Hypercom has been awarded a contract worth more than US$7 million from Visanet Brasil. Under the terms of the agreement, Hypercom will install smart card readers and software on tens of thousands of Visanet-branded ‘Hypercom T7’ terminals throughout the country. VISA expects to have 200,000 smart card capable terminals in Brazil. Hypercom has also rolled out several large smart card programs in Europe and Asia, as well as in Latin America. Hypercom last year remotely upgraded its installed base of card payment terminals in the UK with the latest EMV-certified software applications. This remote upgrade was done from the company’s ‘Term-Master Suite’ terminal management system.Details
For its third quarter ended July 31, 2001, Royal
Bank of Canada announced cash net income of $518 million
($664 million or $.94 per share excluding special items, namely a
restructuring charge for U.S. retail operations, following the acquisition of
Centura Banks, and a write down of deferred income tax assets). Net income was
$436 million ($582 million or $.82 per share excluding these special items,
detailed on page 9). In addition, this quarter’s results reflected an
unusually high expense for Stock Appreciation Rights (discussed on page 10)
resulting from a 19% rise in the bank’s common share price during the quarter,
and an increase in the provision for credit losses (mentioned on page 11).
Commenting on the results, Gordon Nixon, President & Chief Executive
Officer, said, “Despite continuing weak capital markets, we performed well
again, demonstrating the value of our diversified business mix.”
Third quarter operating highlights:
– Gordon Nixon became President & Chief Executive Officer effective
August 1, 2001, succeeding as CEO John E. Cleghorn, who retired July
31. Also at this time, Mr. Guy Saint-Pierre, Chairman
of the Corporate Governance Committee of the Board of Directors of
Royal Bank and lead Director, became non-executive Chairman of Royal
– In June, following U.S. and Canadian regulatory approvals, Royal Bank
closed its acquisition of Centura Banks, Inc., (renamed RBC Centura)
headquartered in Rocky Mount, North Carolina. This acquisition
represented a major step in the bank’s U.S. expansion efforts.
– Subsequent to quarter end, the bank announced that it had signed a
definitive agreement to acquire Tucker Anthony Sutro, a Boston-based
broker dealer, for US$625 million in cash. The transaction is expected
to close in the fall of 2001 pending regulatory and Tucker Anthony
Sutro shareholder approvals.
The bank’s interim consolidated financial statements are expressed in
Canadian dollars, and are prepared in accordance with U.S. and Canadian
generally accepted accounting principles (GAAP). U.S. GAAP interim
consolidated financial statements are provided on pages 19-26. Canadian GAAP
interim consolidated financial statements, including a reconciliation of
significant differences from U.S. GAAP financial statements, are provided on
pages 29-37. The discussion & analysis which follows is based on the financial
statements prepared in accordance with U.S. GAAP and would not read
differently in any material respect if based on the consolidated financial
statements prepared in accordance with Canadian GAAP, except as noted in the
supplemental discussions on pages 7, 9 and 11.
CHIEF EXECUTIVE OFFICER’S MESSAGE
I want to thank John Cleghorn, who retired as CEO on July 31, for leaving
us a company in strong shape. It is well diversified by business, has leading
market positions in Canada in most of its business platforms, has a strong
management team, a shareholder-focused culture, and is successfully
implementing a disciplined growth strategy in the United States. As the new
CEO, I am committed to maintaining our focus on the four strategic priorities
which we have reported on for some time, and which I’ll discuss below.
One of the reasons for our superior valuation is the strong financial
performance that we have delivered to our shareholders over the past several
years. We want to maintain financial performance in the top quartile of North
American financial companies. Our core cash net income growth of 13% this
quarter keeps us well positioned in that regard.
As shown on page 5, our valuation remained in the top quartile of the TSE
Banks & Trusts Index, while earnings per share growth of 11% and ROE of 18.8%
for the first nine months, on a cash basis excluding special items, were
within the target ranges. Revenue growth was well in excess of our 10%
objective. As well, our capital ratios strengthened further in the quarter. As
for loan quality, the nonaccrual loans ratio of 1.2% was virtually unchanged
from last quarter, while the specific provision for credit losses ratio of
.42% for the year to date was slightly above the target range for 2001,
reflecting higher provisions for the U.S. telecommunication portfolio.
Included in this quarter were two months of results for RBC Centura,
which was acquired on June 5th. RBC Liberty Insurance and RBC Prism both
continued to perform well, and RBC Dain Rauscher, although continuing to
suffer the effects of weak client trading volumes, showed some operational
improvement from last quarter. Overall, international cash net income
accounted for 35% of total cash net income, up from 29% in the first nine
months of 2000 (excluding special items).
We announced the proposed acquisition of Tucker Anthony Sutro on August 1
and expect to close this transaction in the autumn. It will be combined with
RBC Dain Rauscher, and together they will form the ninth largest retail
brokerage firm with a national presence in the U.S. and provide substantial
cost savings opportunities. The combined companies will be rebranded RBC Dain
Rauscher, just as Centura has been renamed RBC Centura. In order to create an
integrated and cohesive brand globally, the umbrella “RBC” has been added to
our other U.S. company names — Prism and Liberty Insurance. In Canada, as
well, all business platforms will adopt the letters “RBC” (RBC Royal Bank, RBC
Insurance, RBC Investments, RBC Capital Markets and RBC Global Services).
I want to emphasize that our U.S. expansion will continue to be
disciplined and methodical, adhering to strict financial parameters. Each of
our business platforms is responsible for meeting its targets on a North
American basis and will be paying close attention to the financial returns of
its U.S. operations.
Growth of high-return, high P/E multiple businesses
Our primary focus remains on growing Wealth Management (which we believe
has good growth prospects on a long-term basis) and Personal & Commercial
Banking. However, each business segment has selected areas for priority
growth. While this quarter was a challenging one for Wealth Management, with
brokerage clients further reducing their trading activity, Personal &
Commercial Banking recorded 26% growth in cash net income excluding special
items. Corporate & Investment Banking, also, did well with the fixed income
operations having an exceptional quarter. This further demonstrates the
benefits of a diversified business platform.
We will continue to look for opportunities for restructuring or shedding
non-strategic businesses, as we did earlier this month with the sale of our
institutional money management business, RT Capital.
On the eBusiness front, our Canadian online client base passed the 1.7
million mark, up from 1.1 million a year ago and 1.5 million last quarter.
About 17% of our Canadian clients now deal with us online.
I look forward to reporting on our progress next quarter.Details
Upgrade International Corporation has filed its quarterly report for the nine months ended June 30, 2001, a summary of which is attached below.
