Revenue up 12%, Focused on Executing Growth Strategy
TORONTO, April 12 /CNW/ - ComnetiX(TM) Inc. (TSX:CXI), a leading provider
of biometric and identification solutions, today reported its financial
results for the second quarter of fiscal 2006, the period ended February 28,
2006. All dollar amounts are in Canadian dollars unless otherwise indicated.
"While our revenue growth was affected by contract delays this quarter,
we believe that the long-term outlook for ComnetiX is positive. Historically
our performance has been stronger in the second half of the year and we
anticipate a similar trend this year," said Bernard Crotty, Chief Executive
Officer of ComnetiX. "We are well positioned with a strong offering of
products and services in a growing industry. We have a solid strategy and are
committed to building value for our shareholders."
Revenue for the quarter was $2.9 million, up 12 per cent from $2.6
million in the comparable period last year. The revenue growth is due to the
addition of Paragon, increasing penetration in the U.S. market and the
continued success of the fingerprinting services group. Fingerprint services
won a substantial, three-year contract with a major mining company during the
quarter. However, revenue for the quarter was affected by delays in closing
anticipated contracts. The government procurement cycle is difficult to
predict, but management expects the majority of these contracts to close in
future quarters.
The net loss for the period was $1.7 million or $0.12 per share basic and
diluted, compared to $0.6 million or $0.05 per share basic and diluted in the
second quarter of 2005. The change is due to a rise in expenses, reflecting
the company's continued investment in building its business for long-term
growth. Expenses included costs for integrating Paragon, as well as an
increase in personnel and research and development expenditures.
For the six-month period, revenue was $6.6 million, a rise of 37 per cent
from $4.8 million in the comparable period last year. The year-to-date net
loss was $3.2 million or $0.22 per share basic and diluted, compared to $1.4
million or $0.12 per share basic and diluted in the comparable period last
year.
Focus on Executing Growth Strategy
ComnetiX remains focused on capturing a growing share of the increasing
market for biometrics and identification solutions. The fingerprint services
group in particular continues to deliver solid growth. During the quarter,
ComnetiX established Canada's first comprehensive electronic fingerprinting
service, with 10 offices located across the country. This system uses digital
live scan technology which is fast becoming the way of the future in Canada.
ComnetiX is focused on organic growth in targeted geographic regions, with a
particular emphasis on markets where the company has solid existing
penetration and that demonstrate clear potential.
The company also intends to carefully monitor expenses going forward.
ComnetiX has already taken steps to reduce annual operating expenses by
approximately $1.5 to $2.0 million. These steps, which will take several
quarters to be fully realized, include reductions in administrative personnel
and general and administrative expenses, and the closing of the Campbell, CA
office.
To ensure continuity in the business, Javed Abbas, the company's
corporate controller will continue to serve as the company's principal
financial officer and the company will not be proceeding with a search for a
CFO.
Earnings Conference Call and Web Cast Replay Information
On Thursday, April 13, 2006, ComnetiX(TM) is holding a conference call at
8:30 AM EST where management will discuss the results for the second quarter
of its fiscal year 2006, ended February 28, 2005. Local participants should
dial 416-644-3416 and long distance participants should dial 1-800-796-7558
fifteen minutes prior to the start of the call to register. The live call may
be accessed online at www.comnetix.com or at
http://events.onlinebroadcasting.com/comnetix/041306/index.php.
Online archives of this call will be available through April 21, 2006; to
listen to the online replay please visit www.comnetix.com.
