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Contact:
Steven B. Solomon Chairman and CEO CT Holdings, Inc. 214-520-9292
p 214-520-0034
f Sean
Dougherty
The MWW Group
(201) 507-9500 p
CT Holdings Reports Operating Profit of $1.2 Million, or $0.02 per share, for Second Quarter, Including Reversal of Accrual for Litigation Settlement of $1.9 Million Parago
Announces Record Revenues: Increase
72% to $6.8 Million in Second Quarter
Dallas -- August 15, 2001-- CT Holdings, Inc. (OTCBB:
CITN) announced its preliminary financial results for its fiscal quarter
and six-month period ended June 30, 2001. Revenues for the quarter were
$80,711, a decrease of 22.9 percent from software revenues of $103,258 for
the second quarter ended June 30, 2000. Revenues do not include any
subsidiary revenue from CT Holdings' ownership interest in Parago or River
Logic. The Company reported an operating profit for
the quarter ended June 30, 2001 of $1,203,127, compared to a net operating
loss of $2,634,227 for the quarter ended June 30, 2000, which included the
portion of Parago's losses allocable to CT Holdings for that quarter.
The 2001 quarter’s operating profit includes a reversal of an accrual
for litigation settlement of $1,912,500. CT Holdings reported a net loss
of $884,110, or $0.02 per share, for the second quarter of 2001
versus a net loss of $3,735,757, or $0.08 per share, in the same period
last year, a reduction of 77.4 percent. CT was required under the
equity method to recognize approximately $2.1 million of loss as a result
of CT’s participation in the Parago bridge loan guaranty. These
Parago losses were from prior periods, and do not reflect Parago losses
from the second quarter, which improved to an EBITDA loss of approximately
$1,500,000 on revenues of $6,800,000. CT Holdings continues to hold
20,000,000 shares of Parago common stock and warrants to purchase
28,864.15 shares of Series A-3 Preferred Stock, convertible into 2,886,415
shares of Parago common stock at $0.01 per share, acquired in connection
with the guarantee participation, which will become exercisable only in
the event CT fulfills all of its obligations under the Participation
Agreement or Parago repays the bridge loan. "Throughout the quarter we have focused on CT Holdings as an operating entity, and we are looking forward to the launch of new products in the fourth quarter in our Citadel Technology security and privacy software lines that address the under-served market of computer and system security inside the firewall,” said Steven B. Solomon, chairman and CEO of CT Holdings. “Our products, which are used by clients such as IBM Global Services, Merrill Lynch and the U.S. Navy, address some of the most pressing security issues facing information technology managers across corporate America, including the requirements of legislative mandates such as HIPAA (the Health Insurance Portability and Accountability Act) and the Gramm – Leach – Bliley Act, which impose strict new security and privacy requirements on the health care and financial industries, respectively. These represent large new untapped markets for the Company. In addition, our investments in subsidiary companies Parago and River Logic continue to excel in their respective markets." CT Holdings reported net revenue for the
six-month period ended June 30, 2001 declined to $181,418 a decrease of
26.5 percent from software revenues of $247,536 from the first six months
of 2000. Revenues do not include any subsidiary revenue from CT
Holdings' ownership interest in Parago or River Logic. The Company reported an operating profit for
the six-month period of $531,908 (which includes $1.9 million related to
the reversal of an accrual for litigation settlement expense) compared to
a net loss of $5,295,073 for the comparable period of 2000, which included
the portion of Parago's losses allocable to CT Holdings for that quarter.
CT Holdings reported a net loss of $1,458,586, or $(0.01) per share,
for the six months of 2001 versus a net loss of $10,697,854, or $(0.24)
per share, in the same period last year, a reduction of 86 percent. “During the quarter we strengthened our
management team with the addition of Rick Speyer, executive vice president
of Business Development and Randall Harvey, vice president of sales, and
we expect to announce additional strategic hires by year-end,” Solomon
added. Parago Developments
Parago reported a revenue increase of 72 percent to $6.8 million for the second quarter of 2001, while narrowing its EBITDA loss to $1.5 million. Parago has also significantly expanded its client base, signing 15 new accounts during the quarter, raising the total number of new accounts for 2001 to 30. Key metrics for the six months of 2001 showed strong improvements with revenue increasing 68 percent to $12.1 million, and transaction volumes rising 81 percent. Parago closed on an $8 million term loan from Comerica Bank—Texas and guaranteed by a majority of Parago shareholders including CT Holdings, in exchange for warrants equaling 14 percent of total capitalization. “Parago has solidified its position as a
low cost per transaction provider in its industry, and that is driving
sales growth,” Solomon added. “With services such as
ValueRewards gaining client acceptance, we believe Parago is poised to
build on its initial success.” River Logic DevelopmentsIn May 2000, CT Holdings acquired a minority
interest in River Logic, Inc., a developer of decision-support
applications for industry. In April 2001, River Logic received a venture
capital investment from the Intel 64 Fund, Cardinal Investment, Inc, eMed
Ventures, Mercury Ventures, and CT Holdings, which converted $450,000 of
the principal amount of its notes into shares of the Series C Preferred
Stock issued in the transactions. The remainder of the notes held by CT
were paid in cash in April, 2001. “River Logic has shown very strong growth
in this new and highly complex market, which is an important validation of
its decision support software,” Solomon said. “Its close relationship
with alliance partners like PricewaterhouseCoopers and Heads Up Systems (HUS)
are also helping its solutions resonate in the marketplace.” About
CT Holdings
CT Holdings, Inc. (OTC BB: CITN) develops
and markets its Citadel Technology line of desktop and network security
software, and also acts as a developer of early stage companies, including
Parago and River Logic. For more information on CT Holdings, our
Internet holdings, and our Citadel Technology line of security software
products, please visit our web site at www.ct-holdings.com.
