Applied Imaging (NASDAQ:AICXE)
Historical Stock Chart
From Jun 2019 to Jun 2024
Applied Imaging Files Restated SEC Reports and Announces
Third-Quarter 2004 Results
SAN JOSE, Calif., March 3 /PRNewswire-FirstCall/ -- Applied Imaging Corp.
(NASDAQ:AICXE) today announced that it has filed with the Securities and
Exchange Commission (SEC) the Company's restated financial statements on Form
10-K/A for the fiscal year ended December 31, 2003, its quarterly financial
statements on Form 10-Q/A for the first and second quarters of the fiscal year
ending December 31, 2004, and its Form 10-Q for the third quarter ended
September 30, 2004.
Third Quarter Financial Results
Revenues for the three months ended September 30, 2004 were $5.7 million, an
increase of 39.0% as compared to $4.1 million, as restated, for the third
quarter of 2003. The $1.6 million increase in revenues in the third quarter
was due primarily to the recognition of revenue on Ariol(R) systems from sales
contracts entered into in prior periods and for which the Company has now
fulfilled all obligations under the terms of the original sales contract.
Revenue from these sales contracts was deferred from prior periods because the
company had not at the time completed development of the feature-rich Ariol(R)
2.0 software release. Ariol(R) 2.0 was commercialized in August 2004.
Gross profit increased to $3.2 million in the third quarter of 2004, from $2.2
million in the third quarter of 2003, as restated. Gross margin for the third
quarter of 2004 was 55.6%, as compared to 55.1% in the prior year period.
Operating expenses were $3.4 million for the quarter, as compared to $3.5
million in the third quarter of 2003.
The Company reported a net loss of $237,000, or $0.01 per share, for the
quarter, as compared to a loss of $1,233,000, as restated, or $0.08 per share,
in the third quarter of 2003.
Nine Months Financial Results
Revenues for the nine months ended September 30, 2004 were $14.9 million, an
increase of 7.7% as compared to $13.8 million, as restated, for the
corresponding period in 2003.
For the nine months ended September 30, 2004, gross profit increased by 9.2% to
$8.8 million, from $8.1 million, as restated, in the same period of 2003.
Gross margin for the first nine months of 2004 was 59.0%, as compared to 58.2%,
in the prior year period.
Operating expenses were $10.6 million for the first nine months of 2004, as
compared to $10.2 million for the same period of 2003.
The Company reported a net loss of $1.9 million, or $0.11 per share, for the
first nine months of 2004, as compared to a loss of $2.1 million, as restated,
or $0.13 per share, in the comparable period of 2003.
Financial Condition
Cash used by operations in the nine months ended September 30, 2004 was
$476,000, compared to $615,000 provided by operations in the first nine months
of 2003. Net cash used in operations in the first nine months of 2004 resulted
primarily from a $1.9 million operating loss and a reduction in deferred
revenue of $1.0 million, largely offset by a reduction of $1.4 million in
accounts receivable and a deferred rent incentive received for our new office
facilities of $695,000.
As of September 30, 2004, the Company had cash and cash equivalents of $4.0
million and working capital of $2.0 million, compared to $2.0 million and
$340,000, respectively, at December 31, 2003.
Restated Financials Results for 2004 and 2003 Periods
On November 15, 2004, the Company announced its intent to restate the financial
results for the fiscal year ended December 31, 2003 and the quarterly financial
results for the first and second quarters of the fiscal year ending December
31, 2004. During the third quarter of 2004, a transaction, which was recorded
in June 2004, was identified where revenue was recognized in a manner
inconsistent with the Company's policies and procedures then in effect.
Following the identification of this transaction, the Audit Committee commenced
an investigation. During the course of its investigation, the Audit Committee
identified several revenue transactions principally recorded in fiscal 2002 and
2003 involving its Cytovision and Ariol systems in which commitments were made
for the future delivery of software applications then under development.
Statement of Position (SOP) 97-2 "Software Revenue Recognition" requires that
vendor specific objective evidence (VSOE) of the price attributable to the fair
value of such "future deliverables" be established in order to recognize a
portion of revenue in the reporting period in which the sale was originally
made. The Company did not have VSOE established for these "future
deliverables" at the time revenue was initially recognized. The investigation
also uncovered certain other transactions identified where the Company
recognized revenue inappropriately or without the criteria necessary for
revenue recognition under SOP 97-2. As a result, the Company subsequently
decided to restate its 2002 financial results as well.
As previously reported on the Company's Current Report on Form 8-K dated
November 10, 2004, the Company estimated that the adjustments to its income
statement related to the transactions investigated would result in the deferral
of $1.0 million to $1.5 million in previously recognized revenues from 2003
until the third and fourth quarter reporting periods in 2004. The Company also
estimated that approximately $0.3 million to $0.5 million in revenues
previously recognized related to the investigated transactions in the first
half of 2004 would be deferred until the third and fourth quarters of 2004.
The actual impact of the adjustments to the Company's income statement related
to the investigated transactions was as follows:
* For the year ended December 31, 2002, revenue was reduced by
$0.6 million from $21.2 million to $20.6 million, as restated, and
loss per share increased by ($0.03) from ($0.03) to ($0.06), as
restated.
* For the year ended December 31, 2003, revenue was reduced by
$1.2 million from $20.2 million to $19.0 million, as restated, and
loss per share increased by ($0.05) from ($0.13) to ($0.18), as
restated.