The Company through its UltraCard subsidiary has continued an aggressive development program having completed the specifications for the UltraCard and its Read/Write device during the period and developing their initial pilot project previously announced. The Company remains very active on these development initiatives, in addition to securing funding for the market launch of its products.
Net losses aggregated $22.2 million in the first nine months of the current fiscal year ending June 30, 2001 compared with an $11.8 million net loss for the corresponding period of the prior fiscal year. This increase in net loss reflects the growing level of investment into the Companies core technology and advances in the production processes. Research and development expenditures more than doubled in the current fiscal year compared to the prior year, comprising a large part of the increased expenditures as the Company completes a production ready product. The net loss also reflects an increased cost of capital as the Company has incurred a greater proportion of generating funding through convertible securities than has been the case in prior periods. Interest expense in the amount of $2.7 million was incurred of which the majority represents non-cash warrants and shares issued as compensation to the investor. The Company previously announced that it had terminated the merger agreement with The Pathways Group. Funds advanced to Pathways total $3.4 million as of June 30, 2001. The Company has secured the amounts due from Pathways by way of a general security over the Pathways assets. The collectability of the amounts due from Pathways are potentially unrecoverable and accordingly the Company has provided an allowance of the amount due in the quarter ended June 30, 2001. The Company plans to actively pursue collection of the monies advanced to Pathways. The Company has been able to reduce its general and administrative costs by $2.85 million compared to the corresponding 3-month period in the prior fiscal year. This reduction is comprised of lower legal costs, and reduced compensation components related to key employee warrant issuances. Other than the allowance for potential uncollectible advances and interest expense previously discussed, general and administrative costs for the nine months remained approximately the same as the previous period last year, at approximately $200,000. UltraCard Inc. has again increased its research and development expenditures by $0.8 million over the corresponding prior period in a concentrated effort to complete a commercialized version of its high memory capacity UltraCard and Read/ Write device. These increasing expenditures reflect the Company’s primary focus on efforts which will complete its research and development initiatives, while at the same time, establishing production processes and specifications to facilitate the Company to engage others to produce the UltraCard and its read write device. The other significant operating subsidiary cQue (formerly Centurion) contributed approximately 6% of the total loss reflecting the focus of the consolidated groups efforts to complete the UltraCard technology. For the near future research and development expenditures are expected to increase to meet the Company’s numerous potential market opportunities. All of the Company’s research and development costs have been expensed as incurred.
Sales and marketing expenditures have increased by approximately $161,000 as compared to the nine-month period ended June 30, 2000, as the Company nears completion of UltraCard’s products. Sales and marketing expenditures are associated with the Company’s attendance at trade shows and industry awareness programs as the Company builds market awareness to establish and develop new markets and prepare for effective product launches for products which are nearing the first phase of completion.
LIQUIDITY AND CAPITAL RESOURCES
The Company is managing tight cash flows while still providing funding for an aggressive research and development program at UltraCard along with developing acquisitions in the software development area of business. Cash flows from financing activities of $11.4 million in the current period represents a 34 % increase in the capital raised in the corresponding period of the preceding year. In light of the more restrictive financial conditions at the current time this fact speaks well for the Companies ability to manage and continue to grow through economic downturns. The Company has experienced a significant increase in its current liabilities, increasing from 6.5 million in September 2000 to $11.5 million as at June 30, 2001. The Company has relied upon trade creditors while it aggressively pursues equity and debt capital from sources internationally. At the date of this report negotiations for debt and equity into the Company in amounts in excess of $50 Million dollars are underway.
Upgrade International Corp. through its ownership interest in UltraCard Inc., Efornet Corp., and cQue Corporation is engaged in the development and commercialization of a patented ultra high capacity portable data storage technology. UltraCard’s patented method for using existing hard disk storage technology provides both highly durable media in a credit card format and an inexpensive read/write device that together will become the next generation in personal portable data storage for a broad range of existing and new markets. Management believes that the UltraCard technology will potentially provide numerous industrial users with a combination of high levels of security and a vastly greater amount of personal transportable data storage at the lowest cost in the industry. In addition the acquisition and development of existing SmartCard solution providers represents a strategic market strategy designed to accelerate the integration of the vastly superior technology inherent in the UltraCard into existing and newly developing markets.
Tables to follow:
Upgrade International Corporation and Subsidiaries
(A development stage enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
Nine months ended June 30,
Costs and expenses
Research and development $ 2,253,486 $ 5,030,133
Purchased in-process research
and development 425,800 –
Sales and marketing 1,115,910 1,276,559
General and administrative 8,666,055 8,519,784
Other expenses (income)
Equity in losses of UltraCard – –
Interest expense 588,858 3,733,448
Provision for uncollectible
advances – 3,399,780
Other, net 209,299 193,290
Minority interest in losses
of subsidiaries (1,758,371) –
NET LOSS $ 11,771,037 $ 22,152,994
Loss per common
share-basic and diluted $ 0.64 $ 1.01
Upgrade International Corporation and Subsidiaries
(A development stage enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended Cumulative
June 30, results of
————————- operations since
2000 2001 (Feb. 5, 1997)
——— ——— ————
Costs and expenses
development $654,359 $1,490,718 $13,180,805
development – – 5,971,603
Sales and marketing 187,375 140,908 4,891,522
administrative 4,276,125 1,430,092 19,667,791
———— ———– ————-
5,117,859 3,061,718 43,711,721
Other expenses (income)
Equity in losses of
UltraCard – – 1,264,316
Interest expense 68,214 2,706,606 4,697,442
uncollectible advances – 3,339,780 3,399,780
Other, net 295,790 106,504 435,438
———— ———— ————
364,004 6,212,890 9,796,976
Minority interest in
losses of subsidiaries (71,038) – (2,115,135)
NET LOSS $ 5,410,825 $ 9,274,608 $ 51,393,562
=============== ============== ==============
Loss per common —-
diluted $ 0.28 $ 0.39 $ 4.11
=============== ================ ==============
Upgrade International Corporation and Subsidiaries
(A development stage enterprise)
CONSOLIDATED BALANCE SHEETS
September 30, June 30,
CURRENT ASSETS (unaudited)
Cash and cash equivalents $ 398,989 $ 107,919
Restricted deposit 805,687 300,000
Subscription receivable 32,725 –
Due from related party – 130,000
Equipment held for resale – 3,054,125
Prepaid expenses, deposits
and other 121,491 358,245
Total current assets 1,358,892 3,950,289
PROPERTY AND EQUIPMENT –
AT COST, less accumulated
depreciation and amortization 1,791,257 2,093,076
EQUIPMENT UNDER CONSTRUCTION 3,301,625 –
ADVANCES TO THE PATHWAYS GROUP,
INC less allowance for uncollect-
ible advances of $3,399,780 1,900,825
ADVANCES TO ROCKSTER, INC. – 950,000
Intangible and deferred assets,
net of accumulated amortization 370,206 622,606
Deposits & notes 328,051 332,845
Total assets $ 9,050,856 $ 7,948,816
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable $ 1,993,796 $ 4,496,134
Accrued liabilities 733,241 2,151,140
Bridge loans 799,177 434,259
Notes payable 431,453
contract payable 2,307,025 1,850,000
Royalty fee payable
to Card Tech, Inc., net 487,500 975,000
Payable to related parties 175,240 1,170,560
Total current liabilities 6,495,979 11,508,546
NOTES PAYABLE, net of
unamortized discount – 890,322
net of unamortized discount 809,043 1,662,973
MINORITY INTEREST – –
COMMITMENTS AND CONTINGENCIES – –
STOCKHOLDERS’ EQUITY (DEFICIT)
Common stock – $.001 par value,
50,000,000 shares authorized 20,341 23,725
Stock subscriptions 323,640 711,012
Additional paid in capital 36,925,837 50,829,216
Receivable from stockholders
of subsidiary (266,621) (266,621)
stage deficit (35,257,363) (57,410,357)
Total liabilities and
stockholders’ equity (deficit) $ 9,050,856 $ 7,948,816
For more details, please refer to the Company’s 10-QSB available on the Company’s Web Site at [www.upgd.com]
On Behalf of the Board of Directors,
Daniel Bland President
Alliance Data Systems Corp. announced that it has completed a $900 million offering of asset-backed notes issued through the World Financial Network Credit Card Master Note Trust, as part of the securitization program for Alliance Data’s World Financial Network National Bank. Alliance Data has raised over $1 billion in the public and private markets since June, including its June 8 Initial Public Offering, which yielded net proceeds of $161.9 million.
