Positive Trends; Receives Validation for Product and Services Offerings
TORONTO, July 12 /CNW/ - ComnetiX(TM) Inc. (TSX:CXI), a leading provider
of biometric and identification solutions, today reported its financial
results for the third quarter of fiscal 2006, the period ended May 31, 2006.
All dollar amounts are in Canadian dollars unless otherwise indicated.
"I am happy to report that we are beginning to see positive effects from
the various initiatives we have undertaken to both increase our revenues
through geographic and product expansion and reduce our annual operating
expenses" said Bernard Crotty, Chief Executive Officer of ComnetiX. "We are
beginning to see the results of our efforts to expand into the Western US with
significant contracts from both Kern County, California and the Nevada
Department of Justice. The Kern County contract is a direct result of the
increased understanding and interest in our IIE suite of software solutions
and validates our strategy to move forward with this product suite."
Revenue for the quarter was $3.14 million, up 4.6 per cent
from$3.0 million in the comparable period last year. Net loss for the period
was $0.97 million or $0.07 per share including a one time charge of $0.2
million for restructuring compared to a loss of $0.4 million or $0.03 per
share in the third quarter of 2005.
For the nine month period, revenue was $9.73 million, an increase of 25
per cent from the comparable period last year. The year-to-date net loss was
$4.14 million or $0.29 per share, compared to a loss of $1.82 million or $0.15
per share in the comparable period last year.
The Company initiated several steps in Q2 Fiscal 2006 to reduce its
operating expenses including reductions in personnel, general and
administrative expenses and the closing of satellite offices. The Q3 operating
loss, excluding one time restructuring charges, was reduced by 56 per cent or
$0.8 million sequentially from Q2, while revenue for Q3 increased 7 per cent
or $0.20 million over the preceding quarter. The Company expects the trend of
decreased operating costs to continue into Q4.
Product and Services Offerings Validated
ComnetiX continued to display market leadership in New York in Q3 with
the receipt of 20 new orders from various law enforcement and state agencies
across the State. Steadily winning new customers and building upon existing
strong relationships in NY, ComnetiX has proven itself to be the solution
provider of choice in the region.
The pro-active approach that ComnetiX' fingerprint services division has
taken to maintaining their leadership in the Canadian fingerprinting services
market was validated when the Royal Canadian Mounted Police (RCMP) selected
the company to participate in a Real Time Identification (RTID) Release 0.5
Pilot. Participation in the pilot will give ComnetiX the opportunity to be one
of the first companies to connect to the National Police Service (NPS)
Automated Fingerprint Identification System (AFIS) electronically to submit
fingerprints for criminal record verifications for civil purposes.
ComnetiX also received a formal "Intent to Award" notification from the
Kern County Sheriff's Department in California for its county wide fingerprint
live scan system. This is a very strong indication that interest in the
company's Intelligent Identification Environment (IIE(TM)) suite of software
solutions is gaining momentum. ComnetiX was chosen from a field of respondents
to a competitive request for proposal issued by Kern County in 2005 and will
be providing a system consisting of several components from the IIE product
family.
Subsequent to quarter end ComnetiX was awarded a contract by the Nevada
Department of Public Safety to convert legacy criminal arrest and juvenile
booking fingerprint cards into electronic records and subsequently submit them
to the State AFIS. This is another example of the Company's IIE suite of
products and services winning out over other solution providers in a
competitive bid situation. ComnetiX will utilize its state of the industry
IntelliServ(TM) workflow management system coupled with its ADF enabled
IntelliBook(TM) workstations on this contract.
Earnings Conference Call and Web Cast Replay Information
On Thursday, July 13, 2006, ComnetiX(TM) is holding a conference call at
8:30 AM EST where management will discuss the results for the third quarter of
its fiscal year 2006, ended May 31, 2006. 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 conference call
may be accessed online at www.comnetix.com or at
http://events.onlinebroadcasting.com/comnetix/071306/index.php.
Online archives of this call will be available through July 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.
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COMNETIX INC.
