Saflink Corporation Reports Second Quarter 2006 Financial Results |
KIRKLAND, WA – (August 8, 2006) – Saflink® Corporation (NASDAQ: SFLK), a leading provider of solutions that verify identity, secure access and increase productivity, today reported its financial results for its second quarter ended June 30, 2006.
Revenue for the second quarter of 2006 was $944,000, compared to $857,000 for the first quarter of 2006 and $1.8 million for the second quarter of 2005. Saflink reported a net loss attributable to common stockholders of $37.7 million, or $0.43 per share, in the second quarter of 2006, which included a non-cash impairment loss on goodwill of $30.7 million. This is compared to a net loss attributable to common stockholders of $36.8 million, or $0.42 per share, in the first quarter of 2006, which included a non-cash impairment loss on goodwill of $29.7 million, and a net loss attributable to common stockholders of $6.6 million, or $0.08 per share, in the second quarter of 2005.
Non-GAAP operating loss for the second quarter of 2006 was $5.7 million, which excludes certain non-cash charges such as amortization of intangible assets, impairments of goodwill and intangible assets, stock-based compensation expense, and non-cash interest expense. This is compared to a non-GAAP operating loss of $5.5 million for the second quarter of 2005. 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 attributable to common stockholders to reported GAAP operating loss and net loss attributable to common stockholders is provided below.
Glenn Argenbright, President and CEO of Saflink commented, “During the second quarter, we continued to place a lot of emphasis and focus on our Registered Traveler (RT) solution and marketing to prospective RT airports. We competed for the first RT operational pilot at the Denver International Airport (DIA) and are awaiting their decision. We expect to aggressively market our Fast Lane Option (FLO) card to consumers, in and around Denver, once the DIA initiative moves forward.”
Argenbright continued, “We are also mobilizing the FLO Alliance team to respond quickly to the 3 to 4 requests for proposals that are expected to be issued from major airports in the late August to early September timeframe. We believe the RT opportunity is very compelling and could grow into a substantial market in the coming months, and we feel our unique team and solution are resonating with airport personnel. As a result, we expect RT activities to continue to dominate much of our efforts in the near term.”
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 1-888-459-5609, domestically, or 973-321-1024, internationally. A recording of the call will be available on the Investors page of the Saflink website for 30 days after the call.
About Saflink
Saflink Corporation offers biometric security and smart card solutions that protect intellectual property, secure information and eliminate passwords. Saflink identity assurance management solutions allow administrators to verify the identity of users and control their access to computer networks, facilities and applications. Winner of seven awards in 2005, Saflink and its solutions have been recognized by organizations such as Frost & Sullivan and Software Magazine’s Software 500. For more information, please visit www.saflink.com or call 800-762-9595.
NOTE: "Saflink" is a registered 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. In addition, our success will depend in part on our ability to keep pace with a changing marketplace, integrate new technology into our core software and hardware and introduce new products and product enhancements that build off of our existing technologies to address the changing needs of the marketplace. Various technical problems and resource constraints may impede the development, production, distribution and marketing of our products and services. Also, laws, rules, regulations or industry standards may be adopted in response to these technological changes, which in turn, could materially and adversely affect how we will do business. 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.
