DPAC Technologies Reports Results for Third Quarter of Fiscal Year 2005.
-- Airborne wireless products revenue increases 50% sequentially over
second quarter.
-- Airborne products backlog increased to $900,000 at November
30, 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 third quarter, ended November November: see month. 30, 2004. The Company's financial statements have been reclassified 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 third 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 $334,000 as compared to revenues of $22,000 for the third quarter of the previous year, a period in which the wireless product line, which now constitutes the continuing operations of the Company, was still primarily under development. The Company's net loss from continuing operations totaled $1.4 million, or $(0.06) per share, compared to a net loss from continuing operations for the prior year's third quarter of $7.0 million, or $(0.33) per share. The previous year's net loss for the third quarter included a $5.7 million income tax provision, while the current quarter has no income tax expense or benefit. Discontinued operations realized a gain of $508,000, or $0.02 per share, on revenues of $869,000 for the third quarter of fiscal year 2005. This resulted from final close out shipments of stacking products and royalties. In the prior year's third quarter, the loss from discontinued operations totaled $446,000, or $(0.02) per share, on revenues of $4.3 million. For the nine-month period ended November 30, 2004, revenues from continuing operations totaled $957,000 as compared to $22,000 for the comparable prior-year period, a period in which the wireless product line was primarily still under development. The net loss from continuing operations for the nine-month period ended November 30, 2004 was $5.0 million, or $(0.22) per share, compared to a net loss of $8.4 million, or $(0.40) per share, for the same period a year ago. The net loss in the prior-year period included a $4.8 million income tax provision, while the current year's nine-month period includes $573,000 in restructuring charges 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. , primarily for 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 costs, and includes no income tax expense or benefit. Selling, general and administrative expenses increased by $1.0 million to $3.6 million for the nine-month period ended November 30, 2004 as compared to the same prior year period. The increase was 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 gain from discontinued operations for the nine-month period ended November 30, 2004 was $1,000, or $0.00 per share, compared to a net loss of $994,000, or $(0.05) 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 November 30, 2004, DPAC had total assets of $9.8 million, including cash and cash equivalents of $4.0 million and assets related to discontinued operations of $92,000. 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 November 30, 2004 was $2.6 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, "The 50% revenue increase from the second to the third quarter confirms the on-going Adj. 1. on-going - currently happening; "an ongoing economic crisis" ongoing current - occurring in or belonging to the present time; "current events"; "the current topic"; "current negotiations"; "current psychoanalytic theories"; "the ship's current position" progression of our customers through their product design cycles. During the third quarter, we increased our design wins to more than 60 customers who are in various stages of designing and utilizing our Airborne products. Our progress was also reflected in the substantial increase of our order 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. to $900,000 from $230,000 at the end of the previous quarter, though $600,000 of our backlog is not deliverable until the second half of calendar 2005. This kind of delivery timetable reflects the characteristic profile of an initial launch quantity for our customers' new products, anticipated to be followed by a demand for additional shipments as their products begin to obtain market acceptance." Mr. Early continued, "We're proud of the progress we are making in building our customer base and helping our customers through their design and certification processes and into initial production. The receipt of initial production orders from an increasing number of customers confirms our belief in the validity of the Airborne design and our value proposition. These events represent another significant milestone in the transformation of DPAC into a leader in machine-to-machine wireless communications wireless communications System using radio-frequency, infrared, microwave, or other types of electromagnetic or acoustic waves in place of wires, cables, or fibre optics to transmit signals or data. ." 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 third 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) 814-1914 toll free. A phone replay will be available for 48 hours (beginning two hours after the completion of the conference call) by dialing (888) 266-2081 or (703) 925-2533 and entering the Passcode 625937. 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 Forms 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.
DPAC Technologies Corp.
Condensed Balance Sheets
(Unaudited)
(in 000's)
November 30, February 29,
2004 2004
CURRENT ASSETS:
Cash and cash equivalents $4,001 $4,477
Accounts receivable, net 147 31
Inventories 207 37
Prepaid expenses 148 323
Current assets of discontinued operations 92 1,747
Total current assets 4,595 6,615
Property, net 273 264
Goodwill 4,529 4,529
Other assets 374 406
Non-current assets of discontinued operations - 1,274
TOTAL $9,771 $13,088
CURRENT LIABILITIES:
Accounts payable $327 $336
Accrued compensation 172 217
Accrued restructuring costs - current 580 489
Other accrued liabilities 279 104
Current liabilities of discontinued
operations 639 1,192
Total current liabilities 1,997 2,338
Accrued restructuring costs 384 328
Non-current liabilities of discontinued
operations 546 361
Net stockholders' equity 6,844 10,061
TOTAL $9,771 $13,088
DPAC TECHNOLOGIES CORP.
Condensed Statement of Income
(Unaudited)
(in 000's)
For the quarter For the nine
ended: months ended:
November 30, November 30,
2004 2003 2004 2003
Net Sales - Continuing Operations $334 $22 $957 $22
Cost of sales 221 19 780 19
Gross profit 113 3 177 3
COSTS AND EXPENSES:
Selling, general and
administrative 1,174 845 3,569 2,524
Research and development 388 477 1,086 1,208
Restructuring charges - - 573 -
Total costs and expenses 1,562 1,322 5,228 3,732
LOSS FROM OPERATIONS (1,449) (1,319) (5,051) (3,729)
INTEREST INCOME 10 16 25 46
LOSS BEFORE INCOME TAX BENEFIT (1,439) (1,303) (5,026) (3,683)
INCOME TAX PROVISION - 5,668 - 4,764
LOSS FROM CONTINUING OPERATIONS $(1,439) $(6,971) $(5,026) $(8,447)
GAIN (LOSS) FROM DISCONTINUED
OPERATIONS 508 (446) 1 (994)
NET LOSS $(931) $(7,417) $(5,025) $(9,441)
NET GAIN (LOSS) PER SHARE:
Continuing Operations - Basic and
diluted ($0.06) ($0.33) ($0.22) ($0.40)
Discontinued Operations - Basic
and diluted $0.02 ($0.02) ($0.00) ($0.05)
Net Loss - Basic and diluted ($0.04) ($0.35) ($0.22) ($0.45)
Basic and diluted shares 23,732 21,170 23,180 21,073
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