Certicom Reports Results for Third Quarter of Fiscal 2008



    New CEO focusing on accelerating ECC adoption and improving company
    performance

    
    Highlights for the Quarter:

    -   Karna Gupta appointed new Chief Executive Officer

    -   Bally Technologies licensed Certicom technology for gaming security

    -   Texas Instruments licensed Certicom's ECC technology for improved
        security in next-generation government-issued identification
        documents

    -   Kilopass and Certicom form partnership for delivery of security for
        digital content protection

    -   IdentiPHI licensed Certicom's ECC technology for new security
        products for businesses and government agencies

    -   Certicom's Suite B Power Bundle selected to support Cavium Networks'
        processors

    -   Certicom Device Certificate Authority launched to benefit high-volume
        device manufacturers

    Subsequent to Quarter End:

    -   Aristocrat Technologies licensed Certicom technology for gaming
        security
    

    MISSISSAUGA, ON, March 5 /CNW/ - Certicom Corp. (TSX: CIC) ("Certicom" or
the "Company") today reported results for the third quarter of fiscal 2008
ended January 31, 2008. All figures are in U.S. dollars and in accordance with
Canadian Generally Accepted Accounting Principles (GAAP) except where
otherwise noted.
    Revenue for the quarter was $6.1 million compared to $4.3 million for the
third quarter of fiscal 2007. For the first nine months of fiscal 2008,
revenue was $13.1 million, compared to $14.8 million in the first nine months
of fiscal 2007.
    "Our third quarter revenue included a one-time year-end payment for a
customer contract, which can occur from time to time due to the nature of our
business," said Karna Gupta, Chief Executive Officer.
    Mr. Gupta continued, "Going forward, we will have a sharper focus on
select market segments and will also concentrate on expanding our efforts in
high-potential geographic markets outside North America. While we are not
satisfied with our year-to-date performance, we are encouraged by the strength
and quality of our pipeline of opportunities and are absolutely committed to
significantly enlarging this pipeline."

    Third Quarter Financial Review

    Operating expenses(1) for the quarter were $5.1 million, compared to
$4.7 million in the third quarter of fiscal 2007. The increase in
year-over-year operating expenses was mainly due to legal expenses related to
the Sony litigation. However, these operating expenses were lower than the
guidance given in the previous quarter due to lower-than-expected litigation
expenses, which totaled $0.3 million, and generally lower level spending
during the quarter. The Company posted a net loss on a GAAP basis of $0.2
million, or $0.00 per basic and diluted share for the quarter, compared to a
net loss of $1.3 million, or $0.03 per basic and diluted share in the third
quarter of fiscal 2007.
    The Company reports that recurring revenue for the third quarter was
$2.0 million, consistent with $2.2 million in the third quarter of fiscal
2007.
    Certicom had $38.6 million in cash(2) at quarter-end compared to
$43.2 million at year-end fiscal 2007 and $44.3 million at January 31, 2007.
The Company has no debt.

    Nine-Month Financial Review

    Operating expenses(1) for the first nine months of fiscal 2008 were
$15.8 million, compared to $13.8 million for the same period last year. The
increase in year-over-year operating expenses was mainly due to legal expenses
related to the Sony litigation, which totaled $1.1 million for the nine-month
period, and a planned increase in development resources specifically related
to new product initiatives.
    For the first nine months of fiscal 2008, the Company posted a net loss
on a GAAP basis of $6.4 million, or $0.15 per basic and diluted share,
compared to a net loss of $1.9 million, or $0.05 per basic and diluted share,
for the same period last year.

    Sony Patent Infringement Litigation

    Certicom is currently progressing through the broad discovery phase of
the litigation case, which requires both parties to provide specific
documentation. Management is pleased that the claims construction hearing of
the litigation case (known as a Markman hearing) has been set for June 11,
2009 and the trial date has been set for September 8, 2009.
    The Company remains confident of its legal position and ability to pursue
this litigation to a successful conclusion.

    Outlook

    "I am excited to have joined Certicom at a pivotal time in the company's
history," said Mr. Gupta. "Certicom has strong and scalable core assets,
including leading-edge technology and a dedicated team of professionals. We
intend to accelerate the development of complete security solutions tailored
to our highest-potential market segments."
    Mr. Gupta continued, "We clearly acknowledge that we must improve
performance and are reviewing all company activities with an eye to increasing
revenue and cost efficiencies. An extensive review of our three-year strategic
plan will be conducted over the next few months and we will share the plan's
highlights with our shareholders once the review is complete."
    Management will focus on leveraging Certicom's global leadership position
in ECC to build recurring revenue and profits. The Company continues to
aggressively manage expenses to achieve a cost structure that is in line with
revenue, a strategy that is key to achieving Certicom's goal of sustainable,
profitable growth.
    Operating expenses(1) for the fourth quarter of fiscal 2008, excluding
cost of revenue, depreciation and amortization, and stock-based compensation,
are expected to range from $5.2 to $5.6 million, including estimated legal
expenses associated with intellectual property protection ranging from $0.5 to
$0.8 million.

