For Immediate Release | Contact: John A. Stiles John A. Stiles & Assoc. LLC 314-994-0560 |
AuthentiDate Holding Corp. Announces
Third Quarter and Nine Month Results
Schenectady, NY–May 16, 2005–AuthentiDate Holding Corp. (NASDAQ: ADAT) announced today that revenue for the quarter and nine months ended March 31, 2005 was $4,359,981 and $12,784,106, respectively. This compares with $6,790,398 and $14,090,689 for the same periods last year. The Company experienced significant sales increases in its Security Software Solutions Segment (formerly known as the AuthentiDate Segment, including the operations of AuthentiDate, Inc., Trac Medical Solutions, Inc., and AuthentiDate International AG), and its Document Management Solutions Segment (formerly known as DocStar). However, there was a reduction in low margin hardware sales of $3.2 million in its Systems Integration Segment (formerly known as DJS) as a consequence of management’s efforts to shift the business mix towards higher margin services. As a result of this shift, and a reduction in operating expenses, there was only a $67,000 decrease in segment profit for this segment in the quarter ended March 31, 2005, compared to the same quarter last year.
Revenue in its Security Software Solutions Segment increased 117% from $416,101 to $904,581 for the three month period and 158% from $1,011,696 to $2,606,693 for the nine month period. Deferred revenue increased to approximately $2.7 million from approximately $1.9 million at June 30, 2004, because of increasing orders in the Security Software Solutions Segment.
Revenue from the Document Management Solutions Segment increased from $1,397,981 to $1,650,230 for the three month periods ended March 31, 2004 and 2005 respectively, an increase of 18%. For the nine month periods, the Document Management Solutions Segment revenue increased 13%, or $548,000.
Compared to the prior year, revenue in the Systems Integration Segment declined by approximately $3.2 million and $3.4 million for the quarter and nine months respectively. This sales decrease was primarily a result of management’s efforts to place less emphasis on resale of low-margin hardware, and greater focus on higher margin professional services.
The net loss for the third quarter ended March 31, 2005 was $2,960,055, or $0.09 per share, compared to a net loss of $2,565,345, or $0.09 per share, for the same quarter a year ago. The Company reported a net loss of $10,786,260, or $0.32 per share, and $12,089,053, or $0.49 per share, for the respective nine-month periods ended March 31, 2005 and 2004.
Selling, General and Administrative costs increased during the quarter and nine months ended March 31, 2005 compared to the prior year. The Company attributed this increase to costs and staffing associated with the build out of its Security Software Solutions Segment.
On a non-GAAP basis, the Company reported a net loss of $8,898,246, or $.26 per share, for the nine months ended March 31, 2005. The Company said that the difference between the non-GAAP net loss and the GAAP net loss was attributable to costs associated with non-recurring expense items, including severance and non-cash consulting expenses.
“The revenue traction we are experiencing in our Security Software Solutions Segment, along with the signing of the Liberty Healthcare Group contract in the fourth quarter, demonstrates the effectiveness of the new management team in executing our strategy of a solutions-based approach to the market,” stated Suren Pai, AuthentiDate’s CEO. “We will continue to make necessary investments in our people, technology and infrastructure as we proceed to restructure the Company towards profitable growth.”
