Saflink Corporation Reports Fourth Quarter and Fiscal 2005 Financial Results
BELLEVUE, Wash.--(BUSINESS WIRE)--March 16, 2006--Saflink(R)Corporation (NASDAQ:SFLK), a leading provider of solutions that verify identity, secure access and increase productivity, today reported its financial results for its fourth quarter and year ended December 31, 2005.
Revenue for the fourth quarter of 2005 was $768,000, compared to $2.4 million for the third quarter of 2005 and $2.3 million for the fourth quarter of 2004. Saflink reported a net loss attributable to common stockholders of $7.6 million, or $0.09 per share, for the fourth quarter of 2005. This is compared to a net loss attributable to common stockholders of $26.1 million, or $0.30 per share, for the third quarter of 2005, which included non-cash impairment losses on goodwill and intangible assets of $19.3 million and $600,000, respectively. This is also compared to a net loss attributable to common stockholders of $6.6 million, or $0.08 per share, for the fourth quarter of 2004.
Revenue for fiscal 2005 was $7.1 million, compared to $6.4 million for fiscal 2004. Saflink reported a net loss attributable to common stockholders of $47.1 million, or $0.56 per share, for fiscal 2005, which included non-cash impairment losses on goodwill and intangible assets of $19.3 million and $1.5 million, respectively. This is compared to a net loss attributable to common stockholders of $18.1 million, or $0.36 per share, for fiscal 2004.
Non-GAAP operating losses for the fourth quarter of 2005 and fiscal 2005 were $6.3 million and $22.5 million, respectively, which excludes certain non-cash charges such as amortization of intangible assets, impairments of goodwill and intangible assets and stock-based compensation expense. These losses are compared to non-GAAP operating losses of $5.4 million and $15.7 million for the fourth quarter of 2004 and fiscal 2004, respectively. 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 are disappointed with our operating results for the fourth quarter. Our work in the government sector slowed dramatically as Federal leaders continued to wrestle with funding and technical specifications surrounding the large programs that we have pursued. The shortfall in the government sector was not offset by any significant growth on the commercial side of the business."
Argenbright continued, "On the positive side, recent national attention on the topic of port security, as well as the relatively quick pace of the Registered Traveler program, has improved the outlook for us in the government sector. Meanwhile, our new and growing reseller channel is showing steady contributions to our revenue base in the first quarter of this year. These results, along with our favorable patent settlement, should improve results in the commercial sector. However, these developments are not likely to generate meaningful revenue contributions until at least the second quarter of this year."
Saflink will hold a conference call to discuss financial results today at 5:00 PM EST. Saflink may provide forward-looking information on this call. To listen to the conference, please call 1-888-889-5602, domestically, or 973-341-3080, internationally. A recording of the call will be available on the Investors page of the Saflink web site for 30 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.
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.
Saflink CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three months ended Twelve months ended
December 31, December 31,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Revenue:
Product $620 $1,708 $4,929 $4,580
Service 148 559 2,187 1,818
--------- --------- --------- ---------
Total revenue 768 2,267 7,116 6,398
Cost of revenue:
Product 356 758 2,198 2,211
Service 160 367 1,402 1,131
Amortization of intangible
assets 671 670 2,683 1,227
--------- --------- --------- ---------
Total cost of revenue 1,187 1,795 6,283 4,569
--------- --------- --------- ---------
Gross profit (419) 472 833 1,829
Operating expenses:
Product development 2,510 2,287 9,435 5,668
Sales and marketing 2,029 2,250 9,089 7,413
General and administrative 2,048 2,079 7,663 5,727
Impairment loss on goodwill -- -- 19,300 --
Impairment loss on
intangible assets -- -- 1,500 --
Stock-based compensation 238 460 1,400 859
--------- --------- --------- ---------
