DPAC Technologies Reports Results for Second Quarter of Fiscal Year 2005.
-- Memory Stacking and IDA operations closed, presented as
discontinued operations.
-- Reports $670,000 gain on sale of discontinued operations and
$488,000 restructuring charge to continuing operations.
-- Airborne products backlog increased to $230,000 at August 31,
2004.
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. (Nasdaq:DPAC), a technology company that provides embedded Inserted into. See embedded system. wireless networking See wireless network. and connectivity products, today reported results for its fiscal year 2005 second quarter, ended August 31, 2004. The Company's financial statements have been re-formatted to present the memory stacking product line and the industrial, defense and aerospace ("IDA Ida (ē`dä), city (1990 pop. 91,859), Nagano prefecture, central Honshu, Japan, on the Tenryu River. It is an agricultural market and railway junction. ") product line as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . Operating Results For the second fiscal quarter, revenue from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the was $223,000 as compared to revenue of $0 for the second quarter of the previous year, a period in which the wireless product line, which now constitutes the continuing operations of the Company, was still under development. The Company's net loss from continuing operations totaled $2.2 million, or $(0.09) per share, compared to a net loss from continuing operations for the prior year's second quarter of $0.8 million, or $(0.04) per share. The second quarter's operating results include a restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $488,000, primarily related to severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when of a former corporate officer and other overhead reductions. The previous year's net loss for the second quarter included a $498,000 income tax benefit, while the current quarter has no income tax expense or benefit. Discontinued operations realized a gain of $449,000, or $0.02 per share, on revenue of $2.6 million for the second quarter of fiscal year 2005. The gain from discontinued operations resulted primarily from a $670,000 gain on the sale of the intellectual property and inventory related to the Company's historical memory stacking operations, which were discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: in August 2004. In the prior year's second quarter, the loss from discontinued operations totaled $278,000, or $(0.01) per share, on revenue of $4.4 million. For the six-month period ended August 31, 2004, revenues from continuing operations totaled $623,000 as compared to $0 for the comparable prior-year period, a period in which the wireless product line was still under development. The net loss from continuing operations for the six-month period ended August 31, 2004 was $3.6 million, or $(0.16) per share, compared to a net loss of $1.5 million, or $(0.07) per share, for the same period a year ago. The net loss in the prior-year period included a $904,000 income tax benefit, while the current year's six-month period includes $573,000 in restructuring charges, primarily for severance costs, and includes no income tax expense or benefit. After taking into account the changes in restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). costs and tax effects, the remaining $0.6 million increase in net loss from continuing operations for the second quarter and six-month periods of fiscal year 2005 compared to the comparable prior year periods, is mostly a result of increases in spending on sales and marketing efforts to launch 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 as well as recruiting costs to obtain the management, sales and engineering personnel utilized in the Airborne(TM) operations. Since the Airborne(TM) product line is in the early stages of introduction to the 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 wireless connectivity market, revenues are currently composed primarily of development kits, prototype orders, pre-production quantities and non-recurring engineering Non-recurring engineering (NRE) refers to the one-time cost of researching, designing, and testing a new product. When budgeting for a project, NRE must be considered in order to analyze if a new product will be profitable. fees. The net loss from discontinued operations for the six months period ended August 31, 2004 was $506,000, or $(0.02) per share, compared to a net loss of $548,000, or $(0.03) per share for the comparable prior-year period. The results for the current year period include the gain of $721,000 on the sale of assets for both the memory stacking and IDA product lines. Balance Sheet Summary At August 31, 2004, DPAC had total assets of $11.5 million, including cash and cash equivalents of $4.6 million and assets related to discontinued operations of $1.2 million. This compares to total assets of $13.1 million at the Company's February February: see month. 29, 2004 year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. , with $4.5 million in cash and cash equivalents and assets related to discontinued operations of $3.0 million at that date. Working capital at August 31, 2004 was $3.7 million compared to $4.3 million at February 29, 2004. Comment and Outlook Kim Kim orphan wanders streets of India with lama. [Br. Lit.: Kim] See : Adventurousness Early, DPAC's Chief Executive Officer stated, "This quarter marked continued progress in expanding the customer base for our Airborne(TM) product. We enter our third fiscal quarter with a backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. of $230,000 in customer orders for Airborne(TM) and an opportunity pool of more than 100 customers who have purchased evaluation kits and expressed some level of interest in incorporating our module into their products. Included in that pool are 46 customers which we classify clas·si·fy tr.v. clas·si·fied, clas·si·fy·ing, clas·si·fies 1. To arrange or organize according to class or category. 