Commtouch Provides Fourth Quarter and Year End 2005 Results.MOUNTAIN VIEW, Calif. -- Commtouch(R) (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 :CTCH CTCH Common Traffic Channel ), 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(TM) virus protection, today announced its fourth quarter and 2005 year end results. Revenues for the fourth quarter 2005 were more than double those of the fourth quarter of 2004, and grew by 20% in comparison to the third quarter 2005, from $1,048,000 for the third quarter to $1,257,000 during the fourth quarter of 2005. Deferred revenues (long term and short term) as at December December: see month. 31, 2005 were $1,919,000, compared to deferred revenues of $1,200,000 as at December 31, 2004 and $1,834,000 as at September September: see month. 30, 2005. Net loss for the quarter was $469,000 compared to $412,000 in the third quarter 2005, and $2,554,000 in the fourth quarter 2004. Revenues for the year ended December 31, 2005 grew by approximately 158% over those of fiscal year 2004; $3,925,000 for 2005 compared to $1,523,000 in 2004. Net loss for the year ended December 31, 2005 was $2,690,000 compared to $7,193,000 in 2004. Net loss attributable to ordinary and equivalently participating shareholders for the year was $4,441,000, which included non-cash amortization totaling $1,751,000 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. Cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has at December 31, 2005 was approximately $6,486,000 compared to $4,149,000 as of December 31, 2004. "2005 was a very positive year for the company from a technological, marketing and sales standpoint The Standpoint is a newspaper published in the British Virgin Islands. It was originally published under the name Pennysaver, largely as a shopping-coupon promotional newspaper, but since emerged as one of the most influential sources of journalism in the ," stated Gideon Gideon (gĭd`ēən), or Jerubbaal (jērŭb`āəl, –rəbā`əl) Mantel, CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Commtouch. "We were very encouraged to see that the company achieved positive cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses during the fourth quarter."
Business Updates
The company:
1. Achieved its tenth consecutive quarter of revenue growth in the
fourth quarter of 2005, and sees this trend continuing in the
first quarter of 2006.
2. Expects operational expenses to drop in the first quarter of
2006 compared to the fourth quarter of 2005.
3. Has been experiencing a high rate of renewal business,
especially with its OEM partners, which is a key element to
continued growth for the company.
4. Sees strong demand continuing for messaging security products,
with global interest in the company's products remaining high.
The company will continue to sign new OEM partners during 2006.
About Commtouch Commtouch Software Ltd. (NASDAQ:CTCH) is dedicated to protecting and preserving the integrity of the world's most important communications tool -- email. Commtouch has 15 years of experience developing messaging software, and is a global developer and provider of proprietary anti-spam and Zero-Hour virus protection solutions. Using core technologies including RPD 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, the Commtouch Detection Center analyzes billions of email messages per month to identify new spam E-mail that is not requested. Also known as "unsolicited commercial e-mail" (UCE), "unsolicited bulk e-mail" (UBE), "gray mail" and just plain "junk mail," the term is both a noun (the e-mail message) and a verb (to send it). and malware (MALicious softWARE) Software designed to destroy, aggravate and otherwise make life unhappy. See crimeware, virus, worm, logic bomb, macro virus and Trojan. outbreaks within minutes of their introduction into 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 . Integrated by over 30 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 partners, Commtouch technology protects thousands of organizations, with over 35 million users in 100 countries. 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, including the Commtouch online lab detailing spam statistics and charts. 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 business conditions and growth or deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in the Internet 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 (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. ; 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; 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; and the failure of Commtouch to meet The NASDAQ Capital Market's listing standards in the future, 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)
December 31, December 31,
2005 2004(a)
------------ ------------
Assets
Current Assets:
Cash and cash equivalents $ 3,986 $ 4,149
Marketable Securities $ 2,500 --
Trade receivables, net 355 97(a)
Prepaid expenses and other accounts
receivable 168 111
------------ ------------
Total current assets 7,009 4,357
------------ ------------
Long-term lease deposits 18 53
Equity investment in Imatrix 48 248
Severance pay fund 547 484
Property and equipment, net 373 337
------------ ------------
$ 7,995 $ 5,479
------------ ------------
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable 321 245
Employees and payroll accruals 617 462
Accrued expenses and other liabilities 301 415
Short-term deferred revenue 1,533 692(a)
------------ ------------
Total current liabilities 2,772 1,814
------------ ------------
Long-term deferred revenue 386 508(a)
Accrued severance pay 638 564
------------ ------------
1,024 1,072
============ ============
Shareholders' equity 4,199 2,593
------------ ------------
$7,995 $5,479
============ ============
(a) Certain amounts from prior years have been reclassified to
conform to the current presentation.
COMMTOUCH SOFTWARE LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(USD in thousands, except per share amounts)
Three Months Year ended
ended
----------------- ----------------
Dec. 31 Dec. 31 Dec. 31 Dec. 31
------- ------- ------- -------
2005 2004(a) 2005 2004(a)
------- ------- ------- -------
Revenues $ 1,257 $ 590 $ 3,925 $ 1,523
Cost of revenues 181 162 700 637
------- ------- ------- -------
Gross profit 1,076 428 3,225 886
------- ------- ------- -------
Operating expenses:
Research and development 417 432(a) 1,524 1,564(a)
Sales and marketing 602 779 2,476 3,691
General and administrative 540 466(a) 1,881 1,824(a)
Amortization of stock-based
employee deferred
compensation -- -- -- 30
------- ------- ------- -------
Total operating expenses 1,559 1,677 5,881 7,109
------- ------- ------- -------
Operating loss (483) (1,249) (2,656) (6,223)
Interest and other expense,
net 47 (1,278) 141 (880)
Equity - loss of affiliate (33) (27) (175) (90)
------- ------- ------- -------
Net loss (469) (2,554) (2,690) (7,193)
Amortization of beneficial
conversion feature relating
to convertible Series A
Preferred Shares -- -- (1,751) --
------- ------- ------- -------
Net loss attributable to
ordinary and equivalently
participating shareholders $ (469)$(2,554) $(4,441) $(7,193)
======= ======= ======= =======
Basic and diluted net loss per
share $ (0.01)$ (0.06) $ (0.09) $ (0.18)
======= ======= ======= =======
Weighted average number of
shares used in computing basic
and diluted net loss
per share 53,148 42,616 47,406 39,969
======= ======= ======= =======
(a) Certain amounts from prior years have been reclassified to
conform to the current presentation.
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