Results indicate early progress in build phase of new strategic direction

English webcast | French webcast

Highlights for the Quarter:

• Micronas licensed Certicom’s KeyInject solution for securing silicon chips in consumer electronics
• Certicom launched device authentication service for ZigBee Smart Energy to secure wireless data communications and authenticate smart meter devices
• Qualcomm Inc. announced the use of Certicom’s advanced cryptographic modules to achieve Suite B compliance for BREW
• ClearCommerce Corporation, a Fidelity National Information Services company, selected Certicom’s ECC technology to support secure payment processing
• Tumbleweed Communications Corp. announced the use of Certicom's Security Builder® family of solutions

Subsequent to Quarter End:

• Daintree Networks licensed Certicom’s Security Builder technology for the development of secure ZigBee Smart Energy networking products

Mississauga, Ontario (September 3, 2008) – Certicom Corp. (TSX: CIC) (the “Company”) today reported results for the first quarter of fiscal 2009 ended July 31, 2008. All figures are in U.S. dollars and in accordance with Canadian Generally Accepted Accounting Principles (GAAP) except where otherwise noted.

Revenue for the quarter was $4.2 million compared to $3.2 million for the first quarter of fiscal 2008. 

“Certicom has embarked on its new strategic direction and has completed the first quarter of its 12-quarter strategic plan. This quarter’s results are consistent with this transition phase, in which we continue to focus on the most promising market verticals,” said Karna Gupta, Chief Executive Officer. “A prime example of this is our work in the emerging area of advanced metering infrastructure in the Energy and Utilities vertical, in which we have secured a contract win with Daintree Networks, a leading provider of analysis tools for wireless smart metering. Another example is the progress we’re making in the growing field of satellite-based content management in the Consumer Electronics and Mobility vertical, in which we have established relationships with dominant players XM Radio, WorldSpace and Ondas.”

Mr. Gupta added, “We continue to develop total security solutions by leveraging our core strengths; namely our proven technology, ECC leadership position, brand recognition and highly skilled human resources. Our recent wins stand as significant proof points of our strategic focus and represent important initial steps towards our ultimate goal of sustainable, profitable growth.” 

First Quarter Financial Review

Operating expenses1 for the quarter were $6.2 million, compared to $5.7 million in the first quarter of fiscal 2008. Excluding expenses for the Sony litigation case, operating expenses were $5.2 million, in line with the same period in fiscal 2008 and slightly higher than the expense guidance of $5.0 million. The higher expenses were mainly attributable to investments in accelerated product development spending and the enhancement of Certicom’s customer service infrastructure. The Sony litigation costs were $1.0 million compared to $0.4 million in the same quarter of fiscal 2008 and the expense guidance of $1.5 million. The actual expenses were lower than the guidance primarily due to the timing of legal services rendered. 

The Company posted a net loss on a GAAP basis of $3.4 million or $0.08 per basic and diluted share for the quarter, consistent with the net loss of $3.4 million and $0.08 per basic and diluted share in the first quarter of fiscal 2008. 

Certicom had $37.6 million in cash2 at quarter-end compared to $38.5 million at year-end fiscal 2008. The Company has no debt.

Outlook

“Certicom is making headway on its new three-year plan,” said Mr. Gupta. “We expect to report more contract wins and improved cost efficiencies that are consistent with our new strategic direction as we progress through fiscal 2009.” 

Operating expenses1 for the second quarter of fiscal 2009, excluding expenses related to the Sony litigation, cost of revenue, depreciation and amortization, and stock-based compensation, are expected to range from $4.8 million to $5.2 million. The expenses related to the Sony litigation for the quarter are expected to be approximately $1.7 million. 

Sony Patent Infringement Litigation
Certicom continues to progress through the discovery phase of the Sony litigation, which requires both parties to provide requested documentation, including software code, to conduct depositions, and to exchange specific information. As stated previously, the claims construction hearing of the litigation case (known as a Markman hearing) has been set for June 11, 2009 and the trial date has been set for September 8, 2009. The Company remains confident of its legal position and ability to pursue this litigation to a successful conclusion.

CONFERENCE CALL

The conference call will be webcast live with supporting slides and subsequently archived at www.certicom.com. To listen to the webcast, participants will require Windows Media Player™ which can be downloaded from Certicom’s website prior to the event. An archived recording will be available from 12 p.m. (ET) on September 4 until 12 a.m. (ET) on September 11, 2008. To access the archive, please call 416-640-1917 or 1-877-289-8525 and enter passcode 21276301#.

About Certicom

Certicom manages and protects the value of content, applications and devices with government-approved security. Adopted by the National Security Agency (NSA) for government communications, Elliptic Curve Cryptography (ECC) provides the most security per bit of any known public-key scheme. As the global leader in ECC, Certicom’s security offerings are currently licensed to hundreds of multinational technology companies, including IBM, General Dynamics, Motorola, Oracle and Research In Motion. Founded in 1985, Certicom’s corporate offices are in Mississauga, Ontario, Canada with worldwide sales and marketing headquarters in Reston, Virginia and offices in Europe and Asia. Visit www.certicom.com

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Certicom, Certicom Security Architecture, Certicom Trust Infrastructure, Certicom CodeSign, Certicom KeyInject, Security Builder, Security Builder API, Security Builder BSP, Security Builder Crypto, Security Builder ETS, Security Builder GSE, Security Builder IPSec, Security Builder NSE, Security Builder PKI and Security Builder SSL are trademarks or registered trademarks of Certicom Corp. All other companies and products listed herein are trademarks or registered trademarks of their respective holders. Information subject to change.

FOOTNOTES:

1 This news release contains references to operating expenses. Certicom defines operating expenses as total operating expenses excluding cost of revenues, depreciation and amortization and stock-based compensation. It also excludes interest income, other income (expense) and withholding tax expense

2 This news release contains references to cash, which is defined as cash and cash equivalents, short term and long term marketable securities and restricted cash.

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE GAIN (LOSS)

CONSOLIDATED STATEMENTS OF CASH FLOWS

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