Dauphin Technology, Inc., Announces Fourth Quarter Results.Business Editors PALATINE Palatine, hill, Rome Palatine, hill: see Rome before Augustus and Roman Empire under Rome. Palatine, village, United States Palatine (păl`ətīn), village (1990 pop. , Ill.--(BUSINESS WIRE)--April 15, 2002 Dauphin Dauphin, town, Canada Dauphin (dô`fĭn), town (1991 pop. 8,453), SW Man., Canada, on the Vermilion River. It is the retail and distribution center for an agricultural, lumbering, and fishing area. Technology, Inc. (OTCBB OTCBB See OTC Bulletin Board (OTCBB). : DNTK) today announced net revenue for the fourth-quarter of 2001 was approximately $1,371,000, an increase of approximately $873,000 over net revenue in the fourth-quarter of 2000. The revenue increase is attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the sale of set-top boxes The cable TV box that sits on "top" of the TV "set," although it is often located several feet away in an equipment rack. The set-top box descrambles the premium channels and provides a tuner for the higher cable numbers that very old TVs did not support. to the Hellenic Telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. Organization S.A. (OTE OTE Chiefly Brit (esp. in job adverts) on target earnings: the minimum amount of money a salesman is expected to make OTE abbr (Comm) (= on-target earnings) → Einkommensziel nt ) in Greece Greece, Gr. Hellas or Ellas, republic (2005 est. pop. 10,668,000), 50,944 sq mi (131,945 sq km), SE Europe. It occupies the southernmost part of the Balkan Peninsula and borders on the Ionian Sea in the west, on the Mediterranean Sea in the south, on . Also included in the fourth quarter of 2001 are revenues from the Suncoast
service - work done by one person or group that benefits another; "budget separately for goods and services" of the Company's subsidiary, Advanced Digital Designs, Inc., decreased from approximately $469,000 in the fourth-quarter of 2000 to $176,000 in the fourth-quarter of 2001. The decrease in revenue of 62% is a result of the reduction in engineering projects available in the marketplace. Customers for the type of services have experienced layoffs and cutbacks within their own industries, and outside consulting is another area where companies reduced their costs. This decline has continued throughout the first quarter of 2002. Cost of sales in the fourth-quarter of 2001 includes the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of the remaining inventory associated with the Orasis. Cost of sales in the fourth-quarter of 2000 includes $1,950,000 of write down of inventory and adjustment to the net realizable carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. . Because of the above, gross loss decreased from $1,936,000 in the fourth-quarter of 2000 to $359,000 for the fourth-quarter of 2001. Revenue for the year ended December December: see month. 31, 2001 was approximately $2,620,000 as compared to net revenues of $860,000 in 2000. Revenues from the sale of products increased from $64,000 in 2000 to $1,274,000 in 2001. The significant increase is the result of the Company beginning shipment of its set-top box during the fourth quarter of 2001. Additionally, the Company recognized approximately $135,000 of revenues from its interactive cable provider subsidiary, Suncoast. These revenues are only for six months, since the Company acquired the net assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. of Suncoast on July July: see month. 1, 2001. Design service revenue increased from $796,000 in 2000 to $1,346,000 in 2001, an increase of 69%. Design service revenues in 2000 were for four and one-half months, since the date of acquisition of Advanced Digital Designs, Inc. on August 18, 2000. Design service revenues began declining during the second half of 2001, as customers began canceling projects and not beginning new ones. Cost of sales decreased from $2,376,000 in 2000 to $1,680,000 in 2001. Cost of sales in 2000 included a write down of obsolete inventory Obsolete Inventory Term that refers to inventory that is at the end of its product life cycle and has not seen any sales or usage for a set period of time usually determined by the industry. This type of inventory has to be written down and can cause large losses for a company. of $1,440,000 and a write down of inventory to its net realizable value Net realizable value (NRV) is a commonly used method of evaluating an asset's worth in the field of inventory accounting. NRV is part of GAAP rules that apply to valuing inventory, so as to not overstate or understate the value of inventory goods. of $510,000. Cost of sales for 2001 includes the costs of the set-top boxes sold, as well as a write down of obsolete inventory of $490,000. Cost of services increased from $500,000 in 2000 to $1,137,000 in 2001. Cost of services for 2000 are included only from the date of acquisition of Advanced Digital Designs, Inc., representing four and one-half months. Cost of services consist primarily of payroll and related employee benefits of the engineers performing the services. Gross profit for design services decreased from 37% in 2000 to 16% in 2001. The decline in gross profit is a result of the decline in revenues while cost of services did not decrease in proportion to the revenues. Selling, general and administrative expenses for fourth-quarter of 2001 include the operations of the Suncoast subsidiary as well as the operations of the branch office in Greece, whereas neither of these two operations existed in 2000. Selling, general and administrative expenses for the fourth- quarter of 2000 include expenses associated with the Comdex2000 trade