Notify Technology Reports Results for the Fiscal Year Ended
September 30, 2004
Major product shift improves gross margins and Company’s wireless
product revenue achieves fourteen fold increase
Contacts:
At Notify Technology:
Jerry Rice, Chief Financial Officer
Phone: 408-777-7927
jerry .rice@notifycorp.com
San Jose, CA, November 17, 2004 -- – Notify Technology Corporation (OTC: NTFY) today announced financial results for the fiscal year ended September 30, 2004.
A major shift in product concentration between the fiscal year 2004 and the fiscal year 2003 had the effect of decreasing revenue to $3,528,099 with a gross margin of 80.5% from $8,340,750 with a gross margin of 23.8% reported for fiscal year ended September 30, 2003. Revenue in the fiscal year 2004 was primarily software and service sales whereas revenue in the fiscal year 2003 was dominated by a high concentration of wireline device sales.
The Company’s net loss for the fiscal year 2004 was $655,907 or a net loss per share of $0.10, compared to a net loss of $1,100,475, or a net loss per share of $0.24, reported for the fiscal year 2003. The loss for the fiscal year 2003 was negatively impacted by $659,000 in expense when Notify’s hosting partner began charging a long distance connection fee that had not been charged before. The issue was short-lived and did not exist in the fiscal year 2004.
The sales of the device portion of the Visual Got Mail Solution for voice messaging decreased from $6,564,000 in the fiscal year 2003 to $526,000 in the fiscal year 2004. In contrast, the revenue from the service portion of the Visual Got Mail Solution increased to $1,666,000 in the fiscal year 2004 compared to $1,088,000 reported for the fiscal year 2003. Unfortunately, we expect this service revenue will decline due to customer decisions to withdraw from the consumer market that the Notify product supports.
The Company continues to focus most of its research, development and sales efforts on its NotifyLink enterprise wireless products and services. As a result, NotifyLink wireless product revenue, led by the Enterprise product, contributed 28% or $1,004,000 of the total revenue for the fiscal year 2004 compared to less than 1% or $68,000 in the fiscal year 2003.
“A fourteen fold increase in our wireless business during fiscal 2004 has helped transition Notify from its legacy wireline business to its new wireless enterprise software business,” said Paul DePond, Chief Executive Officer. “Over the past eighteen months, we believe NotifyLink has become the defacto standard for Enterprise wireless solutions in the Novell GroupWise marketplace.”
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 consumers throughout the United States. Notify’s wireless solutions provide secure synchronized email and PIM access and management to any size organization on a variety of wireless 2-way devices and networks. Notify sells its wireless products directly and sells its wireline products through CLECs. 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 expectation that the revenue from the service portion of the Visual Got Mail Solution will decline due to customer decisions to withdraw from the consumer market that the Notify product supports, and the percentage contribution to revenue of NotifyLink, 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 |
Twelve-Month Periods |
|||||||||||
Ended September 30, |
Ended September 30, |
|||||||||||
2004 |
2003 |
2004 |
2003 |
|||||||||
Revenue: |
||||||||||||
Product revenue |
$ 519,674 |
$ 450,248 |
$ 1,605,107 |
$ 7,089,228 |
||||||||
Service revenue |
442,016 |
359,407 |
1,768,017 |
1,216,897 |
||||||||
Royalty revenue |
-- |
2,671 |
154,975 |
34,625 |
||||||||
Total revenue |
961,690 |
812,326 |
3,528,099 |
8,340,750 |
||||||||
Cost of revenue: |
||||||||||||
Product cost |
46,725 |
324,972 |
471,485 |
5,375,808 |
||||||||
Service cost |
59,910 |
48,992 |
215,216 |
978,011 |
||||||||
Total cost of revenue |
106,635 |
373,964 |
686,701 |
6,353,819 |
||||||||
Gross profit |
855,055 |
438,362 |
2,841,398 |
1,986,931 |
||||||||
Operating expenses: |
||||||||||||
Research and development |
342,803 |
268,030 |
1,034,221 |
990,355 |
||||||||
Sales and marketing |
320,353 |
103,995 |
957,493 |
462,255 |
||||||||
General and administrative |
391,932 |
316,791 |
1,495,208 |
1,487,966 |
||||||||
Total operating expenses |
1,055,088 |
688,816 |
3,486,922 |
2,940,576 |
||||||||
Loss from operations |
(200,033) |
(250,454) |
(645,524) |
(953,645) |
||||||||
Interest expense, net |
444 |
30,189 |
10,383 |
146,830 |
||||||||
Net loss |
$ (200,477) |
$ (280,643) |
$ (655,907) |
$ (1,100,475) |
||||||||
Basic and diluted net loss per share |
$ (0.02) |
$ (0.06) |
$ (0.10) |
$ (0.24) |
||||||||
Weighted average shares outstanding |
|
|
|
|
||||||||
Notify Technology CORPORATION |
||||||||
Condensed Balance Sheets |
||||||||
September 30, |
September 30, |
|||||||
2004 |
2003 |
|||||||
Assets: |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ 1,026,121 |
$ 556,805 |
||||||
Restricted cash |
-------- |
436,000 |
||||||
Accounts receivable, net |
485,425 |
528,927 |
||||||
Other assets |
56,598 |
101,406 |
||||||
Total current assets |
1,568,144 |
1,623,138 |
||||||
Property and equipment, net |
170,391 |
247,168 |
||||||
Total assets |
$ 1,738,535 |
$ 1,870,306 |
||||||
Liabilities and shareholders’ equity (deficit) |
||||||||
Current liabilities: |
||||||||
Short term borrowings |
$ ------- |
$ 162,750 |
||||||
Current portion of capital lease obligations |
|
|
||||||
Accounts payable |
64,012 |
108,948 |
||||||
Accrued payroll and related liabilities |
378,057 |
141,792 |
||||||
Deferred revenue |
1,081,175 |
438,137 |
||||||
Customer advances |
271,114 |
417,986 |
||||||
Other accrued liabilities |
173,168 |
160,050 |
||||||
Total current liabilities |
1,982,097 |
1,443,388 |
||||||
Long-term capital lease obligations |
16,623 |
31,195 |
||||||
Total liabilities |
1,998,720 |
1,474,583 |
||||||
Shareholders' equity (deficit): |
||||||||
Preferred stock |
------- |
993,742 |
||||||
Common stock |
13,814 |
5,834 |
||||||
Additional paid-in capital |
22,802,235 |
21,816,474 |
||||||
Accumulated deficit |
(23,076,234) |
(22,420,327) |
||||||
Total shareholders’ equity (deficit) |
(260,185) |
395,723 |
||||||
Total liabilities and shareholders' equity (deficit) |
$ 1,738,535 |
$ 1,870,306 |
||||||
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©2004 Notify Technology Corporation. All Rights Reserved.