INVESTOR RELATIONS CONTACT:
Tony Schor, Lindsay Kenoe
(847) 945-2222
www.investorawareness.com
SAFLINK PRESS CONTACT:
Sterling Communications
Lindsay Stril
(206) 388-5763
lstril@sterlingpr.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,
------------------- ---------------------
2006 2005 2006 2005
--------- --------- ---------- ----------
Revenue:
Product $786 $1,099 $1,542 $2,277
Service 158 707 259 1,713
--------- --------- ---------- ----------
Total revenue 944 1,806 1,801 3,990
Cost of revenue:
Product 366 470 693 876
Service 130 403 256 1,021
Amortization of intangible
assets 671 671 1,342 1,342
--------- --------- ---------- ----------
Total cost of revenue 1,167 1,544 2,291 3,239
--------- --------- ---------- ----------
Gross profit (loss) (223) 262 (490) 751
Operating expenses:
Product development 2,423 2,320 4,842 4,632
Sales and marketing 2,053 2,399 3,931 4,711
General and
administrative 1,956 2,129 4,013 4,430
Impairment loss on
goodwill 30,700 -- 60,400 --
Impairment loss on
intangible assets -- -- -- 900
--------- --------- ---------- ----------
Total operating expenses 37,132 6,848 73,186 14,673
--------- --------- ---------- ----------
Operating loss (37,355) (6,586) (73,676) (13,922)
Interest expense (323) (28) (362) (66)
Other income, net 59 74 171 161
Change in fair value of
outstanding warrants -- 27 -- 172
--------- --------- ---------- ----------
Loss before income taxes (37,619) (6,513) (73,867) (13,655)
Income tax provision
(benefit) 13 13 26 (298)
--------- --------- ---------- ----------
Net loss (37,632) (6,526) (73,893) (13,357)
Modification of outstanding
warrants (76) (59) (585) (59)
--------- --------- ---------- ----------
Net loss attributable to
common stockholders $(37,708) $(6,585) $(74,478) $(13,416)
========= ========= ========== ==========
Basic and diluted loss per
common share attributable to
common stockholders $(0.43) $(0.08) $(0.85) $(0.17)
Weighted average number of
common shares outstanding 88,106 81,286 88,101 80,116
SAFLINK CORPORATION
Supplemental Non-GAAP Information
(Unaudited)
(In thousands, except per share data)
Three months ended Six months ended
June 30, June 30,
--------------------- ---------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Operating loss $(37,355) $(6,586) $(73,676) $(13,922)
Adjustments to reconcile
operating loss in the
financial statements to
non-GAAP operating loss:
Amortization of
intangibles - cost of
sales 671 671 1,342 1,342
Amortization of
intangibles - general
and administrative 25 39 50 78
Impairment loss on
intangible assets -- -- -- 900
Impairment loss on
goodwill 30,700 -- 60,400 --
Stock-based compensation 216 402 518 867
---------- ---------- ---------- ----------
Non-GAAP operating loss $(5,743) $(5,474) $(11,366) $(10,735)
========== ========== ========== ==========
Net loss attributable to
common shareholders $(37,708) $(6,585) $(74,478) $(13,416)
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 671 671 1,342 1,342
Amortization of
intangibles - general
and administrative 25 39 50 78
Impairment loss on
intangible assets -- -- -- 900
Impairment loss on
goodwill 30,700 -- 60,400 --
Stock-based compensation 216 402 518 867
Non-cash interest
expense 228 -- 228 --
Change in warrant
valuation -- (27) -- (172)
Modification of
outstanding warrants 76 59 585 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 $(5,779) $(5,428) $(11,329) $(10,640)
========== ========== ========== ==========
Non-GAAP basic and diluted
net loss per share $(0.07) $(0.07) $(0.13) $(0.13)
Weighted average number of
common shares outstanding 88,106 81,286 88,101 80,116
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 of intangible assets, impairments of goodwill and
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)
June 30, December 31,
ASSETS 2006 2005
--------------- ---------------
Current assets:
Cash and cash equivalents $10,492 $15,217
Accounts receivable, net 494 692
Inventory 589 563
Other current assets 1,179 841
--------------- ---------------
Total current assets 12,754 17,313
Furniture and equipment, net 1,523 1,018
Debt issuance costs, net 906 --
Intangible assets, net 18,456 19,848
Goodwill 15,523 75,923
--------------- ---------------
Total assets $49,162 $114,102
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,125 $1,204
Accrued expenses 2,968 2,150
Current portion of convertible debt,
net 2,323 1,250
Other current obligation 569 765
Deferred revenue 133 174
--------------- ---------------
Total current liabilities 7,118 5,543
Deferred tax liability 166 140
Long-term convertible debt, net 2,672 --
--------------- ---------------
Total liabilities 9,956 5,683
Stockholders' equity:
Common stock 889 889
Additional paid-in capital 273,980 269,256
Deferred stock-based compensation -- (541)
Accumulated deficit (235,663) (161,185)
--------------- ---------------
Total stockholders' equity 39,206 108,419
--------------- ---------------
Total liabilities and
stockholders' equity $49,162 $114,102
=============== ===============
SOURCE: Saflink Corporation