The notes will be secured by a beneficial interest in a pool of receivables that arise under WFNNB’s private label revolving credit card accounts. The notes have an expected maturity date of August 16, 2004.
Alliance Data’s Chief Financial Officer, Ed Heffernan, said the successful IPO and note offering further solidify the company’s strong financial position, which is one of the company’s four key attributes. Alliance Data is committed to providing its stakeholders with growth, visibility, predictability and liquidity, said Heffernan.
“We feel our recent successes in the capital markets serve as validation of our business model and growth strategy,” Heffernan said. “With this offering, which was done through a public note offering and private placements, we have taken advantage of favorable rates and obtained $900 million of funding at what will be, effectively, a fixed rate for the next three years. We are also pleased with the tight spread, which we believe is a sign of the comfort and familiarity that investors now have with Alliance Data.”
Underwriters for the note offering were J.P. Morgan Securities Inc., Banc One Capital Markets, Inc., Barclays Capital Inc., Credit Suisse First Boston Corporation and First Union Securities, Inc.
Alliance Data Systems
Based in Dallas, Alliance Data Systems is a leading provider of transaction services, credit services and marketing services, assisting retail, petroleum, utility and financial services companies in managing the critical interactions between them and their customers. Additionally, Alliance Data operates and markets the largest coalition loyalty program in Canada. All together, each year, the company manages over 2.5 billion transactions and 72 million consumer accounts for some of North America’s most recognizable companies. Alliance Data Systems employs approximately 6,000 associates at more than 20 locations in the United States, Canada and New Zealand. For more information about the company, visit its web site, .Details
WorldPay, Inc., the global leader in multi-currency transaction processing and eCommerce, and Miva Corporation, the leading provider of eCommerce platforms for small to medium-sized businesses, announced a technology partnership designed to extend the horizons of U.S. e-tailers into global markets.
The partnership, announced at the Web Hosting Expo 2001 in Washington, D.C., combines the comprehensive eCommerce development capabilities of Miva Merchant 4.0 with WorldPay’s secure multi-currency transaction processing service.
Miva Merchant 4.0 is a versatile storefront solution that includes many powerful new features including: affiliate program management, inventory tracking, advanced administrative features, store statistics and more.
These new features complement those found in previous versions of the software including account and catalog management, merchandising, order fulfillment and integrated payment processing services. Miva Merchant 4.0 comes complete with a set of wizards that help simplify the process of building an online store. Merchants can set up their storefront and begin selling in just a few minutes.
A new integration module jointly developed with WorldPay allows Miva Merchant users to offer consumers WorldPay’s secure, multi-currency transaction capability, making it possible to purchase goods and services via the Web from over 90 countries, and in 120 currencies.
“eCommerce has long been hyped as a global opportunity, but U.S. sites typically lock out overseas buyers by limiting transactions to the U.S. dollar,” said David Talley, Vice President of U.S. Operations for WorldPay.
“With Miva and its strong customer base here, WorldPay is expanding our U.S. presence and at the same time helping online businesses reach their full potential by providing access to the largest market possible.”
“Miva Merchant 4.0 empowers online business owners with everything they need to launch customized e-commerce storefronts quickly, easily and efficiently,” said Robert Hanczor, Miva’s Vice President of Marketing. “With WorldPay, we’re ensuring our users can do business with their customers no matter where they are or what currency they prefer to use.”
About Miva Corporation
Founded in 1996, Miva Corporation provides the leading e-commerce platform for channels that target small-to mid-size businesses. These distribution partners are at the forefront of servicing the exploding number of small to mid-size businesses using the Internet to expand their market reach.
Channels can easily and quickly integrate the Miva platform of scripting, end-user applications and API with their existing services to deliver complete e-commerce solutions to SMBs. No other e-commerce platform company offers the ease of browser-based point and click, deep-down customizability and the reach to deliver integrated marketing services. For more information on Miva’s products, contact Miva Corporation, 5060 Santa Fe Street, San Diego, California 92109. Phone: (858) 490- 2570, fax: (858) 731-4200 or visit Miva’s Web site at .
About WorldPay, Inc.
WorldPay is a global leader in multi-currency, secure online card payments and international eCommerce solutions. WorldPay enables one of the most fundamental components of eCommerce: the ability for customers to securely purchase goods and services through the Internet, and for businesses to receive and process payments securely.
WorldPay has created eCommerce solutions that enable online credit card payments in over 120 currencies, and has partners and customers in more than 90 countries worldwide.
