NW_20030113_VASCO Provides Fourth Quarter Update

January 13, 2003

OAKBROOK TERRACE, Illinois and BRUSSELS, Belgium – January 13, 2003 – VASCO (Nasdaq NM & Nasdaq Europe: VDSI; www.vasco.com), a global provider of enterprise-wide security products that support e-business and e-commerce, today announced that revenues for the fourth quarter of 2002 are expected to be in the range of $3.5 to $3.7 million, compared with $5.1 million for the third quarter of 2002. Revenues for the quarter reflect continued softness in the technology sector and the implementation of the Company’s “just-in-time” delivery program. The program, which is designed to work with strategic banking customers to more closely coordinate the delivery of product to meet their needs, will give the Company more flexibility in meeting the demands of the market by reducing costs and improving cash flow.

The Company indicated that while the implementation of the “just-in-time” delivery program negatively impacted the fourth quarter revenue by moving orders to 2003, it had seen benefits from the program in terms of a stronger than forecasted year-end cash position and a strong backlog for 2003. The Company reported that it would end the year with approximately $2.5 million in cash, a reduction of only $0.2 million from the end of the third quarter, and had a firm Digipass backlog for delivery in 2003, excluding sales and maintenance associated with the VACMAN product line, in excess of $10 million. The Company further indicated that all of its credit facilities remained in place, including an unused line of credit for up to 2 million Euros.

“VASCO’s management team is committed to meeting the needs of our customers and continues to analyze every aspect of its business to drive towards a profitable year in 2003. The just-in-time delivery program is one example of the team’s commitment to our customers. By working closely with our customers, the management team was able to formulate a program that would deliver the product to each customer according to their specific needs and, at the same time, reduce costs and improve cash flow. While the program had the one-time impact of moving sales from the fourth quarter to fiscal 2003, it will give us better visibility of product demand and allow us to reduce costs by becoming more efficient. As Jan Valcke and his team continued to work closely with our customers, I’m also happy to report that they were successful in building a firm order backlog and sales prospect pipeline for 2003.” observed Ken Hunt, CEO.

“Although there can be no guarantees with this unpredictable economy, VASCO is seeing very strong support for our just-in-time delivery program and strong order activity from our largest customers. Also encouraging is the activity that we see from VASCO’s reseller channel. We believe this to be directly attributable to our investment in training over 1000 reseller professionals over the past 14 months,” stated Jan Valcke, President and COO.

Apart from the preliminary results for the quarter, Company also announced that two of its Belgian Directors, Mr. Christian Dumolin and Mr. Chris Lebeer, have resigned from VASCO’s Board, reducing the Board to five members. In addition, VASCO has filed an application with The Nasdaq Stock Market, Inc. to move its listing from the National Market to the SmallCap Market and is planning to de-list the Company’s shares from the Nasdaq Europe market. De-listing from Nasdaq Europe will enable the VASCO to further reduce its expenses.

VASCO indicated that it expects to release final results for the quarter and year-ended December 31, 2002 during the second week of February 2003. The Company will schedule a conference call to discuss the results and answer related questions at that time.

About VASCO:
VASCO designs, develops, markets and supports patented “Identity Authentication” products for e-business and e-commerce. VASCO’s Identity Authentication software is delivered via its Digipass security products, small “calculator” hardware devices carried by an end user, or in a software format on mobile phones, other portable devices, and PCs. For user access control, VASCO’s VACMAN products guarantee that only designated Digipass users get access to the application. VASCO’s target markets are the applications and their several hundred million users that utilize fixed passwords as security. VASCO’s time-based system generates a “one-time” password that changes with every use, and is virtually impossible to hack, or break. With 8 million current users of its Digipass products, VASCO has established itself as a world-leader for strong Identity Authentication with 180 international financial institutions, approximately 800 blue-chip corporations, and governments representing more than 50 countries.

Forward Looking Statements
Statements made in this news release that relate to future plans, events or performances are forward-looking statements. Any statement containing words such as “believes,” “anticipates,” “plans,” “expects,” and similar words, is forward-looking, and these statements involve risks and uncertainties and are based on current expectations. Consequently, actual results could differ materially from the expectations expressed in these forward-looking statements.
Reference is made to the Company's public filings with the US Securities and Exchange Commission for further information regarding the Company and its operations.
More information is available at www.vasco.com.

For more information contact:
Media: Jochem Binst: +32 2 456 9810, [email protected]
Investor Relations: Tony Schor, President, Investor Awareness, Inc.: 847-945-2222, [email protected]