Interim Consolidated Statements of Operations and Deficit
(unaudited)
-------------------------------------------------------------------------
Three Months Ended Nine Months Ended
--------------------------- ---------------------------
May 31, May 31, May 31, May 31,
2006 2005 2006 2005
------------- ------------- ------------- -------------
SALES $ 3,139,906 $ 3,001,984 $ 9,725,329 $ 7,809,115
EXPENSES
Cost of hardware
sold 552,738 649,841 3,038,122 2,253,082
Wages 1,718,478 1,332,617 5,067,435 3,928,824
Sales, general
and administra-
tive 1,296,940 1,216,374 4,307,275 2,909,140
Interest 16,023 584 78,966 4,523
Amortization of
capital assets 61,261 34,281 153,426 105,094
Amortization of
intangible
assets 143,929 6,500 431,787 18,850
Stock
compensation
expense 201,943 187,641 904,602 473,774
Restructuring
expense 199,727 - 199,727 -
--------------------------------------------- ---------------------------
$ 4,191,039 $ 3,427,838 $ 14,181,340 $ 9,693,287
--------------------------------------------- ---------------------------
LOSS FROM
OPERATIONS (1,051,133) (425,854) (4,456,011) (1,884,172)
OTHER INCOME 15,236 26,054 54,255 69,440
--------------------------------------------- ---------------------------
LOSS BEFORE TAXES
FOR THE PERIOD (1,035,897) (399,800) (4,401,756) (1,814,732)
FUTURE TAX
RECOVERY 68,714 - 257,304 -
--------------------------------------------- ---------------------------
NET LOSS FOR THE
PERIOD (967,183) (399,800) (4,144,452) (1,814,732)
DEFICIT, BEGINNING
OF PERIOD (14,489,532) (9,848,934) (11,312,263) (8,434,002)
--------------------------------------------- ---------------------------
DEFICIT, END OF
PERIOD $(15,456,715) $(10,248,734) $(15,456,715) $(10,248,734)
--------------------------------------------- ---------------------------
--------------------------------------------- ---------------------------
LOSS PER COMMON
SHARE - basic
and diluted $ (0.07) $ (0.03) $ (0.29) $ (0.15)
--------------------------------------------- ---------------------------
--------------------------------------------- ---------------------------
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING
(000's) 14,402 12,288 14,370 11,739
--------------------------------------------- ---------------------------
--------------------------------------------- ---------------------------
COMNETIX INC.
Interim Consolidated Balance Sheets
(unaudited)
-------------------------------------------------------------------------
May 31, August 31,
2006 2005
------------- -------------
(unaudited) (audited)
ASSETS
CURRENT
Cash $ 516,348 $ 828,170
Short term investments (Note 3) 1,454,320 5,554,466
Accounts receivable 4,140,723 3,067,393
Inventory 535,912 545,459
Prepaid expenses 137,866 156,819
-------------------------------------------------------------------------
6,785,169 10,152,307
CAPITAL ASSETS (Note 4) 598,234 609,168
INTANGIBLE ASSETS (Note 5) 2,990,636 3,422,421
GOODWILL 4,920,796 4,896,706
-------------------------------------------------------------------------
$ 15,294,835 $ 19,080,602
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES
CURRENT
Bank indebtedness (Note 6) $ 495,675 $ 548,331
Accounts payable and accrued liabilities 2,757,419 3,470,263
Current portion of capital lease obligation - 4,115
Current portion of notes payable (Note 7) 44,596 560,175
Deferred revenue 2,091,985 1,774,150
-------------------------------------------------------------------------
5,389,675 6,357,034
-------------------------------------------------------------------------
LONG TERM
Capital lease obligation - 1,697
Future income tax liability 671,972 929,275
Notes payable (Note 7) 82,613 134,796
-------------------------------------------------------------------------
754,585 1,065,768
-------------------------------------------------------------------------
6,144,260 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 497,245 -
WARRANTS 251,906 620,206
CONTRIBUTED SURPLUS (Note 9) 2,731,985 2,005,796
DEFICIT (15,456,715) (11,312,263)
-------------------------------------------------------------------------
9,150,575 11,657,800
-------------------------------------------------------------------------
$ 15,294,835 $ 19,080,602
-------------------------------------------------------------------------
-------------------------------------------------------------------------
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