WorldPay provides a one-stop service to enable businesses to trade successfully online, set up online stores and accept payments without need for separate bank approval. Its cost-effective online solutions include:
— Credit and debit card processing through WorldDirect
— Credit card fraud protection for both eTailers and customers with the WorldPay Guarantee
— Online eCommerce storebuilding with Click and Build
— Integration tools for tailor made, individual eCommerce solutions
— eCommerce storefront design consultancy and support
WorldPay’s headquarters are located in Cambridge, UK, its Americas office is located in the Metropolitan Washington, D.C. area in Sterling, VA, and its Asian regional base is in Singapore.Details
Hypercom Corporation announced that it has been awarded a contract worth more than US$7 million from Visanet Brasil.
Under the terms of the agreement, Hypercom will install smart card readers and software on tens of thousands of Visanet-branded Hypercom T7 terminals throughout the country.
“This agreement represents one important part of Visanet Brasil’s efforts to upgrade its card reader base to accept smart cards. Our goal is to smart card enable 100% of our terminal base. When we achieve that, we will have more than 200,000 smart card capable terminals. That is far ahead of virtually any other country in Latin America,” said Fernando Castejon, Vice President of Products, Visa do Brasil.
“The conversion to smart cards in Brasil is primarily driven by the clear need for improved security and additional functionality. Just as importantly, there has been an overall simplification of smart card applications — namely the focus on credit and debit, as well as the decreasing cost of smart cards, and the increasing availability of cost effective smart card terminals,” said Reinaldo Assis, Commercial Director, Hypercom do Brasil. “It is important to make smart card acceptance straightforward and simple. That’s what we are doing. And we are pleased to join with Visanet in this important effort.”
This latest agreement further underscores Hypercom’s global experience and expertise in smart cards. Hypercom has assisted the major acquirers in Brasil with their national conversion to a smart card-based credit/debit card acceptance environment.
The company has also rolled out several large smart card programs in Europe and Asia, as well as in Latin America. These include smart card-based credit, debit, stored value, loyalty, ticketing and e-coupon applications. More recently, shipments of smart card-capable ICE(TM) terminals have started to accelerate in the US, where savvy processors have begun preparing for the inevitable arrival of smart cards.
Additionally, Hypercom last year remotely upgraded its installed base of card payment terminals in the UK with the latest EMV-certified software applications. This remote upgrade was done from the company’s sophisticated and centrally located Term-Master Suite(R) terminal management system — further demonstrating the company’s ability to keep terminals apace with evolving smart card standards — without having to upgrade hardware.
Visanet was founded in November 1995, as a result of the association of Visa International and large Brazilian banks. Since its inception, its goals were well set: manage the network of Visa affiliated merchants in Brazil, and offer them all the support they need to conduct transactions fast and safely. Visanet enabled a fair division of functions and responsibilities to improve efficiency standards. Visa do Brasil performs administrative tasks related to the cards which carry its brand, whereas Visanet centralizes all operations relating to transactions with Visa cards. Check the figures: Visanet has 600 thousand affiliated merchants; 140 thousand electronic POS terminals; 400 million annual transactions; 95% of transactions are conducted electronically in 4000 Brazilian cities; revenues of R$25 billion in 2000 and 42 offices nationwide.
About Hypercom (www.hypercom.com)
Hypercom do Brasil, a subsidiary of Hypercom Corporation, is the number one provider of electronic payment solutions in Latin America. Hypercom do Brasil maintains an installed base of more than 400,000 card payment terminals in Brasil, and more than 800,000 units in Latin America.
Hypercom Corporation (NYSE:HYC) is the leading global provider of electronic payment solutions that add value at the point-of-sale for consumers, merchants and acquirers, and yield increased profitability for its customers. Hypercom’s products include secure web-enabled transaction terminals that work seamlessly with its networking equipment and software applications for e-commerce, m-commerce, smart cards and traditional payment applications. The company’s widely-accepted ePOS-infocommerce(TM) (epic) framework of consumer-activated, EMV-certified, touch-screen ICE (Interactive Consumer Environment) terminals enable acquirers and merchants to decrease costs, increase revenues and improve customer retention.
Headquartered in Phoenix, Arizona, Hypercom is independently acknowledged as the leading provider of point-of-sale card payment terminals worldwide. Demand for Hypercom’s terminals surpassed one million units last year alone. Hypercom today maintains an installed base of more than 4 million terminals in over 100 countries which conduct over 10 billion transactions annually.Details
Multi Service Corp., the nation’s sixth-largest processor of private-label credit cards, has been named the lead transaction-processing partner of Clickshare Service Corp. Under an agreement announced today, Multi Service will offer its customers Clickshare’s platform for multi-site, privacy-protected digital-content purchasing.
Under the alliance, Clickshare will likewise offer Multi Service’s back end transaction-processing services to content providers and other partners of Clickshare, and Multi Service will run and maintain Clickshare’s back-end transaction infrastructure, including inbound customer-care management.
“Over two decades, Multi Service has rapidly expanded its core customer-care and transaction processing leadership in the trucking and aviation industries,” said Nell Fields, Clickshare’s CEO. “Now, as our primary processing partner, Multi Service will be offering card users a new form of privacy and mobility with the ability to purchase digital content anywhere on any device at any time.”
Since 1994, Multi Service, with over $1.5 billion in annual billings, has also developed specialized Internet database and user management technologies and operates a group of specialized websites.
“Our alliance with Clickshare results from our conviction that the sale of digital content – music, text, multi-media entertainment, games, software and services – represents a multi-billion dollar emerging business opportunity – the next big frontier for online processing,” said Mark O’Connell, Multi Service president. “Clickshare’s unique distributed-customer management technology is designed to scale to the opportunity, protecting consumer privacy and the sanctity of consumer relationships with their most-trusted providers such as banks, telcos, ISPs and associations.”
The Clickshare Service allows a consumer to have one account at a most-trusted “infomediary”, and purchase information from across the web without having to repeatedly enter credit-card information, register repeatedly or surrender personal information. The result is one account, one ID, one-bill simplicity.
About Multi Service
Multi Service Corp. was established in 1978 to provide specialized credit-card services to the trucking industry, expanding to the aviation industry in 1980. The Multi Service Card is the most widely used corporate aviation card in the world. Headquartered in Overland Park, Kan., a suburb of Kansas City, the company and also has offices in Australia and The Netherlands. Multi Service’s core business is high-volume transaction-processing programs and specialized web software. The private company also provides processing services for toll road and tunnel authorities in Europe, and consolidated billing and tracking services for the auto-parts industry.
Since 1994, Multi Service has developed specialized web software for a wide variety of web sites and online applications, including product sales and large active communities based on gaming and nostalgia. E-commerce has been extensively employed on these sites, including retail transactions and various methods of paying for online memberships, such as subscription services and pay-by-the-hour.
The Clickshare Service is an Internet transaction infrastructure for privacy-protected purchasing of text, music, video, software, and other products and services.
