Company Experiences Strong Results in First Year of New Millennium; Record
revenue of $9.6 million or a loss of $0.07 Earnings Per Share
Zaventem - 1 March 2001-Keyware (EASDAQ: KEYW), one of the world's leading
providers of biometric and centralized authentication solutions, today
announced unaudited financial results for the fourth quarter and year
December 31, 2000.
For the fourth quarter of 2000, Keyware's total revenues were $9.550.000;
a 500 % increase in the stated revenue of $1.904.000 for the fourth
of 1999. For the fiscal year 2000, the company reported total revenues of
$22.944.000 or an increase of 487% over the reported revenues of
The increase in revenue in Q4 is mainly coming from organic growth due to
increased sales to new and existing customers such as Ubizen, Context,
emedicalfiles.com, INS, and Valor, which accounted for 38% of Q4 revenues.
Keyware reported a net loss for Q4 2000 of $1.7 million which represents
loss of $0.07 per share based on an average of 23,7 million average
shares outstanding compared to a net loss of $2 million for Q4 1999 or a
loss of $0,20 per share based on an average of 10 million average diluted
Net loss for fiscal 2000 totalled $10.1 million or $0.55 per share on 18.5
million average diluted shares compared to a loss of $5.3 million or $0.57
per share on 9.2 million average diluted shares during 1999.
The company's gross margin increased to 56% in Q4 2000 compared to 49% in
1999. For fiscal year 2000 the consolidated gross margin increased from
in 1999 to 49% for the year 2000. The gross profit increased significantly
to $5.3 million in Q4 2000 from $0.9 million in Q4 1999. For full fiscal
year it saw an increase from $1.8 million in 1999 to $11.3 million in
"Like many other industries, information security - particularly
and layered authentication -- are affected by a seasonal buying pattern in
which the fourth quarter traditionally is the strongest of the year,"
Francis Declercq, president and CEO of Keyware. "Our Q4 revenues are in
with our expectations and our business plan. Even with the negative impact
of the currency translation from BEF/Euro's into US dollar, we have
achieved strong results."
"If you look at the factors driving the market for the security industry,
you will see some very exciting opportunities," said Judith Markowitz,
president of J. Markowitz Consultants. "Keyware has played a leading role
cultivating some of these opportunities for itself and for the biometrics
industry as a whole. The most notable are its leading-edge development in
layered and multibiometric solutions and its leadership in the creation of
viable standards. At the same time, Keyware has enhanced its technology
portfolio through acquisitions and targeted market strategies so as to
position itself to capitalize on some of the most exciting emerging
The total operating expenses increased from $6.8 million in 1999 to $21.4
million in 2000 but decreased on percentage of sales from 174% in 1999 to
93% in 2000.
Sales & Marketing expenses were $3.5 million in Q4 2000 compared to $0.7
million in Q4 1999. The increase in marketing expenses, although
as a percentage of sales, is consistent with the company's business plan
is intended to help increase Keyware's market position by building a
brand presence in the early phase of the market's development. Main
activities were focussed on:
* Increased brand building;
* The hiring of additional marketing employees; and
* The opening of more sales offices.
Research & Development expenses were $1.0 million in Q4 2000 compared to
$1.1 million in Q4 1999. Total R&D expenses for 2000 were $3.1 million, an
increase of 64% compared to $1.9 million in 1999.
During Q4 the company focused primarily on integrating the new
and R&D resources it had gained through the acquisitions made throughout
2000. It expects its R&D efforts in 2001 to be in line with the expected
General and administrative expenses increased to $1.8 million in Q4 2000
$0.8 million in Q4 1999. As a percentage of sales, G&A expenses decreased
from 44% in Q4 1999 to 18.8% in Q4 2000. For the full year 2000, expenses
$2.6 million in 1999 to $6.5 million in 2000. As a percentage of sales,
expenses decreased from 65% in 1999 to 28% in 2000.
The company was able to achieve a strong improvement in EBITDA (earnings
before interest, taxes, depreciation and amortization), reporting a
EBITDA for the first time. It was increased from a negative $1.2 million
Q3 2000 to a positive number of $0.2 million in Q4 2000.
