Increasing Number of Design Wins Provides Evidence of Widespread
Adoption of ECCHighlights for the Year:
- GE's security business licensed Certicom's Elliptic Curve
Cryptography (ECC) technology
- Nokia licensed Certicom's cryptographic technology in multi-year
contract as foundation for security in Intellisync Mobile Suite and
other messaging and file synchronization products
- Visto Corporation licensed Certicom's technology and ECC cryptography
for mobile push email and messaging applications in multi-year
agreement
- Cybertrust licensed Certicom's Suite B Power Bundle products to offer
commercially available ECC certificates
- NTT and Certicom will conduct joint research on ECC digital signature
technology
- WORLDSPACE Satellite Radio, a global leader in satellite-based
digital radio services, licensed Certicom's Conditional Access System
- Secured recurring revenue contracts with top-tier multinationals in
broad range of sectors during fourth quarter of fiscal 2007
Subsequent to Year End:
- Appointed Dr. Matthew Campagna as director of research, who brings
extensive experience in ECC implementation to the role
- Initiated litigation against Sony for patent infringementMISSISSAUGA, ON, June 6 /CNW/ - Certicom Corp. (TSX: CIC) (the "Company")
today reported results for the fiscal year and fourth quarter ended April 30,
2007. All figures are in U.S. dollars and in accordance with Canadian
Generally Accepted Accounting Principles (GAAP) except where otherwise noted.
Revenue for the year was $21.4 million compared to $15.1 million for
fiscal 2006. For the fourth quarter of fiscal 2007, revenue was $6.5 million,
compared to $5.1 million in the same period in fiscal 2006.
"Certicom's fourth quarter revenue reflects the timing of contract
closings for several large, multi-year contracts, which we alluded to in our
third quarter release," said Bernard Crotty, Certicom's President and Chief
Executive Officer. "Management is very pleased that our annual results are
consistent with the objectives set out in our business plan."
"In fiscal 2007, we had a substantial increase in the number of design
wins, with multinationals such as GE, Nokia and WORLDSPACE committing to
Certicom's ECC-enabled solutions. This provides strong evidence of the
increasing market adoption of ECC," continued Mr. Crotty. "We look forward to
building on our momentum in fiscal 2008."
"The patent infringement litigation against Sony Corporation is an
example of a situation where we will defend our patent portfolio when
necessary. We are confident that we have adequate patent rights and resources
to successfully pursue this suit," Mr. Crotty added.
Full Year Financial Review
Operating expenses(1) for the year were $20.1 million, compared to
$15.2 million in fiscal 2006. The increase in year-over-year operating
expenses was mainly due to a planned increase in product development
resources, higher sales commissions related to increased revenue and legal
expenses related to intellectual property protection. For the year, the
Company posted a net loss on a GAAP basis of $3.1 million or $0.08 per basic
and diluted share, compared to a net loss of $3.2 million, or $0.08 per basic
and diluted share in fiscal 2006.
Certicom had $43.2 million in cash(2) at year end, compared to
$44.3 million at the end of the third quarter. The cash position was $24.7
million at April 30, 2006. The Company has no debt.
Fourth Quarter Financial Review
Operating expenses(1) for the fourth quarter of fiscal 2007 were
$6.3 million, compared to $4.5 million for the same period last year. The
year-over-year increase was due mainly to the same factors mentioned above in
the full year review. For the fourth quarter of fiscal 2007, the Company
posted a net loss on a GAAP basis of $1.2 million or $0.03 per basic and
diluted share, compared to a net loss of $0.2 million, or $0.00 per basic and
diluted share for the same period last year.
Fourth Quarter Operational Highlights- NTT and Certicom will conduct joint research on ECC digital signature
technology
- WORLDSPACE Satellite Radio, a global leader in satellite-based
digital radio services, licensed Certicom's Conditional Access System
- Certicom to provide Suite B Power Bundle products for nCipher
hardware security modules
- MobileAware licensed Certicom technology to meet encryption security
requirements
- Secured recurring revenue contracts with top-tier multinationals in
broad range of sectorsOutlook
Management intends to continue its focus on leveraging Certicom's
position as a global leader in ECC in order to build recurring revenue and
sustainable profits. This will involve defending Certicom's patent portfolio
where necessary.