Total operating expenses 6,825 7,076 48,387 19,667
--------- --------- --------- ---------
Operating loss (7,244) (6,604) (47,554) (17,838)
Interest expense (35) (37) (138) (59)
Other income, net 154 96 450 204
Debt extinguishment loss on
convertible note to related
party (455) -- (455) --
Change in fair value of
outstanding warrants -- -- 172 1,808
--------- --------- --------- ---------
Loss before income taxes (7,580) (6,545) (47,525) (15,885)
--------- --------- --------- ---------
Income tax provision 13 12 (488) 52
--------- --------- --------- ---------
Net loss (7,593) (6,557) (47,037) (15,937)
Modification of outstanding
warrants -- -- 59 2,167
--------- --------- --------- ---------
Net loss attributable to common
stockholders $(7,593) $(6,557) $(47,096) $(18,104)
========= ========= ========= =========
Basic and diluted loss per
common share $(0.09) $(0.08) $(0.56) $(0.36)
Weighted average number of
common shares outstanding 88,081 78,472 84,125 50,125
Saflink CORPORATION
Supplemental Non-GAAP Information
(Unaudited)
(In thousands, except per share data)
Three months ended Twelve months ended
December 31, December 31,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Operating loss $(7,244) $(6,604) $(47,554) $(17,838)
Adjustments to reconcile
operating loss in the
financial statements to
non-GAAP operating loss:
Amortization of intangible
assets - cost of sales 671 670 2,683 1,227
Amortization of intangible
assets - general and
administrative 39 39 155 97
Impairment loss on goodwill -- -- 19,300 --
Impairment loss on
intangible assets -- -- 1,500 --
Stock-based compensation 238 460 1,400 859
--------- --------- --------- ---------
Non-GAAP operating loss $(6,296) $(5,435) $(22,516) $(15,655)
========= ========= ========= =========
Net loss attributable to common
stockholders $(7,593) $(6,557) $(47,096) $(18,104)
Adjustments to reconcile net
loss attributable to
common stockholders in the
financial statements
to non-GAAP net loss
attributable to common
stockholders:
Amortization of intangible
assets - cost of sales 671 670 2,683 1,227
Amortization of intangible
assets - general and
administrative 39 39 155 97
Impairment loss on goodwill -- -- 19,300 --
Impairment loss on
intangible assets -- -- 1,500 --
Stock-based compensation 238 460 1,400 859
Debt extinguishment loss on
convertible note to related
party 455 -- 455 --
Change in warrant valuation -- -- (172) (1,808)
Modification of outstanding
warrants -- -- 59 2,167
Tax benefit related to
impairment loss on
intangible assets -- -- (540) --
Deferred income tax
associated with acquisition 13 12 52 52
--------- --------- --------- ---------
Non-GAAP net income
attributable to common
stockholders $(6,177) $(5,376) $(22,204) $(15,510)
========= ========= ========= =========
Non-GAAP basic and diluted net
loss per share $(0.07) $(0.07) $(0.26) $(0.31)
Weighted average number of
common shares outstanding 88,081 78,472 84,125 50,125
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)
December 31, December 31,
ASSETS 2005 2004
Current assets:
Cash and cash equivalents $15,217 $22,217
Accounts receivable, net 692 1,737
Inventory 563 672
Prepaid expenses 589 756
Other current assets 252 278
------------ ------------
Total current assets 17,313 25,660
Furniture and equipment, net 1,018 1,153
Goodwill 75,923 95,223
Intangible assets, net 19,848 24,186
------------ ------------
Total assets $114,102 $146,222
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,204 $1,665
Accrued expenses 2,150 2,207
Convertible note payable to related party 1,250 1,250
Other current obligation 765 937
Deferred revenue 174 340
------------ ------------
Total current liabilities 5,543 6,399
Deferred tax liability 140 628
------------ ------------
Total liabilities 5,683 7,027
Stockholders' equity:
Common stock 889 797
Additional paid-in capital 269,256 254,328
Deferred stock-based compensation (541) (1,841)
Accumulated deficit (161,185) (114,089)
------------ ------------
Total stockholders' equity 108,419 139,195
------------ ------------
Total liabilities and stockholders'
equity $114,102 $146,222
============ ============
CONTACT: Investor Awareness, Inc.
Tony Schor or Lindsay Kenoe (Investor Relations),
847-945-2222
www.investorawareness.com
or
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Rachel Berry (Press), 253-853-5030
rberry@sterlingpr.com
SOURCE: Saflink Corporation