Balance sheet as of December 31, 2000
The total assets of Keyware as of December 31, 2000 were $93.9 million.
Cash and cash equivalents amounts to $28.2 million in Q4 2000 and
represented 30% of the total assets as of December 31, 2000. Cash in Q4
being used for
- The acquisition of ABLE
- Increase in working capital
- Capital expenditures
- Bank debt were $2.5 million in Q4 2000, representing only 3% of total
liabilities Stockholders equity of $75.8 million represents 81% of total
liabilities and stockholders' equity as of December 31, 2000.
Revenue split up per division:
Keyware reports its revenue in two divisions:
The Technology & Solutions Division, which includes primarily licensing
company's LBV technology to third party companies and to OEM's, and
its Applications division, which includes primarily projects for and
software sales to corporations.
T&S increased it revenues by 524% to $4.6 million in the fourth quarter of
2000, from $0.7 million in the fourth quarter of 1999. It saw an increase
its full fiscal year revenue by 812 % from $0.9 million in 1999 to $8.6
million in 2000.
The majority of the growth in Q4 is mainly organic as a result from sales
customers such as British Airways, Sony, Context, Ubizen, Ektelis, INS,
The Applications Division increased its revenue by 325 % to $5.0 million
the fourth quarter of 2000, from $1.2 million in the fourth quarter of
For its full fiscal year, this division increased its revenues by 384 %
$3.0 million in 1999 to $14.3 million in 2000.
The majority of the growth in Q4 is mainly internal due to sales to
customers such as GEFCO, VAG, Solvay Ixelles, SNCB, Cahners Instat,
Football League, Athena Diagnostics, Q8 petroleum and Valor.
Revenue split up per geography
Of the $9.6 million revenue earned in Q4 2000, $7.6 million came from
$2 million from the United States.
For the full fiscal year 2000, $6.2 million of the company's revenues were
earned in the United States and $16.7 million in Europe, represents 73%
the total revenues. In the year 2001, the company expects to see a higher
percentage of its sales coming from the United States.
Founded in 1996 and listed on the Easdaq since June 2000, Keyware is one
world's leading providers of a broad range of authentication solutions for
real-world business applications, and a pioneer in the field of
the technology of verifying an individual by means of personal
characteristics such as voice, face and fingerprints. Keyware's
Authentication Server (CAS) with LBV-technology allows companies to manage
multiple authentication techniques, including biometrics, from one central
server. CAS optimizes security and convenience for physical locations,
e-commerce, network, smart cards and telecommunications applications.
Keyware's award-winning technology is sold globally through an extended
network of OEMs, system integrators and VARs. Keyware is co-headquartered
Brussels (Belgium) and Woburn (Mass., USA), and publishes further
information on line at: http://www.keyware.com
Forward Looking Statements
The figures mentioned in this press release are unaudited, and, with the
exception of historical information set forth herein, the matters set
in this news release are forward-looking statements that involve risks and
uncertainties. Investors are cautioned that the unaudited figures and all
forward-looking statements involve risks and uncertainties and that a
of factors could cause audited figures and/or actual results to differ
materially from those contained herein. These factors include, among
anticipated revenues, technology risks, including dependence on core
technology, fluctuations in quarterly results, dependence on new product
development, rapid technological and market change, reliance on sales by
others, management of growth, dependence on key personnel, rapid
financial risk management, future growth subject to risks, and the
dependence on intellectual property rights. Most of these factors and
factors which could cause actual results to differ materially are
in the offering circular relating to Keyware Technologies' listing on
on June 23, 2000.
Keyware plus the Keyware logo, and LBV - Layered Biometric Verification
all trademarks of Keyware. All other company, brand or product names
contained in this document may be trademarks or registered trademarks of
their respective holders.
Keyware's Highlights of Q4 2000 (Addendum)
* Keyware, and Gemplus, the world's number one provider of smart card
solutions, signed a partnership agreement to protect smart cards with
* Keyware partnered with Baltimore Technologies. This resulted in
membership to PKI World, the Baltimore Technologies' program that promotes
interoperability in PKI by bringing together organisations whose products
are based on open industry standards.