    Conference Call

    
    -------------------------------------------------------------------------
    Conference Call and Webcast         March 6, 2008, 10 a.m. ET (7 a.m. PT)
    -------------------------------------------------------------------------
    Participant Numbers                 416-644-3423 or 1-800-731-5319
    -------------------------------------------------------------------------
    

    The conference call will be webcast live 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
from Certicom's website prior to the event. An archived recording will be
available from 12 p.m. (ET) on March 6 until 12 a.m. (ET) on March 13, 2008.
To access the archive, please call 416-640-1917 or 1-877-289-8525 and enter
passcode 21263240, followed by the number sign.

    About Certicom

    Certicom protects the value of content, applications and devices with
government-approved security. Adopted by the National Security Agency (NSA)
for 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, Europe and China. Visit
www.certicom.com

    
    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 ended  Nine months ended
                                       ------------------  -----------------
                                            January 31,         January 31,
                                          2008      2007      2008      2007
                                      ---------------------------------------
    Sales and marketing               $  1,955  $  2,205  $  5,950  $  6,576
    Product development and
     engineering                         1,753     1,562     5,162     4,335
    General and administrative           1,381       972     4,683     2,873
                                      --------- --------- --------- ---------
    Total operating expenses          $  5,089  $  4,739  $ 15,795  $ 13,784
                                      --------- --------- --------- ---------
                                      --------- --------- --------- ---------

    (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.

                                    January 31, April 30,
                                          2008      2007

      Cash and cash equivalents       $  5,015  $  3,397
      Marketable securities             22,891    26,752
      Long-term marketable securities   10,684    13,013
                                      -------------------
      Total Cash                      $ 38,590  $ 43,162
                                      -------------------
    

    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, 2007 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. In particular but without
limitation, there is no assurance that the Company will achieve all or a
portion of the goals outlined in its fiscal 2008 business plan within the time
limits specified therein or at all.


    
                               CERTICOM CORP.
                         CONSOLIDATED BALANCE SHEETS
                       (In thousands of U.S. dollars)

    CANADIAN GAAP
                                                        January 31, April 30,
                                                              2008      2007
                                                        ----------- ---------
                                                        (Unaudited) (Audited)
    ASSETS

    Current assets:
      Cash and cash equivalents.......................... $  5,015  $  3,397
      Marketable securities..............................   22,891    26,752
      Accounts receivable, net...........................    4,353     6,008
      Unbilled receivables...............................      399       559
      Prepaid expenses and other current assets..........      664       758
                                                          --------- ---------
        Total current assets.............................   33,322    37,474

    Long-term marketable securities......................   10,684    13,013
    Property and equipment, net..........................    1,227     1,250
    Patents, net.........................................    2,703     2,222
    Other assets.........................................       24        24
                                                          --------- ---------
        Total assets..................................... $ 47,960  $ 53,983
                                                          --------- ---------
                                                          --------- ---------

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities:
      Accounts payable................................... $  1,050  $  2,170
      Accrued liabilities................................    2,401     2,878
      Deferred revenue...................................    1,744     3,378
      Obligation under capital lease.....................       18         -
      Current portion of lease inducements...............       52        52
                                                          --------- ---------
        Total current liabilities........................    5,265     8,478

    Other long-term payables.............................      463       491
    Obligation under capital lease, long term............       35         -
    Lease inducements, net of current portion............       48        87
                                                          --------- ---------
        Total liabilities................................    5,811     9,056

    Shareholders' equity:
      Share capital (Note 5).............................   38,621    36,514
      Contributed surplus................................    8,411     7,044
      Retained earnings (deficit)........................   (5,005)    1,369
      Accumulated other comprehensive income (Note 2)....      122         -
                                                          --------- ---------
        Total shareholders' equity.......................   42,149    44,927
                                                          --------- ---------
        Total liabilities and shareholders' equity....... $ 47,960  $ 53,983
                                                          --------- ---------
                                                          --------- ---------



                               CERTICOM CORP.
    CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
       (In thousands of U.S. dollars, except number of shares and per
                                 share data)
                                 (Unaudited)

    CANADIAN GAAP
                                       Three months ended  Nine months ended
                                           January 31,         January 31,
                                         2008      2007      2008      2007
                                      --------- --------- --------- ---------
    Revenues:
      Product and intellectual
       property...................... $  4,409  $  2,774  $  7,460  $ 10,155
      Services.......................    1,671     1,485     5,626     4,688
                                      --------- --------- --------- ---------
        Total revenues...............    6,080     4,259    13,086    14,843

    Cost of revenues:
      Product and intellectual
       property......................        -        73        12       141
      Services.......................      826       439     2,430     1,548
                                      --------- --------- --------- ---------
        Total cost of revenues.......      826       512     2,442     1,689

                                      --------- --------- --------- ---------
    Gross margin.....................    5,254     3,747    10,644    13,154

    Operating expenses:
      Sales and marketing............    1,955     2,205     5,950     6,576
      Product development
       and engineering...............    1,753     1,562     5,162     4,335
      General and administrative.....    1,381       972     4,683     2,873
      Depreciation and amortization..      356       290       994       852
      Stock-based compensation.......      475       440     1,686     1,272
                                      --------- --------- --------- ---------
        Total operating expenses.....    5,920     5,469    18,475    15,908

