DPAC Technologies Reports Financial Results for the Second Quarter of Fiscal Year 2006.HUDSON, Ohio Hudson is a city in Summit County, Ohio, United States. The population was 22,439 at the 2000 census, making it the 389th largest city in the midwest. This number rose to 23,154 at the 2006 census estimates [1]. -- DPAC DPAC Denver Performing Arts Complex (CO, USA aka: DCPA) DPAC Deferred Policy Acquisition Costs (insurance) DPAC District Parent Advisory Committee DPAC Dover Partnership Against Crime Technologies Corp. (OTCBB OTCBB See OTC Bulletin Board (OTCBB). :DPAC), a leader in device networking Using an Ethernet LAN to interconnect sensors, instruments, machine tools, medical monitors, restaurant appliances, POS terminals and other devices. In the mid-1990s, Comtrol Corporation created the first "device server," which converts serial transmission to Ethernet, enabling and connectivity solutions, today reported results for its second quarter ended June 30, 2006. These results include the combined operations For the department of the British War Office during World War II, see . In the military, combined operations are operations conducted by forces of two or more allied nations acting together for the accomplishment of a single mission. See also
Second Quarter Operating Results For the second quarter of 2006, net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight were $3.5 million, up 36% from net sales of $2.6 million in the second quarter of 2005, and up 9% from net sales of $3.2 million in the first quarter of 2006. Net sales related to the Company's Device Connectivity products increased by $200,000, or 8%, and net sales related to the Company's Device Networking products, including the Airborne airborne /air·borne/ (ar´born) suspended in, transported by, or spread by air. airborne, adj carried through the air. In health care settings, viruses or bacteria may become airborne, e.g. (TM) wireless product line, increased by $733,000, or 685% over the quarter ended June 30, 2005. The Company reported an operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. of $97,000 as compared to $302,000 for the second quarter of 2005 and an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $52,000 for the first quarter of 2006. The Company's net loss for the current year second quarter totaled $296,000 as compared to net income of $92,000 for the prior year's second quarter, and a net loss of $246,000 for the first quarter of 2006. Total operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. incurred in the second quarter of 2006 of $1.5 million increased by $600,000 over the previous year period. The increase was the result of incremental costs Costs which are additional costs to the Service appropriations that would not have been incurred absent support of the contingency operation. See also financial management. , primarily personnel related, in Sales & Marketing of $126,000 and R&D of $112,000, incurred to support the Airborne wireless product line; amortization expense of $122,000 for intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. acquired in the merger; and an increase in General & Administrative expenses of $254,000. Interest expense of $382,000 for second quarter of 2006 included non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. totaling $219,000, for the amortization of deferred financing costs and the accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the of success fees and discount on the subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". . Additionally, the company recorded a non-cash charge of $163,000 for the accretion of the liability for warrants. Six Months Operating Results Net sales for the first six months of 2006 were $6.7 million, up 47% from net sales of $4.5 million in the same period of 2005. Net sales related to the Company's Device Connectivity products increased $928,000, or 22%, and net sales related to the Company's Device Networking products, including the Airborne wireless product line, increased by $1.2 million, or 470% over the six months ended June 30, 2005. The Company reported an operating profit of $45,000 as compared to $335,000 for the 2005 period. The Company's net loss for the current year period totaled $543,000 as compared to net income of $11,000 for the prior year period. Interest expense of $715,000 for the first six months of 2006 included non-cash charges totaling $393,000, for the amortization of deferred financing charges discounts and the accretion of success fees and discount on the subordinated debt. Additionally, the company recorded a non-cash charge of $164,000 for the accretion of the liability for warrants. Balance Sheet Summary At June 30, 2006, DPAC had total assets of $13.2 million, including cash and cash equivalents of $28,000. This compares to total assets of $7.6 million at December 31, 2005, which included $11,000 in cash and cash equivalents. As a result of the merger, the Company recorded goodwill and intangible assets of approximately $5.1 million. Comments Chief Executive Officer and President Steve Runkel commented, "I am pleased with our Q2 results. Our sequential revenue growth of 9% and year-over-year growth of 36% was in line with our objectives." Mr. Runkel continued, "We continue to make good progress in becoming a leading provider of industrial 802.11 solutions for the machine-to-machine (M2M M2M Machine-to-Machine (communication, mainly mobile) M2M Minutes to Midnight (Linkin Park album) M2M Mobile to Mobile (cellular phone) M2M