Continued cost management; strong progress in government market

Mississauga, Ontario (September 4, 2003) – Certicom Corp. (TSX: CIC), a leading provider of wireless security solutions, today announced results for the first quarter of fiscal 2004 ended July 31, 2003. All figures are in U.S. dollars and in accordance with Canadian Generally Accepted Accounting Principles (GAAP).

Certicom reported revenues of $2.2 million in the first quarter of fiscal 2004, compared with $3.3 million a year ago and $2.4 million in the fourth quarter of fiscal 2003. This decrease is due primarily to continuing difficult market conditions, which particularly affected movian product sales as companies continued to defer the considerable expense of moving from the pilot stage to full deployment. It also reflects seasonal fluctuations in Certicom’s business and the lag in first quarter activity typically experienced by companies within the industry.

“The challenging selling environment persisted in the first quarter as economic conditions in our markets remained difficult,” said Ian McKinnon, President and Chief Executive Officer. “While we are disappointed with revenues, our cash position remained healthy and we continued to significantly reduce our expenses, despite the strengthening Canadian dollar.”

“Operationally, we further expanded the Certicom Partner Network with six new partners and achieved Federal Information Processing Standards (FIPS) validation for our Government Security Edition (GSE) products, which represents a significant milestone in our government strategy. We are confident in the steps being taken towards achieving sustainable, profitable growth and that Certicom is competitively positioned in its target markets.”

First Quarter Financial Review

Operating expenses, including cost of sales and excluding depreciation and amortization, totaled $2.8 million during the quarter, in line with previously provided guidance of $2.8 million to $3.1 million. This compares with operating expenses of $3.8 million in the same quarter last year, representing a 24% decrease, and operating expenses of $3.2 million in the fourth quarter of 2003, representing a 12% decrease.

The company reported an EBITDA* loss of $0.6 million for the three months ended July 31, 2003 compared with a loss of $0.4 million for the same period a year ago and a loss of $0.8 million in the fourth quarter of fiscal 2003.

Net loss on a GAAP basis for the quarter was $1.6 million, or $0.05 per share, compared with a net loss of $1.1 million, or $0.03 per share, in the first quarter of fiscal 2003. In the fourth quarter of fiscal 2003, the net loss was $2.0 million, or $0.06 per share.

Cash and cash equivalents and restricted cash (collectively, “Cash”) totaled $6.8 million at quarter end. Cash at the end of the fourth quarter of fiscal 2003 was $8.8 million. In the second quarter, the company will make a $0.3 million payment for restructuring liabilities, which represents the company’s last significant one-time restructuring payment, thereby reducing Certicom’s future cash requirements. At present operating levels, the company does not anticipate that it needs to raise additional cash to meet its financial obligations in the current fiscal year, but is currently addressing the re-financing of the company’s outstanding convertible debentures that mature in August 2004.

First Quarter Operational Highlights

  • Signed contracts with three new original equipment manufacturers (OEMs).
  • Signed agreements with six new channel partners, comprised of four Alliance partners and two Advantage partners, including a distribution agreement with Fujitsu Siemens Computers, a European computer company. Fujitsu Siemens Computers will add movianVPNTM to its mobile device offerings, allowing it to deliver complete end-to-end security solutions to its extensive reseller channels and corporate customers. The Certicom Partner Network, introduced in November 2002, targets security-specific value-added resellers (VARs) and systems integrators (SIs) and has two levels of partnership, Advantage and Alliance, which reflect resellers’ geographic reach and revenue commitment.
  • Certicom also signed SRA International, Inc., a leading provider of information technology (IT) services and solutions to U.S. federal government organizations, as an Advantage partner. SRA International will include movian GSE products to enable it to provide key capabilities for comprehensive and integrated secure wireless solutions that meet the government's highest security standards. The Certicom Partner Network enhances Certicom’s responsiveness to demand for wireless security solutions throughout North America and internationally.
  • Security Builder® GSE by Certicom, the company’s core developer toolkit for constrained devices, received the Federal Information Processing Standards (FIPS) 140-2 validation for Windows and Windows CE. Security Builder® GSE, which is the first solution to receive the designation for use on both PC-based and wireless operating systems, is the core cryptographic module for all Certicom security applications. In addition to targeting government organizations directly, Certicom intends to leverage its toolkits to target government-focused OEMs to enable them to build FIPS-validated applications.
  • Certicom announced its support of EDS’ Extended Connected Office (ECO) offering, a fully managed enterprise mobility solution, by using movianVPN™, an award-winning virtual private network (VPN) client for wireless handhelds.
  • Certicom partnered with NetScreen Technologies Inc. in the NetScreen Global Security Alliance. As a member, movianVPN™ by Certicom has been tested and certified for interoperability and functionality with NetScreen’s integrated firewall and VPN security solutions.

