BETHESDA, MD -- (MARKET WIRE) -- May 14, 2007 -- Technest Holdings, Inc. (
OTCBB:
TCNH), a
defense and homeland security company, announced today its operating
results for the Company's third quarter and nine months ended March 31,
2007. The complete filing is available at
www.sec.gov.
For the third quarter ending March 31, revenues were $17.95 million in 2007
compared to $17.86 million in the same period in 2006. Gross profit for the
third quarter was $3.93 million vs. $3.24 million in the third quarter of
2006. The operating loss for the quarter narrowed to $268,926 compared with
$795,772 for the same quarter a year ago. The net loss attributable to
common shareholders was $0.92 million or $0.05 per share in 2007 compared
to a net loss of $1.52 million or $0.10 per share in the third quarter of
2006. For the nine months ending March 31, revenues were $53.67 million vs.
$55.14 million for the same nine months in 2006. Gross profit for the nine
months in 2007 was $11.00 million compared to $10.30 million during the
same period in 2006. The operating loss for the nine month period was $1.59
million compared with $1.08 million for the same period a year ago. The net
loss attributable to common shareholders for the nine months ended March
31, 2007 was $4.67 million or $0.28 per share in 2007 compared to a net
profit of $21.73 million or $1.36 per share in the same nine months in
2006. The net profit in 2006 was due primarily to a non-cash derivative
income in the amount of $25.05 million representing the change in fair
value of certain warrants issued by Technest in February 2005. Non-cash
charges included in the loss for the nine months ended March 31, 2007 were
$5.59 million and net non-cash income for the same period in 2006 was
$21.61 million.
Dr. Joseph Mackin, President and CEO, Technest Holdings, commented,
"Overall, we are pleased with our third quarter, where our gross profit
improvement was due to a larger percentage of high margin services provided
compared with lower margin material procurement contracts. Our funded
backlog remains strong at over $44 million and we have additional awarded
but as yet unfunded contracts in excess of $122 million. Going forward, we
expect to execute additional military contracts in the fourth quarter that
have been previously awarded but are awaiting processing. These processing
delays were the primary cause of our shortfall in revenue in the nine
months ended March 31, 2007 compared to the previous year."
About Technest Holdings, Inc.
Technest Holdings, Inc. is a provider of: advanced remote sensor systems,
chemical detectors, intelligent surveillance and advanced 3D imaging
technology solutions to the defense and homeland security marketplaces.
Technest is committed to setting next-generation standards in defense and
security through the provision of innovative emerging technologies and
expert services. Technest's solutions support military, law enforcement and
homeland security personnel. Through strategic development, Technest
focuses on the creation of dual-use technology and products with
applications in both the defense market and civilian homeland security and
law enforcement fields. For more information, please visit the company's
website at
http://www.technestholdings.com.
Investors are cautioned that certain statements contained in this press
release are "forward-looking" statements within the meaning of the Private
Securities Litigation Reform Act of 1995 (the "Act"). Forward-looking
statements include statements which are predictive in nature, which depend
upon or refer to future events or conditions, which include words such as
"expects," "anticipates," "intends," "plans," "believes," "estimates," or
similar expressions. In addition, any statements concerning future
financial performance (including future revenues, earnings or growth
rates), ongoing business strategies or prospects, applicability, benefit
and use of our product and possible future actions, which may be provided
by management, are also forward-looking statements as defined by the Act.
Some of the factors that could significantly impact the forward-looking
statements in this press release include, but are not limited to: the
functionality of our product; a rejection of the Company's products and
technologies by the marketplace; and disputes as to the Company's
intellectual property rights. Forward-looking statements are based upon
current expectations and projections about future events and are subject to
risks, uncertainties, and assumptions about Technest Holdings, its
products, economic and market factors and the industries in which Technest
Holdings does business, among other things. These statements are not
guarantees of future performance and Technest Holdings has no specific
intention to update these statements. More detailed information about those
factors is contained in Technest Holdings' filings with the Securities and
Exchange Commission.
http://www.sec.gov
Pursuant to an agreement beginning May 15, 2007, Consulting For Strategic
Growth1, Ltd. ("CFSG1") provides Technest Holdings, Inc. with consulting,
business advisory, investor relations, public relations and corporate
development services. Independent of CFSG1's receipt of cash compensation
from Technest Holdings, CFSG1 may choose to purchase the company's common
stock and thereafter liquidate those securities at any time it deems
appropriate to do so.