Operating expenses(1) for the first quarter of fiscal 2008 excluding cost
of revenues, depreciation and amortization, and stock-based compensation, are
expected to range from $6.7 to $7.1 million, including estimated legal
expenses ranging from $0.8 to $1.3 million associated with intellectual
property protection. This is consistent with Certicom's fiscal 2008 business
plan.
Conference Call
Management will host a conference call to discuss Certicom's performance
for the fiscal year and fourth quarter of 2007 at 10 a.m. ET (7 a.m. PT) on
Thursday, June 7, 2007. The call may be accessed at 416-644-3415 or
1-800-733-7571. It will also be webcast with supporting slides and
subsequently archived at www.certicom.com. To listen to the webcast,
participants will require Windows Media Player(TM) which can be downloaded via
Certicom's website prior to the event. An archived recording will be available
from 12 p.m. (ET) on June 7 until 12 a.m. (ET) on June 14, 2007. To access it,
call 416-640-1917 or 1-877-289-8525 and enter passcode 21233392 followed by
the number sign.
Annual General Meeting of Shareholders
Certicom will hold its Annual General Meeting of shareholders on
Thursday, September 20, 2007 at 10 a.m. ET at The Gallery of the TSX Broadcast
& Conference Centre located at The Exhange Tower, 130 King Street West in
Toronto. The meeting will also be simulcast live at Certicom's web site at
www.certicom.com.
About Certicom
Certicom protects the value of content, applications and devices with
government-approved security. Adopted by the National Security Agency (NSA)
for classified and sensitive but unclassified government communications,
Elliptic Curve Cryptography (ECC) provides the most security per bit of any
known public-key scheme. As the global leader in ECC, Certicom security
offerings are currently licensed to more than 300 customers including General
Dynamics, Motorola, Oracle, Research In Motion and Unisys. Founded in 1985,
Certicom's corporate offices are in Mississauga, Ontario, Canada with
worldwide sales and marketing headquarters in Reston, Virginia and offices in
the U.S., Canada and Europe.
Certicom, Certicom Security Architecture, Certicom Trust Infrastructure,
Certicom CodeSign, Certicom KeyInject, Security Builder, Security Builder
API, Security Builder BSP, Security Builder Crypto, Security Builder ETS,
Security Builder GSE, Security Builder IPSec, Security Builder NSE,
Security Builder PKI and Security Builder SSL are trademarks or
registered trademarks of Certicom Corp. All other companies and products
listed herein are trademarks or registered trademarks of their respective
holders. Information subject to change.
ENDNOTES:
---------
(1) This news release contains references to operating expenses. Certicom
defines operating expenses as total operating expenses excluding cost
of revenues, depreciation and amortization and stock-based
compensation. It also excludes interest income, other income
(expense) and withholding tax expense.----------------------------------------
Three months Twelve months
ended ended
April 30, April 30,
2007 2006 2007 2006
----------------------------------------
Sales and marketing $ 2,635 $ 1,965 $ 9,211 $ 7,017
Product development and
engineering 1,878 1,515 6,213 4,873
General and administrative 1,813 1,017 4,686 3,315
---------- --------- --------- ---------
Total operating expenses $ 6,326 $ 4,497 $ 20,110 $ 15,205
---------- --------- --------- ---------
---------- --------- --------- ---------
(2) This news release contains references to cash, which is defined as
cash and cash equivalents, short term and long term marketable
securities and restricted cash.
Cash and cash equivalents $ 3,397 $ 2,044
Marketable securities 26,752 22,703
Long-term marketable
securities 13,013 -
--------------------
Total Cash $ 43,162 $ 24,747
--------------------Except for historical information contained herein, this news release
contains forward-looking statements that involve risks and uncertainties.
Forward-looking information includes information concerning the Company's
future financial performance, business strategy, plans, goals and objectives.
When used in such documents, the words "plans", "expects", "budget",
"scheduled", "estimates", "forecasts", "intends", "anticipates", "will",
"believes" or variations of such words and phrases often, but not always,
identify forward-looking statements. Factors which could cause actual results
or events to differ materially from current expectations include, among other
things: the ability of the Company to successfully implement its strategic
initiatives and whether such strategic initiatives will yield the expected
benefits; the ability of the Company to develop, promote and protect its
proprietary technology security breaches or defects in the Company's products;
competitive conditions in the businesses in which the Company participates;
changes in consumer spending; the outcome of legal proceedings as they arise;
general economic conditions and normal business uncertainty; consolidation in
the Company's industry and by its customers; customer preferences towards
product offerings; the risk that customers may cancel their contracts with the
Company; reliance on a limited number of customers; demand for ECC-based
technology; performance of the Company's management team and the Company's
ability to attract and retain skilled employees; operating the Company's
business profitably; fluctuations in revenue and foreign currency exchange
rates; interest rate fluctuations and other changes in borrowing costs; the
ability to develop and maintain strategic relationships; and other factors
identified under the heading "Risk Factors" in the Company's annual
information form dated July 26, 2006 and filed on SEDAR at www.sedar.com.
