Saflink(R) Corporation Reports First Quarter 2005 Financial Results
BELLEVUE, Wash., May 12 /PRNewswire-FirstCall/ -- Saflink(R) Corporation (Nasdaq: SFLK), a leading developer, marketer, and integrator of biometric security solutions and smart cards, today reported its financial results for its first quarter ended March 31, 2005.
Revenue for the first quarter of 2005 was $2.2 million, compared to $2.3 million for the fourth quarter of 2004 and $802,000 for the first quarter of 2004. The Company reported a net loss of $6.8 million, or $0.09 per share, in the first quarter of 2005, compared to a net loss of $6.6 million, or $0.08 per share, in the fourth quarter of 2004, and a net loss of $2.0 million, or $0.07 per share, in the first quarter of 2004.
Non-GAAP operating loss for the first quarter of 2005 was $5.3 million, which excludes certain non-cash charges such as the amortization or impairment of intangible assets and stock-based compensation expense. This is compared to a non-GAAP operating loss of $3.0 million for the first quarter of 2004. Saflink believes that supplementary non-GAAP measures for operating results enhance an investor's overall understanding of the Company's financial performance by reconciling more closely the actual cash expenses of the Company in its operations, as well as excluding expenses that, in management's view, are unrelated to the Company's core operations. A reconciliation of non-GAAP operating loss and non-GAAP net loss to reported GAAP operating loss and net loss is provided below.
Glenn Argenbright, President and CEO of Saflink commented, "During the first quarter, we exerted substantial effort in completing the integration work related to our merger with SSP-Litronic in the second half of 2004. We realigned our management structure and reporting units, developed our new product roadmap utilizing the technologies of both companies, and -- as previously announced during our last financial results conference call -- we reduced our headcount to better match the capabilities and activities required by our post-merger company. We believe we have effectively brought together the key technologies -- biometrics, physical access control, and smart cards -- that are increasingly in demand for the burgeoning credentialing security market. In addition, we bolstered our board of directors with the appointment of Asa Hutchinson, former Under Secretary of Homeland Security, who managed several key government programs that are now defining the credentialing industry."
Argenbright continued, "Gaining participation and positioning on the major government credentialing programs consumed the bulk of our efforts in 2004. With the conceptual stages of TWIC and US-VISIT changing to a more process oriented evaluation stage, we can now direct more resources to a balanced approach to the commercial and public sectors. Consistent with this approach, we are pleased to announce that we secured an order to implement biometric access control technology in a brand new market for us -- correctional facilities. The order -- from a northeastern state -- will equip 21 facilities in the state's penitentiary system and is valued at over half a million dollars. The solution delivers identity validation to secure shift changes for guards, and may be expanded to authenticate visitors and contractors. This is another example of the valuable foundation and flexibility represented by Saflink's products and services, and highlights another area in the marketplace where authentication enhances security. We expect to recognize the revenue from this order in the second or third quarter of 2005."
Saflink will hold a conference call to discuss financial results today at 5:00 PM EDT. Saflink may provide forward-looking information on this call. To listen to the conference, please call 1-800-366-7417, domestically, or 303-262-2137, internationally. A recording of the call will be available on the Investors page of Saflink's web site for thirty days after the call.
About Saflink
Saflink Corporation offers biometric security and smart card solutions that protect intellectual property, secure information assets and eliminate passwords. Saflink provides Identity Assurance Management(TM) solutions, allowing administrators to verify identity and control access to computer networks, physical facilities, applications, and time and attendance systems. Saflink's products also offer protection and privacy for popular applications such as e-mail, web transactions and individual files. For more information, please visit http://www.saflink.com or call 800-762-9595.
NOTE: "Saflink" is a registered trademark of Saflink Corporation. "Identity Assurance Management" is a trademark of Saflink Corporation.
This release contains information about management's view of the company's future expectations, plans and prospects that constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from historical results or those indicated by these forward-looking statements as a result of a variety of factors including, but not limited to, risks and uncertainties associated with the company's financial condition, its ability to sell its products, its ability to compete with competitors and the growth of the security market, and in its Annual Report on Form 10-K, as well as other documents periodically filed with the Securities and Exchange Commission.
