By Calvin Biesecker
Cross Match Technologies yesterday said it has lowered the expected price range of its forthcoming initial public offering (IPO), suggesting that net proceeds from the sale of stock could be about $23 million less than planned when the company refiled to go public last month.
Under the amended filing with the Securities and Exchange Commission (SEC), Cross Match expects the public offering price to be between $11 and $13 per share, with slightly more than 8.3 million shares being offered. That means at $12 per share, the company expects net proceeds of $91.8 million. Last month Cross Match had pegged the planned offering price at between $13 and $17 per share, which would have generated net proceeds of about $115.4 million (Defense Daily, Oct. 18).
Cross Match had originally filed to go public at between $14 and $16 per share in May but temporarily shelved those plans due to market volatility in August.
Adjustments to the initial value of a public stock offering are not uncommon and Cross Match could still decide to offer its stock at $13 per share, matching the low end of October amended filing. A secondary offering of about 1.1 million shares by one of the company’s shareholders was withdrawn in this week’s filing with the SEC.
If Cross Match goes through with its IPO, the company will be the only pure-play biometric solutions provider. L-1 Identity Solutions [ID], the largest of the identity solutions providers, also has an intelligence services business that makes up around half of the company’s sales.
Most of Cross Match’s sales, about 80 percent, come from the sale of the company’s livescan digital fingerprinting devices. The company also has a small amount of revenue in facial recognition and a new iris capture device that is simple to use and will become part of its biometric jump kits it sells to the United States military.
Late last month Cross Match filed a prospectus with the SEC that outlined its growth strategy over the next five years. By 2011, the company hopes that its facial, iris, software, document readers, mobile, single finger, and multi-modal applications and services make up about 45 percent of sales, with livescan accounting for the remainder. The company believes its targeted market segments will grow 28 percent annually through 2011. Four segments targeted for investment are multi-modal biometrics, iris recognition, face recognition, and software.
Through the first half of 2007 Cross Match has narrowed its net losses from a year ago, losing just $302,000 versus $4.7 million. The company actually turned in a $1.2 million operating profit in the first half of this year versus a $3.3 million operating loss for the first half of 2006.
Sales through June of this year are up 29 percent to $46.9 million from $36.2 million a year ago.