Subsequent to quarter end, Certicom announced that Synchrologic, a current customer, will use its Security Builder® GSE toolkit to build FIPS-validated security into its products to ensure they meet stringent government security standards.

Due to the unpredictable economic environment, Certicom no longer provides quarterly guidance for revenue and cash but continues to provide guidance for operating expenses. Second quarter fiscal 2004 operating expenses, including cost of sales, are expected to range from $2.8 million to $3.1 million if the current value of the Canadian dollar remains stable. A strengthening Canadian dollar could potentially adversely affect management’s ability to deliver within this range.

Conference Call
Management will host a conference call to discuss Certicom’s performance and outlook, starting at 5 p.m. (ET) (2 p.m. PT) today, September 4, 2003. The call may be accessed at: 1-800-814-4861 or 416-640-4127. It will also be webcast with supporting slides and subsequently archived at http://www.certicom.com. To listen to the webcast, participants will require Windows Media Player™ which can be downloaded via Certicom’s website, prior to accessing the event. A taped rebroadcast will be available from September 4 at 7 p.m. (ET) until September 11 at 11:59 p.m. (ET). For access, please call 1-877-289-8525 or 416-640-1917 and enter the passcode 21015513.

Condensed Consolidated Statements of Operations
Condensed Consolidated Balance Sheet
Condensed Consolidated Statement of Cash Flows

About Certicom
Certicom is a leading provider of wireless security solutions, enabling developers, governments and enterprises to add strong security to their devices, networks and applications. Designed for constrained devices, Certicom’s patented technologies are unsurpassed in delivering the strongest cryptography with the smallest impact on performance and usability. Certicom products are currently licensed to more than 300 customers including Texas Instruments, Palm, Research In Motion, Cisco Systems, Oracle and Motorola. Founded in 1985, Certicom is headquartered in Mississauga, ON, Canada, with offices in Ottawa, ON; Herndon, VA; San Mateo, CA; and London, England. Visit www.certicom.com.

Certicom, Security Builder, SSL Plus, Trustpoint, WTLS Plus, movian and movianVPN are trademarks or registered trademarks of Certicom Corp. All other companies and products listed herein are trademarks or registered trademarks of their respective holders.

Except for historical information contained herein, this news release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially. Factors that might cause a difference include, but are not limited to, those relating to our ability to successfully integrate newly-hired professionals into the management team, the ability to realize anticipated cost savings from our consolidation initiatives, the acceptance of mobile and wireless devices and the continued growth of e-commerce and m-commerce, the continued commitment to new security investments on the part of the U.S., Canadian and other governments and government agencies, the continued acceptance by our customers of our subscription license model, our ability to implement our restructuring initiatives and our ability to realize resulting cost savings, the increase of the demand for mutual authentication in m-commerce transactions, the acceptance of Elliptic Curve Cryptography (ECC) technology as an industry standard, the market acceptance of our principal products and sales of our customer’s products, the impact of competitive products and technologies, the possibility of our products infringing patents and other intellectual property of fourth parties, and costs of product development. Certicom will not update these forward-looking statements to reflect events or circumstances after the date hereof. More detailed information about potential factors that could affect Certicom’s financial results is included in the documents Certicom files from time to time with Canadian securities regulatory authorities.

For further information, please contact:

Investors and Financial Analysts Media:
Hervé Séguin Brendan Ziolo
Chief Financial Officer Director of Marketing
Certicom Corp. Certicom Corp.
(905) 501-3827 (613) 254-9267
hseguin@certicom.com bziolo@certicom.com