Saflink CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three months ended March 31,
2005 2004
Revenue:
Product $1,178 $464
Service 1,006 338
Total revenue 2,184 802
Cost of revenue:
Product 406 342
Service 618 173
Amortization of intangibles 671 47
Total cost of revenue 1,695 562
Gross profit 489 240
Operating expenses:
Product development 2,300 864
Sales and marketing 2,298 1,443
General and administrative 1,823 934
Amortization of intangibles 39 14
Stock-based compensation 465 7
Impairment loss on intangible assets 900 --
Total operating expenses 7,825 3,262
Operating loss (7,336) (3,022)
Interest expense (38) (1)
Other income, net 87 15
Change in fair value of outstanding warrants 145 1,034
Loss before income taxes (7,142) (1,974)
Income tax provision (benefit) (311) 13
Net loss $(6,831) $(1,987)
Basic and diluted loss per common share $(0.09) $(0.07)
Weighted average number of common
shares outstanding 78,921 29,370
Saflink CORPORATION
Supplemental Non-GAAP Information
(Unaudited)
(In thousands, except per share data)
Three months ended March 31,
2005 2004
Operating loss $(7,336) $(3,022)
Adjustments to reconcile operating loss in
the financial statements to non-GAAP
operating loss:
Amortization of intangibles - cost of sales 671 47
Amortization of intangibles - general
and administrative 39 14
Stock-based compensation 465 7
Impairment loss on intangible assets 900 --
Non-GAAP operating loss $(5,261) $(2,954)
Net loss $(6,831) $(1,987)
Adjustments to reconcile net loss in
the financial statements to non-GAAP
net loss:
Amortization of intangibles - cost of sales 671 47
Amortization of intangibles - general
and administrative 39 14
Stock-based compensation 465 7
Impairment loss on intangible assets 900 --
Change in fair value of outstanding warrants (145) (1,034)
Tax benefit related to impairment loss
on intangible assets (324) --
Income tax provision related to goodwill 13 13
Non-GAAP net loss $(5,212) $(2,940)
Non-GAAP net loss per share $(0.07) $(0.10)
Weighted average number of common
shares outstanding 78,921 29,370
Statement Regarding Non-GAAP Disclosures:
To supplement the financial information that is presented in accordance U.S. generally accepted accounting principles (GAAP), we present certain financial measures that exclude certain non-cash charges, including charges related to acquisitions such as amortization and impairment of intangible assets and stock-based compensation expense which would otherwise be required by GAAP. We believe that these non-GAAP measures facilitate evaluation by management and investors of our ongoing operating business and enhance overall understanding of our financial performance by reconciling more closely our actual cash expenses in operations as well as excluding expenses that in management's view are unrelated to our core operations, the inclusion of which may make it more difficult for investors to compare our results from period to period.
Non-GAAP financial measures should not be considered in isolation from, as a substitute for, or superior to, financial information presented in compliance with GAAP, and non-GAAP financial measures we report may not be comparable to similarly titled items reported by other companies.
Saflink CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
March 31, December 31,
ASSETS 2005 2004
Current assets:
Cash and cash equivalents $16,912 $22,217
Accounts receivable, net 1,777 1,737
Inventory 643 672
Other current assets 945 1,034
Total current assets 20,277 25,660
Furniture and equipment, net 1,057 1,153
Intangible assets, net 22,576 24,186
Goodwill 95,223 95,223
Total assets $139,133 $146,222
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,434 $1,665
Accrued expenses 2,100 2,207
Convertible note payable 1,250 1,250
Other current obligation 792 937
Deferred revenue 191 340
Total current liabilities 5,767 6,399
Deferred tax liability 317 628
Stockholders' equity:
Common stock 798 797
Additional paid-in capital 254,592 254,328
Deferred stock-based compensation (1,421) (1,841)
Accumulated deficit (120,920) (114,089)
Total stockholders' equity 133,049 139,195
Total liabilities and stockholders'
equity $139,133 $146,222
SOURCE Saflink Corporation
-0- 05/12/2005
/CONTACT: Press, Rachel Berry of Sterling Communications,
+1-253-853-5030, rberry@sterlingpr.com; or Investor Relations, Todd Kehrli of
MKR Group, LLC, +1-818-556-3700, ir@mkr-group.com, both for Saflink
Corporation/
/Web site: http://www.saflink.com /
(SFLK)
CO: Saflink Corporation
ST: Washington
IN: CPR HTS OTC
SU: ERN CCA
BM-SF
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1065 05/12/200516:00 EDThttp://www.prnewswire.com