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The following tables are the Statements of Operations and Balance Sheets for AuthentiDate Holding Corp
March 31, 2005 | March 31, 2004 | March 31, 2005 | March 31, 2004 | ||||||||||
Segment Sales | |||||||||||||
Security Software Solutions | 904,581 | 416,101 | 2,606,693 | 1,011,696 | |||||||||
Document Management Solutions | 1,650,230 | 1,397,981 | 4,859,695 | 4,311,759 | |||||||||
Systems Integration | 1,805,170 | 4,976,316 | 5,317,718 | 8,767,234 | |||||||||
Net sales | $ | 4,359,981 | $ | 6,790,398 | $ | 12,784,106 | $ | 14,090,689 | |||||
Cost of sales | 2,300,894 | 5,095,363 | 6,753,808 | 9,543,119 | |||||||||
Gross profit | 2,059,087 | 1,695,035 | 6,030,298 | 4,547,570 | |||||||||
Selling, general and administrative expenses | 4,633,871 | 3,783,166 | 15,805,309 | 9,727,163 | |||||||||
Product development expenses | 855,049 | 679,027 | 2,156,396 | 1,759,054 | |||||||||
Loss from operations | (3,429,833 | ) | (2,767,158 | ) | (11,931,407 | ) | (6,938,647 | ) | |||||
Other income (expense) | |||||||||||||
Interest and other income | 477,104 | 244,358 | 1,166,836 | 1,056,395 | |||||||||
Interest expense | (4,326 | ) | (42,134 | ) | (13,139 | ) | (6,224,294 | ) | |||||
Loss before income taxes | (2,957,055 | ) | (2,564,934 | ) | (10,777,710 | ) | (12,106,546 | ) | |||||
Income tax (expense)/benefit | (3,000 | ) | (411 | ) | (8,550 | ) | 17,493 | ||||||
Net loss | $ | (2,960,055 | ) | $ | (2,565,345 | ) | $ | (10,786,260 | ) | $ | (12,089,053 | ) | |
Weighted Average Shares Outstanding: | 34,082,353 | 30,283,325 | 33,827,337 | 25,051,355 | |||||||||
Per share amounts: | |||||||||||||
Basic and diluted loss per common share | $ | (.09 | ) | $ | (.09 | ) | $ | (.32 | ) | $ | (.49 | ) | |
Part I Financial Information |
Authentidate Holding Corporation and Subsidiaries |
Consolidated Balance Sheets |
(unaudited except for the June 30, 2004 balance sheet) |
March 31, 2005 | June 30, 2004 | |||||
Assets | ||||||
Current assets | ||||||
Cash and cash equivalents | $ | 27,800,076 | $ | 42,689,823 | ||
Restricted cash | 141,307 | 365,116 | ||||
Marketable Securities | 37,750,000 | 31,300,000 | ||||
Accounts receivable, net of allowance for doubtful accounts of $424,961 and $420,916 at March 31, 2005 and June 30, 2004, respectively | 3,348,890 | 3,039,044 | ||||
Inventories | 324,521 | 125,206 | ||||
Prepaid expenses and other current assets | 563,632 | 474,309 | ||||
Total current assets | 69,928,426 | 77,993,498 | ||||
Property and equipment, net | 3,733,802 | 3,396,454 | ||||
Other assets | ||||||
Software development costs, net | 637,237 | 497,977 | ||||
Goodwill | 11,616,736 | 11,616,736 | ||||
Other intangible assets | 959,489 | 727,763 | ||||
Investment in affiliates | 750,000 | — | ||||
Other assets | 4,449 | 4,448 | ||||
Total assets | $ | 87,630,139 | $ | 94,236,876 | ||
Liabilities and Shareholders' Equity | ||||||
Current liabilities | ||||||
Accounts payable | $ | 1,081,730 | $ | 859,360 | ||
Accrued expenses and other current liabilities | 2,263,013 | 1,838,860 | ||||
Deferred revenue | 2,220,505 | 1,881,277 | ||||
Current portion of obligations under capital leases | 34,072 | 69,968 | ||||
Current portion of long-term debt | 78,000 | 208,239 | ||||
Line of credit | 420,696 | 571,622 | ||||
Income taxes payable | 13,777 | 6,130 | ||||
Total current liabilities | 6,111,793 | 5,435,456 | ||||
Long-term deferred revenue | 478,125 | — | ||||
Long-term debt, net of current portion | — | 48,000 | ||||
Obligations under capital leases, net of current portion | 9,926 | 35,421 | ||||
Other long term liabilities | 343,871 | — | ||||
Total liabilities | 6,943,715 | 5,518,877 | ||||
Commitments and contingencies | ||||||
Shareholders’ equity | ||||||
Preferred stock $.10 par value, 5,000,000 shares authorized: | ||||||
Series B – 28,000 shares issued and outstanding at March 31, 2005 and June 30, 2004 | 2,800 | 2,800 | ||||
Common stock, $.001 par value; | ||||||
75,000,000 shares authorized, 34,378,483 and 32,951,656 issued and outstanding at March 31, 2005 and June 30, 2004, respectively | 34,378 | 32,952 | ||||
Additional paid-in capital | 160,437,793 | 157,602,589 | ||||
Accumulated deficit | (79,685,288 | ) | (68,846,528 | ) | ||
Currency translation adjustment | (103,259 | ) | (73,814 | ) | ||
Total shareholders’ equity | 80,686,424 | 88,717,999 | ||||
Total liabilities and shareholders’ equity | $ | 87,630,139 | $ | 94,236,876 | ||
In analyzing its financial results the Company has used non-GAAP pro forma financial measures because it believes that they provide meaningful information regarding the Company's operational performance that excludes certain unusual and non-recurring expenses, as described in the footnotes to the following reconciliation. They also facilitate management's internal comparisons to historical operating results. Wherever non-GAAP disclosures are included in this press release the Company has provided a reconciliation of non-GAAP operating results to GAAP operating results. The non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies and therefore the non-GAAP results should not be considered in isolation from, or as a substitute for financial information prepared in accordance with GAAP. The footnotes to the non-GAAP reconciliation should be read in conjunction with the reconciliation below.
