EXHIBIT 99.1
FOR IMMEDIATE RELEASE Contact: Antonio L. DeLise
- ---------------------
President, Chief Executive Officer & Chief
Financial Officer
PubliCARD, Inc.
(212) 651-3120
PubliCARD, INC. ANNOUNCES THIRD QUARTER RESULTS
NEW YORK - NOVEMBER 12, 2004 - PubliCARD, Inc. (OTC BB: CARD.OB)
reported its financial results for the three and nine months ended September 30,
2004.
Sales for the third quarter of 2004 declined to $1,260,000, compared
to $1,417,000 a year ago. Foreign currency changes had the effect of increasing
revenues by 10%. Excluding the impact of foreign currency changes, sales in 2004
decreased by 21% driven by a decline in shipments to distribution partners
located outside of the United Kingdom. The Company reported a net loss for the
quarter ended September 30, 2004 of $3,082,000, or $0.12 per share, compared
with a net loss of $749,000, or $0.03 per share, a year ago. The 2004 results
include a $2,739,000 non-cash loss on the termination of the Company's frozen
defined benefit pension plan. As of September 30, 2004, cash and short-term
investments totaled $2,342,000.
For the nine months ended September 30, 2004, sales were $3,116,000
compared to $4,023,000 a year ago. Foreign currency changes had the effect of
increasing revenues by 8%. Excluding the impact of foreign currency changes,
sales in 2004 decreased by 31%. Sales in each of the Company's three geographic
areas suffered declines versus 2003. The revenue decline in Europe, principally
in the United Kingdom, was caused by a decrease in new business booked through
catering accounts. Also, shipments to distribution partners located in the U.S.
declined by $444,000 in 2004 as compared to 2003. The 2003 revenues included
$270,000 of sales to a customer in the U.S. relating to a magnetic stripe
product that was phased-out. The Company reported a net loss of $4,368,000, or
$0.18 per share, for the nine months ended September 30, 2004 compared with a
net loss of $678,000, or $0.03 per share, in 2003. The 2004 and 2003 results
include gains of $647,000 and $1,705,000, respectively, relating to settlements
with various historical insurers that resolve certain claims (including certain
future claims) under policies of insurance issued to the Company by those
insurers. The 2004 results also include the pension termination loss referenced
above.
About PubliCARD, Inc.
Headquartered in New York, NY, PubliCARD, through its Infineer Ltd.
subsidiary, designs smart card solutions for educational and corporate sites.
The Company's future plans revolve around a potential acquisition strategy that
would focus on businesses in areas outside the high technology sector while
continuing to support the expansion of the Infineer business. However, the
Company will not be able to implement such plans unless it is successful in
obtaining additional funding, as to which no assurance can be given. More
information about PubliCARD can be found on its web site www.publicard.com.
Special Note Regarding Forward-Looking Statements: Certain statements
contained in this press release may constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995 that involve
risks and uncertainties that could cause actual results to differ materially
from those expressed or implied in the applicable statements. Such factors
include general economic and business conditions, the ability to fund operations
and need to raise capital, the ability to identify and consummate acquisitions
and strategic alliances, business and product development, time to market, the
loss of market share, ability to attract and retain employees, development of
competitive products by others, ability to protect our intellectual property,
impact of pending litigation, liquidity of our common shares, market makers
choosing not to make a market for our common shares on the OTC Bulletin Board
F-11
and other factors over which PubliCARD has no control. For more information on
the potential factors which could affect financial results, refer to the
Company's most recent Annual Report on Form 10-K for the year ended December 31,
2003, and quarterly reports on Form 10-Q for the quarters ended March 31, 2004,
June 30, 2004 and September 30, 2004, as filed with the Securities and Exchange
Commission.
(table to follow)
PUBLICARD, INC.
AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2004 2003 2004 2003
------------ ------------ ------------ ------------
Revenues $ 1,260 $ 1,417 $ 3,116 $ 4,023
Cost of revenues 530 645 1,416 1,876
------------ ------------ ------------ ------------
Gross margin 730 772 1,700 2,147
------------ ------------ ------------ ------------
Operating expenses:
General and administrative 568 676 1,840 2,067
Sales and marketing 365 415 1,190 1,420
Product development 173 169 522 414
Amortization of intangibles 10 10 30 30
------------ ------------ ------------ ------------
1,116 1,270 3,582 3,931
------------ ------------ ------------ ------------
Loss from operations (386) (498) (1,882) (1,784)
------------ ------------ ------------ ------------
Other income (expenses):
Interest income 6 3 18 10
Interest expense (6) (3) (16) (8)
Cost of pensions - non-operating (132) (255) (396) (697)
Loss on pension settlement (2,739) -- (2,739) --
Gain on insurance recoveries 170 (2) 647 1,705
Other income (expenses), net 5 6 -- 96
------------ ------------ ------------ ------------
(2,696) (251) (2,486) 1,106
------------ ------------ ------------ ------------
Net loss $ (3,082) $ (749) $ (4,368) $ (678)
============ ============ ============ ============
Basic and diluted loss per common share $ (.12) $ (.03) $ (.18) $ (.03)
============ ============ ============ ============
Basic and diluted weighted average common
shares outstanding 24,690,902 24,534,652 24,690,902 24,428,402
============ ============ ============ ============
See Note 1 below.
