For Immediate Release

Notify Technology Reports Results for the Second Fiscal Quarter
Ended March 31, 2004

San Jose, CA, May 7, 2004 -- – Notify Technology Corporation (OTC: NTFY) today announced financial results for the quarter ended March 31, 2004. Revenues for the three month period ended March 31, 2004 decreased to $819,000 from $2,945,000 reported for the comparable three month period of fiscal 2003. The Company’s net loss for the three month period ended March 31, 2004 was $305,000 or a net loss per share of $0.07, compared to a net loss of $570,000, or a net loss per share of $0.13, reported for the corresponding period of fiscal 2003.

A drop in the sales of the Visual Got Mail Solution Customer Premise Equipment (CPE) for voice messaging was responsible for the decrease in revenue in the second quarter of fiscal 2004 resulting from our primary customer changing from a giveaway program in June 2003 to a program that sold the CPE to new voice mail customers. The revenue from the service portion of the Visual Got Mail Solution was stronger at $443,000 in the three month period ended March 31, 2004 compared to $268,000 reported for the corresponding period of fiscal 2003. The revenue generated by the CPE portion of the Visual Got Mail Solution was $125,000 in the three month period ended March 31, 2004 compared to $1,727,000 reported for the corresponding period of fiscal 2003.

The gross margin of 76.9% for the three month period ended March 31, 2004 increased significantly compared to 8.9% for the same period in the prior year. The increase of the margin to 76.9% in the three month period ended March 31, 2004 was due to the effect of a product mix change from high volume sales of the low margin CPE to a high concentration of service and wireless revenue.

Over the past year, the Company has focused a major portion of its research and development and sales on its NotifyLink enterprise wireless products and services. NotifyLink wireless product revenue, led by our Enterprise product, contributed 20% of the total revenue for the three-month period ended March 31, 2004 compared to less than 1% in the same period in fiscal 2003. Just three months ago, the NotifyLink revenue contribution was 9% of total revenues for the three-month period ended December 31, 2003.

“We are pleased with both the improvement in gross margin in the second quarter and the increasing contribution that NotifyLink is making to our revenues. We value our Visual Got Mail Solution business as it has provided us with a revenue stream that allows us to leverage our resources in the NotifyLink product area where we believe the future lays. The NotifyLink product line increased its contribution to revenue in the second fiscal quarter of 2004. This improved contribution has mitigated the negative impact on our cash flow of the loss of CPE sales since most of the wireless contracts have a higher margin and are sold on a prepaid basis.” said Paul DePond, Chief Executive Officer. “The NotifyLink sales have also significantly reduced our dependence on a single customer. The wireless products have both expanded our product offerings and increased the number of customers we service.”

 

About Notify Technology Corporation

Founded in 1994, Notify Technology Corporation, (OTC: NTFY) is an innovative communications company offering wireline and wireless products and services. Notify’s wireline solution provides consumer voice mail notification to customers of CLECs in multiple states. Notify’s wireless solutions provide any size organization with notification, access, and management on a variety of wireless 2-way devices and networks. Notify sells its products directly and through wireline carriers and wireless carriers. The company is headquartered in San Jose, California. For more information, visit http://www.notifycorp.com or contact 408-777-7920.

Forward-Looking Statements: This press release contains forward-looking statements related to Notify Technology that involve risks and uncertainties, including, but not limited to statements regarding the sales and service revenue on the Visual Got Mail Solution and the development of NotifyLink revenue. Those statements are based on current information and expectations and there are important factors that could cause actual results to differ materially from those anticipated by such statements. These risks include, but are not limited to, our ability to deliver products and manage growth, the continuance of certain customer voice mail programs, the percentage contribution to revenue of the NotifyLink, market acceptance of certain products, as well as other risks. These forward-looking statements are made in reliance on the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. For further information about these factors that could affect Notify Technology's future results, please see the Company’s filings with the Securities and Exchange Commission. Prospective investors are cautioned that forward-looking statements are not guarantees of performance. Actual results may differ materially from management expectations.

(Financial Tables Follow)


NOTIFY TECHNOLOGY CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

Three-Month Periods

Six-Month Periods

Ended March 31,

Ended March 31,

2004

2003

2004

2003

(Unaudited)

(Unaudited)

Revenue:

Product revenue

$ 344,962

$ 2,637,448

$ 676,958

$ 4,626,838

Service revenue

466,919

298,746

888,637

553,630

Royalty revenue

6,940

8,395

54,975

26,595

Total revenue

818,821

2,944,589

1,620,570

5,207,063

Cost of revenue:

Product cost

138,937

2,021,581

344,256

3,532,870

Service cost

50,624

659,559

101,343

748,971

Total cost of revenue

189,561

2,681,140

445,599

4,281,841

Gross profit

629,260

263,449

1,174,971

925,222

Operating expenses:

Research and development

254,069

227,942

475,062

475,751

Sales and marketing

236,243

118,409

379,174

228,962

General and administrative

443,266

447,608

750,344

811,986

Total operating expenses

933,578

793,959

1,604,580

1,516,699

Loss from operations

(304,318)

(530,510)

(429,609)

(591,477)

Interest expense and other, net

552

39,243

9,438

76,812

Net loss

$ (304,870)

$ (569,753)

$ (439,047)

$ (668,289)

Basic and diluted net loss per share

$ (0.07)

$ (0.13)

$ (0.10)

$ (0.15)

Weighted average shares outstanding


4,593,995


4,549,808


4,596,917


4,549,808


Notify Technology Coporation

Condensed Balance Sheets

March 31,

Sep 30,

2004

2003

(unaudited)

Assets:

Current assets:

Cash and cash equivalents

$ 1,098,154

$ 556,805

Restricted cash

3,100

436,000

Accounts receivable, net

362,456

528,927

Other assets

57,580

101,406

Total current assets

1,521,290

1,623,138

Property and equipment, net

199,831

247,168

Total assets

$ 1,721,121

$ 1,870,306

Liabilities and shareholders’ equity (deficit)

Current liabilities:

Short term borrowings

$ -------

$ 162,750

Current portion of capital lease obligations


14,142


13,725

Accounts payable

91,443

108,948

Accrued payroll and related liabilities

232,538

141,792

Deferred revenue

894,569

438,137

Customer advances

361,427

417,986

Other accrued liabilities

146,308

160,050

Total current liabilities

1,740,427

1,443,388

Long-term capital lease obligations

24,018

31,195

Total liabilities

1,764,445

1,474,583

Shareholders' equity (deficit):

Preferred stock

993,742

993,742

Common stock

4,594

5,834

Additional paid-in capital

21,817,714

21,816,474

Accumulated deficit

(22,859,374)

(22,420,327)

Total shareholders’ equity (deficit)

(43,324)

395,723

Total liabilities and shareholders' equity (deficit)

$ 1,721,121

$ 1,870,306

Contacts:

At Notify Technology:
Jerry Rice, Chief Financial Officer
Phone: 408-777-7927
jerry .rice@notifycorp.com

 


©2004 Notify Technology Corporation. All Rights Reserved.

 

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