comparable quarter last year. Net loss attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to ordinary and equivalently participating shareholders for the quarter was $1,749,000, which included non-cash amortization totaling $677,000 relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Series A Preferred Share beneficial conversion feature, while loss for the fourth quarter 2004 included a one time, non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of $1,296,000 in relation to the early repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan of the November November: see month. 2003 convertible loan. As discussed in last quarter's earnings release, the company's OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and business model continues to foster double digit Noun 1. double digit - a two-digit integer; from 10 to 99 integer, whole number - any of the natural numbers (positive or negative) or zero; "an integer is a number that is not a fraction" revenue growth with stable expense outlays Outlays Payments on obligations in the form of cash, checks, the issuance of bonds or notes, or the maturing of interest coupons. . The company expects expenses during the second quarter to remain relatively unchanged. Cash at March 31, 2005 was approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $3,420,000 compared to $4,149,000 as of December 31, 2004. During April 2005, we received $914,000 of the proceeds relating to the warrant exercise transaction of March 31, 2005. The first quarter included a number of noteworthy events for Commtouch. In addition to the seventh consecutive quarter of revenue growth, the company also announced the shipment of its new Zero Hour(TM) Virus Protection product to the first of its many OEM customers. No less significant was the announcement of an exclusive marketing arrangement with Rhyolite rhyolite, fine-grained light-colored acidic volcanic rock. Rhyolite is chemically the equivalent of granite, and is thus composed primarily of quartz and orthoclase feldspar with subordinate amounts of plagioclase feldspar, biotite mica, amphiboles, and pyroxenes. Software and the DCC (1) (Direct Cable Connection) A Windows 95/98 feature that allows PCs to be cabled together for data transfer. DCC actually sets up a network connection between the two machines. product portfolio, which when coupled with the patent acquired last year enables the company to implement a consistent and far reaching licensing program for a large variety of existing and new customers. Also during the quarter, the company continued to make positive strides in securing the continued listing of its Ordinary Shares on The NASDAQ SmallCap Market in general, and increasing its shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. to over $2.5 million in particular. The company received approximately $1.2 million against the issuance of approximately 3.2 million shares from the exercise of certain previously issued warrants. About Commtouch Commtouch Software Ltd. (NASDAQ:CTCHC) is dedicated to protecting and preserving the integrity of the world's most important communications tool - email. A global developer and provider of proprietary anti-spam solutions, Commtouch has an installed base of over 25 million users. The company's core technologies, including RPD(TM) - Recurrent recurrent /re·cur·rent/ (re-kur´ent) [L. recurrens returning] 1. running back, or toward the source. 2. returning after remissions. re·cur·rent adj. 1. Pattern Detection, reflect Commtouch's 14 years of experience developing messaging software. Commtouch solutions are incorporated into OEM applications and are also sold through channels and resellers. Commtouch is headquartered in Netanya Netanya (nətän`yə), city (1994 pop. 144,900), W central Israel, on the Mediterranean Sea; also spelled Nathania. It is a beach resort and the trade center for agricultural settlements in the region. , Israel Israel, in the Bible Israel (ĭz`rēəl, ĭz`rāəl) [as understood by Hebrews,=he strives with God], according to the book of Genesis, name given to Jacob as eponymous ancestor of the Hebrews, the chosen people of God. and has a subsidiary in Mountain View, CA. For more information, see: www.commtouch.com. This press release contains 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. , including projections about our business, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. For example, statements in the future tense future tense n. A verb tense expressing future time. Noun 1. future tense - a verb tense that expresses actions or states in the future future , and statements including words such as "expect," "plan," "estimate," anticipate," or "believe" are forward-looking statements. These statements are based on information available to us at the time of the release; we assume no obligation to update any of them. The statements in this release are not guarantees of future performance and actual results could differ materially from our current expectations as a result of numerous factors, including the failure of Commtouch to satisfy the conditions imposed by the Nasdaq Listing Qualifications Panel for the continued listing of Commtouch shares on The Nasdaq SmallCap Market; business conditions and growth or deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the market, commerce and the general economy, both domestic as well as international; fewer than expected new-partner relationships; fewer than expected license agreements resulting from Commtouch's exclusive rights to market DCC; competitive factors including pricing pressures; technological developments, and products offered by competitors; the ability of our OEM partners to successfully penetrate markets with products integrated with Commtouch technology; a slower than expected acceptance rate for real time AV solutions in general and the Commtouch Zero Hour(TM) Virus Protection product in particular; availability of qualified staff for expansion; and technological difficulties and resource constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. encountered in developing new products, such as the Zero Hour solution, as well as those risks described in the text of this press release and the company's Annual Reports on Form 20-F and reports on Form 6-K, which are available through www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. . Recurrent Pattern Detection, RPD and Zero-Hour are trademarks, and Commtouch is a registered trademark, of Commtouch Software Ltd. U.S. Patent No. 6,330,590 is owned by Commtouch.
COMMTOUCH SOFTWARE LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(USD in thousands)
March 31, Dec. 31,
2005 2004(a)
---------- --------
Assets
Current Assets:
Cash and cash equivalents $3,420 $4,149
Trade receivables, net 318 97(a)
Prepaid expenses 108 89
Receivables on account of issuance of warrants 914 ---
Other accounts receivable 7 22
---------- --------
Total current assets 4,767 4,357
---------- --------
Long-term lease deposits 48 53
Equity investment in Imatrix 219 248
Severance pay fund 497 484
Property and equipment, net 392 337
---------- --------
$5,923 $5,479
---------- --------
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable 257 245
Employees and payroll accruals 518 462
Accrued expenses and other liabilities 328 415
Deferred revenue 1,478 1,200(a)
---------- --------
Total current liabilities 2,581 2,322
---------- --------
Accrued severance pay 571 564
---------- --------
Shareholders' equity 2,771 2,593
---------- --------
$5,923 $5,479
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(a) Reclassed for current period presentation
COMMTOUCH SOFTWARE LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(USD in thousands, except per share amounts)
Three Months ended
-------------------
Mar. 31 Mar. 31
-------- --------
2005 2004
-------- --------
Revenues $740 $160
Cost of revenues 194 144
-------- --------
Gross profit (loss) 546 16
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Operating expenses:
Research and development, net 368 363
Sales and marketing 678 841
General and administrative 546 354
Amortization of stock-based employee deferred
compensation --- 30
-------- --------
Total operating expenses 1,592 1,588
-------- --------
Operating loss (1,046) (1,572)
Interest and other expense, net (7) (45)
Equity in (loss) earnings of affiliate (19) 5
-------- --------
Net loss (1,072) (1,612)
Amortization of beneficial conversion feature
relating to convertible Series A Preferred Shares (677) -
-------- --------
Net loss attributable to ordinary and equivalently
participating shareholders $(1,749) $(1,612)
======== ========
Basic and diluted net loss per share $(0.03) $(0.04)
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Weighted average number of shares used in
computing basic and diluted net loss per share 50,226 37,206
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