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News Release for NetNanny

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hillsandvalleys   Monday, 03/04/02 04:57:55 PM
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News Release for NetNanny
For Immediate Release: For More Information Contact:
March 1, 2002 ECON Investor Relations, Inc.
Toll Free: 888-889-9212
dvanzant@investorideas.com
truehs@investorideas.com


NET NANNY REPORTS SECOND QUARTER FINANCIAL RESULTS

Operating losses down 73% over prior year; Company moves forward with Biometric Keystroke Technology

Bellevue, Washington, March 1, 2002 — Net Nanny Software International Inc. (CDNX: NNS) (OTCBB: NNSWF), today announced its unaudited first six month financial results for the period ended December 31, 2001.

Sales revenues for the quarter were US$585,000 a decrease of $328,000 or 35% over fiscal year 2000’s revenues of $913,000. This decrease was due to reduced sales revenues from decreased activity in retail accounts processed by the Company’s distributor, Macmillan USA. Slowed computer sales reduced demand for the Company’s flagship product Net Nanny. Operating expenses were $1,476,000 a decrease of 67% over the same period last year. Loss per share was $0.04 compared to the prior year’s loss per share of $0.12 as the Company incurred significant sales and marketing expenses for BioPassword. BioPassword is a patented software-only biometric application that uses keystroke authentication to identify users by the way they type. This software only biometric technology is a key focal point of future revenue growth for the Company.

The Company has signed two additional agreements with other companies in December to integrate BioPassword into their applications. The Company expects to begin receive recurring transaction-based revenues from these customers beginning the second half of the fiscal year as these companies begin selling their products and services to end-users. The Company’s new partners were highlighted at the recent RSA Security show in San Jose in February where BioPassword SDK 2.0 was announced and launched.

“There was overwhelming industry reception and interest in BioPassword’s technology as a security solution to software authentication to complex networks as well as securing proprietary data base and software applications” said Andrew Tull, Vice President of Sales. “Keystroke authentication is currently a relatively small segment of the Biometric industry, but companies are beginning to see the software only technology is a solution to the current security issues that can be implemented, quickly, cost effectively and is easy to install. We had a larger than anticipated number of companies request implementation strategies over the next 90 days” he continued.

BioPassword SDK 2.0 provides an easy, transparent solution that can be installed quickly and efficiently and provide improved security, fraud detection and productivity. Significant future business opportunities were created similar to the recently announced agreements with Novell and Authentor.
The following figures are taken from the Company’s unaudited consolidated financial statements:
CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in U.S. dollars)
FOR THE YEARS ENDED SEPTEMBER 30, 2001, 2000 and 1999.
2001 2000 1999
Revenue
Sales 585,304 1,016,754 387,747
Cost of Sales 93,106 112,967 16,528
Gross Margin 492,198 800,534 331,570

Expenses
General and Administrative 365,769 1,018,754 418,984
Sales and Marketing 634,939 2,060,754 319,147
Research and development 346,943 1.325,550 201,898
Amortization 128,000 138,666 18,544
1,475,651 4,543,913 958,573

Loss from operations (983,453) (3,743,376) (587,352)

Foreign Exchange and Investment Income 784 1,042,763 10,571

Loss for the year (982,689) (2,700,616) (576,781)

Loss per common share (0.04) (0.12) (0.04)
General and Administrative ("G&A") costs of $365,769 decreased 64% over fiscal 2000 and were 13% less than 1999. The decrease reflected reduced headcount and expense control as the Company focused its efforts on selling BioPassword.

Sales and Marketing costs of $635,000 decreased $1,425,000 or 71% over 2000, due to decreases in staffing, elimination of expenses related to last year’s electronic commerce initiatives and two new product
Launches that took place in 2000. Research and Development costs decreased 74% to $347,000 from
$1,325,000 in 2000 and $201,000 in 1999. The decrease was due to completion of a major upgrade to the
Company’s flagship product, Net NannyÒ, and the commercial release of BioPassword in 2000. Current
Efforts are focused on software development for BioPassword customers and future releases of Net Nanny.
As at December 31, 2001, the Company's unrestricted cash position was $16,000 versus balances of $128,000 in 2000. The Company consumed $320,000 in operations during the period compared to the previous year’s expenditure of $757,000.

Working capital deficit at December 31, 2001 was $(2,480,000), representing a ratio of approximately 0.14:1 in fiscal 2002 compared to .65:1 for the prior fiscal year. The Company increased its deficit by $983,000 since June 30, 2001.
The Company has hired Econ Investor Relations to handle shareholder and investor relations for the Company.

On behalf of the Board of Directors
Net Nanny Software International Inc.

“Gordon A. Ross”
Chairman and CEO

Note to Readers: Statements in this news release looking forward in time involve risks and uncertainties, including the risks associated with the effect of changing economic conditions, trends in the development of the Internet as a commercial medium, market acceptance risks, technological development risks, seasonality and other risk factors. The Canadian Venture Exchange has not reviewed and does not accept responsibility for the adequacy or the accuracy of this Press Release.

For More Information Contact Dawn Van Zant at dvanzant@investorideas, Trevor Ruehs at truehs@investorideas.com or Toll Free 1 888 889 9212




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