TORONTO, Jan. 12 /CNW/ - ComnetiX(TM) Inc (TSX:CXI), a leading provider of biometric identification and authentication solutions, reported results for its 2007 fiscal first quarter ended November 30, 2006. Revenue for the quarter was $3.2 million compared to revenue of $3.6 million reported in the comparable quarter of the previous year (which included revenue from an unusually large contract with a US government department). The $3.2 million of revenue is a substantial sequential increase over the $2.8 million reported in the fourth quarter of fiscal 2006. (All dollar amounts in this release are in Canadian dollars unless otherwise indicated.)
"I am happy to report that the Company generated positive operating cash flow of $209,000 prior to changes in working capital in the quarter," said Bernard Crotty, Chief Executive Officer of ComnetiX. "Our fingerprint services group generated record revenue of $787,000. The product group increased its backlog of orders during the quarter and generated record maintenance revenues. We are also pleased to see a reduction in our quarterly net loss for the third consecutive quarter as well as a very significant reduction compared to the same quarter in the previous fiscal year."
Revenue for the first quarter of fiscal 2007, ended November 30, 2006, was $3.2 million with a net loss of $133,000, or $0.01 loss per share, versus revenue for the first quarter of fiscal 2006 ended November 30, 2005, of $3.6 million with a net loss of $1.43 million, or $0.10 loss per share. Results reflect a one time gain on a settlement with a supplier in the amount of $242,000 and one time transaction expenses of $169,000.
First Quarter Highlights
ComnetiX continued to display leadership in the Canadian Fingerprint Services Market by becoming certified by the RCMP to electronically transmit Miscellaneous Applicant Civil (MAP) fingerprint transactions to the RCMP Real Time Identification (RTID) new messaging infrastructure. ComnetiX successfully transmitted an electronic fingerprint record to the Royal Canadian Mounted Police on the first day of the RTID Release 0.5 Pilot in November of 2006. The Company's fingerprint services division is working with agencies, both governmental and private, to ensure that participation in the Pilot project achieves the maximum output for the Company's systems prior to the full release of RTID in early 2007.
The Company maintained its success in the Southeast United States achieving record product bookings. New bookings for the first quarter included products from the Company's Intelligent Identification Environment (IIE) suite of products and demonstrate an increased understanding and interest in IIE throughout the region.
Future Outlook
The Company believes that its revenues will increase over time as a result of its strategy to develop new products and pursue sales growth in the United States and Canada. While the timing and extent of this increase is not certain and cannot be guaranteed as a result of the increased back log of orders going into the second quarter of fiscal 2007, the Company believes that both its product revenues and aggregate revenues will increase in the second quarter of 2007 compared to the first quarter of fiscal 2007. Prior to any non-recurring items no material change in wages and sales, general and administrative expenses, is anticipated between the first quarter of fiscal 2007 and the second quarter of fiscal 2007. Cost of hardware expenses are a function of the level and mix of product sales.
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 established more than 40 applicant fingerprinting services locations throughout the United States.
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.
COMNETIX INC.
Interim Consolidated Statements of Operations and Deficit
(unaudited)
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Three Months Ended
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November 30, November 30,
2006 2005
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SALES $ 3,215,184 $ 3,648,709
EXPENSES
Cost of hardware sold $ 700,089 1,598,215
Wages 1,422,291 1,653,687
Sales, general and administrative 888,229 1,367,555
Interest 5,195 17,854
Amortization of capital assets 35,597 39,527
Amortization of intangible assets 146,723 143,929
Stock compensation expense 201,229 357,538
Restructuring expense - -
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$ 3,399,353 $ 5,178,305
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LOSS FROM OPERATIONS (184,169) (1,529,596)
OTHER INCOME 9,629 45,296
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LOSS BEFORE TAXES FOR THE PERIOD (174,540) (1,484,300)
FUTURE TAX RECOVERY 41,354 51,161
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NET LOSS FOR THE PERIOD (133,186) (1,433,139)
DEFICIT, BEGINNING OF PERIOD (15,991,639) (11,312,263)
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DEFICIT, END OF PERIOD $ (16,124,825) $ (12,745,402)
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LOSS PER COMMON SHARE - basic and diluted $ (0.01) $ (0.10)
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WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING (000's) 14,125 14,304
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COMNETIX INC.