Reconciliation of GAAP Statement of Operations to non-GAAP Proforma Statement of Operations
For the Nine Months Ended March 31, 2005
For the 9 months ended March 31, 2005 | |||||||||||||
GAAP (1) | DIFFERENCE | NON-GAAP(2) | |||||||||||
Revenues: | $ | 12,784,106 | $ | 12,784,106 | |||||||||
Costs & expenses: | |||||||||||||
Cost of sales | 6,753,808 | 6,753,808 | |||||||||||
S,G&A expenses | 15,805,309 | (1,221,114 | ) | (3) | 13,917,295 | ||||||||
(666,900 | ) | (4) | |||||||||||
Product development exp. | 2,156,396 | 2,156,396 | |||||||||||
Total costs & expenses | 24,715,513 | (1,888,014 | ) | 22,827,499 | |||||||||
Operating Loss | (11,931,407 | ) | 1,888,014 | (10,043,393 | ) | ||||||||
Other income (expense) | |||||||||||||
Interest and other income | 1,166,836 | 1,166,836 | |||||||||||
Interest expense | (13,139 | ) | (13,139 | ) | |||||||||
Loss before income taxes | (10,777,710 | ) | 1,888,014 | (8,889,696 | ) | ||||||||
Income tax (expense)/benefit | (8,550 | ) | (8,550 | ) | |||||||||
Net loss | $ | (10,786,260 | ) | $ | 1,888,014 | $ | (8,898,246 | ) | |||||
Per share amounts: | |||||||||||||
Basic and diluted loss per | |||||||||||||
common share | $ | (.32 | ) | (0.26 | ) | ||||||||
(1) Reflects operating results in accordance with US GAAP. | |
(2) Non-GAAP amounts exclude a warrant charge for a one-time consulting arrangement and | |
one-time severance accruals | |
(3) Represents the exclusion of a one-time severance accrual related to executive officer restructuring. | |
(4) Represents the exclusion of a non-cash equity based expense relating to a consultant fee. |
About AuthentiDate Holding Corp.
AuthentiDate Holding Corp. (AHC) is the holding company which operates its software and services businesses in three segments: the Security Software Solutions Segment (fka Authentidate Segment, including AuthentiDate, Inc., Trac Medical Solutions, Inc. and Authentidate International AG), the Document Management Solutions Segment (fka Docstar Division) and the Systems Integration Segment (fka DJS). The Company is a worldwide provider of secure enterprise workflow management solutions that incorporate its proprietary and patent pending content authentication technology. AuthentiDate’s offerings include the United States Postal Service Electronic Postmark Service (USPS EPM®), electronic signing solutions, and electronic forms processing solutions. AuthentiDate also provides secure document management solutions, and enterprise network security products and services.
This press release contains forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and section 21E of the Securities Act of 1934. When used in this release, the words “believe,” “anticipate,” “think,” “intend,” “plan,” “will be,” “expect,” and similar expressions identify such forward-looking statements. Such statements regarding future events and/or the future financial performance of The Company are subject to certain risks and uncertainties, which could cause actual events or the actual future results of the Company to differ materially from any forward-looking statement. Such risks and uncertainties include, among other things, the availability of any needed financing, the Company’s ability to implement its business plan for various applications of its technologies, the impact of competition, the management of growth, and the other risks and uncertainties that may be detailed from time to time in the Company’s reports filed with the Securities and Exchange Commission. In light of the significant risks and uncertainties inherent in the forward-looking statements included herein, the inclusion of such statements should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.
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