Commtouch Releases Third Quarter 2004 Financial Results.MOUNTAIN VIEW, Calif. -- Commtouch(R) (Nasdaq:CTCHC), the innovator of anti-spam Spam elimination. See spam filter, spambot and e-mail obfuscator. solutions featuring 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 (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, today announced its third quarter results for 2004. Revenues for the quarter were $415 thousand compared to $358 thousand for the prior quarter (second quarter 2004) and $84 thousand in the comparable quarter last year. Deferred revenues as at September September: see month. 30, 2004 were $1,127 thousand, as compared to deferred revenues of $923 thousand as at June June: see month. 30, 2004. Total loss for the quarter was $1,833 thousand compared to $1,194 thousand in the prior quarter and $1,763 thousand in the comparable quarter last year. As described previously, in the second quarter, the company had non-cash financial income of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $613 thousand relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the November November: see month. 2003 convertible loan and related warrants and fair value adjustment thereof, out of which $583 thousand was attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the change of terms of the November 2003 agreement pursuant to the terms of the May 2004 financing round. Revenues for the nine months ended September 30, 2004 and September 30, 2003 were $933 thousand and $260 thousand, respectively. Total loss for the nine months ended September 30, 2004 was $4,639 thousand, compared to $3,944 thousand in the comparable period last year. Cash at September 30, 2004 was approximately $5,107 thousand compared to $4,143 thousand as of June 30, 2004. Immediately following the close of the second quarter, we received $2,650 thousand in relation to the May 2004 private placement, representing the balance of the $3,900 thousand investment. About Commtouch Commtouch Software Ltd. is a global developer and provider of proprietary anti-spam solutions featuring Recurrent Pattern Detection (RPD) technology. Its mission is to protect and preserve the integrity of the world's most important communications tool -- email. The company's core technologies reflect its 13 years of experience as a leading vendor of email software applications and provider of global messaging services. Commtouch's patent-pending technologies are employed in solutions that are sold through channels and resellers. In addition, Commtouch anti-spam technologies are incorporated in software applications of security and messaging OEMs. 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 its subsidiary, Commtouch Inc., is based in Mountain View, CA. The company was founded in 1991 and has been publicly traded since 1999 (Nasdaq:CTCHC). To learn more about Commtouch visit www.commtouch.com. For a free copy of "Choosing the Best Technology to Fight Spam.", a recently published IDC study analyzing qualities of spam-fighting technologies, visit: http://www.commtouch.com/analysts_and_publications.shtml 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 non-occurrence of any of the company's recently announced proposed transactions; the failure of the company to consummate To carry into completion; to fulfill; to accomplish. A Common-Law Marriage is consummated when the parties live in a manner intended to bring about public recognition of their relationship as Husband and Wife. the transactions within the timeframe required by Nasdaq, or to otherwise fail to satisfy the conditions imposed by the Panel for the continued listing of Commtouch shares on The Nasdaq SmallCap Market; the acceleration acceleration, change in the velocity of a body with respect to time. Since velocity is a vector quantity, involving both magnitude and direction, acceleration is also a vector. In order to produce an acceleration, a force must be applied to the body. of the payment date of convertible notes due to a delisting Delisting When the stock of a company is removed from a stock exchange. Notes: Reasons for delisting include violating regulations and/or failure to meet financial specifications set out by the stock exchange. by Nasdaq; 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; competitive factors including pricing pressures; technological developments, and products offered by competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. ; 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 as well as those risks described in the text of this press release or 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 and RPD are trademarks and Commtouch is a registered trademark of Commtouch Software Ltd.
COMMTOUCH SOFTWARE LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(USD in thousands)
Sept. 30, December 31,
2004 2003(a)
---------- ------------
Assets
Current Assets:
Cash and cash equivalents $5,107 $4,125
Trade receivables 52 92
Prepaid expenses 199 156
Receivables on account of shares --- 955
Other accounts receivable 33 15
---------- ------------
Total current assets 5,391 5,343
---------- ------------
Long-term lease deposits 5 5
Equity investment in Imatrix 223 339
Deferred charges 266 353
Severance pay fund 412 391
Property and equipment, net 342 452
Intangible asset 40 --
---------- ------------
$6,679 $6,883
---------- ------------
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable 354 479
Employees and payroll accruals 520 418
Accrued expenses and other liabilities 434 376
Deferred revenue 1,127 222
---------- ------------
Total current liabilities 2,435 1,495
---------- ------------
Convertible loan 2,753 2,134
Shares to be registered upon exercise of
warrants 192 372
Accrued severance pay 457 425
---------- ------------
3,402 2,931
---------- ------------
Shareholders' equity 842 2,457
---------- ------------
$6,679 $6,883
========== ============
(a) Reclassified to conform to current period presentation.
COMMTOUCH SOFTWARE LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(USD in thousands, except per share amounts)
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
Sept. Sept. Sept. Sept.
30 30 30 30
-------- -------- -------- --------
2004 2003 2004 2003
-------- -------- -------- --------
Revenues: $415 $84 $933 $260
Cost of revenues: 170 130 475 447
-------- -------- -------- --------
Gross profit (loss) 245 (46) 458 (187)
-------- -------- -------- --------
Operating expenses:
Research and development, net 423 387 1,055 1,095
Sales and marketing 998 609 2,964 1,137
General and administrative 545 561 1,383 1,335
Amortization of stock-based
employee deferred compensation -- 63 30 189
-------- -------- -------- --------
Total operating expenses 1,966 1,620 5,432 3,756
-------- -------- -------- --------
Operating loss (1,721) (1,666) (4,974) (3,943)
Interest and other income
(expense), net (46) (141) 398 (283)
Equity in Income of Imatrix (66) 44 (63) 282
-------- -------- -------- --------
Net loss $(1,833) $(1,763) $(4,639) $(3,944)
======== ======== ======== ========
Basic and diluted net loss per
share $(0.04) $(0.07) $(0.12) $(0.17)
======== ======== ======== ========
Weighted average number of shares
used in computing basic and
diluted net loss per share 42,467 24,997 39,080 23,173
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