2. To designate (a document, for example) as confidential, secret, or top secret. as 'design ins' or 'design wins', meaning they are actively engaged in design efforts aimed at incorporating Airborne(TM) into their product offerings. We are still in the phase of shipping evaluation kits and small prototype quantities to most of our customers, but as and when their design processes move through testing and product certification Product certification or product qualification is the process of certifying that a certain product has passed performance and/or quality assurance tests or qualification requirements stipulated in regulations such as a building code and nationally accredited test standards, , we expect those customers to begin to order initial production quantities to launch their new wirelessly-enabled products," continued Early. "While these OEM product design cycles can be quite long before resulting in production volumes, we're pleased with our progress of increasing the number of customers who are including DPAC in their new product designs. I am confident the customer activity to date demonstrates the need for our module and the validity of our design as a foundation for future growth in the machine-to-machine communications market." Conference Call and Webcast Management of DPAC will host a conference call today at 10:30 a.m. Pacific/1:30 p.m. Eastern to discuss DPAC's financial performance in the second quarter of fiscal year 2005. The conference call will feature Chief Executive Officer Kim Early and Chief Financial Officer Steve Vukadinovich. To participate on the live call, please dial 866-835-8906. A phone replay will be available for 48 hours (beginning two hours after the completion of the conference call) by dialing 888-266-2081 and entering the passcode 568852. About DPAC Technologies Located in Garden Grove, California Garden Grove is a city centrally located in northern Orange County, California, United States. As of 2004, the city population was 170,000 people. California State Route 22, also known as the Garden Grove Freeway, passes through the city from east to west. , DPAC Technologies provides embedded wireless networking and connectivity products for machine-to-machine communication applications. DPAC's 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. The Company's web site address is www.dpactech.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. Every statement herein that is not historic in nature is a forward-looking statement for purposes of the Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such statements are subject to risks and uncertainties, and therefore results may differ materially from those set forth in these statements. Factors that affect DPAC's business include, but are not limited to, that our Airborne(TM) products are new, that we sell to original equipment manufacturers for new product introductions by them, and that all of these are subject to risks and uncertainties regarding new product introductions such as uncertainty of market acceptance. Should revenues for our products increase more slowly than we currently anticipate, we may require additional financing. Such financing may not be available on favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. terms. 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 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , 10-Q 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 Balance Sheets
(Unaudited)
(in 000's)
August 31, February 29,
2004 2004
CURRENT ASSETS:
Cash and cash equivalents $4,601 $4,477
Accounts receivable, net 128 31
Inventories 79 37
Prepaid expenses 299 323
Current assets of discontinued operations 1,184 1,747
Total current assets 6,291 6,615
Property, net 248 264
Goodwill 4,529 4,529
Other assets 455 406
Non-current assets of discontinued
operations - 1,274
TOTAL $11,523 $13,088
CURRENT LIABILITIES:
Accounts payable $428 $336
Accrued compensation 277 217
Accrued restructuring costs - current 649 489
Other accrued liabilities 231 104
Current liabilities of discontinued
operations 1,005 1,192
Total current liabilities 2,590 2,338
Accrued restructuring costs 522 328
Non-current liabilities of discontinued
operations 639 361
Net stockholders' equity 7,772 10,061
TOTAL $11,523 $13,088
DPAC TECHNOLOGIES CORP.
Condensed Statement of Income
(Unaudited)
(in 000's)
For the quarter ended: For the six months ended:
August 31, August 31, August 31, August 31,
2004 2003 2004 2003
Net Sales - Continuing
Operations $223 $- $623 $-
Cost of sales 202 - 559 -
Gross profit 21 - 64 -
COSTS AND EXPENSES:
Selling, general and
administrative 1,324 909 2,395 1,679
Research and
development 384 415 698 731
Restructuring
charges 488 - 573 -
Total costs and
expenses 2,196 1,324 3,666 2,410
LOSS FROM OPERATIONS (2,175) (1,324) (3,602) (2,410)
INTEREST INCOME 8 13 15 30
LOSS BEFORE INCOME TAX
BENEFIT (2,167) (1,311) (3,587) (2,380)
INCOME TAX BENEFIT - 498 - 904
LOSS FROM CONTINUING
OPERATIONS $(2,167) $(813) $(3,587) $(1,476)
GAIN (LOSS) FROM
DISCONTINUED
OPERATIONS 449 (278) (506) (548)
NET LOSS $(1,718) $(1,091) $(4,093) $(2,024)
NET GAIN (LOSS) PER
SHARE:
Continuing Operations
- Basic and diluted ($0.09) ($0.04) ($0.16) ($0.07)
Discontinued
Operations - Basic
and diluted $0.02 ($0.01) ($0.02) ($0.03)
Net Loss - Basic and
diluted ($0.07) ($0.05) ($0.18) ($0.10)
Basic and diluted
shares 23,732 21,010 22,904 20,999
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