TECHNEST HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months
Ended
March 31,
--------------------------
2007 2006
------------ ------------
Revenues $ 17,945,067 $ 17,855,160
Cost of Revenues (including $278,916 and $-0-
to related parties in the three months ended
March 31, 2007 and 2006, respectively) 14,018,027 14,618,076
------------ ------------
Gross Profit 3,927,040 3,237,084
------------ ------------
Operating Expenses:
Selling, general and administrative
(including $250,000 to related parties in
the three months ended March 31, 2007 and
2006, respectively) 3,733,213 3,586,344
Research and development 16,241 --
Amortization of intangible assets 446,512 446,512
------------ ------------
Total Operating Expenses 4,195,966 4,032,856
------------ ------------
Operating Loss (268,926) (795,772)
------------ ------------
Other Expenses (Income), Net
Interest expense 658,245 763,469
Other income, net (7,077) (35,633)
------------ ------------
Total Other Expenses, Net 651,168 727,836
------------ ------------
Net Loss Applicable to Common Stockholders $ (920,094) $ (1,523,608)
============ ============
Basic and diluted Income (Loss) Per Common
Share $ (0.05) $ (0.10)
============ ============
Weighted Average Number of Common Shares
Outstanding - Basic and Diluted 16,815,136 15,677,163
============ ============
TECHNEST HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Nine Months
Ended
March 31,
--------------------------
2007 2006
------------ ------------
Revenues $ 53,665,577 $ 55,141,077
Cost of Revenues (including $623,482 and $-0-
to related parties in the nine months ended
March 31, 2007 and 2006, respectively) 42,665,001 44,845,200
------------ ------------
Gross Profit 11,000,576 10,295,877
------------ ------------
Operating Expenses:
Selling, general and administrative
(including $750,000 to related parties
in the nine months ended March 31, 2007
and 2006, respectively) 11,197,647 9,897,578
Research and development 49,858 138,448
Amortization of intangible assets 1,339,535 1,339,634
------------ ------------
Total Operating Expenses 12,587,040 11,375,660
------------ ------------
Operating Loss (1,586,464) (1,079,783)
------------ ------------
Other Expenses (Income), Net
Interest expense 3,120,036 2,359,289
Derivative income -- (25,046,489)
Other income, net (41,003) (118,811)
------------ ------------
Total Other Expenses (Income), Net 3,079,033 (22,806,011)
------------ ------------
Net Income (Loss) Applicable to Common
Stockholders $ (4,665,497) $ 21,726,228
============ ============
Basic Income (Loss) Per Common Share $ (0.28) $ 1.45
============ ============
Diluted Income (Loss) Per Common Share $ (0.28) $ 1.36
============ ============
Weighted Average Number of Common Shares
Outstanding - Basic 16,423,488 15,034,540
============ ============
- Diluted 16,423,488 15,997,985
============ ============
TECHNEST HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 2007
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 1,648,919
Accounts receivable 9,545,217
Unbilled receivables 1,146,351
Restricted cash 250,000
Inventory 7,450
Prepaid expenses and other current assets 140,029
------------
Total Current Assets 12,737,966
------------
Property and Equipment - Net of accumulated depreciation and
amortization of $983,055 492,025
------------
Other Assets
Deposits 78,737
Deferred financing costs - Net of accumulated amortization
of $278,857 1,005,152
Definite-lived intangible assets -
Net of accumulated amortization of $4,825,060 10,212,995
Goodwill 14,035,551
------------
Total Other Assets 25,332,435
------------
$ 38,562,426
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 10,047,535
Accrued expenses and other current liabilities 3,814,557
Due to related party 363,297
Revolving line of credit 4,415,184
Current portion of long-term debt 1,828,364
------------
Total Current Liabilities 20,468,937
Non Current Liabilities
Long-term debt, less current portion and discount of
$171,873 2,072,315
------------
Total Liabilities 22,541,252
------------
Commitments and Contingencies
Stockholders' Equity
Series A Convertible Preferred Stock - $.001 par value;
150 shares authorized; 64,325 shares issued and
outstanding (preference in liquidation of $64,325 at
March 31, 2007) --
Series C Convertible Preferred Stock - $.001 par value;
1,149,425 shares authorized; 632,185 issued and
outstanding (preference in liquidation of $1,375,002 at
March 31, 2007) 632
Common stock - par value $.001 per share; 500,000,000
shares authorized; 16,878,451 shares issued and
outstanding 16,877
Additional paid-in capital 35,907,101
Accumulated deficit (19,903,436)
------------
Total Stockholders' Equity 16,021,174
------------
$ 38,562,426
============
Contact Information: Contact:
Stanley Wunderlich
Consulting for Strategic Growth 1
(800) 625-2236
(516) 729-3714
swunderlich@cfsg1.com