PUBLICARD, INC.
AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF
SEPTEMBER 30, 2004 AND DECEMBER 31, 2003
(IN THOUSANDS, EXCEPT SHARE DATA)
SEPTEMBER 30, DECEMBER 31,
2004 2003
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(unaudited)
ASSETS
Current assets:
Cash, including short-term investments of $2,102 and
$3,501 in 2004 and 2003, respectively $ 2,342 $ 3,580
Trade receivables, less allowance for doubtful accounts
of $89 and $115 in 2004 and 2003, respectively 1,136 1,133
Inventories 589 635
Prepaid insurance and other 561 440
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Total current assets 4,628 5,788
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Equipment and leasehold improvements, net 146 191
Goodwill and intangibles 792 822
Other assets 446 598
--------- ---------
$ 6,012 $ 7,399
========= =========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Trade accounts payable and overdraft $ 1,213 $ 1,569
Accrued liabilities 1,539 5,206
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Total current liabilities 2,752 6,775
Note payable 7,501 --
Other non-current liabilities 410 3,552
--------- ---------
Total liabilities 10,663 10,327
--------- ---------
Commitments and contingencies (Note 4)
Shareholders' deficit:
Class A Preferred Stock, Second Series, no par value:
1,000 shares authorized; 565 shares issued and
outstanding as of September 30, 2004 and December
31, 2003 2,825 2,825
Common shares, $0.10 par value: 40,000,000 shares
authorized; 24,690,902 shares issued and outstanding
as of September 30, 2004 and December 31, 2003 2,469 2,469
Additional paid-in capital 108,119 108,119
Accumulated deficit (117,985) (113,617)
Other comprehensive loss (79) (2,724)
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Total shareholders' deficit (4,651) (2,928)
--------- ---------
$ 6,012 $ 7,399
========= =========
See Note 1 below.
Note 1--Liquidity and Going Concern Considerations
The condensed consolidated statements of operations and balance sheets
presented above contemplate the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company has incurred operating
losses, a substantial decline in working capital and negative cash flow from
operations for a number of years. The Company has also experienced a substantial
reduction in its cash and short term investments, which declined from $17.0
million at December 31, 2000 to $2.3 million at September 30, 2004. The Company
also had a shareholders' deficit of $4.7 million at September 30, 2004.
The Company sponsored a defined benefit pension plan (the "Plan") that was
frozen in 1993. In January 2003, the Company filed a notice with the Pension
Benefit Guaranty Corporation (the "PBGC") seeking a "distress termination" of
the Plan. In September 2004, the PBGC proceeded to terminate the Plan and was
appointed as the Plan's trustee. As a result of the Plan termination, the
Company's 2003 and 2004 funding requirements due to the Plan amounting to $3.4
million through September 15, 2004 were eliminated. As such, management believes
that existing cash and short term investments may be sufficient to meet the
Company's operating and capital requirements at the currently anticipated levels
through September 30, 2005. However, additional capital will be necessary in
order to operate beyond September 30, 2005 and to fund the current business plan
and other obligations. While the Company is considering various funding
alternatives, the Company has not secured or entered into any arrangements to
obtain additional funds. There can be no assurance that the Company will be able
to obtain additional funding on acceptable terms or at all. If the Company
cannot raise additional capital to continue its present level of operations it
is not likely to be able to meet its obligations, take advantage of future
acquisition opportunities or further develop or enhance its product offering,
any of which would have a material adverse effect on its business and results of
operations and is likely to lead the Company to seek bankruptcy protection.
These conditions raise substantial doubt about the Company's ability to continue
as a going concern. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty. The
independent auditors' reports on the Company's Consolidated Financial Statements
for the years ended December 31, 2003 and 2002 contained emphasis paragraphs
concerning substantial doubt about the Company's ability to continue as a going
concern.
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