Commtouch Reports Third Quarter 2003 Results and Issues Business Updates.Business Editors/High-Tech Writers MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--Nov. 21, 2003 Commtouch (Nasdaq:CTCH CTCH Common Traffic Channel ), a developer and provider of proprietary anti-spam Spam elimination. See spam filter, spambot and e-mail obfuscator. solutions, today announced its third quarter results for 2003. Revenues for the quarter were $84 thousand compared to $70 thousand for the prior quarter and $525 thousand in the comparable quarter last year. Total loss for the quarter was $1,763 thousand compared to $1,037 thousand in the prior quarter and $1,082 thousand in the comparable quarter last year. During the third quarter, Commtouch recognized $44 thousand as equity income of Imatrix (formerly Commtouch Japan). Revenues for the nine months ended September September: see month. 30, 2003 were $260 thousand, with revenues in the comparable period last year being $2,801 thousand. Total loss for the nine months ended September 30, 2003 was $3,944 thousand compared to $2,681 thousand in the comparable period last year. Based on the company's and its partners' pipelines, the Company anticipates reporting a significant increase in revenues from anti-spam solutions in Q1 2004. The Company is recognizing revenues over the lives of anti-spam solution contracts, as opposed op·pose v. op·posed, op·pos·ing, op·pos·es v.tr. 1. To be in contention or conflict with: oppose the enemy force. 2. to up-front up-front or up·front Informal adj. 1. Straightforward; frank. 2. Paid or due in advance: up-front cash. adv. when contracts are signed. Thus, while revenues were only slightly greater than in the preceding quarter, based on the amount of contracts closed during the past quarter, the company expects to see much larger revenues going forward from those contracts. Cash at September 30, 2003 was approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $2,653 thousand compared to $1,388 thousand as of December December: see month. 31, 2002. During the nine months ended September 30, 2003, the company received $1,250 thousand under the previously announced convertible loan agreement and $3,040 thousand from the two private placements announced on July July: see month. 16 and August 4, 2003.
Business Updates (Through the Date of This Release):
1. Signed 11 channel partners in Q3 2003, for a total of 52 to
date.
2. We increased our sales and marketing efforts in Q3 2003 and are
continuing to do so in Q4 2003. We have more than doubled the
sales force and hope to see the results of these efforts in
early 2004.
3. Interest in Commtouch's anti-spam solutions in international
markets is rising (see Commtouch's recent press release
regarding the Waterford deal). Commtouch's solutions have key
competitive advantages in the international markets, as the
underlying technology is not based on content filtering
mechanisms, thereby enabling the technology to work with a
multitude of languages.
4. Commtouch successfully completed the development of its second
product -- the SDK software kit -- that enables vendors to
integrate some of the key features of Commtouch's anti-spam
solution into their own offerings, i.e. other applications or
security appliances. We are in discussion with numerous
players, and anticipate announcing at least one additional
agreement by year-end.
5. Although our financing deals this year have injected the
company with funds necessary for its continuing operations, we
believe that in order for us to successfully compete in a very
competitive and fast moving enterprise anti-spam market,
additional financing should be secured. In this regard, we
also announced today that we entered into an agreement with
our existing convertible note holders for conversion of the
company's $1.25 million debt into equity and their exercise of
warrants for approximately $1 million in cash to the company,
against the company's prepayment of an additional 7.5%
interest (by way of an issuance of additional shares and
warrants).
About Commtouch Commtouch Software Ltd. is a developer and provider of proprietary anti-spam solutions. The company's core technologies reflect its dozen years of experience as a leading vendor of email software applications and provider of global messaging services. 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's solutions visit our web site at http://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)
Sept. Dec.
30, 31,
2003 2002
------- -------
Assets
Current Assets:
Cash and cash equivalents $2,653 $1,388
Trade receivables, net -- 64
Prepaid expenses and other accounts receivable 229 231
------- -------
Total current assets 2,882 1,683
------- -------
Long-term lease deposits 5 5
Equity investment in Imatrix 284 3
Severance pay fund 340 264
Property and equipment, net 569 1,029
------- -------
$4,080 $2,984
------- -------
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable 421 338
Employees and payroll accruals 447 424
Accrued expenses and other liabilities 423 372
------- -------
Total current liabilities 1,291 1,134
------- -------
Other liabilities 135 135
Convertible loan 333 --
Accrued severance pay 358 278
------- -------
826 413
---------------
Shareholders' equity 1,963 1,437
---------------
$4,080 $2,984
===============
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. 30 Sept. 30 Sept. 30 Sept. 30
------------------------------------
2003 2002 2003 2002
------------------------------------
Revenues $84 $525 $260 $2,801
Cost of revenues 130 153 447 1,492
------- ------- ------- -------
Gross profit (loss) (46) 372 (187) 1,309
------- ------- ------- -------
Operating expenses:
Research and development, net 387 621 1,095 1,724
Sales and marketing 609 221 1,137 986
General and administrative 561 379 1,335 1,566
Amortization of stock-based
employee deferred compensation 63 138 189 414
------- ------- ------- -------
Total operating expenses 1,620 1,359 3,756 4,690
------- ------- ------- -------
Operating loss (1,666) (987) (3,943) (3,381)
Interest and other expense, net (141) (48) (283) (24)
Equity Income (Loss) 44 (47) 282 (29)
Minority interest -- -- -- 74
------- ------- ------- -------
Loss from continuing operations (1,763) (1,082) (3,944) (3,360)
------- ------- ------- -------
Gain on disposal of Wingra -- -- -- 1,014
Discontinued operations - Wingra -- -- -- (335)
------- ------- ------- -------
Gain from sale of discontinued
operations -- -- -- 679
------- ------- ------- -------
Net loss $(1,763) $(1,082) $(3,944) $(2,681)
======= ======= ======= =======
Basic and diluted net loss
per share
Loss from continuing operations $(0.07) $(0.05) $(0.17) $(0.16)
Gain from sale of discontinued
operations -- -- -- 0.03
------- ------- ------- -------
Net loss $(0.07) $(0.05) $(0.17) $(0.13)
======= ======= ======= =======
Weighted average number of shares
used in computing basic and
diluted net loss per share 24,997 22,199 23,173 20,380
======= ======= ======= =======
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