Commtouch Reports Fourth Quarter and Year-End 2003 Results.Business Editors MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--Feb. 20, 2004 Commtouch (Nasdaq:CTCH CTCH Common Traffic Channel ), a global developer and provider of proprietary anti-spam Spam elimination. See spam filter, spambot and e-mail obfuscator. solutions, today announced its fourth quarter and year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. results for 2003. Commtouch saw an increase in new contracts during the fourth quarter of 2003 -- only the second full quarter of sales activity since the release of Commtouch's proprietary, patent pending anti-spam solution. New contracts during the quarter totaled approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $500 thousand, up from approximately $150 thousand during the third quarter of 2003. As previously announced, revenues associated with the sale of the Commtouch solution are recognized ratably over the period in which the service is provided, which is usually one to two years. Payment of fees to Commtouch is generally due in full 30-60 days following the sale. Revenues for the quarter were $69 thousand compared to $84 thousand for the prior quarter and $637 thousand in the comparable quarter last year. Total loss for the quarter was $2,890 thousand compared to $1,763 thousand in the prior quarter and $2,230 thousand in the comparable quarter last year. Also during the quarter, the company had a 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 approximately $1,843 thousand for interest and other expenses relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the issuance of convertible loans and warrants. Revenues for the year ended December December: see month. 31, 2003 were $329 thousand compared to $3,438 thousand in 2002. Revenues from Commtouch's previous email service See Internet e-mail service. business decreased over the course of 2003 as relevant contracts expired ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. . Total loss for the year ended December 31, 2003 was $6,834 thousand compared to $4,911 thousand in 2002. During the fourth quarter, the company had a non-cash charge of approximately $1,843 thousand for interest and other expenses relating to the issuance of convertible loans and warrants. Headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. as of December 31, 2003 was at 40, up from 25 at the end of 2002. Cash at December 31, 2003 was approximately $4,125 thousand compared to $1,388 thousand as of December 31, 2002 (with an additional amount of $1,457 thousand received in January January: see month. 2004 bringing the total to approximately $5,500 thousand). During the twelve months ended December 31, 2003, Commtouch received $1,250 thousand under the January 2003 convertible loan agreement (that was subsequently converted into shares), $3,040 thousand from the two private placements announced on July July: see month. 16 and August 4, 2003, $3,000 thousand from the November November: see month. 2003 convertible loan (some of which was received in January 2004), and approximately $1,000 thousand from the exercise of warrants related to the January 2003 convertible loan agreement (most of which was received in January 2004). About Commtouch Commtouch Software Ltd. is a global developer and provider of proprietary anti-spam solutions. 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 and also sold directly to enterprises. 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:CTCH). To learn more about Commtouch visit www.commtouch.com. Note: Commtouch(R) is a registered trademark of Commtouch Software Ltd. Other terms and product names in this document may be trademarks of others. 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 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 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. .
COMMTOUCH SOFTWARE LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(USD in thousands)
Dec. 31, Dec. 31,
2003 2002
-------- --------
Assets
Current Assets:
Cash and cash equivalents $4,125 $1,388
Trade receivables, net 92 64
Prepaid expenses 156 139
Receivables on account of shares 955 ---
Other accounts receivable 132 92
-------- --------
Total current assets 5,460 1,683
-------- --------
Long-term lease deposits 5 5
Equity investment in Imatrix 339 3
Deferred charges 236 ---
Severance pay fund 391 264
Property and equipment, net 452 1,029
-------- --------
$6,883 $2,984
-------- --------
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable 479 338
Employees and payroll accruals 418 424
Accrued expenses and other liabilities 598 372
-------- --------
Total current liabilities 1,495 1,134
-------- --------
Other liabilities -- 135*
Convertible loan 2,134 --
Shares to be registered upon exercise of warrants 372 --
Accrued severance pay 425 278
-------- --------
2,931 413
-------- --------
Shareholders' equity 2,457 1,437
-------- --------
$6,883 $2,984
======== ========
* Reclassified
COMMTOUCH SOFTWARE LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(USD in thousands, except per share amounts)
Three Months ended Twelve Months ended
------------------- -------------------
Dec. 31 Dec. 31 Dec. 31 Dec. 31
2003 2002 2003 2002
--------- --------- --------- ---------
Revenues $69 $637 $329 $3,438
Cost of revenues 134 183 581 1,675
--------- --------- --------- ---------
Gross profit (loss) (65) 454 (252) 1,763
--------- --------- --------- ---------
Operating expenses:
Research and development, net 381 522 1,476 2,246
Sales and marketing 738 190 1,875 1,176
General and administrative 291 1,022 1,626 2,588
Repayment of notes receivables (318) - (318) -
Amortization of stock-based
employee deferred
compensation 58 137 247 551
Write-off of property and
equipment -- 750 -- 750
--------- --------- --------- ---------
Total operating expenses 1,150 2,621 4,906 7,311
--------- --------- --------- ---------
Operating loss (1,215) (2,167) (5,158) (5,548)
Interest and other expense,
net (1,684) (36) (1,967) (60)
Equity Income (Loss) 9 (27) 291 (56)
Minority interest -- -- -- 74
--------- --------- --------- ---------
Loss from continuing
operations (2,890) (2,230) (6,834) (5,590)
--------- --------- --------- ---------
Gain on disposal of Wingra -- -- -- 1,014
Discontinued operations -
Wingra -- -- -- (335)
--------- --------- --------- ---------
Gain from sale of discontinued
operations -- -- -- 679
--------- --------- --------- ---------
Net loss $(2,890) $(2,230) $(6,834) $(4,911)
========= ========= ========= =========
Basic and diluted net loss per
share
Loss from continuing
operations $(0.10) $(0.10) $(0.28) $(0.27)
Gain from sale of
discontinued operations -- -- -- 0.03
--------- --------- --------- ---------
Net loss $(0.10) $(0.10) $(0.28) $(0.24)
========= ========= ========= =========
Weighted average number of
shares used in computing
basic and diluted net loss
per share 28,754 22,226 24,573 20,854
========= ========= ========= =========
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