Member-to-Member M2M Month to Month ) market as evidenced by the 31% sequential growth and 685% year-over-year growth of our Device Networking products. In addition, we continue to add design wins in the transportation, telematics Originally coined to mean the convergence of telecommunications and information processing, the term later evolved to refer to automation in automobiles. GPS navigation, integrated hands-free cellphones, wireless communications and automatic driving assistance systems all come under the and medical product markets." Conference Call Management of DPAC will host a conference call on August 10, 2006 at 10:00 a.m. Eastern/7:00 a.m. Pacific to discuss DPAC's financial performance for the second quarter of fiscal year 2006. The conference call will feature Chief Executive Officer Steve Runkel and Chief Financial Officer Steve Vukadinovich. To participate on the live call, please dial (866) 814-8485 toll free. A phone replay will be available for 72 hours (beginning two hours after the completion of the conference call) by dialing (888) 266-2081 and entering the Passcode 948711. About DPAC Technologies DPAC Technologies provides embedded Inserted into. See embedded system. 802.11 wireless networking See wireless network. products for machine-to-machine communication applications. DPAC's Airborne(TM) and AirborneDirect(TM) wireless products are used by major OEMs in the transportation, instrumentation instrumentation, in music: see orchestra and orchestration. instrumentation In technology, the development and use of precise measuring, analysis, and control equipment. and industrial control, homeland security Noun 1. Homeland Security - the federal department that administers all matters relating to homeland security Department of Homeland Security executive department - a federal department in the executive branch of the government of the United States , medical diagnostics (1) Software routines that test hardware components (memory, keyboard, disks, etc.). Diagnostics are often stored in ROM chips and activated on startup. (2) Error messages in a programmer's source code that refer to statements or syntax that the compiler or assembler and logistics markets to provide remote data collection and control. DPAC Technologies is based in Hudson, OH. The Company's web site address is www.dpactech.com. Information concerning DPAC is filed by DPAC with the SEC and is available on the SEC website, www.sec.gov. About QuaTech QuaTech, Inc., a wholly-owned subsidiary of DPAC, delivers high performance device networking & connectivity solutions to help companies improve their bottom line performance. QuaTech enables reliable machine-to-machine (M2M) communications via secure 802.11 wireless or traditional wired networks with industrial grade (hardened) embedded radios, modules, boards and external device servers and bridges. For local and mobile connections, QuaTech serial adapters A device that adds a serial port to a computer. It plugs into the USB port and contains one or more serial port sockets. See serial port. provide secure connectivity and port expansion via any interface option. Satisfied customers rely on our unique combination of performance and support to improve bottom line performance through real-time 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. remote monitoring (protocol) remote monitoring - (RMON) A network management protocol that allows network information to be gathered at a single computer. Whereas SNMP gathers network data from a single type of Management Information Base (MIB), RMON 1 defines nine additional MIBs that provide a & control, streamlined systems and lower total cost of ownership (TCO (1) (Total Cost of Ownership) The cost of using a computer. It includes the cost of the hardware, software and upgrades as well as the cost of the inhouse staff and/or consultants that provide training and technical support. See ROI. ). QuaTech markets its products through a global network of distributors, resellers, systems integrators An individual or organization that builds systems from a variety of diverse components. With increasing complexity of technology, more customers want complete solutions to information problems, requiring hardware, software and networking expertise in a multivendor environment. and original equipment manufacturers (OEMs). Founded in 1983, QuaTech is headquartered in Hudson, Ohio, and merged with DPAC Technologies, Inc. in February 2006. www.quatech.com. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release includes forward-looking statements. You can identify these statements by their forward-looking words such as "may," "will," "expect," "anticipate," "believe," "guidance," "estimate," "intend," predict," and "continue" or similar words or any connection with any discussion of future events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or or of management's current estimates or beliefs. Forward-looking statements are subject to risks and uncertainties, and therefore results may differ materially from those set forth in those statements. More information about the risks and challenges faced by DPAC Technologies Corp. is contained in the Securities and Exchange Commission filings made by the Company on Form S-4, 10-K, 10-Q or 10-QSB and 8-K. DPAC Technologies Corp. specifically disclaims any obligation to update or revise any forward-looking statements whether as a result of new information, future developments or otherwise. - tables to follow -
DPAC TECHNOLOGIES CORP.