show, advertising, expenses associated with exploring foreign markets and the charges to increase the reserve for bad debts reserve for bad debts See allowance for doubtful accounts. . All other selling, general and administrative expenses are comparable between the fourth quarter of 2001 and 2000. Selling, general and administrative expenses increased to approximately $4,742,000 for the year ended December 31, 2001 as compared to $3,630,000 for 2000. Selling, general and administrative expenses for 2000 consisted of professional fees and financial service expenses related to the private placement, salaries for administrative personnel, expenses for the common stock purchase agreement, administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. associated with the design services subsidiary, ADD and costs associated with exercising the drawdown Drawdown The peak to trough decline during a specific record period of an investment or fund. It is usually quoted as the percentage between the peak to the trough. Notes: . For the year 2001, selling, general and administrative costs were primarily expenses associated with the issuance of common stock for reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. pursuant to a personal guarantee, salaries for administrative and marketing personnel, expenses in establishing the operations of the Greek In desktop publishing, to display text in a representative form in which the actual letters are not discernible, because the screen resolution isn't high enough to display them properly. The software lets you set which font sizes should be greeked. branch office and expenses pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to the Suncoast subsidiary. Included in selling, general and administrative expenses for 2001 are the operations of the branch office in Greece, amounting to approximately $300,000. Also included in 2001 are six months of selling, general and administrative expenses of Suncoast, included since the date of acquisition. These approximated $490,000. Research and Development costs decreased by approximately $325,000 from approximately $999,000 in the fourth-quarter 2000 to approximately $674,000 in the fourth-quarter 2001. This is attributable to the completion of the development of the OraLynx(TM) set-top box in 2001. Research and Development costs increased to approximately $2,434,000 for the year ended December 31, 2001 as compared to $1,472,000 for 2000. Approximately 84% of Research and Development in 2001 consisted of costs associated with the development of the OraLynx(TM) set-top box, with approximately 16% for the development of the new version of the Orasis(R). Research and Development costs in 2000 were for the development of the OraLynx(TM) set-top box. For the year ended December 31, 2001, amortization of goodwill associated with the acquisition of Advanced Digital Designs, Inc. amounted to $1,100,000, whereas in 2000, only four and one-half months of amortization are included, which amounted to $412,500. Asset impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. and other losses for the year ended December 31, 2001 consisted of the write off of the remaining goodwill associated with the acquisition of Advanced Digital Designs, Inc. of $3,987,500 and $290,000 of an investment in non-marketable securities. During the fourth quarter of 2001 the Company determined that the set-top box design was completed and the design services business with outside customers was declining, therefore an impairment of the goodwill associated with the acquisition of ADD occurred. The Company revised its projections and determined that the projected results would not support the carrying value of the goodwill balance. In addition, the Company determined that the carrying value of its investment in non-marketable securities had been impaired See assistive technology. since the investment had 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: paying dividends in 2001 and due to the overall poor financial condition of the issuing company. Interest expense increased from $4,000 in the fourth-quarter 2000 to approximately $258,000 in the fourth-quarter of 2001. This increase is attributable to the amortization of the beneficial conversion feature associated with the Convertible Note in 2001. Interest expense increased to approximately $274,000 for the year ended December 31, 2001 from $68,000 for the year ended December 31, 2000. Interest on capital leases and other borrowings decreased from $68,000 to $22,000 because the outstanding balances on the capital leases and borrowings have decreased. Dauphin Technology, Inc., a Palatine, Illinois
Oldsmar's history dates to 1913 when automobile pioneer Ransom E. and Piraeus Piraeus, Greece: see Piraiévs. Piraeus City (pop., 2001: 175,697), port of Athens, Greece. The port and its “long walls,” fortified barriers connecting it with Athens, were completed in the mid-5th century BC. , Greece, develops and markets broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). communication products and hand-held hand-held also hand·held adj. Compact enough to be used or operated while being held in the hand or hands: a hand-held video camera. Adj. 1. , pen based computers. Certain matters discussed in this news release are forward-looking statement 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. involving certain risks and uncertainties including, without limitations, changes in product demand, the availability of products, change in competition, economic conditions, various risks due to changes in market conditions and other risks detailed in the Company's Securities and Exchange Commission filings and reports.