While the Company believes that its forecasts and assumptions are
reasonable, results or events predicted in this forward-looking information
may differ materially from actual results or events.CERTICOM CORP.
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars)
CANADIAN GAAP April 30,
2007 2006
--------- ---------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents ......................... $ 3,397 $ 2,044
Marketable securities ............................. 26,752 22,703
Accounts receivable, net .......................... 6,008 2,729
Unbilled receivables .............................. 559 287
Prepaid expenses and other current assets ......... 758 657
--------- ---------
Total current assets ............................ 37,474 28,420
Long-term marketable securities ..................... 13,013 -
Property and equipment, net ......................... 1,250 1,079
Patents, net ........................................ 2,222 1,888
Other assets ........................................ 24 176
--------- ---------
Total assets .................................. $ 53,983 $ 31,563
--------- ---------
--------- ---------
LIABILITIES
Current liabilities:
Accounts payable .................................. $ 2,170 $ 1,118
Accrued liabilities ............................... 2,878 2,253
Deferred revenue .................................. 3,378 3,599
Current portion of lease inducements .............. 52 52
--------- ---------
Total current liabilities ....................... 8,478 7,022
Other long-term payables ............................ 491 503
Lease inducements, net of current portion ........... 87 139
--------- ---------
Total liabilities ............................... 9,056 7,664
SHAREHOLDERS' EQUITY
Share capital ..................................... 36,514 14,031
Contributed surplus ............................... 7,044 5,366
Retained earnings ................................. 1,369 4,502
--------- ---------
Total shareholders' equity ...................... 44,927 23,899
--------- ---------
Total liabilities and shareholders' equity ...... $ 53,983 $ 31,563
--------- ---------
--------- ---------
CERTICOM CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
-----------------------------------------------------------
(In thousands of U.S. dollars, except number of shares and
per share data)
CANADIAN GAAP Years ended April 30,
-----------------------------
2007 2006 2005
--------- --------- ---------
(unaudited)
Revenues .................................. $ 21,353 $ 15,135 $ 11,550
--------- --------- ---------
Costs and expenses:
Cost of product sales ................... 207 126 70
Cost of services ........................ 2,614 1,648 1,269
Sales and marketing ..................... 9,211 7,017 6,466
Product development and engineering ..... 6,213 4,873 3,772
General and administrative .............. 4,686 3,315 2,711
Depreciation of property and equipment .. 703 570 476
Amortization of patents ................. 428 400 275
Stock-based compensation ................ 1,742 1,030 611
--------- --------- ---------
Total costs and expenses .............. 25,804 18,979 15,650
--------- --------- ---------
Loss from operations ...................... (4,451) (3,844) (4,100)
Other income (expense) .................... 1,792 690 (174)
--------- --------- ---------
Loss before income taxes .................. (2,659) (3,154) (4,274)
Income tax expense ........................ 474 - -
--------- --------- ---------
Net loss for the year ..................... (3,133) (3,154) (4,274)
Retained earnings, beginning of year ...... 4,502 7,656 11,930
--------- --------- ---------
Retained earnings, end of year ............ $ 1,369 $ 4,502 $ 7,656
--------- --------- ---------
--------- --------- ---------
Basic and diluted net loss per
common share ............................. $ (0.08) $ (0.08) $ (0.11)
--------- --------- ---------
--------- --------- ---------
Weighted average shares used in computing
basic and diluted net loss per common
share (000's) ............................ 41,453 38,162 37,774
--------- --------- ---------
--------- --------- ---------
CERTICOM CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
CANADIAN GAAP Years ended April 30,
-----------------------------
2007 2006 2005
--------- --------- ---------
Cash provided by (used in): (unaudited)
Operating activities:
Net income (loss) for the year .......... $ (3,133) $ (3,154) $ (4,274)
Items not affecting cash:
Depreciation of property and
equipment ............................ 703 570 476
Amortization of patents ............... 428 400 275
