LINK News Interlink Electronics Files Third Quarter 2006 Report
CAMARILLO, Calif.--(BUSINESS WIRE)--Interlink Electronics, Inc. (Pink Sheets:LINK) today
announced the filing with the Securities and Exchange Commission of its
report on Form 10-Q for the quarter ended September 30, 2006. “I
am very pleased to say we are now current with our regulatory filings
and expect to file on a timely basis going forward,”
said E. Michael Thoben, Chairman, CEO and President.
“Revenues in the third quarter were in line
with our recent guidance at $9.0 million, up 6% from the 2006 second
quarter and down 12% from the same quarter last year,”
Mr. Thoben continued. “Revenues for the 2006
nine-month period were $26.1 million, down 12% from the same period in
2005 primarily due to the previously announced restructuring of our OEM
Remote business in the third quarter of 2005, which included de-emphasis
of the OEM presentation projector remote control portion of this
segment. We anticipate that OEM Remote revenues will continue to drop in
the fourth quarter of 2006. However, as shown in results for the 2006
third quarter, we expect revenues generated from our higher margin
business segments to become a larger percentage of our overall revenues
and offset this decline. Total company revenues are expected to reach
record levels in the fourth quarter of 2006, with the majority of this
growth driven by our higher margin businesses, particularly the
E-transactions and Specialty segments.”
The Company reported a net loss for the three months ended September 30,
2006 of $1.9 million, or a loss per share of $0.14, compared to a net
loss of $2.7 million, or a loss per share of $0.20, in the third quarter
of 2005 and a net loss of $3.6 million, or a loss per share of $0.26, in
the three months ended June 30, 2006. Net loss for the third quarter of
2006 included $1.1 million in non-cash stock based compensation expense
related to the 2006 implementation of Statement of Financial Accounting
Standards 123R (“SFAS 123R”).
The reconciliation of GAAP to non-GAAP measurements is set forth in the
non-GAAP financial statements below.
The net loss for the nine months ended September 30, 2006 was $8.1
million, or a loss per share of $0.59, compared to a net loss of $5.0
million, or a loss per share of $0.37, for the nine months ended
September 30, 2005. Net loss for the nine months ended September 30,
2006 included $3.2 million in non-cash stock based compensation expense
related to SFAS 123R.
Gross profit for the quarter ended September 30, 2006 was $3.2 million,
or 36% of revenues, compared to $1.3 million, or 13% of revenues, for
the same quarter last year. Gross profit for the nine months ended
September 30, 2006 was $8.9 million, or 34% of revenues, compared to
$6.4 million, or 21% of revenues, for the nine months ended September
30, 2005. Increases in both gross profit and gross profit margins were
achieved despite lower overall revenues, reflecting improvements
resulting from the restructuring decisions made by the Company in the
third quarter of 2005.
Operating expenses for the three months ended September 30, 2006 were
$5.1 million, up approximately $150,000 from the 2005 third quarter, net
of $861,000 of stock-based compensation expense. Operating expenses for
the nine months ended September 30, 2006 were $17.1 million, an increase
of $5.4 million from the 2005 nine month period including $2.6 million
in stock-based compensation expense and approximately $1.3 million in
costs related to the Company’s internal
accounting investigation and additional consulting, accounting, and
legal fees.
“Looking to the fourth quarter, we anticipate
we will return to record revenue levels and we will accomplish this with
a more desirable product mix. This achievement will assist the company
in improving our bottom line and our overall financials,”
said Mr. Thoben. “This week we also secured a
line of credit that allows for borrowings up to $5 million, based on
accounts receivables. We will continue to explore ways of reinforcing
our balance sheet in order to execute our growth strategies.”