About
Citadel Technology
CT Holdings’
Citadel Technology develops and markets computer security and privacy
software for one of the fastest growing segments today – security
“inside the firewall.” These
products enable companies to enforce security policies from a single point
of control across all Windows and NetWare platforms.
Citadel Technology software secures confidential information,
applications, and systems from unauthorized access, worms, and other
security vulnerabilities. The products specifically enforce policies recently mandated
by HIPAA and Gramm Leach Bliley legislation for the health care and
financial industries. Citadel’s
clients include IBM Global Services, Merrill Lynch, the U.S. Navy and
several large health care companies. About
Parago
Parago's
patent-pending technology platform and processes represent an innovative
approach designed to improve the promotional marketing industry.
Parago provides a range of Internet-based customer relationship management
products, PromoCenterSM, ValueRewardsSM and KnowledgeCenterSM, which are
created to increase sales, reduce costs, enhance customer retention for
its clients, and improve loyalty. These products comprise Parago's
Continuous Customer InteractionSM model, which helps retailers,
manufacturers and service organizations reduce the cost of conducting
promotions and drive incremental revenue by cross-selling and upselling
new products and services. During the relationship management
process, Parago captures fresh, accurate, and usable transaction and buyer
demographic data that can be used by its clients to improve their
promotional marketing programs. Parago maintains a web site at
www.parago.com. About
River Logic
River Logic, Inc.
develops decision-support applications for industry. Using COR
Technology(TM), a rapid-application development system, developers at
River Logic create applications that enable industry professionals to
model complex enterprises and explore financial relationships on a desktop
computer or laptop. Embedded analytics allow end-users to understand the
financial implications of critical business decisions easily by
manipulating graphical icons that model their enterprise.
Headquartered in Beverly, Massachusetts, River Logic is a privately held
corporation receiving venture capital support from Cardinal Investment,
Inc., CT Holdings (OTC BB: CITN), EBSCO CASIAS, eMed Ventures, Intel
Capital, and Mercury Ventures. As previously disclosed, in April 2001,
River Logic received an investment led by the Intel® 64 Fund. The Intel
64 Fund investment was made in support of River Logic's commitment to port
and tune its Enterprise OptimizerTM software application to Intel’s
IA-64 platform, beginning with the ItaniumTM processor. To learn
more about River Logic, visit www.riverlogic.com, call 978.753.5029, or
email info@riverlogic.com. For more information
on CT Holdings, its Internet subsidiaries, and its Citadel Technology line
of security software products, please visit our Web site at http://www.ct-holdings.com.
For information on purchasing products, contact us directly by writing or
calling: CT Holdings, 3811 Turtle Creek Blvd., Suite 770, Dallas, Texas
75219; phone: 214/520.9292; fax: 214/520.9293. Forward-Looking
Statements: This news release contains forward-looking statements, which
involve risks and uncertainties. Accordingly, no assurances can be given
that the actual events and results will not be materially different than
the anticipated results described in the forward-looking statements.
Investors are also directed to consider carefully the other risks factors
and uncertainties discussed in documents we file with the Securities and
Exchange Commission, including our Quarterly Report on Form 10-QSB for the
quarter ended March 31, 2001 and our Annual Report on Form 10-KSB for the
ten month period ended December 31, 2000. There are a number of important
factors that could cause actual results to differ materially from those
expressed in any forward-looking statement made by us. These factors
include the availability of capital to CT Holdings, Parago and River
Logic; substantial dilution in the event CT Holdings determines not to
fully participate in the Parago bridge loan participation in the event the
additional payments are required; risks related to our software business
line; risks relating to the accounting treatment of the reversal of
accruals for litigation settlement; the activities of new or existing
competitors; the ability to attract and retain employees and strategic
partners; general economic conditions; and litigation costs. The Company
undertakes no obligation to publicly release the result of any revisions
to these forward-looking statements, which may be made to reflect events
or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
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