Innovative Card Technologies (NASDAQ:INVC), developers of the breakthrough InCard DisplayCard security device for e-banking, e-commerce and data access, today announced third quarter financial results.
The company reported its strongest quarterly revenue performance to date, taking in $840,098 in the third quarter of 2008, with only two months of production during the quarter due to a month-long holiday shutdown of a key European supplier, compared with $159 in the third quarter of 2007. The company achieved a 59% reduction in operating expense over the comparable 2007 period. After accounting for the revaluation of warrant liability and interest, InCard lost $1,561,843 in the third quarter, or $0.05 per diluted share, as compared with $0.16 per diluted share in the third quarter of 2007. The company's order backlog at October 30, 2008 was $1.2 million.
For the nine months ended September 30, 2008, InCard reported revenue of $1.86 million, versus $2,669 revenue in the prior year period. Also, for the comparable year-over-year period, the company reduced its operating expenses by 35%.
"InCard Technologies, having completed successful pilot programs and product performance testing by some of the world's most demanding financial institutions and security vendors, has built a foundation for continued quarterly revenue growth," said Steven R. Delcarson, President and CEO of InCard Technologies. "We are now fulfilling deployments by customers who have fully vetted the utility and market appeal of our product - and who are now committing marketing dollars and personnel to their expanded rollout efforts, in some cases mandating use of the InCard DisplayCard to their end users. Even amidst difficult global financial market conditions, we expect to close out InCard's 2008 revenue performance with continued growth in the fourth quarter, and we have a strong revenue outlook for 2009." Delcarson continued, "We expect yield rates and margins to improve as we deploy higher volumes of cards and begin to see the impact of our new pricing structure. We maintain a conservative 10% warranty reserve, and expect this to improve as our products continue to perform reliably in the field through their service life warranty."
The InCard DisplayCard's success parallels the success of the quickly-growing hardware token market, which will be worth $764 million in 2009 per IDC. One-time passcode tokens, a subset of this market, generate a unique digital passcode that can only be used once. The passcode is entered into a database or website login along with the username and password, providing dual-factor authentication for each account login. This strong security prevents fraudulent access to electronic financial accounts, provides quick authentication of a caller's identity to call centers (thus allowing agents to handle more calls per hour), and prevents misuse of sensitive data.
Among one-time passcode authenticators, the InCard DisplayCard stands out with its ultra-portable credit card form - a much easier-to-carry device than legacy keyfob tokens. The InCard DisplayCard has been deployed to authenticate access to VPN systems, corporate databases, government information systems, online gaming accounts, sensitive document storage, and, most notably, online banking and brokerage accounts. This format especially resonates with financial institutions, as the InCard DisplayCard is compatible with existing payment card infrastructure (ATM, distribution systems, point-of-sale), the card's artwork is fully branded to the issuing institution, and bank customers are familiar and comfortable with receiving card products from their bank.
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