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)
-------------------------------------------------------------------------
Three Months Ended Six Months Ended
February 28 February 28 February 28 February 28
2006 2005 2006 2005
------------- ------------- ------------- -------------
SALES $ 2,936,714 $ 2,634,980 $ 6,585,423 $ 4,807,131
EXPENSES
Cost of
hardware sold 887,169 906,032 2,485,384 1,603,241
Wages 1,793,610 1,266,006 3,348,957 2,596,207
Sales, general
and
administrative 1,544,440 895,733 3,010,335 1,692,766
Interest 45,089 905 62,943 3,939
Amortization
of capital
assets 52,638 38,618 92,165 70,813
Amortization of
intangible
assets 143,929 6,500 287,858 12,350
Stock
compensation
expense 345,121 137,416 702,659 286,133
--------------------------------------------- ---------------------------
4,811,996 3,251,210 9,990,301 6,265,449
--------------------------------------------- ---------------------------
LOSS FROM
OPERATIONS (1,875,282) (616,230) (3,404,878) (1,458,318)
OTHER INCOME (6,277) 13,124 39,019 43,386
--------------------------------------------- ---------------------------
LOSS BEFORE TAXES
FOR THE PERIOD (1,881,559) (603,106) (3,365,859) (1,414,932)
FUTURE TAX
RECOVERY 137,429 - 188,590 -
--------------------------------------------- ---------------------------
NET LOSS FOR
THE PERIOD (1,744,130) (603,106) (3,177,269) (1,414,932)
DEFICIT,
BEGINNING OF
PERIOD (12,745,402) (9,245,828) (11,312,263) (8,434,002)
--------------------------------------------- ---------------------------
DEFICIT, END
OF PERIOD $(14,489,532) $ (9,848,934) $(14,489,532) $ (9,848,934)
--------------------------------------------- ---------------------------
--------------------------------------------- ---------------------------
LOSS PER COMMON
SHARE - basic
and diluted $ (0.12) $ (0.05) $ (0.22) $ (0.12)
--------------------------------------------- ---------------------------
--------------------------------------------- ---------------------------
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING
(000's) 14,402 11,513 14,353 11,456
--------------------------------------------- ---------------------------
COMNETIX INC.
Interim Consolidated Balance Sheets
-------------------------------------------------------------------------
February 28 August 31
2006 2005
------------- -------------
(unaudited) (audited)
ASSETS
CURRENT
Cash $ 1,011,515 $ 828,170
Short term investments (Note 3) $ 1,428,368 5,554,466
Accounts receivable $ 4,314,648 3,067,393
Inventory $ 669,691 545,459
Prepaid expenses $ 129,377 156,819
-------------------------------------------------------------------------
$ 7,553,599 10,152,307
CAPITAL ASSETS (Note 4) $ 646,516 609,168
INTANGIBLE ASSETS (Note 5) $ 3,134,564 3,422,421
GOODWILL $ 4,920,796 4,896,706
-------------------------------------------------------------------------
$ 16,255,475 $ 19,080,602
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES
CURRENT
Bank indebtedness (Note 6) $ 511,470 $ 548,331
Accounts payable and accrued liabilities $ 3,061,111 3,470,263
Current portion of capital lease obligation $ - 4,115
Current portion of notes payable (Note 7) $ 99,721 560,175
Deferred revenue $ 2,020,621 1,774,150
-------------------------------------------------------------------------
$ 5,692,923 6,357,034
-------------------------------------------------------------------------
LONG TERM
Capital lease obligation $ - 1,697
Future income tax liability $ 740,686 929,275
Notes payable (Note 7) $ 85,245 134,796
-------------------------------------------------------------------------
$ 825,931 1,065,768
-------------------------------------------------------------------------
$ 6,518,854 7,422,802
-------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
SHARE CAPITAL (Note 8) $ 19,437,536 18,655,443
CONVERTIBLE DEBENTURE $ 1,688,618 1,688,618
CUMULATIVE TRANSLATION ADJUSTMENT $ 154,022 -
WARRANTS $ 620,206 620,206
CONTRIBUTED SURPLUS (Note 9) $ 2,325,771 2,005,796
DEFICIT $(14,489,532) (11,312,263)
-------------------------------------------------------------------------
$ 9,736,621 11,657,800
-------------------------------------------------------------------------
$ 16,255,475 $ 19,080,602
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>
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