Dauphin Technology, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Year ended
Ended December 31, Ended December 31,
----------------- -----------------
2001 2000 2001 2000
---- ---- ---- ----
RESTATED
--------
NET SALES $ 1,194,971 $ 29,961 $ 1,274,045 $ 63,913
DESIGN SERVICE
REVENUE 176,451 468,860 1,346,162 795,924
--------- --------- --------- --------
TOTAL REVENUE 1,371,422 498,821 2,620,207 859,837
COST OF SALES 1,534,267 2,089,888 1,608,380 2,375,948
COST OF SERVICES 196,525 345,100 1,136,619 499,679
--------- --------- --------- ---------
Gross loss (359,370) (1,936,167) (124,792) (2,015,790)
SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES 1,407,304 897,535 4,742,028 3,630,199
RESEARCH AND
DEVELOPMENT
EXPENSE 673,866 998,980 2,434,006 1,472,093
AMORTIZATION OF
GOODWILL 275,000 275,000 1,100,000 412,500
ASSET IMPAIRMENT AND
OTHER LOSSES 4,277,500 - 4,277,500 -
WRITE OFF ASSETS NO
LONGER USED IN
BUSINESS 525,691 - 525,691 -
-------- --------- --------- ----------
Loss from
operations (7,518,731) (4,107,682) (13,204,017) (7,530,582)
INTEREST EXPENSE 257,663 4,170 274,407 67,753
INTEREST INCOME 15,165 30,331 226,064 83,356
-------- --------- --------- ----------
Loss before
income taxes (7,761,229) (4,081,521) (13,252,360) (7,514,979)
INCOME TAXES - - - -
-------- --------- --------- ----------
NET LOSS $(7,761,229) $ (4,081,521)$(13,252,360) $ (7,514,979)
========= ========= ========== =========
BASIC AND DILUTED
LOSS PER SHARE $ (0.12) $ (0.07) $ (0.21) $ (0.13)
========= ========= ========= =========
Weighted average number
of shares of common
stock
outstanding 64,041,413 61,234,736 63,147,476 58,711,286
Dauphin Technology, Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31, 2001 and 2000
----------------------------------------------------------------------
2001 2000
---- ----
RESTATED
CURRENT ASSETS:
Cash $ 725,364 $ 2,683,480
Accounts receivable-
Trade, net of allowance for bad debt of
$50,621 at December 31, 2001
and 2000 67,201 321,377
Employee receivables 3,248 21,590
Inventory, net of reserves for obsolescence
of $2,981,623 and $2,491,216 at December 31,
2001 and 2000 518,452 505,749
Prepaid expenses 37,883 20,794
------- ------
Total current assets 1,352,148 3,552,990
INVESTMENT IN RELATED PARTY - 290,000
PROPERTY AND EQUIPMENT, net of accumulated
depreciation of $475,899 and $1,127,040
at December 31, 2001 and 2000 1,824,935 1,477,787
ESCROW DEPOSIT 368,181 752,500
ASSETS NOT USED IN BUSINESS 75,017 -
INSTALLATION CONTRACTS, net of
accumulated amortization of $22,857
at December 31, 2001 297,143 -
GOODWILL, net of accumulated amortization of
$412,500 at December 31, 2000 - 5,087,500
--------- ---------
Total assets $ 3,917,424 $ 11,160,777
========== ==========
CURRENT LIABILITIES
Accounts payable $ 477,716 $ 290,474
Accrued expenses 103,792 80,433
Current portion of long-term debt 82,507 113,629
Customer deposits 7,741 53,244
---------- ----------
Total current liabilities 671,756 537,780
LONG-TERM DEBT 43,580 102,133
CONVERTIBLE DEBENTURES 1,153,197 -
--------- ----------
Total liabilities 1,868,533 639,913
COMMITMENTS AND CONTINGENCIES - -
SHAREHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 10,000,000
shares authorized but unissued - -
Common stock, $0.001 par value, 100,000,000
shares authorized; 64,059,813 shares issued
and outstanding at December 31, 2001 and
61,652,069 shares issued and outstanding at
December 31, 2000 64,061 61,653
Warrants to purchase 9,198,744 and
8,822,572 shares at December 31, 2001
and 2000 4,227,499 3,321,810
Paid-in capital 57,351,406 53,479,116
Accumulated deficit (59,594,075) (46,341,715)
------------ ------------
Total shareholders' equity 2,048,891 10,520,864
------------ ------------
Total liabilities and
shareholders' equity $ 3,917,424 $11,160,777
=========== ===========
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