* Keyware signed a $1.5 million contract with Context Systems appointing
Context Systems as a VAR (Value Added Reseller) for Keyware's
and biometric products. In a related agreement, Keyware was authorised to
use Context Systems' PKI software on a license basis. The implementation
this open architecture PKI software into Keyware's authentication products
enables Keyware to centralise different PKI enabled applications from
several vendors, such as Baltimore, into its the central CAS-server with
* Keyware was chosen by Ektelis, a leading provider of e-business
in Information and Content publishing, to integrate its Centralized
Authentication Server (CAS) technology into the Ektos platform.
* Keyware announced the appointment of five experienced senior executives
strengthen its management team. The new appointments were Chris Buysse as
vice president of Finance, Amaury de Potter d'Indoye as vice president
Worldwide Operations and Frank Coucke as vice president Technology and
Solutions Division Worlwide.
* Keyware acquired ABLE, a provider of Internet communications security
servers. As a result of the acquisition, Keyware integrated its CAS
technology into ABLE's flagship product, the UNI-Box, which is a
comprehensive software solution allowing secure connections between a
area network and the Internet. The integration allows users to manage
authentication on the network, telephone system and building entry of an
organization. It also gives organizations the ability to support different
types of authentication, such as PKI, smart cards, PINs, passwords and
* Keyware opened its Asia office in Singapore. The increased demand for
authentication solutions on smart cards in the Asian market was a major
factor in the opening of Keyware's Asian office.
Keyware's Highlights First Nine Months of the Year 2000
* Keyware was chosen to provide customized fingerprint smart card
authentication for eMedicalFiles.com, LLC. The initial deal is worth over
1 million and is expected to result in several million within the next few
years. The eMedicalFiles.com system will store and retrieve medical
information via a combination of a secure smart card and web-based
* Keyware acquired Neosys, a Belgian provider of advanced e-commerce
* Securis, a leading supplier of security personnel and services in
selected Keyware's biometric software solutions for deployment in its
sites. The implementations will include time and attendance applications
Securis' 3,500 staff based in a variety of locations throughout Belgium,
including the Brussels Airport.
* Keyware, partnered on Litton PRC, Inc.'s core team to provide smart card
technology to all agencies of the U.S. government. Litton PRC, a
of Litton Industries (NYSE: LIT), was one of five prime vendors selected
the General Services Administration for its government-wide Smart Access
Common ID program. The GSA program has an estimated value of $1.5 billion
over a 10-year period of performance.
* Proton World signed an Original Equipment Manufacturer (OEM) Agreement
with Keyware. Proton World and Keyware were already technology partners.
They introduced their proof-of-concept integration of the Proton e-purse
Keyware's Layered Biometric Verification (LBV) at the Smart Card 2000
show in London in February 2000, where it won the Advanced Card Award for
the Best New Security Product.
* Keyware acquired Newton Online Business Solutions, a fast-growing web
design and integration firm located in Waltham, Mass., in order to speed
growth of biometric-enabled Internet applications.
* Keyware launched its initial public offering on EASDAQ.
* Keyware acquired Alacarte Engineering, one of Europe's foremost
of smart card applications. Smart cards will become a significant platform
for biometric authentication technologies, as a protection of confidential
* Keyware signed an agreement with G2 Speech, a leading dictation software
provider. G2 Speech will integrate Keyware's voice verification software
into G2 Speech's dictation application.
* Keyware acquired Riverland Next Generation, a strategic Internet and
e-commerce service provider.
* Keyware partnered with Interstrat, a strategic systems integrator, to
embed its biometric technology into smart cards that will be used to
identify trouble-makers in nightclubs in the Netherlands.
* Keyware acquired Tech Talk, provider physical access and time management
solutions. This will enable Keyware to extend its current biometric
authentication applications in the areas of physical access control and
* Keyware received funding from the Flemish insurance company De
Vaderlandsche (Patriotique) for $3 million.
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