Consumers have one account at a website of their choice, and purchase digital content from other websites without having to pass around a credit-card number, repeatedly register or give out personal information. Banks, ISPs, associations, retailers, wireless and other telecommunications carriers use it to enhance, extend and share customer relationships with publishers and entertainment providers.
Clickshare’s clients include A. H. Belo & Co., Knight Ridder/Tribune Business News, Comtex News Network Inc., China Online Inc., HomeTips.com, uclick.com (Andrews McMeel/Universal Press), the Corpus Christi [Texas] Caller Times, Foster’s Daily Democrat [Dover, N.H.], the Concord [N.H.] Monitor, the Sioux City [Iowa] Journal, the Lawrence [Ks.] Journal-World, and others.
Clickshare is based in Williamstown, Mass. Its investors include Sawgrass Seacoast Investors LLC and private individuals, including founding executives of PeopleSoft Inc., and the former publisher of the Philadelphia Inquirer and Chicago Sun-Times. Its executives, board and advisors include veterans of the publishing and credit-card industries.Details
Credit card use for the first six months of this year increased 114% to 199.27 trillion won. The number of cards-in-force rose 43% to 68.4 million according to the
Financial Supervisory Service. The seven major card issuers reported a combined net profit of 1.01 trillion won for the first half of 2001, up 150% from the second half last year.
LG Capital Services Corp. recorded the largest net profit at 358 billion won, followed by Samsung Card with 305 billion won, Kookmin Credit Card with 230 billion won, and Korea Exchange Bank Credit Service with 100 billion won. Total revenues among the 19 banks operating credit card units recorded a combined revenue of 2.33 trillion won in the first six months according to the FSS.
The Federal Open Market Committee yesterday afternoon decided to lower its target for the federal funds rate by 25 bps to 3.5% and to cut the discount rate to 3.0%. By the end of the business day most major banks cut their prime lending rate to 6.50%, which will affect some bank credit card rates during September. The Fed believes that against the background of its long-run goals of price stability and sustainable economic growth and of the information currently available, the risks are weighted mainly toward conditions that may generate economic weakness in the foreseeable future. The rate cut is a boost for card issuers who are dealing with slowly, but surely, rising chargeoffs and personal bankruptcies. At mid-year, most issuers reported that the $15+ billion savings in annual funding costs have been off-set by higher losses and beefed-up reserves. The effect of yesterday’s rate on consumers will be somewhat muted considering the impact of floor rates, fixed rates, and delayed adjustments. Since the first of this year, bank credit card rates have declined 155 basis points while the prime interest rate has declined 275 basis points.Details
Bioscrypt Inc., a leading provider of
biometric authentication solutions, announced it has teamed with
Indivos Corporation to provide merchants and their customers with integrated
solutions that eliminate the need to carry cash, cheques or credit cards by
conducting electronic payment transactions with the convenience and added
security of biometric authentication.
Indivos is provider of a payment service in which consumers voluntarily
enroll in order to access their chequing, credit and loyalty accounts without
having to use cumbersome, costly plastic cards, paper cheques, and other
tokens. Instead, consumers who enroll in Indivos’ free service will be able to
pay for goods simply by placing their finger on a sensor integrated with a
countertop credit card device. Bioscrypt’s algorithm will perform the
authentication of the user against a previously enrolled template.
“Bioscrypt is excited to be working with Indivos to bring shoppers and
retailers a secure and efficient method of executing transactions without
having to carry cash or remember cumbersome cards or tokens,” said Pierre
Donaldson, President and CEO of Bioscrypt Inc. “Consumers and merchants are
embracing this new payment method that not only adds security but also is more
convenient and less costly than paper-and-plastic methods.”
“Indivos is very pleased to be working with Bioscrypt to help give
consumers and retailers the advantages of a free Pay By Touch(TM) service,”
said Phil Gioia, CEO of Indivos. “In bringing Pay By Touch to the retail
marketplace, Bioscrypt’s algorithm is an integral technology for high
performance and customer satisfaction.”
Indivos service allows consumers to access their bank and debit accounts
electronically without having to use the plastic cards, paper cheques, and
passwords that can easily be lost, stolen or damaged. At the same time, the
service provides merchants with reduced risk and lower costs in handling cash
and cheques. Consumers who enroll in the voluntary system no longer have to
carry their cards and cheques, but can easily access their accounts online
using the ultra security of fingerprint authentication.
About Indivos Corporation
Indivos’ fully voluntary patented service enables a cashless, chequeless,
cardless payment environment in which consumers who have voluntarily enrolled
a finger scan to complete transactions securely, conveniently, and
efficiently. It also enables merchants to substantially reduce transaction-
processing costs, and significantly mitigate the risk of fraud. Indivos’
Internet address is www.indivos.com. Indivos has 16 issued patents enabling
About Bioscrypt Inc.
Bioscrypt Inc. (TSE:BYT) is a leading provider of fingerprint-based
biometric solutions to organizations requiring a high level of security for
network, wireless and physical access. Bioscrypt provides strong
authentication through the use of a robust pattern recognition algorithm that
is used to bind a user’s credentials to their biometric, such as a
fingerprint. Bioscrypt’s biometric solutions are designed to enhance end user
convenience and reduce password management costs. Bioscrypt brands its
technology as “bioscrypt on board”, which signifies that Bioscrypt Inc.’s high
standards of biometric quality and security reside within that product. For
more information on Bioscrypt, visit the Company’s Web site at
Image Data, pioneer of the use of identity verification to stop point-of-service frauds by putting a “face on every transaction,” announced a name change to Identico Systems LLC. The new name more closely reflects the company’s expanded business strategy and unique expertise in successfully securing financial transactions in today’s complex point-of-service environment.
According to CEO Larry Gilbert, the move also positions the company to take advantage of the broader market opportunities it has identified for its True ID service. “True ID’s growing and diverse customer base speaks for itself Â identity verification offers businesses better protection against payroll check, auto rental, and other point-of- service frauds,” said Gilbert. “Because our True ID Service verifies ‘the person, not the paper,’ customers have experienced a dramatic decrease in losses. True ID’s consumer-friendly process also alleviates growing consumer fears over the security of their personal and financial account information.”
The increasing acceptance of the True ID Service across market segments reflects the critical need for a new approach to providing secure payment solutions in face-to face-transactions. Businesses relying on traditional loss prevention systems are experiencing staggering losses, with worthless checks alone costing retailers and banks an estimated $15 billion annually. Gilbert noted, “The outdated approach of verifying easily counterfeited financial and identification documents is no longer effective against today’s technology-enabled identity criminal.”
