Exhibit 99.1
NOTIFY TECHNOLOGY REPORTS RESULTS FOR THE FISCAL QUARTER ENDED JUNE 30, 2006
THE INTERPRETATION OF EITF 00-19 DOMINATES FINANCIAL RESULTS
SAN JOSE, Calif., Aug. 14 /PRNewswire-FirstCall/ -- Notify Technology
Corporation (OTC: NTFY) today announced financial results for its fiscal
quarter ended June 30, 2006.
The Company showed a net loss for the three month period ended June 30,
2006, of $138,370, or a net loss per share of $0.01, compared to a net loss of
$252,695, or a net loss per share of $0.02, reported for the same period in
fiscal 2005.
The $937,515 of revenue reported in the fiscal quarter ended June 30, 2006
compares to $866,633 of revenue for the same period last year. The improvement
in revenue consisted of a 26% increase in NotifyLink revenues offset by a
decrease of 26% in our legacy Visual Got Mail Solution.
The gross margin for three month period ended June 30, 2006 was 97.5%
compared to 95.9% in the same period last year because the three month period
ended June 30, 2006. The Company's NotifyLink wireless product line revenue
improved to $745,606 for the three month period ended June 30, 2006 from
$593,564 for the same period of the prior year. The service portion of the
Visual Got Mail Solution product line was $191,909 in the three month period
ended June 30, 2006 compared to $295,069 in the same period of the prior year.
The level of Visual Got Mail service revenue is expected to continue to decrease
in future periods as the installed base the Visual Got Mail product services
declines due to our customer's discontinued marketing of the service.
The Company also satisfied the closing conditions of the agreement to sell
selected patents for net proceeds of approximately $250,000. The collection of
the $250,000 both improved the balance sheet and was recorded as a gain on the
income statement for the three month period ended June 30, 2006. The patents
sold do not involve Notify's current software product line but are associated
with Notify's legacy wireline hardware product line no longer in production.
The results from operations for the three month period ended June 30, 2006
was a loss due to the $312,667 increase in warrant liability related to warrants
for common stock issued during the July 2001 Series A Preferred offering. These
warrants qualify for accounting treatment under EITF 00-19, "Accounting for
Derivative Financial Instruments Indexed to, and Potentially Settled in, A
Company's Own Stock."
In accordance with EITF 00-19, due to the potential payment of liquidated
damages in the event the Company becomes delinquent in its future SEC filings,
the fair value of the warrants issued in the financing must be accounted for as
a liability. The value of these warrants are recalculated based on their fair
market value at the end of each quarterly period, and the change to the warrant
liability and related gain or loss is reflected in the financial statements of
the Company's quarterly report.
On June 30, 2006, the closing day of the second fiscal quarter of 2006, the
fair value of the warrants using the Black-Scholes option-pricing model was
estimated to be $145,252. On June 30, 2006, the fair value of the warrants using
the same valuation method increased to $457, 919. Consequently, the $312,667
increase in fair value of the warrants was recorded as a "Loss on fair value of
warrants" in the Company's statement of operations in the three month period
ended June 30, 2006, and included in "Warranty liability" on the Company's
balance sheet.
"The 25% growth in NotifyLink revenue this period over the same period a
year ago plus the sales of selected legacy wireline patents has been completely
overshadowed by the negative EITF 00-19 adjustment," said Paul DePond, President
of Notify Technology. "I hope our shareholders realize that the negative
adjustment of the EITF-00-19 is a non-cash accounting adjustment and subject to
reversal if the warrants were exercised or they expire in July 2008.
Shareholders need to focus on the growth of our wireless business which is the
true indicator of how the Company is financially performing."
About Notify Technology Corporation
Founded in 1994, Notify Technology Corporation is an innovative software
company developing mobility products for organizations of all sizes. 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 through authorized
resellers internationally. 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 development of NotifyLink
revenue and the service revenue on the Visual Got Mail Solution. 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,
the probability that we will not be delinquent on any SEC filings before July
2008 as well as other risks. In particular, we cannot predict future NotifyLink
revenues with any accuracy and do not know whether NotifyLink revenues will
continue to grow at the rates we have recently experienced. Increasing
NotifyLink revenues will require continued investments in our sales and
marketing organization, and we have limited available cash resources to make
these investments. 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.
Contacts:
At Notify Technology Corporation:
Jerry Rice, Chief Financial Officer
Phone: 408-777-7927
jerry.rice@notifycorp.com
NOTIFY TECHNOLOGY CORPORATION
CONDENSED UNAUDITED STATEMENTS OF OPERATIONS
Three-Month Periods Nine-Month Periods
Ended June 30, Ended June 30,
------------------------- -------------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------
Revenue:
Product revenue $ 745,606 $ 604,200 $ 2,707,495 $ 3,067,338
Service revenue 191,909 262,433 637,784 1,113,602
Total revenue 937,515 866,633 3,345,279 4,180,940
Cost of revenue:
Product cost 2,420 25,586 459,816 1,278,912
Service cost -- 10,175 15,375 34,112
Royalty payments 20,855 -- 56,753 --
Total cost of revenue 23,275 35,761 531,944 1,313,024
Gross profit 914,240 830,872 2,813,335 2,867,916
Operating expenses:
Research and
development 250,589 266,796 713,035 779,816
Sales and
marketing 403,320 405,064 1,221,606 1,240,171
General and
administrative 334,681 412,411 970,746 1,185,791
Total operating
expenses 988,590 1,084,271 2,905,387 3,205,778
Loss from operations (74,350) (253,399) (92,052) (337,862)
Other interest
(expense), net (1,353) 704 (1,509) 2,053
Proceeds from sale
of patents 250,000 -- 253,046 --
Loss on fair value
of warrants (312,667) -- (457,919) --
Net loss $ (138,370) $ (252,695) $ (298,434) $ (335,809)
Basic and diluted
net loss per share $ (0.01) $ (0.02) $ (0.02) $ (0.02)
Basic and diluted
weighted average
shares outstanding 13,968,995 13,968,995 13,968,995 13,921,486
NOTIFY TECHNOLOGY CORPORATION
CONDENSED BALANCE SHEETS
June 30, Sept. 30,
2006 2005
------------ ------------
(Unaudited)
Assets:
Current assets:
Cash and cash equivalents $ 820,428 $ 424,228
Accounts receivable, net 524,748 472,942
Other assets 45,213 58,751
Total current assets 1,390,389 955,921
Property and equipment, net 104,440 144,418
Total assets $ 1,494,829 $ 1,100,339
Liabilities and shareholders' deficit
Current liabilities:
Current portion of
capital lease obligation 17,896 22,609
Accounts payable 12,704 47,650
Accrued payroll and
related liabilities 256,121 328,535
Deferred revenue 1,704,283 1,287,866
Customer advances -- 30,039
Other accrued liabilities 109,344 139,484
Warrant liability 457,919 --
Total current liabilities 2,558,267 1,856,183
Long-term capital lease obligations 13,883 23,044
Total liabilities 2,572,150 1,879,227
Shareholders' deficit:
Common stock 13,969 13,969
Additional paid-in capital 22,840,830 22,840,830
Accumulated deficit (23,932,120) (23,633,687)
Total shareholders' deficit (1,077,321) (778,888)
Total liabilities and
shareholders' deficit $ 1,494,829 $ 1,100,339
SOURCE Notify Technology Corporation
-0- 08/14/2006
/CONTACT: Jerry Rice, Chief Financial Officer of Notify Technology
Corporation, +1-408-777-7927, or jerry.rice@notifycorp.com/
/Web site: http://www.notifycorp.com /
(NTFY)