Revenue Up Nearly 300 Percent; Company Expands North American Customer Base
TORONTO, July 6 /CNW/ -- ComnetiX(TM) Inc (TSX: CXI), a
leading provider of biometric identification and authentication solutions,
announced significant growth in sales for the fiscal third quarter ended May
31, 2005, the second consecutive quarter that revenues have reached record
levels. Driven by a rapidly expanding customer base, particularly in New York
and other parts of the US, revenue for the third quarter increased by nearly
300 percent compared to the previous year's third quarter, and grew by
168 percent for the first nine months of 2005 compared to the year earlier.
Revenue for the quarter also benefited from the Company's fingerprinting
services group which contributed CN $447,000 to the growth.
The significantly higher revenue pushed the net loss for the period down
sharply. Revenue for the third quarter of fiscal 2005 was $3 million with a
net loss of $399,800, or $0.03 loss per share, versus revenue for the third
quarter ended May 31, 2004, of $756,755 with a net loss of $799,132, or
$0.12 loss per share. Excluding a non-cash stock compensation charge of
$187,641 the loss for the third quarter of fiscal 2005 was $212,159.
For the nine months ended May 31, 2005, revenue was $7.8 million with a
net loss of $1.8 million, or $0.15 loss per share, compared to revenues of
$2.9 million and a net loss of $1.3 million, or $0.25 loss per share, for the
nine months ended May 31, 2004. The year to date non-cash stock compensation
charge was $473,774.
"Our growth continues to accelerate sharply due to the rapidly expanding
biometric technology market in the US and throughout North America," said CEO
Jim Scullion. "We believe the services and products we have developed are
comprehensive, and they are clearly being well received by law enforcement and
other government agencies that are driving the growth in demand. Also, our
initiative to extend our sales and marketing efforts outside of the Northeast
began to pay off during the third quarter when we received orders from new
customers in Canada, California and the Midwest region of the US.
"Our relationship with Integrated Biometric Technology, which is closely
associated with the Transportation Security Agency (TSA), will be an important
source of revenue," Scullion added. "Overall, we are seeing that biometric
technology is becoming an increasingly important part of law enforcement,
government and corporate security efforts, which is great news for our
industry. Our strategy is to expand our sales and marketing efforts and, at
the same time, to continue to focus on new products to fulfill the need of the
marketplace for comprehensive, integrated software-centric solutions."
CFO Tim Zahavich said, "Due to cash management and the private placement
that closed in April, our balance sheet continued to strengthen during the
quarter, as current assets rose to $12.8 million vs $9.9 million at the end of
the last fiscal year. At the same time our current liabilities rose only
slightly, with the result of an overall improvement in our current ratio,
which stood at 3.7:1 as of the end of the third quarter, vs 3.2:1 at the end
of the last fiscal year. Our cash and short-term investments rose to
$9.7 million vs $7.4 million at the beginning of the year. It should also be
noted that we have no debt."
Third Quarter Highlights and Subsequent Events
The Company continued to work closely with the State of New York on an
initiative to roll out electronic fingerprinting systems statewide. By
mid-May the Company had received orders from 24 law enforcement agencies for
its proprietary software-centric business automation solutions and
accompanying hardware including desktop live scan systems and the
IntelliScreen(TM) (Civil Applicant Processing System/CAPS(TM)) and
IntelliBook(TM) (Repository for Integrated Criminalistic Imaging/RICI(TM))
software products. An additional nine orders were received in June.
The Company received a comprehensive order from the Windsor (Ontario)
Police Service for an IntelliBook mug shot/fingerprint live scan system, the
Company's open image server (IntelliServ(TM)), the software solution
Repository for Integrated Criminalistic Imaging (RICI) customized specifically
for Canada's National Police Services.
The Company extended its relationship with Integrated Biometric Technology
(IBT), which has an extensive contract with the federal Transportation
Security Administration, through the US Department of Homeland Security, to
screen truck drivers transporting hazardous materials. With IBT, ComnetiX is
providing fingerprinting services for potential HazMat drivers in 21 states
throughout the US.
The Company launched the latest version of its Java-based Intelligent
Identification Environment(TM) (IIE). Its features offer increased speed and
functionality, with a zero footprint, to make the ComnetiX solutions more
compatible with both new and legacy systems.
The Company announced its first orders from California and the Midwest,
including six orders for the IntelliScreen civil applicant processing solution
and desktop live scan system from non-law enforcement organizations in
California.