Interim Consolidated Balance Sheets
(unaudited)
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November 30, August 31,
2006 2006
--------------- ---------------
(unaudited) (audited)
ASSETS
CURRENT
Cash $ 790,909 $ 536,154
Short term investments 400,997 1,014,648
Accounts receivable 3,786,989 3,525,874
Inventory 505,706 436,009
Prepaid expenses 184,306 169,575
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5,668,907 5,682,260
CAPITAL ASSETS 556,001 578,023
INTANGIBLE ASSETS 2,688,804 2,835,527
GOODWILL 4,719,630 4,719,630
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$ 13,633,342 $ 13,815,440
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LIABILITIES
CURRENT
Bank indebtedness $ 517,845 $ 502,483
Accounts payable and accrued liabilities 1,599,129 2,025,929
Current portion of notes payable 28,555 27,633
Deferred revenue 2,140,554 1,954,489
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4,286,083 4,510,534
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LONG TERM
Future income tax liability 722,506 763,860
Notes payable 85,665 82,898
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808,171 846,758
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5,094,254 5,357,292
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SHAREHOLDERS' EQUITY
SHARE CAPITAL 18,877,885 18,877,885
CONVERTIBLE DEBENTURE 1,688,618 1,688,618
CUMULATIVE TRANSLATION ADJUSTMENT 537,276 524,379
WARRANTS 41,128 251,906
CONTRIBUTED SURPLUS 519,006 3,106,999
DEFICIT (16,124,825) (15,991,639)
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5,539,088 8,458,148
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$ 10,633,342 $ 13,815,440
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COMNETIX INC.
Interim Consolidated Statements of Cash Flows
(unaudited)
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Three Months Ended
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November 30, November 30,
2006 2005
--------------- ---------------
NET (OUTFLOW) INFLOW OF
CASH RELATED TO THE
FOLLOWING ACTIVITIES
OPERATING
Net loss for the period $ (133,186) $ (1,433,139)
Items not affecting cash:
Amortization of capital assets 35,597 39,527
Amortization of intangible assets 146,723 143,929
Stock compensation expense 201,229 357,538
Future tax recovery (41,354) (51,161)
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209,009 (943,306)
Changes in non-cash operating
working capital
Accounts receivable (256,485) (709,507)
Inventory (67,769) (75,218)
Prepaid expenses (15,015) 56,802
Accounts payable and accrued
liabilities (415,218) 495,752
Deferred revenue 182,031 186,800
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(572,455) (45,371)
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(363,446) (988,677)
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FINANCING
Payment of capital lease obligation - (5,812)
Repayment of notes payable 3,689 (391,766)
Proceed from exercise of compensation units - 499,739
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3,689 102,161
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INVESTING
Redemption of short term investments 613,651 1,174,031
Purchase of capital assets (10,738) (122,993)
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602,913 1,051,038
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NET INCREASE IN CASH 243,155 164,522
CUMMULATIVE EFFECT OF EXCHANGE
RATE CHANGES ON CASH 11,600 216
CASH, BEGINNING OF PERIOD 536,154 828,170
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CASH AT END OF PERIOD 790,909 992,908
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SUPPLEMENTARY INFORMATION
Interest Paid $ 16,089 $ 17,854
Gain on settlement of accounts payable
not affecting cash included above in
changes in non-cash operating working
capital $ 241,660 $ -
OTHER NON CASH TRANSACTIONS
Contributed surplus related to
expired warrants $ 210,778 $ -