True IDÂ® — a Better Solution
True ID’s ability to securely identify a consumer as the “true” owner of a financial account presented during a transaction means less fraud for businesses, better information for loss prevention investigations and increased protection for consumers. Retailers, banks, auto rental firms, and distribution centers are already successfully using True ID to deter fraud by as much as 80%, and increase restitution efforts by 50%.
True IDÂ® is simple to use and integrates easily into any point-of-service environment:
1) During a transaction, the consumer presents his or her photo ID to a clerk or teller. 2) The photo ID is scanned, encrypted, and transmitted to a secure Identico Systems database, where it is mapped to the consumer’s account data; and
3) The next time the consumer initiates a transaction at any business that uses True ID, the consumer’s image is securely sent back to the point of service for instant identity verification.
Because Identico Systems is committed to protecting consumer privacy, no information other than the image is sent to the point of service. The employee views the image, decides whether it matches the consumer’s face, and proceeds with the transaction.
“True ID has met with nearly 100% consumer acceptance everywhere it’s been used because people are increasingly aware of the threat of ID theft,” said Gilbert. “At the same time, businesses are realizing the need to be more proactive in protecting their honest customers from ID thieves, so they are welcoming a new technology that not only cuts their financial losses from fraud but also builds a loyal customer base.”
To learn more about Identico Systems, call 1-888-887-8343 (1-888-8TRUE-ID) or visit them online at [www.identicosystems.com]
Baltimore Technologies, plc announced a significant restructuring and cost reduction
programme that will enable the Company to refocus on its core areas of
expertise in providing trust and security for e-business. This strategy will
enable it to extend its leadership position in the market for authentication
and authorisation applications and solutions. The restructuring plan will
chart a fully funded path to positive EBITDA in Q2, 2002. The Company also
announced today its second quarter and half year results for the period ended
30 June 2001.
— The targeted cost savings and proceeds of 72.0 million pounds sterling
(US$101.3million) from the restructuring and divestment of non-core
activities will ensure sufficient cash resources are available to fully
fund the Company’s operations to become EBITDA positive in Q2, 2002.
— Baltimore Technologies will focus on maximising return from its
authorisation and Public Key based authentication technology, in a
market estimated by IDC to be valued at US$4.0 billion by 2004. These
offerings will be combined into one business unit targeting Baltimore’s
core traditional sectors in addition to exploiting the emerging
opportunities in the wider Corporate market so as to restore its market
— Direct salesforce reorganised to offer both authentication and
authorisation products individually or as part of an integrated
solution. A fundamental review of the business and sales engagement
models has been conducted in order to realign direct and indirect sales
channels to jointly market both Baltimore’s authentication and
authorisation products and solutions.
— The review has concluded that there are 2 clearly different businesses
with limited synergies between them. The market leading Content
security business will immediately be run as a separate business unit.
The Board strongly believes in the potential of this business and has
concluded that a divestment strategy will maximise its market
opportunity and the overall return for all stakeholders.
— The Company has initiated a review of the potential divestment of all
other non-core activities with the objective of maximising shareholder
and customer value and to fund the profitable growth of the core
— As part of the restructuring, a reduction of a further 220 positions
will be made.
— The Company is targeting a staffing level of approximately
470 employees, which will be achieved by Q2 2002 primarily through
— Voluntary delisting from NASDAQ and move to the OTC Bulletin Board with
effect from 30 September 2001.
Peter Morgan, Chairman of Baltimore Technologies commented,
“Baltimore earned its reputation as a dynamic company producing innovative
products and solutions. This restructuring ensures that the company is now
fully focussed on its core competencies in providing security and trust for
e-business and will ensure that all activities are closely targeted at
building a strong viable company for the future and delivering enhanced
Paul Sanders, Chief Financial Officer and acting Chief Executive Officer
“The radical restructuring announced today demonstrates our commitment to
growing and investing in the business by concentrating on what we know and do
best. The excellent technology and people within this company have enabled us
to build an acknowledged leadership position in the IT security industry and
this restructuring provides us with a clear, fully funded path to
Q2 and Half Year 2001 Results:
— Total revenues for Q2 were 16.5 million pounds (US$23.2 million)
compared to 22.9 pounds million (US$32.2 million) in Q1 2001 and
16.3 million pounds (US$22.9 million) in Q2 2000.
— Gross Margin was 47% (Q1 2001: 60% and Q2 2000: 64%)
— LBITDA (Loss before interest tax depreciation amortisation and
exceptional items) of 23.7 million pounds (US$33.3 million) has
increased from 17.9 million pounds (US$25.2 million) in Q1 2001 and
from 4.4 million pounds (US$6.2 million) in Q2 2000.
— Ending cash balance of 53.9 million pounds (US$75.8 million) compared
to 83.6 million pounds (US$117.6 million) at the end of Q1 2001.
Half Year 2001
— Total revenues for H1 were 39.4 million pounds (US$55.4 million)
compared to 25.7 million pounds (US$36.1 million) in H1 2000.
— Gross Margin was 54% (H1 2000: 65%)
— LBITDA (Loss before interest tax depreciation amortisation and
exceptional items) of 41.6 million pounds (US$58.5 million) compared to
9.7 million pounds (US$13.6 million) in H1 2000.
— Non-cash goodwill write-off of totalling 503.8 million pounds
(US$708.5 million), following write down of acquisitions and
Paul Sanders, Chief Financial Officer and acting Chief Executive Officer
“There is little doubt that this has been a difficult period for the group
whilst, the strength of our technology offering enabled us to achieve revenues
of 16.5 million pounds (US$23.2million) for the second quarter of this year
and 39.4 million pounds (US$55.4 million) in the first half of 2001. Clearly
these results are not acceptable and do not reflect the Company’s true
potential. The measures we have announced today will firmly address this
* Six months to 30 June 2001 includes restated results for first quarter
Baltimore Technologies has grown rapidly both organically and by
acquisition in the past 18 months. However, the downturn in global IT
spending combined with recent operating results has made it necessary for the
Company to fundamentally examine its approach to the market and to ensure that
it has the right cost base to deliver the anticipated revenues.
To achieve the targeted annualised savings of 72 million pounds
(US$101.3 million) Baltimore is implementing a significant restructuring plan
to concentrate on its core competencies of authorisation and Public Key based
authentication products and solutions. In parallel, the Company will pursue a
policy of divestment of non-core activities. This restructuring plan will
chart a fully funded path to positive EBITDA in Q2, 2002.
— Focus on Core Competencies of Security & Trust
The Company sees continuing opportunities for authorisation and
authentication technology deals amongst its traditional market sectors of
finance, healthcare, government and telecommunication companies where, despite
its deployment concerns, public key based security is the defacto standard.
