HAUPPAUGE, N.Y., March 9 /PRNewswire-FirstCall/ -- Sentry Technology
Corporation (OTC Bulletin Board: SKVY) today reported financial results for
the Company's fourth quarter and year ended December 31, 2003. The Company
achieved its second consecutive operating profit following 7 years of
operating losses. This dramatic change is a result of the very significant
restructuring undertaken throughout 2003, including staff reduction of 50%,
relocation of its offices to a smaller and less costly facility, outsourcing
of manufacturing, restructuring of supplier debt and renegotiation of its
credit facility. The Company has achieved its goals of maintaining key
customers, increasing gross margins and substantially cutting operating costs
and is now positioned to attract needed investment capital in the form of
$2,000,000 in convertible subordinated debt.
Revenues for the fourth quarter of 2003 were $3,325,000, compared to
revenues of $3,188,000 reported in the fourth quarter of the prior year. The
Company generated an operating profit for the current quarter of $47,000 as
compared to an operating loss of $646,000 for the same period of 2002. Net
loss was $109,000, or $(0.00) per share, in the fourth quarter of 2003 as
compared to a net loss $873,000, or $(0.01) per share, in the fourth quarter
of 2002.
For the year ended December 31, 2003, revenues were $13,009,000, compared
to $14,536,000 reported in the previous year. The decrease in revenues is
primarily related to lower sales of EAS and conventional CCTV products to
several of the Company's larger customers. However, sales of the Company's
proprietary SmartTrack traveling camera systems increased by 29% in 2003, led
by an increase in international sales. Net income was $181,000, or $(0.00)
per share, compared to a net loss of $3,356,000, or $(0.05) per share.
Included in the net income for the year were extraordinary gains of $738,000,
or $0.01 per share, related to the settlement with trade creditors of past due
debt and the termination of its long-term lease with its prior landlord for
the Hauppauge, New York facility.
As announced on February 26th, Sentry has signed a term sheet to raise
$2,000,000 in secured convertible debt with a venture fund (the VC Fund)
managed by a multibillion-dollar North American company. Signing the term
sheet was only possible once the Company could demonstrate the benefits of the
restructuring. After the repayment of certain debts and expenses, the
majority of the $2,000,000 in proceeds will be used for working capital
purposes.
As part of the transaction, Sentry will acquire ID Systems, a Toronto
based group of companies engaged in anti-shoplifting technology, security
labeling, radio frequency identification (RFID), access control and library
security in exchange for 30,000,000 Sentry common shares. ID Systems will add
new products and growth opportunities with approximately $6.5 million in
sales, $4.5 million in assets and $700,000 in EBITDA based upon 2003
performance. The acquisition of ID Systems will increase the number of
outstanding Sentry shares to a total of 115,755,610. Peter Murdoch, President
and CEO of Sentry and President of ID Systems, will indirectly own the newly
issued Sentry shares as a result of the sale of his controlling interest in ID
Systems.
By agreement between Peter Murdoch and the VC Fund, no shares owned
directly or indirectly by Murdoch can be sold during the first year following
the VC fund investment. Thereafter, while the debenture is outstanding,
Murdoch is subject to annual selling restrictions. Following the convertible
debt transaction by the VC Fund, Murdoch is expected to own or control 47.4%
of the outstanding common stock of Sentry.
"We are pleased with the progress that has been made in restructuring
Sentry," said Peter J. Mundy, Vice President and CFO of Sentry Technology
Corporation. "Much has been accomplished during 2003, without the benefit of
any additional working capital. The completion of the proposed $2,000,000
convertible debt transaction and the ID Systems acquisition will dramatically
strengthen Sentry's financial position. Also through its investment of long
term capital, senior management continues to show its commitment towards the
future success of the combined companies."
Sentry Technology Corporation designs, manufactures, sells and installs a
complete line of Radio Frequency (RF) and Electro-Magnetic (EM) EAS systems
and Closed Circuit Television (CCTV) solutions. The CCTV product line
features SentryVision(R), a proprietary, patented traveling Surveillance
System, including our latest SmartTrack system. The Company's products are
used by retailers to deter shoplifting and internal theft and by industrial
and institutional customers to protect assets and people. The partnership with
Dialoc ID Holdings, B.V. expands the Company's product offering to include
proximity Access Control and Radio Frequency Identification (RFID) solutions.
For further information, please visit our Web site at
http://www.sentrytechnology.com.
This press release may include information that could constitute forward-
looking statements made pursuant to the safe harbor provision of the Private
Securities Litigation Reform Act of 1995. Any such forward-looking statements
may involve risk and uncertainties that could cause actual results to differ
materially from any future results encompassed within the forward-looking
statements. Factors that could cause or contribute to such differences
include those matters disclosed in the Company's Securities and Exchange
Commission filings.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
REVENUES $3,325 $3,188 $13,009 $14,536
COSTS AND EXPENSES:
Cost of sales 1,200 1,791 5,179 7,382
Customer service expenses 1,065 930 3,977 4,240
Selling, general and
administrative expenses 849 980 3,575 5,119
Research and development 164 133 656 548
3,278 3,834 13,387 17,289
OPERATING PROFIT (LOSS) 47 (646) (378) (2,753)
INTEREST AND
FINANCING EXPENSE 158 227 671 603
LOSS BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM (111) (873) (1,049) (3,356)
INCOME TAX BENEFIT (1) -- (492) --
LOSS BEFORE
EXTRAORDINARY ITEM (110) (873) (557) (3,356)
EXTRAORDINARY ITEM
- Gain on extinguishment
of debt, net of $1 and
$492 income taxes 1 -- 738 --
NET INCOME (LOSS) $(109) $(873) $181 $(3,356)
BASIC INCOME (LOSS)
PER COMMON SHARE
Income (loss) before
extraordinary item $(0.00) $(0.01) $(0.01) $(0.05)
Extraordinary item 0.00 0.00 0.01 0.00
Net income (loss) $(0.00) $(0.01) $0.00 $(0.05)
WEIGHTED AVERAGE SHARES 85,754 78,044 84,153 72,193
CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, December 31,
2003 2002
ASSETS
CURRENT ASSETS
Cash and cash equivalents $210 $266
Accounts receivable, less
allowance for doubtful
accounts of $304 and $303,
respectively 1,482 1,472
Inventories 1,855 3,145
Prepaid expenses and
other current assets 126 237
Total current assets 3,673 5,120
PROPERTY, PLANT AND EQUIPMENT, net 209 2,563
OTHER ASSETS 211 309
$4,093 $7,992
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Revolving line of credit and term loan $1,515 $2,067
Accounts payable 566 1,807
Accrued liabilities 1,601 1,523
Obligations under capital
leases - current portion 5 97
Deferred income 271 394
Total current liabilities 3,958 5,888
NOTES PAYABLE 247 --
OBLIGATIONS UNDER CAPITAL LEASES -
noncurrent portion 13 2,555
Total liabilities 4,218 8,443
SHAREHOLDERS' EQUITY (DEFICIT)
Common stock 86 78
Additional paid-in capital 44,658 44,521
Accumulated deficit (44,749) (44,930)
Note receivable from shareholder (120) (120)
Total shareholders' equity (deficit) (125) (451)
$4,093 $7,992
SOURCE Sentry Technology Corporation
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Related links:
http://www.sentrytechnology.com
Company News On-Call:
http://www.prnewswire.com/comp/494538.html
CONTACT:
Peter J. Mundy, Vice President - CFO of
Sentry Technology Corporation, +1-631-739-2000
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