Saflink Corporation Reports Second Quarter 2005 Financial Results
BELLEVUE , WA – (August 11, 2005) – Saflink ® Corporation (NASDAQ: SFLK), a leading provider of biometric and smart card security solutions, today reported its financial results for its second quarter ended June 30, 2005.
Revenue for the second quarter of 2005 was $1.8 million, compared to $2.2 million for the first quarter of 2005 and $918,000 for the second quarter of 2004. Saflink reported a net loss attributable to common stockholders of $6.6 million, or $0.08 per share, in the second quarter of 2005. This is compared to a net loss attributable to common stockholders of $6.8 million, or $0.09 per share, in the first quarter of 2005, and a net loss attributable to common stockholders of $2.4 million, or $0.07 per share, in the second quarter of 2004.
Non-GAAP operating loss for the second quarter of 2005 was $5.5 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 $3.1 million for the second quarter of 2004. Saflink believes that supplementary non-GAAP measures for operating results enhance an investor’s overall understanding of the financial performance of Saflink by reconciling more closely the actual cash expenses of Saflink in its operations, as well as excluding expenses that, in management’s view, are unrelated to the core operations of Saflink. 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, “We believe t he second quarter highlighted the validation of Saflink’s past TWIC successes. During the quarter, we initiated our first deliveries to the state of Florida and advanced our joint work with Microsoft on multiple fronts. This included joint development and customer contact in wireless security and on the Registered Traveler initiative, as well as working together to attract Microsoft resellers as part of our channel launch targeted to the small and medium-sized business market.”
Argenbright continued, “We continue to believe that we have built the appropriate suite of products and solutions to serve the needs of public sector and commercial customers in the coming months, as the demand for trusted authentication solutions grows. We continually receive validation for this view from potential customers, partners, and industry experts.”
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 -257-1927, domestically, or 303-262-2050, internationally . A recording of the call will be available on the Investors page of the Saflink 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 Identity Assurance Management ™ solutions allow administrators to verify identity and control access to computer networks, physical facilities and applications. Saflink also offers protection and privacy for email, web applications and electronic documents. 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 our 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 our financial condition, our ability to sell our products, our ability to compete with competitors and the growth of the security market. We encourage you to review other factors that may affect our future results in our Annual Report on Form 10-K, as well as other documents we file periodically with the Securities and Exchange Commission.
Saflink PRESS CONTACT:
Sterling Communications
Rachel Berry
(253) 853-5030
rberry@sterlingpr.com
INVESTOR RELATIONS CONTACT
MKR Group, LLC
Todd Kehrli
(818) 556-3700
ir@mkr-group.com
SAFLINK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three months ended Six months ended
June 30, June 30,
2005 2004 2005 2004
Revenue:
Product $1,099 $484 $2,277 $948
Service 707 434 1,713 772
Total revenue 1,806 918 3,990 1,720
Cost of revenue:
Product 470 260 876 602
Service 403 280 1,021 453
Amortization of
intangibles 671 47 1,342 94
Total cost of revenue 1,544 587 3,239 1,149
Gross profit 262 331 751 571
Operating expenses:
Product development 2,312 858 4,612 1,722
Sales and marketing 2,384 1,528 4,682 2,971
General and
administrative 1,711 1,115 3,534 2,049
Amortization of
intangibles 39 13 78 27
Stock-based compensation 402 12 867 19
Impairment loss on
intangible assets -- -- 900 --
Total operating expenses 6,848 3,526 14,673 6,788
Operating loss (6,586) (3,195) (13,922) (6,217)
Interest expense (28) -- (66) (1)
Other income, net 74 19 161 34
Change in fair value of
outstanding warrants 27 803 172 1,837
Loss before income taxes (6,513) (2,373) (13,655) (4,347)
Income tax provision 13 13 (298) 26
Net loss (6,526) (2,386) (13,357) (4,373)
Modification of outstanding
warrants (59) -- (59) --
Net loss attributable to
common stockholders $(6,585) $(2,386) $(13,416) $(4,373)
Basic and diluted loss per
common share $(0.08) $(0.07) $(0.17) $(0.14)
Weighted average number of
common shares outstanding 81,286 31,935 80,116 30,652
SAFLINK CORPORATION
Supplemental Non-GAAP Information
(Unaudited)
(In thousands, except per share data)
Three months ended Six months ended
June 30, June 30,
2005 2004 2005 2004
Operating loss $(6,586) $(3,195) $(13,922) $(6,217)
Adjustments to reconcile
operating loss in the
financial statements to
non-GAAP operating loss:
Amortization of
intangibles - cost of
sales 671 47 1,342 94
Amortization of
intangibles - general and
administrative 39 13 78 27
Stock-based compensation 402 12 867 19
Impairment loss on
intangible assts -- -- 900 --
Non-GAAP operating loss $(5,474) $(3,123) $(10,735) $(6,077)
Net loss attributable to
common shareholders $(6,585) $(2,386) $(13,416) $(4,373)
Adjustments to reconcile net
loss attributable to
common shareholders in the
financial statements
to non-GAAP net loss
attributable to common
stockholders:
Amortization of
intangibles - cost of
sales 671 47 1,342 94
Amortization of
intangibles - general and
administrative 39 13 78 27
Stock-based compensation 402 12 867 19
Impairment loss on
intangible assets -- -- 900 --
Change in warrant
valuation (27) (803) (172) (1,837)
Modification of
outstanding warrants 59 -- 59 --
Tax benefit related to
impairment loss on
intangible assets -- -- (324) --
Deferred income tax
associated with acquisition 13 13 26 26
Non-GAAP net income
attributable to common
shareholders $(5,428) $(3,104) $(10,640) $(6,044)
Non-GAAP basic and diluted
net loss per share $(0.07) $(0.10) $(0.13) $(0.20)
Weighted average number of
common shares outstanding 81,286 31,935 80,116 30,652
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)
ASSETS June 30, December 31,
2005 2004
Current assets:
Cash and cash equivalents $26,307 $22,217
Accounts receivable, net 1,522 1,737
Inventory 615 672
Prepaid expenses 470 756
Other current assets 183 278
Total current assets 29,097 25,660
Furniture and equipment, net 1,016 1,153
Intangible assets, net 21,867 24,186
Goodwill 95,223 95,223
Total assets $147,203 $146,222
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,221 $1,665
Accrued expenses 2,298 2,207
Notes payable 1,250 1,250
Other current obligation 765 937
Deferred revenue 210 340
Total current liabilities 5,744 6,399
Deferred tax liability 330 628
Total liabilities 6,074 7,027
Stockholders' equity:
Common stock 889 797
Additional paid-in capital 268,768 254,328
Deferred stock-based compensation (1,023) (1,841)
Accumulated deficit (127,505) (114,089)
Total stockholders' equity 141,129 139,195
Total liabilities and
stockholders' equity $147,203 $146,222