In addition, the implementation of digital signature legislation around
the world and an increase in the adoption of devices for e-business such as
mobile phones and smartcards will ensure growth for e-security authentication
and authorisation solutions. Datamonitor forecast that the wireless PKI
market will represent more than 40 % of the total PKI market by 2006 and the
Company believes it is some six months ahead of its competitors in this area.
The success of the Baltimore Telepathy wireless solution has already been
evidenced by the recent deal with Radiolinja.
Baltimore’s authorisation product, SelectAccess continues to establish
itself in the rapidly growing authorisation market (CAGR 70%).
Why Authentication & Authorisation?
As businesses continue to open more of their internal IT systems to the
Internet, they face a series of security challenges around authentication and
Authentication is being able to verify the identity of someone trying to
access information via an electronic service. Authorisation ensures that the
right people get access to the right information and services.
Given the increase in the value and volume of trade on the web there is a
need to maintain digital evidence of binding transactions, which is necessary
for both normal business-auditing purposes and for dispute resolution. A
common approach being used today and that will continue to be used in the web
services era, is to digitally sign the electronic transaction, verify the
signature and store a copy of the signed data.
Customers will increasingly use the Internet as a distributed operating
system to supporting application services (commonly referred to as web
services) from multiple suppliers. New harmonised security standards
essential for web services are currently being defined, leveraging existing
Public Key authentication and authorisation management systems, and these will
be deployed in the coming years.
Baltimore’s UniCERT PKI authentication and SelectAccess authorisation
systems together provide the key security elements of any information service
delivery platform and future web services. These synergies led to the
decision to closely align the offerings in this space into a single business
Market Strategy for Authentication & Authorisation
Baltimore plans to achieve market penetration for its public key based
technology and authorisation system through a realigned sales engagement model
comprising of direct, and indirect channels. Sales and marketing have been
streamlined worldwide in line with this model.
Baltimore’s direct salesforce will now be structured to offer both
Baltimore’s authentication and authorisation products and solutions either
individually or as part of an integrated solution. Baltimore will continue to
invest in developing future solutions in its European, US and Australian
development centres. A strategic business development group has been created
to focus on key opportunities and initiatives in areas such as wireless and
The Baltimore TrustedWorld Partner programme will be relaunched to better
leverage channels to market and by incorporating complementary vendor
products, Baltimore can provide a wider range of applications, solutions and
service offerings in a more cost-effective model.
In conjunction with its partners, Baltimore is committed to the ongoing
development of its Managed Services Solutions offering as a key element of its
— Manage Content Security as a separate business unit
The market leading Content security business will be run as a separate
business unit with a view to divestment. The Board of Baltimore Technologies
believes in the potential of this business and that this approach will
maximise its market opportunity and the overall return for all stakeholders.
The Content security unit will have its own sales and marketing strategy
targeted at sustaining its leading position in the market. These changes will
enable the business unit to concentrate its efforts on the unique requirements
of the MIMEsweeper channel partners, and maximise revenue opportunities in a
market which is expected to grow according to IDC by 40% per annum until it
reaches a size of US$1.2 billion in 2004.
Content security is increasingly being recognised as necessary to protect
against virus attacks and the distribution of inappropriate content. The
MIMEsweeper product suite is the market leader with strong brand recognition.
The Content business is adopting a two-tier channel strategy based upon Value
Added Distributors (VADs) and Authorised/Premier resellers for its MIMEsweeper
range. OEM opportunities will also be explored with Anti Virus and archiving
vendors. Service Providers will continue to host the e-Sweeper service for
small to medium sized organisations.
— Cost reductions through restructuring
Headcount has been reduced from a peak of 1,400 at March 2001 to
approximately 1,100 employees post the redundancies announced in May. With
immediate effect, there will be a reduction of a further 220 positions
worldwide. The Company is targeting a staffing level of approximately
470 employees, which will be achieved by Q2 2002 primarily through divestment
of non-core businesses.
Baltimore’s extensive office network has already been reduced from 51 to
38 offices with plans to eliminate under utilised and excess office capacity
resulting from its divestments.
— Voluntary NASDAQ Delisting
In light of the high cost of maintaining a separate listing in the USA and
the fall in the ADR price, the company has decided that it is no longer
appropriate to maintain its listing on the NASDAQ national market, and
accordingly will be applying to voluntarily delist its shares from that market
and move to the OTC Bulletin Board with effect from 30 September 2001. Once
completed, the estimated annualised savings from not having a separate US
listing will be at least 2 million pounds (US$2.8 million).
During the period, demand continued for Baltimore’s e-security solutions
in the finance, government and mobile commerce sectors.
In the finance sector, Baltimore was chosen to provide a leading
Australian bank with a PKI-based certificate solution. This bank has also
purchased Baltimore SelectAccess to provide access authorisation to new online
banking services, demonstrating sales synergies between Baltimore’s
authentication and authorisation products.
In the government sector, the Company was also chosen to supply the secure
communications and e-business solutions to the 90,000 Australian Defence
personnel and through Baltimore’s TrustedWorld partner Getronics, Baltimore
UniCERT will provide the underlying security infrastructure for all internal
and external communication requirements for the 25,000 users within the
In the mobile commerce space, the Company won a notable contract for
wireless e-security with Radiolinja, one of Finland’s largest network
operators and a world leader in new mobile services, licensing Baltimore
Telepathy(TM) wireless e-security to build and deploy a complete wireless
trust infrastructure for secure mobile commerce. A further example has been
the strengthening of the relationship with Motorola through partnering to
provide a service to issue mobile operators and service providers with
“short-lived” digital certificates for the security of wireless applications.
The SelectAccess v3 authorisation system was released with new enhanced
features to enable more business processes and transactions to be securely and
cost-effectively conducted online, enabling organisations such as BBS, the
clearinghouse and payment service provider for the Norwegian banking industry,
who chose SelectAccess in Q1 to easily provide secure, role-based user access
to online information and services. Baltimore SelectAccess has recently been
endorsed by Mindcraft, an independent testing lab, when it received the
highest performance marks in tests designed to mirror a real world corporate
Repeat business occurred from Commercial Certificate Authorities worldwide
such as Belgacom E-Trust and Cable & Wireless for Baltimore’s Public Key based
On July 10, Fran Rooney resigned as Chief Executive Officer and Deputy
Chairman of Baltimore Technologies. Paul Sanders was appointed Acting Chief
Executive Officer while retaining his responsibilities as Chief Financial
Officer. The Company is currently undertaking a search for a new Chief
Executive Officer. Changes were also made to the Board with the appointment
of David Guyatt and Bijan Khezri as non-Executive Directors on 12th July.