The Company plans to hold a conference call to discuss its third quarter
results and its expectations for the 2006 year on Friday, January 5,
2007 at 11:00 a.m. ET. To access the live conference call, dial
1-888-942-9565 (pass code is LINK); for international callers dial
1-210-234-0002 (pass code is LINK). For live or replay webcast access,
go to www.interlinkelectronics.com.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Month Period
Nine Month Period
Ended September 30,
Ended September 30,
2006
2005
2006
2005
Revenues
$9,034
$10,223
$26,082
$29,756
Cost of revenues
5,785
8,931
17,187
23,389
Gross profit
3,249
1,292
8,895
6,367
Operating expenses:
Product development and research
1,432
1,128
4,271
3,337
Selling, general and administrative
3,654
2,930
12,801
8,307
Total operating expenses
5,086
4,058
17,072
11,644
Operating loss
(1,837)
(2,766)
(8,177)
(5,277)
Other income (expense):
Interest income, net
61
106
294
296
Other expense
(14)
(29)
(52)
(67)
Total other income
47
77
242
229
Loss before income taxes
(1,790)
(2,689)
(7,935)
(5,048)
Provision for income taxes
95
---
174
---
Net loss
$(1,885)
$(2,689)
$(8,109)
$(5,048)
Loss per share – basic
$(0.14)
$(0.20)
$(0.59)
$(0.37)
Loss per share – diluted
$(0.14)
$(0.20)
$(0.59)
$(0.37)
Weighted average shares – basic
13,773
13,734
13,765
13,710
Weighted average shares – diluted
13,773
13,734
13,765
13,710
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(IN THOUSANDS)
September 30,
December 31,
2006
2005
Assets
Current assets:
Cash and cash equivalents
$2,221
$3,938
Short-term investments, available for sale
2,000
10,000
Accounts receivable, less allowance for doubtful accounts and
product returns of $431 and $423 at September 30, 2006 and December
31, 2005, respectively
8,008
9,184
Inventories, net of reserves of $2,329 and $1,739 at September 30,
2006 and December 31, 2005, respectively
11,600
8,119
Prepaid expenses and other current assets
544
456
Total current assets
24,373
31,697
Property and equipment, net
1,513
1,099
Patents and trademarks, less accumulated amortization of $1,269 and
$1,201 at September 30, 2006 and December 31, 2005, respectively
292
308
Other assets
247
67
Total assets
$26,425
$33,171
Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of long-term debt
$154
$154
Accounts payable
3,752
5,731
Accrued payroll and related expenses
2,129
1,931
Deferred revenue
543
863
Other accrued expenses
261
66
Total current liabilities
6,839
8,745
Long-term debt, net of current portion
76
154
Contingencies
Stockholders’ equity:
Preferred stock, $5.00 par value (100 shares authorized, none issued
and outstanding)
—
—
Common stock, $0.00001 par value (50,000 shares authorized, 13,756,
and 13,754 shares issued and outstanding at September 30, 2006 and
December 31, 2005, respectively)
53,942
50,740
Due from stockholders
(18)
(157)
Accumulated other comprehensive loss
(484)
(490)
Accumulated deficit
(33,930)
(25,821)
Total stockholders’ equity
19,510
24,272
Total liabilities and stockholders’ equity
$26,425
$33,171
NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
USE OF NON-GAAP FINANCIAL INFORMATION
To supplement our condensed consolidated financial statements
presented on a GAAP basis, we may at times, use non-GAAP measures of
gross profit, net income (loss), operating income (loss) and certain
expenses (including selling, general and administrative and product
development and research), which exclude non cash stock-based
compensation to allow for a better comparison of results in the
current period to those in prior periods that did not include SFAS
123R stock-based compensation amounts. We believe the non-GAAP
measures that exclude non cash stock-based compensation enhance the
comparability of results against prior periods. In addition, we do, at
times, use these non-GAAP financial measures for internal management
purposes, when publicly providing our business outlook and as a means
to evaluate period-to-period comparisons. These non-GAAP financial
measures should be considered as a supplement to, and not as
substitute for, or superior to, financial measures prepared in
accordance with GAAP.
