DPAC Technologies Reports Financial Results for the Third Quarter of Fiscal Year 2007.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 third quarter ended September 30, 2007. 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
Third Quarter Operating Results For the third quarter of 2007, 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 of $3.1 million decreased 20% from net sales of $3.9 million in the third quarter of 2006, and increased 7% from net sales of $2.9 million in the second quarter of 2007. Net sales related to the Company's Device Connectivity products decreased by $904,000, or 32%, and net sales related to the Company's Device Networking products, including the Airborne wireless product line, increased by $131,000, or 12% over the quarter ended September 30, 2006. 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 $272,000 as compared to $347,000 for the third quarter of 2006 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 for the second quarter of 2007. The Company reported a net profit of $71,000 as compared to $39,000 for the prior year's third quarter and a net loss of $382,000 for the second quarter of 2007. 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 third quarter of 2007 of $1.1 million decreased by $246,000, or 18%, from the previous year period. The decrease was due primarily to decreases in sales and marketing expenses of $207,000 and G&A expenses of $103,000, as the Company continued to integrate operating departments since the date of the Merger. Additionally, the company recorded a non-cash gain of $163,000 in the current year period compared to $109,000 in the prior year quarter for the fair value adjustment for the liability for warrants. An income tax provision of $34,000 was recorded in the third quarter of 2006 and no income tax provision was recorded in the current year period as a full valuation allowance was recorded against deferred tax assets in the fourth quarter of 2006. Nine Months Operating Results Net sales of $8.8 million for the first nine months of 2007 decreased by 16% from net sales of $10.6 million for the same period of 2006. Net sales related to the Company's Device Connectivity products decreased $2.7 million, or 32%, while net sales related to the Company's Device Networking products, including the Airborne wireless product line, increased by $923,000, or 40% over the nine months ended September 30, 2006. The Company reported an operating profit of $58,000 as compared to $392,000 for the 2006 period. The Company's net loss for the current year period totaled $850,000 compared to $504,000 for the prior year period. Interest expense of $1.1 million for the first nine months of 2007 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 $594,000, for the amortization of deferred financing charges and the accretion 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". . An income tax benefit of $257,000 was recorded in the 2006 period and no income tax benefit was recorded in the current year period as a full valuation allowance was recorded against deferred tax assets in the fourth quarter of 2006. Balance Sheet and Liquidity Summary At September 30, 2007 we had a cash balance of $257,000 and a deficit in working capital of $3,583,000. This compares to a cash balance of $38,000 and a deficit in working capital of $2,851,000 at the end of fiscal year 2006. Additionally, the Company has Bank loan balances of approximately $2,245,000 which are due and payable on November 30, 2007 and a subordinated debt obligation of approximately $2,000,000 which was due and payable on August 31, 2007. The amount of cash the Company can generate from future operations will not be sufficient to satisfy the debt obligations. The Company's ability to continue its operations is dependant upon Adj. 1. dependant upon - determined by conditions or circumstances that follow; "arms sales contingent on the approval of congress" contingent on, contingent upon, dependant on, dependent on, dependent upon, depending on, contingent its ability to raise capital through debt or equity financing Equity Financing The act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests in the corporation. in order to meet its debt obligations and working capital needs. Management is currently engaged in seeking additional funds to satisfy the debt obligations either through an equity capital raise or through new debt financing Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay , or a combination of both. We may also seek to merge the Company with another entity or look to sell certain assets of the Company. Although management believes that efforts currently underway to obtain additional funding can be successful, there can be no assurance that additional financing will become available on terms favorable to the Company, if at all. Comments Chief Executive Officer and President Steve Runkel commented, "Our third quarter results reflect our efforts to bring our expenses in alignment with our revenue. Our operating expenses were down over 18% compared to Q3, 2006 and are down approximately 15% on a year to date basis. This, along with stability in revenue from our Device Connectivity products on a sequential basis and continued growth in revenue from our Device Networking products, resulted in income from operations of $272K in Q3 and $58K on a year to date basis." Mr. Runkel continued: "Revenue from our Device Connectivity products, while down over the same period in 2006, grew 5% sequentially over the second quarter of 2007. The revenue shortfall from these products compared to 2006 reflects a drop in orders from several long standing OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and customers who serve the US based retail banking markets. Our products remain specified as part of the solution for several of these projects, though order levels have been impacted by issues associated with that market. We also introduced a new line of Express Card products in Q3 which will address the device connectivity requirements for new laptops." "Additionally, revenue from our Device Networking products grew 10% sequentially over the second quarter of 2007 and is up 40% on a year to date basis. We began production shipments of a custom 802.11 a/b/g product for a major medical products company in Q3. We also introduced the WLRA WLRA World Leisure and Recreation Association WLRA Wafer-Level Reliability Assessment embedded 802.11 a/b/g radio module based on the RF design of this customer product. This dual band radio module is well suited for applications that need isolation from interference within the crowded 2.4GHz frequency." About DPAC Technologies DPAC Technologies provides embedded 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 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 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 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 ) 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 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 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 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 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. [TABLE OMITTED] [TABLE OMITTED] |
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