Condensed Consolidated Balance Sheet Information
(Unaudited)
(In 000's)
June 30, December 31,
2006 2005
-------- ------------
CURRENT ASSETS:
Cash and cash equivalents $28 $11
Accounts receivable, net 1,842 1,330
Inventories 1,748 1,633
Prepaid expenses and other current assets 183 119
-------- ------------
Total current assets 3,801 3,093
Property, net 452 282
Goodwill and intangible assets 8,896 4,196
Other assets 56 -
-------- ------------
TOTAL $13,205 $7,571
======== ============
CURRENT LIABILITIES:
Notes payable $84 $-
Revolving credit facility 1,400 1,175
Current portion of long-term debt 310 1,125
Accounts payable 1,799 1,284
Accrued restructuring costs - current 555 -
Other accrued liabilities 501 591
-------- ------------
Total current liabilities 4,649 4,175
Deferred tax liability 31 324
Accrued restructuring costs 427 -
Long-term debt, net of current portion 4,516 1,773
Net stockholders' equity 3,582 1,299
-------- ------------
TOTAL $13,205 $7,571
======== ============
DPAC TECHNOLOGIES CORP.
Condensed Consolidated Statement of Income
(Unaudited)
(in 000's)
For the quarter ended: For the six months ended:
June 30, June 30,
---------------------- -------------------------
2006 2005 2006 2005
---------- ----------- ------------ ------------
REVENUE $3,496 $2,563 $6,690 $4,538
COST OF GOODS SOLD 1,929 1,391 3,668 2,448
---------- ----------- ------------ ------------
GROSS PROFIT 1,567 1,172 3,022 2,090
OPERATING EXPENSES
Sales and marketing 542 416 1,145 785
Research and
development 261 150 526 313
General and
administrative 544 290 1,064 629
Amortization of
intangible assets 123 14 164 28
Restructuring
charges - - 78 -
---------- ----------- ------------ ------------
Total operating
expenses 1,470 870 2,977 1,755
INCOME FROM
OPERATIONS 97 302 45 335
OTHER EXPENSES:
Interest expense 381 148 715 290
Accretion of
warrant liability 164 - 164 -
Miscellaneous
expense - 16 - 28
---------- ----------- ------------ ------------
TOTAL OTHER EXPENSES 545 164 879 318
---------- ----------- ------------ ------------
INCOME (LOSS) BEFORE
INCOME TAXES (448) 138 (834) 17
INCOME TAX
(PROVISION) BENEFIT 152 (46) 291 (6)
---------- ----------- ------------ ------------
NET INCOME (LOSS) $(296) $92 $(543) $11
========== =========== ============ ============
NET INCOME (LOSS) PER
SHARE:
Net Income (Loss) -
Basic and diluted $0.00 $0.00 ($0.01) $0.00
========== =========== ============ ============
WEIGHTED AVERAGE
SHARES OUTSTANDING:
Basic 92,775 42,016 75,885 42,016
========== =========== ============ ============
Diluted 92,775 65,339 75,885 65,339
========== =========== ============ ============
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