Stock-based compensation .............. 1,742 1,030 611
Non-cash interest expense ............. - - 483
Foreign exchange loss on convertible
debentures ........................... - - 391
Amortization of lease inducements ..... (52) (63) (20)
Net change in non-cash operating
working capital ........................ (2,056) 365 2,441
--------- --------- ---------
Net cash provided by (used in)
operating activities ................. (2,368) (852) 383
Investing activities:
Purchase of property and equipment ...... (874) (475) (642)
Purchase of patents and other
long-term assets ....................... (762) (660) (712)
Maturity (purchase) of marketable
securities, net ........................ (17,062) (154) 8,341
Decrease in restricted cash ............. - 617 51
--------- --------- ---------
Net cash provided by (used in)
investing activities ................... (18,698) (672) 7,038
Financing activities:
Proceeds on the issuance of common
shares, net ............................ 22,419 872 337
Repayment of convertible debenture ...... - - (10,005)
--------- --------- ---------
Net cash provided by (used in)
financing activities ................. 22,419 872 (9,668)
Effect of exchange rate on cash and cash
equivalents .............................. - 9 (12)
--------- --------- ---------
Increase (decrease) in cash and cash
equivalents .............................. 1,353 (643) (2,259)
Cash and cash equivalents, beginning
of year .................................. 2,044 2,687 4,946
--------- --------- ---------
Cash and cash equivalents, end of year .... $ 3,397 $ 2,044 $ 2,687
--------- --------- ---------
--------- --------- ---------
CERTICOM CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
-----------------------------------------------------------
(In thousands of U.S. dollars, except number of shares and
per share data)
(Unaudited)
CANADIAN GAAP Three months ended Twelve months ended
April 30, April 30,
2007 2006 2007 2006
--------- --------- --------- ---------
Revenues:
Product and intellectual
property ..................... $ 4,475 $ 3,609 $ 14,630 $ 10,870
Services ...................... 2,035 1,501 6,723 4,265
--------- --------- --------- ---------
Total revenues .............. 6,510 5,110 21,353 15,135
Cost of revenues:
Product and intellectual
property ..................... 66 (91) 207 126
Services ...................... 1,066 511 2,614 1,648
--------- --------- --------- ---------
Total cost of revenues ...... 1,132 420 2,821 1,774
--------- --------- --------- ---------
Gross margin .................... 5,378 4,690 18,532 13,361
Operating expenses:
Sales and marketing ........... 2,635 1,965 9,211 7,017
Product development and
engineering .................. 1,878 1,515 6,213 4,873
General and administrative .... 1,813 1,017 4,686 3,315
Depreciation and
amortization ................. 279 265 1,131 970
Stock-based compensation ...... 470 291 1,742 1,030
--------- --------- --------- ---------
Total operating expenses .... 7,075 5,053 22,983 17,205
--------- --------- --------- ---------
Loss from operations ............ (1,697) (363) (4,451) (3,844)
Other income (expense):
Interest income ............... 469 199 1,814 766
Interest expense and other,
net .......................... 7 (3) (22) (76)
--------- --------- --------- ---------
Total other income .......... 476 196 1,792 690
--------- --------- --------- ---------
Income (loss) before provision
for income taxes ............... (1,221) (167) (2,659) (3,154)
Provision for income taxes .... (12) - 474 -
--------- --------- --------- ---------
Net income (loss) for the
period ......................... $ (1,209) $ (167) $ (3,133) $ (3,154)
Retained earnings, beginning
of period ...................... 2,578 4,669 4,502 7,656
--------- --------- --------- ---------
Retained earnings, end of
period ........ $ 1,369 $ 4,502 $ 1,369 $ 4,502
--------- --------- --------- ---------
--------- --------- --------- ---------
Basic and diluted net loss
per share ...................... $ (0.03) $ (0.00) $ (0.08) $ (0.08)
--------- --------- --------- ---------
--------- --------- --------- ---------
Shares used in basic and
diluted net loss per share
calculations ................... 42,649 38,376 41,453 38,162
--------- --------- --------- ---------
--------- --------- --------- ---------
For further information: Investors and Financial Analysts: Hervé Séguin,
Chief Financial Officer, Certicom Corp., (905) 501-3827, hseguin@certicom.com;
Media: John Callahan, Director, Public Relations & Marketing Communications,
Certicom Corp., (703) 234-2357, jcallahan@certicom.com; www.certicom.com