The Board firmly believes that there is a long-term profitable opportunity
for authorisation and public key based authentication in the Company’s
traditional core sectors of finance, government, telecommunications and
healthcare. The restructuring, together with the divestment of non-core
activity will radically realign the cost base while still maintaining
leadership in innovative authentication and authorisation technology.
Financial Results for H1 2001 and Q2 2001:
— Quarter 2, 2001 Summary (unaudited)
Total revenues for Q2 2001 were 16.5 million pounds (US$23.2 million) an
increase of 2% compared to the same quarter last year and a decrease of
28% over Q1 2001.
Licence revenue of 6.6 million pounds (US$9.3 million) accounted for
40% of total revenue in Q2 compared to 50% in the same period last year and
53% in Q1 2001. The license revenue for the quarter decreased by 18% compared
to Q2 2000 and by 46% compared to Q1 2001. However, services revenues for Q2
2001 of 8.9 million pounds increased by 34% over Q2 2000 and by 10% over Q1
The geographic mix of revenue continues to reflect Baltimore’s strong
global footprint with EMEA, APAC and the US accounting for 47%, 28% and
25% respectively of total revenue in Q2 2001 compared to 53%, 25%, 22% in Q1
2001, and 40%, 34%, 26% in the same period last year.
Gross Profit Margin of 47% is down from 64% in the same quarter last year
and 60% in the first quarter principally due to an adverse change in license
revenue mix and under utilisation of professional services.
LBITDA (before exceptional items) of 23.7 million pounds (US$33.3 million)
increased from 4.4 million pounds (US$6.2 million) in Q2 2000 and from
17.9 million pounds (US$25.2 million) in Q1 2001. Operating expenses before
exceptional items, for Q2 2001 of 91.0 million pounds (US$127.9 million)
(including 57.6 million pounds (US$ 81.0 million) charge for amortisation)
increased by 240% from 26.7 million pounds (US$37.6 million) (including a
10.9 million pounds (US$15.3 million) charge for amortisation) in Q2 2000 and
by less than 1% from 90.4 million pounds (US$127.1 million) ( including a
57.3 million pounds (US$ 80.6 million) charge for amortisation) in Q1 2001.
Exceptional charges in the quarter totalled 393.8 million pounds
(US$553.8 million) and comprises accelerated amortisation of goodwill
389.0 million pounds (US$547.0 million), write off of Fixed Assets of
2.1 million pounds (US$3.0 million) and redundancy costs of 2.7 million pounds
Loss per share before Exceptional Items was 0.16 pounds (US$0.23)
At 30 June 2001, net cash totalled 53.9 million pounds (US$75.8 million),
compared to 83.6 million pounds (US$117.6 million) at the end of Q1 2001.
— Half Year 2001 Summary (unaudited)
Total revenues for H1 2001 of 39.4 million pounds (US$55.4 million)
increased by 53% compared to the same period last year. Licence revenues for
the period were 18.8 million pounds (US$26.4 million) an increase of
42% compared to Q2 2000. Licence revenue accounted for 48% of total revenue
in H1 2001 compared to 51% in H1 2000. Services revenue for H1 2001 of
17.0 million pounds (US$23.9 million) increased by 76% over H1 last year.
The geographic mix of revenue continues to reflect Baltimore’s strong
global footprint with EMEA, APAC and the US accounting for 51%, 26% and
23% respectively of total revenue in the first half of 2001 compared to
45%, 32% and 23% in the same period last year.
Gross Profit Margin of 54% is down from 65% in the first half of 2000, and
reflects the reduction in licence revenue as a proportion of total revenue
compared to the same period last year.
LBITDA (before exceptional items) of 41.6 million pounds (US$58.5 million)
increased from 9.7 million pounds (US$13.6 million) in H1 2000. Operating
expenses before exceptional items for H1 2001 of 181.4 million pounds
(US$255.1 million) (including 114.9 million pounds (US$161.6 million) charge
for amortisation), increased by 329% from 42.3 million pounds
(US$59.6 million) including 14.4 million pounds (US$20.3 million) charge for
amortisation) in H1 2000 reflecting the impact of the acquisitions made in
2000. Exceptional charges in the period totalled 393.8 million pounds
(US$553.8 million) and comprises amortisation of goodwill 389.0 million pounds
(US$547.0 million), write off of Fixed Assets of 2.1 million pounds
(US$3.0 million) and redundancy costs of 2.7 million pounds (US$3.8 million).
At 30 June 2001, net cash totalled 53.9 million pounds (US$75.8 million),
compared to 107.8 million pounds (US$151.6 million) at the end of 2000.
The necessity for making a Goodwill impairment charge has arisen
principally to ensure compliance with FRS 11 to reflect the likely fall in the
value of acquisitions made last year as a result of the global economic
downturn, and lower valuations for technology companies.
At the end of the six month period ended 30 June 2001 the Company had a
cash balance of 53.9 million pounds (US$75.8 million), and had suffered a net
cash out flow of 43.0 million pounds (US$60.5 million) over the same period.
The targeted cost savings from the restructuring and the proceeds from the
divestment of non- core activities will ensure sufficient cash resources are
available to fully fund the anticipated net cash outflow until the Company has
positive EBITDA in Q2, 2002 and is operating cash flow positive in Q4 2002.
As announced on July 30, as part of the extensive business review and
restructuring, Baltimore Technologies discovered specific instances where
software revenues were overstated in the India, Middle East and Africa region
(“IMEA”) due to incorrect contract classifications, which was the direct
result of the actions of a limited number of employees. The restatement
principally relates to Q4 2000 and the impact is a reduction in the revenues
for the 12 month period ended 31st December 2000 of 5.5% from 74.2 million
pounds (US$104.4 million) to 70.1 million pounds (US$98.6 million), and in the
three month period to 31st March 2001 of 3.4% from 23.7 million pounds
(US$33.3 million) to 22.9 million pounds (US$32.2 million). These adjustments
had no effect on the results for the three month period ended 30th June 2001
or on the current cash position of the Company.
About Baltimore Technologies — A Global Leader in Security & Trust for
Baltimore Technologies’ products, services and solutions solve the
fundamental security and trust needs of e-business, ensuring that companies
can verify the identity of who they are doing business with and which
resources and information users can access on open networks. Many of the
world’s leading organisations have chosen Baltimore’s e-security technology to
conduct business more efficiently and cost effectively over the Internet and
wireless networks. The company also offers support worldwide for its
authorisation management and Public Key based authentication systems.
Baltimore’s products and services are sold directly and through its
worldwide partner network, Baltimore TrustedWorld. Baltimore Technologies is
a public company, principally trading on London (BLM). For more information
on Baltimore Technologies please visit .