<http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_PrintFriendly&c=Article&cid=1086905412521&call_pageid=968350072197> Toronto Star Jun. 11, 2004. 01:00 AM Certicom reports first profitable fiscal year Certicom Corp., a specialist in security software, is reporting the first profitable year in its 19-year history, with net income of $17.2 million (U.S.) due largely to a major contract with the U.S. National Security Agency. The profit was good news for Certicom employees, who shared $1.4 million in bonuses for helping to get the Mississauga-based company into the black in the fiscal year ended April 30. But the bonus payouts increased the company's operating expenses and contributed to a $1.7 million loss in Certicom's fiscal fourth quarter, which included a $500,000 bonus expense. The firm reports in U.S. dollars. Certicom chief executive Ian McKinnon, who was hired in March, 2002, to turn around the company, said yesterday the U.S. contract enabled the company to achieve its first profitable year. That deal alone contributed $24.9 million of the $34.5 million in revenue Certicom reported in fiscal 2004. In fiscal 2003, revenue totalled $10.4 million. McKinnon said there is increased market acceptance of elliptic curve cryptography (ECC), the technology at the root of Certicom's products. Following the end of the fourth quarter, Certicom signed major ECC-based licensing agreements with BlackBerry maker Research In Motion Ltd. of Waterloo, and Pennsylvania-based Unisys Corp., a global information technology services company. The structure of the RIM deal is a model for what Certicom hopes to do in other contracts as it seeks to generate an ongoing stream of recurring revenue rather than "lumpy" revenue from one-time sales, McKinnon told analysts. With the RIM contract, Certicom is selling a pre-paid block of licences. "We like this model. I would say it's representative of the financial model for this company going forward," McKinnon said during a conference call. While Certicom's technological strength has long been acknowledged, the company has struggled to turn that acumen into sales and profits since it was founded in 1985. It issued an initial public stock offering in June, 1997. Certicom rose 27 cents (Canadian) to $3.45 yesterday on the Toronto Stock Exchange, up 8.5 per cent. But the stock is well below its 52-week high of $4.99, set in January, and the all-time split-adjusted high of $120.47 set in March, 2000. In the fiscal fourth quarter, Certicom's board approved a new strategy for licensing the company's intellectual property. McKinnon wouldn't provide guidance on future revenue. Earnings for the financial year ended April 30 amounted to 50 cents (U.S.) a share and compared with a loss of $4.9 million, or 15 cents per share, a year earlier. In the fourth quarter, Certicom lost $1.7 million, or 4 cents a share, compared with a loss of $2 million, or 6 cents a share, a year earlier. Revenue rose to $2.6 million from $2.4 million. -- ----------------- R. A. Hettinga <mailto: rah@ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'