Also during the quarter, the Company closed a brokered private placement
that it announced on April 22nd. Under the financing, ComnetiX issued
1,926,300 units (each a "Unit") priced at $2.50 per Unit. Each Unit consisted
of one common share and one-half of one common share purchase warrant. The
proceeds of the offering were designated to fund growth, as working capital
and for general corporate purposes.
All figures are in Canadian Dollars, unless otherwise noted.
About ComnetiX(TM) Inc (www.ComnetiX.com)
ComnetiX(TM) Inc provides secure identification and authentication
solutions to both the public and private sectors throughout North America.
ComnetiX offers multimode biometric identification solutions for use in areas
such as applicant screening, financial services, health care, transportation,
airlines and airports, casinos and gaming, and energy and utilities. Clients
include American Airlines, Lehman Brothers, New York City Health and Hospital
Corporation, New York State Division of Criminal Justice Services, Toronto
Police Services Board, Boston Police Department and the Royal Canadian Mounted
Police. ComnetiX is also Canada's premier applicant fingerprinting services
company, facilitating tens of thousands of criminal background checks each
year through its chain of ten offices across Canada. In addition, ComnetiX
has recently launched its first applicant fingerprinting services office in
the US, located in Sacramento, California.
Statements made in this news release that relate to future plans, events
or performances are forward-looking statements. Any statement in this release
containing words such as "believes," "plans," "expects" or "intends" and other
statements that are not historical facts are 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.
For further information
Investor Relations:
Jesse Deal Tim Zahavich
1-877-691-8087 (toll-free) ComnetiX Inc
investor.relations@ComnetiX.com 905-829-9988 ext 206
investor.relations@ComnetiX.com
ComnetiX Inc
Interim Consolidated Balance Sheet
(in 000s, unaudited)
May 31 August 31
2005 2004
ASSETS
CURRENT
Cash 808,394 907,984
Short term investments 8,904,342 6,529,480
Accounts receivable 2,648,199 1,909,873
Inventory 149,374 432,564
Employee loan 4,732 36,494
Prepaid expenses 286,595 132,392
12,801,636 9,948,787
CAPITAL ASSETS 492,723 380,452
INTANGIBLE ASSET 59,150 --
GOODWILL 1,454,563 --
14,808,072 10,329,239
LIABILITIES
CURRENT
Accounts payable and accrued
liabilities 1,841,105 2,109,955
Deferred revenue 1,634,927 1,038,238
Current portion of capital lease
obligation 421 9,594
3,476,453 3,157,787
CAPITAL LEASE OBLIGATION -- 500
3,476,453 3,158,287
SHAREHOLDERS EQUITY
SHARE CAPITAL 17,089,029 12,206,814
CONVERTIBLE DEBENTURE 1,688,618 1,688,618
WARRANTS 933,132 207,538
CONTRIBUTED SURPLUS 1,869,574 1,501,984
DEFICIT (10,248,734) (8,434,002)
11,331,619 7,170,952
14,808,072 10,329,239
ComnetiX Inc
Interim Consolidated Statements of Operations and Deficit
(in 000s, unaudited)
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
May 31, May 31, May 31, May 31,
2005 2004 2005 2004
SALES $3,001,984 $756,755 $7,809,115 $2,913,430
EXPENSES
Cost of hardware
sold 649,841 98,466 2,253,082 387,552
Wages 1,332,617 812,843 3,928,824 1,893,898
Sales, general and
administrative 1,216,374 531,809 2,909,140 1,589,085
Interest 584 7,220 4,523 168,713
Amortization
of capital
assets 34,281 19,206 110,944 52,623
Amortization of
intangible
assets 6,500 -- 13,000 --
Amortization of
deferred financing
costs -- -- -- 77,539
Stock compensation
expense 187,641 86,343 473,774 86,343
3,427,838 1,555,887 9,693,287 4,255,753
LOSS FROM OPERATIONS (425,854) (799,132) (1,884,172) (1,342,323)
OTHER INCOME 26,054 -- 69,440 --
LOSS FOR THE PERIOD (399,800) (799,132) (1,814,732) (1,342,323)
DEFICIT, BEGINNING
OF THE PERIOD (9,848,934) (6,587,403) (8,434,002) (6,044,212)
DEFICIT, END OF
YEAR TO DATE (10,248,734) (7,386,535) (10,248,734) (7,386,535)
NET LOSS PER
COMMON SHARE,
BASIC $(0.03) $(0.12) $(0.15) $(0.25)
NET LOSS PER
COMMON SHARE,
DILUTED $(0.03) $(0.12) $(0.15) $(0.25)
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING (000S) 12,288 6,761 11,739 5,280
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