Commtouch Reports Eighth Consecutive Quarter of Revenue Growth; Second Quarter 2005 is Highlighted by Improvement in Company's K
August 10 2005 - 3:00PM
Business Wire
Commtouch(R) (Nasdaq:CTCH), the developer of ground breaking
RPD(TM) technology for real time anti-spam and zero-hour virus
protection, today announced its second quarter and year to date
results for the period ending June 30, 2005. Revenues for the
quarter were more than double those of the same quarter of last
year, and grew by 19% in comparison to the prior quarter, from
$740,000 for the first quarter to $880,000 during the second
quarter of 2005. Deferred revenues as at June 30, 2005 were
$1,753,000, compared to deferred revenues of $1,200,000 as at
December 31, 2004 and $1,478,000 as at March 31, 2005. Net loss for
the quarter was $737,000 compared to $1,072,000 in the prior
quarter, and $1,194,000 in the comparable quarter last year. Net
loss attributable to ordinary and equivalently participating
shareholders for the quarter was $1,368,000, which included
non-cash amortization totaling $631,000 relating to the Series A
Preferred Share beneficial conversion feature. Revenues for the six
months ended June 30, 2005 and June 30, 2004 were $1,620,000 and
$518,000, respectively. Total loss for the six months ended June
30, 2005 was $1,809,000, compared to $2,806,000 in the comparable
period last year. Net loss attributable to ordinary and
equivalently participating shareholders for the six months ended
June 30, 2005 was $3,117,000, which included non-cash amortization
totaling $1,308,000 relating to the Series A Preferred Share
beneficial conversion feature. "We have shown that we have great
products that are answering the market's needs," stated Gideon
Mantel, CEO of Commtouch. "Remarkably, we are growing the business
while lowering expenses and significantly reducing the company's
cash burn. The first half-year results are yet another example of
the scalability of our business, and we look forward to the second
half of the year with much anticipation and excitement as we
continue to educate markets globally of the 'must have' features of
our products." Cash at June 30, 2005 was approximately $3,878,000
compared to $4,334,000 as of March 31, 2005 on a pro forma basis
(includes $914,000 of the proceeds relating to the warrant exercise
transaction of March 31, 2005). The company expects expenses during
the third quarter to remain relatively unchanged. 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 14 years of experience
developing messaging software, and is a global developer and
provider of proprietary anti-spam and Zero-Hour(TM) virus
protection solutions. Using core technologies including RPD(TM) --
Recurrent Pattern Detection, the Commtouch Detection Center
analyzes 1.5 billion email messages per month to identify new spam
and malware outbreaks within minutes of their introduction into the
Internet. Integrated by approximately 28 OEM partners, Commtouch
technology protects thousands of organizations, with 35 million
users in 100 countries. Commtouch is headquartered in Netanya,
Israel and has a subsidiary in Mountain View, CA. For more
information, see: www.commtouch.com. This press release contains
forward-looking statements, 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, 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 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; 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 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. 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. -0- *T COMMTOUCH SOFTWARE LTD. CONDENSED CONSOLIDATED
BALANCE SHEETS (USD in thousands) June 30, December 31, 2005
2004(a) -------- ------------ Assets Current Assets: Cash and cash
equivalents $3,878 $4,149 Trade receivables, net 401 97(a) Prepaid
expenses 44 89 Other accounts receivable 27 22 ------ ------ Total
current assets 4,350 4,357 ------ ------ Long-term lease deposits
40 53 Equity investment in Imatrix 171 248 Severance pay fund 481
484 Property and equipment, net 390 337 ------ ------ $5,432 $5,479
------ ------ Liabilities and Shareholders' Equity Current
Liabilities: Accounts payable 256 245 Employees and payroll
accruals 531 462 Accrued expenses and other liabilities 272 415
Deferred revenue 1,753 1,200(a) ------ ------ Total current
liabilities 2,812 2,322 ------ ------ Accrued severance pay 559 564
------ ------ Shareholders' equity 2,061 2,593 ------ ------ $5,432
$5,479 ====== ====== (a) Reclassed for current period presentation
COMMTOUCH SOFTWARE LTD. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (USD in thousands, except per share amounts) Three
Months Six Months ended ended ---------------- ----------------
June 30 June 30 June 30 June 30 ---------------- ----------------
2005 2004 2005 2004 ------- ------- ------- ------- Revenues $ 880
$ 358 $ 1,620 $ 518 Cost of revenues 145 161 339 305 -------
------- ------- ------- Gross profit (loss) 735 197 1,281 213
------- ------- ------- ------- Operating expenses: Research and
development, net 363 269 731 632 Sales and marketing 627 1,073
1,305 1,914 General and administrative 504 536 1,050 890
Amortization of stock-based employee deferred compensation --- ---
--- 30 ------- ------- ------- ------- Total operating expenses
1,494 1,878 3,086 3,466 ------- ------- ------- ------- Operating
loss (759) (1,681) (1,805) (3,253) Interest and other expense, net
63 489 56 444 Equity in (loss) earnings of affiliate (41) (2) (60)
3 ------- ------- ------- ------- Net loss (737) (1,194) (1,809)
(2,806) Amortization of beneficial conversion feature relating to
convertible Series A Preferred Shares (631) - (1,308) - -------
------- ------- ------- Net loss attributable to ordinary and
equivalently participating shareholders
$(1,368)$(1,194)$(3,117)$(2,806) ======= ======= ======= =======
Basic and diluted net loss per share $ (0.03)$ (0.03)$ (0.06)$
(0.08) ======= ======= ======= ======= Weighted average number of
shares used in computing basic and diluted net loss per share
53,565 37,473 51,905 37,339 ======= ======= ======= ======= *T
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