                                      --------- --------- --------- ---------
    Loss from operations.............     (666)   (1,722)   (7,831)   (2,754)

    Other income:
      Interest income................      461       559     1,447     1,345
      Interest expense and other,
       net...........................       31         5        29       (29)
                                      --------- --------- --------- ---------
        Total other income...........      492       564     1,476     1,316

                                      --------- --------- --------- ---------
    Loss before provision for
     income taxes....................     (174)   (1,158)   (6,355)   (1,438)
      Provision for income taxes.....        -       109        19       486
                                      --------- --------- --------- ---------
    Net loss for the period.......... $   (174) $ (1,267) $ (6,374) $ (1,924)
    Retained earnings (deficit),
     beginning of period.............   (4,831)    3,845     1,369     4,502
                                      --------- --------- --------- ---------
    Retained earnings (deficit),
     end of period................... $ (5,005) $  2,578  $ (5,005) $  2,578
                                      --------- --------- --------- ---------
                                      --------- --------- --------- ---------

    Basic and diluted net loss
     per share (Note 3).............. $   0.00  $  (0.03) $  (0.15) $  (0.05)
                                      --------- --------- --------- ---------
                                      --------- --------- --------- ---------

    Shares used in basic and
     diluted net loss per share
     calculations (Note 3)...........   43,669    42,615    43,545    41,082
                                      --------- --------- --------- ---------
                                      --------- --------- --------- ---------



                               CERTICOM CORP.
             CONSOLIDATED STATEMENTS OF COMPREHENSIVE GAIN (LOSS)
                       (In thousands of U.S. dollars)
                                 (Unaudited)

    CANADIAN GAAP
                                       Three months ended  Nine months ended
                                           January 31,         January 31,
                                         2008      2007      2008      2007
                                      --------- --------- --------- ---------
    Net income (loss)
     for the period.................. $   (174) $ (1,267) $ (6,374) $ (1,924)
    Other comprehensive income:
      Net unrealized gain on
       derivatives designated
       as cash flow hedges...........   (1,275)        -      (218)        -
                                      --------- --------- --------- ---------
    Comprehensive gain (loss)........ $ (1,449) $ (1,267) $ (6,592) $ (1,924)
                                      --------- --------- --------- ---------
                                      --------- --------- --------- ---------



                               CERTICOM CORP.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                       (In thousands of U.S. dollars)
                                 (Unaudited)

    CANADIAN GAAP
                                       Three months ended  Nine months ended
                                           January 31,         January 31,
                                         2008      2007      2008      2007
                                      --------- --------- --------- ---------
    Cash flows from operating
     activities:
      Net loss....................... $   (174) $ (1,267) $ (6,374) $ (1,924)
      Adjustments to reconcile net
       loss to net cash provided
       by (used in) operating
       activities:
        Depreciation and
         amortization................      356       290       994       852
        Stock-based compensation.....      475       440     1,686     1,272
        Amortization of lease
         inducements.................      (13)      (13)      (39)      (39)
        Changes in operating assets
         and liabilities:
          Accounts receivable
           and unbilled
           receivables, net..........     (997)    1,824     1,815      (298)
          Prepaid expenses and
           other assets..............      168        46       216       (37)
          Account payable............     (823)     (152)   (1,120)      (36)
          Accrued liabilities........      476      (235)     (477)     (457)
          Deferred revenue...........     (955)     (634)   (1,634)     (636)
          Obligation under
           capital lease.............       53         -        53         -
          Other payables.............        -         -       (28)       32
                                      --------- --------- --------- ---------
            Net cash provided by
             (used in) operating
             activities..............   (1,434)      299    (4,908)   (1,271)

    Cash flows from investing
     activities:
      Purchase of property
       and equipment.................     (171)     (240)     (604)     (763)
      Purchase of patents............     (194)     (233)     (848)     (590)
      Net maturity of marketable
       securities....................    4,004     3,809     6,190   (15,596)
                                      --------- --------- --------- ---------
        Net cash provided by
         (used in) investing
         activities..................    3,639     3,336     4,738   (16,949)

    Cash flows from financing
     activities:
      Proceeds from issuance
       of common stock, net..........        3        83     2,094    22,215
      Common shares repurchased
       (Note 5)......................        -         -      (306)        -
                                      --------- --------- --------- ---------
        Net cash provided by
         financing activities........        3        83     1,788    22,215

    Effect of exchange rate on
     cash and cash equivalents.......        -         -         -       (44)
                                      --------- --------- --------- ---------
    Net increase (decrease) in
     cash and cash equivalents.......    2,208     3,718     1,618     3,951

    Cash and cash equivalents,
     beginning of period.............    2,807     2,277     3,397     2,044
                                      --------- --------- --------- ---------
    Cash and cash equivalents,
     end of period................... $  5,015  $  5,995  $  5,015  $  5,995
                                      --------- --------- --------- ---------
                                      --------- --------- --------- ---------
    





For further information:

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

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CERTICOM CORP.

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