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Communication Intelligence Corporation Reports Third Quarter 2002 Financial Results and Establishment of $15 Million Equity Line

REDWOOD SHORES, Calif., Nov 1, 2002 /PRNewswire-FirstCall via COMTEX/ -- Communication Intelligence Corporation (Nasdaq: CICI) ("CIC" or the "Company"), the leader in biometric signature verification & natural input solutions, announced today its financial results for the third quarter of 2002 and results for the nine month period ended September 30, 2002.

Revenues for the three months ended September 30, 2002, decreased 43% to $525,000 as compared to $915,000 for the corresponding quarter of the prior year. Despite this $390,000 decrease in revenue the Company reported a net loss applicable to common stockholders of $159,000 less for the quarter ended September 30, 2002, then in the corresponding quarter of the prior year. The net loss applicable to common stockholders was $1.07 million for the three months ended September 30, 2002, as compared to a net loss applicable to common stockholders of $1.23 million for the corresponding quarter of the prior year. The decrease in net loss was primarily attributable to the decrease in total revenues during the three-month period ended September 30, 2001 offset by a decrease in expenses of $561,000 as we continued to adjust our spending in anticipation of the continuing bleak economy. The basic and diluted loss per share was $0.01 on approximately 91.5 million weighted average common shares outstanding for the three months ended September 30, 2002 as compared to a basic and diluted loss of $0.01 per share on approximately 90.7 million weighted average common shares outstanding for the corresponding quarter of the prior year.

Revenues for the nine months ended September 30, 2002 decreased 37% to $2.79 million as compared to $4.44 million for the corresponding period of the prior year. The net loss applicable to common stockholders for the nine months ended September 30, 2002 decreased to $2.43 million as compared to a net loss of $2.66 million for the corresponding nine months of the prior year. The decrease in revenue was primarily attributable to the negative impact on third quarter revenues caused by the lack of corporate IT spending and a continuing weak economy. The decrease in net loss for the nine months ended September 30, 2002 was primarily attributable to the action taken beginning in the third quarter of 2001 to lower the costs and expenses in the face of a weakening economy. The basic and diluted loss per share was $0.03 on approximately 91.2 million weighted average common shares outstanding for the nine months ended September 30, 2002 as compared to a basic and diluted loss of $0.03 per share on approximately 90.5 million weighted average common shares outstanding for the corresponding period of the prior year.

The Company also announced the establishment of a $15 million equity line of credit with Cornell Capital Partners, LP ("Cornell"). Cornell is a domestic based private equity fund with its principal office in Jersey City, New Jersey. Subject to the terms of the Equity Line of Credit Agreement (the "Agreement") the Company may call upon Cornell to purchase up to $15 million worth of the Company`s common stock at 100% of the then market price of the stock, as determined by reference to the Volume Weighted Average Price of the common stock as reported by Bloomberg, LP. The Company may call upon Cornell to provide such funding for twenty-four months commencing from the effective date of a registration statement, filed with the SEC, covering the shares to be sold to Cornell. The Company was not required to pay a commitment fee to secure the line; rather it will pay a 6.5 percent financing fee against each draw made on the line. The Company filed a registration statement related to the line on October 31, 2002.

CIC`s Chairman and CEO, Guido DiGregorio stated, "Our disappointing third quarter results reflect industry reports that IT spending, in that quarter, continued to spiral downward and was significantly less than in the second quarter. This lack of spending was exacerbated by the continuing uncertainty of the economic and geopolitical climate that has and continues to weigh heavily on business confidence causing our targeted e-Signature/Enterprise projects to be delayed. Despite the harsh reality of the IT spending environment, we believe that our focused sales efforts aimed at target accounts that represent the best opportunities for near term IT expenditures provide the potential for significant fourth quarter revenue growth as well as the foundation for maintaining our market leadership position. We are pleased to have established a $15,000,000 equity credit line. This equity credit line will act as a safety net supplementing other anticipated cash sources and providing necessary working capital. The line may also, as necessary, provide capital to accelerate global sales growth, especially in China with its robust economy, digital signature product development programs, and possible acquisitions of companies that could enhance our market position and significantly increase our short term revenue potential."

Certain statements contained in this press release, including without limitation, statements containing the words "believes," "anticipates," "hopes," "intends," "expects," and other words of similar import, constitute "forward-looking" statements within the meaning of the Private Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors which may cause actual events to differ materially from expectations. Such factors include the following (1) technological, engineering, quality control or other circumstances which could delay the sale or shipment of products containing the Company`s technology; (2) economic, business, market and competitive conditions in the software industry and technological innovations which could affect the Company`s business; (3) the Company`s inability to protect its trade secrets or other proprietary rights, operate without infringing upon the proprietary rights of others or prevent others from infringing on the proprietary rights of the Company; and (4) general economic and business conditions and the availability of sufficient financing.

Selected financial information follows. Detailed corporate and financial information is available on CIC`s website at http://www.cic.com .

About CIC

Communication Intelligence Corporation is the leading supplier of electronic signature, biometric security and natural input solutions focused on emerging, fast growth applications including paperless workflow, smart wireless devices and e-Commerce enabling the world with "The Power to Sign Online(TM)." The Company`s core software technologies include multilingual handwriting recognition systems, biometric signature verification, natural messaging, and operating system extensions that enable pen input. CIC`s products are designed to increase the ease of use, functionality, and security of wireless electronic devices and e-business processes. CIC sells direct to OEMs and Enterprises. Products are also available through major retail outlets such as Circuit City, CompUSA, Staples, OfficeMax, key integration partners and direct via www.cic.com. Industry leaders such as Ericsson, Fujitsu, Hitachi, Siebel Systems, IBM, Charles Schwab and Prudential have licensed the company`s technology. CIC is headquartered in Redwood Shores, California and has a joint venture, CICC, in Nanjing, China. For more information, please visit our website http://www.cic.com