* For the quarter ended March 31, 2004, revenue was increased by
$0.1 million from $4.8 million to $4.9 million, as restated, and there
was no impact on loss per share of ($0.04).
* For the quarter ended June 30, 2004, revenue was increased by
$0.1 million from $4.1 million to $4.2 million, as restated, and there
was no impact on loss per share of ($0.06).
Additional details concerning the impact of the restatements are available from
the Company's restated filings on the SEC's website at http://www.sec.gov/
About Applied Imaging
Applied Imaging Corp., based in San Jose, California, is the leading supplier
of automated imaging and image analysis systems for the detection and
characterization of chromosomes and molecular markers in genetics and cancer
applications. The Company markets a wide range of imaging and image analysis
systems for fluorescence and brightfield microscopy, including the Company's
Ariol(R), SPOT(TM) and CytoVision(R) product families. Applied Imaging has
installed over 4,000 systems in over 1,000 laboratories in more than 60
countries. The Company is also developing a system for the detection,
quantification and characterization of circulating tumor cells from the blood
of cancer patients. More information about Applied Imaging can be found at
http://www.aicorp.com/.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of
1995: This press release contains forward looking statements as defined in the
Private Securities Litigation Reform Act of 1995, regarding, among other
matters, the Company's ability to maintain its listing on the Nasdaq SmallCap
market, the Company's future financial performance, financial condition and
future needs for liquidity, anticipated demand for the Company's products,
strategies to enhance profitability, our ability to research, develop, patent
and commercialize new technology to detect and characterize circulating tumor
cells in peripheral blood, as well as regulatory approval, clinical value and
market size for such a technology. Actual results could differ materially from
those projected in the forward-looking statements as a result of a number of
factors, including the failure of Applied Imaging to successfully develop its
cancer diagnostics or genetic instrument business, potentially unacceptable
results from its preclinical and clinical trials of circulating tumor cell
enrichment methods and other such factors as set forth in Applied Imaging's
filings with the Securities and Exchange Commission, including the Form 10-KA
for the Fiscal Year Ended December 31, 2003. The forward-looking statements in
this news release are made as of March 3, 2005, and Applied Imaging is under no
obligation to revise or update the forward-looking statements.
CCG Investor Relations
Crocker Coulson, President
15300 Ventura Boulevard, Suite 303
Sherman Oaks, CA 91403
(818) 789-0100
Applied Imaging Corp.
Robin Stracey, Chief Executive Officer
120 Baytech Drive,
San Jose, CA 95134
(408) 719-6459
Applied Imaging Corp. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share data)
Three months ended Nine months ended
September 30, September 30,
2004 Restated 2003 2004 Restated 2003
Revenues $5,709 $4,084 $14,895 $13,827
Cost of revenues 2,535 1,834 6,103 5,775
Gross profit 3,174 2,250 8,792 8,052
Operating expenses:
Research and development 887 980 2,622 2,761
Sales and marketing 1,619 1,793 4,956 5,438
General and
administrative 910 709 3,040 1,978
Total operating
expenses 3,416 3,482 10,618 10,177
Operating loss (242) (1,232) (1,826) (2,125)
Other income (expense),
net 5 (1) (85) 30
Net loss $(237) $(1,233) $(1,911) $(2,095)
Net loss per share
- basic and diluted $(0.01) $(0.08) $(0.11) $(0.13)
Weighted average shares
outstanding
- basic and diluted 19,073 15,961 17,885 15,938
Selected Consolidated Balance Sheet Data
(Unaudited, in thousands)
September 30, December 31,
2004 2003
ASSETS
Cash, cash equivalents and
restricted cash $4,133 $2,225
Current Assets 11,562 10,561
Total assets $15,245 $13,888
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $9,526 $10,221
Total liabilities 10,423 11,022
Stockholders' equity 4,822 2,866
Total liabilities and stockholders' equity $15,245 $13,888
Applied Imaging Corp. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands, except per share data)
Nine months ended
September 30,
2004 Restated 2003
Cash flows from operating activities:
Net loss $(1,911) $(2,095)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 429 465
Provision for doubtful accounts -- (100)
Loss on sale of property and equipment -- 2
Changes in operating assets and liabilities:
Trade accounts receivable 1,353 2,698
Inventories (413) 198
Prepaid expenses and other current assets (33) (536)
Other assets 99 (213)
Accounts payable 22 (500)
Accrued expenses 245 66
Deferred revenues (962) 630
Deferred rent incentive 695 --
Net cash provided by (used in) operating
activities: (476) 615
Cash flows from investing activities:
Purchases of property and equipment (884) (259)
Net cash used in investing activities (884) (259)
Cash flows from financing activities:
Net proceeds from issuance of common stock 3,867 56
Bank loan proceeds 8,521 9,009
Bank loan payments (9,120) (10,190)
Restricted cash (2) (11)
Net cash provided by (used in) financing
activities: 3,266 --
(1,136)
Net increase in cash and cash equivalents 1,906 (780)
Cash and cash equivalents at the beginning
of period 2,047 2,897
Cash and cash equivalents at end of period $3,953 $2,117
DATASOURCE: Applied Imaging Corp.
CONTACT: Crocker Coulson, President of CCG Investor Relations,
+1-818-789-0100, , for Applied Imaging Corp.; or
Robin Stracey, Chief Executive Officer of Applied Imaging Corp.,
+1-408-719-6459,
Web site: http://www.aicorp.com/