ActivCard Reports Fourth Quarter Financial Results

Net loss for the quarter was $9.4 million, or $0.22 per diluted share, compared to a net loss of $9.2 million, or $0.22 per diluted share in the fourth quarter of 2002. Included in the net loss for the quarter ended December 31, 2003 is $1.5 million, or 100 percent of the loss incurred by ASPACE Solutions Limited. During the fourth quarter, ActivCard increased its ownership of ASPACE to 49 percent of the voting control. As of December 31, 2003, the Company had $229 million in cash and short-term investments. Fourth Quarter and Subsequent Highlights -- ActivCard will provide its smart card and credential lifecycle management software for an initial project phase of the NASA employee ID badge, through its partnership with MAXIMUS and a NASA smart card system task order awarded by the U.S. General Services Administration. -- Northrop Grumman Information Technology selected the ActivCard Identity Management System (AIMS) for the initial phase of a large federal law enforcement organizations employee ID card initiative. -- U.S. Department of Interiors Bureau of Land Management is deploying ActivCard Gold client software and AIMS for their employee ID badge program combining both physical and network security credentials in the form of a smart card-based badge. -- The Company launched its updated AIMS Enterprise v3.5 card and credential management system for issuing and managing trusted digital identities -- offering enhanced interoperability for Microsoft environments. -- New ActivCard Keychain Token and ActivReader Solo pin-pad smart card reader were introduced -- enhancing mobility for secure remote access users while broadening the choice of authentication form-factors for secure dial-up, VPN, web, terminal services, and wireless LAN access. -- ActivCard Trinity single sign-on solution achieved IBM(R) Ready for Tivoli status, extending the IBM identity management and centralized provisioning model with desktop SSO, as well as smart card-based ID and biometric capabilities. 2003 Highlights -- ActivCard now has a worldwide installed base of 6.7 million users of ActivCard digital identity software and devices, an increase of approximately 25 percent over the prior year. -- ActivCard shipped over 500,000 licenses of ActivCard Gold, resulting in an installed base of over 2.3 million users of the award-winning smart card client software to date. -- ActivCard shipped over 800,000 ActivCard authentication tokens for secure remote access and secure Internet banking. -- U.S. Department of Defense (DoD) Common Access Card (CAC) badge program has deployed over 4 million CAC cards to date using ActivCard issuance and management software -- illustrating the scalability and robustness of ActivCard technology for large scale ID card programs. -- While maintaining the lead as primary DoD smart card middleware provider, ActivCard extended government penetration to multiple defense and civilian department digital identity projects in the United States and internationally. -- ActivCard completed its re-incorporation as a publicly listed company in the United States. Outlook In the first quarter of 2004, the Company expects revenues to range between $6.3 million and $7.5 million, with the geographic mix similar to the fourth quarter of 2003. Year End Results Revenues for the year ended December 31, 2003 were $38.3 million compared to $41.8 million for the year ended December 31, 2002. Net loss for the year ended December 31, 2003 was $29.8 million, or $0.72 per diluted share, compared to $45.5 million, or $1.10 per diluted share, for the year ended December 31, 2002. Included in the net loss for the year ended December 31, 2003 is 100 percent of the loss of ASPACE Solutions Limited in the amount of $2