DecisionPoint Systems Reports Second Quarter 2011 Results
Significantly Improved Balance Sheet; Positive Cash Flow From Operations Reached
FOOTHILL RANCH, CA -- (MARKET WIRE) -- 08/23/11 -- DecisionPoint Systems, Inc. (OTCBB: DPSI), a leading enterprise mobility and RFID systems integrator, reported financial results for the second quarter ended June 30, 2011.
Highlights of Second Quarter Ended June 30, 2011:
- Completed reverse merger with Comamtech
- Exchanged $4.0 million of senior notes for convertible preferred stock
- Initiated the integration of CMAC
- Improved Professional Services revenue mix
- Generated $0.2 million in operating cash flow
- Shareholder's equity improved by $5.1 million as of June 30, 2011 at $2.2 million, versus $(2.9) million as of December 31, 2010 reflecting a major benefit of the Comamtech merger and the senior debt to equity exchange
Revenue in the second quarter of 2011 was $13.2 million compared to $13.3 million in the same period a year ago. Softer revenue in the company's retail division due to certain product availability issues and general economic issues was partially offset by the revenue contribution of CMAC, which was acquired by DecisionPoint on December 31, 2010.
Gross profit in the second quarter of 2011 was $2.7 million, compared to $2.5 million in the same period of 2010. Gross profit margin was 20.2%, compared to 19.0% in the same period a year ago. Reduced costs coupled with improved revenue mix of professional services positively impacted the company's gross profit.
Selling, general and administrative expenses in the second quarter of 2011 were $3.5 million, compared to $2.5 million in the same period a year ago. The year-over-year increase was primarily due to the additional costs and personnel related to the integration of the acquisition of CMAC. Included in selling, general and administrative expenses for the second quarter of 2011 were one-time expenses of $0.1 million related to the Comamtech merger and debt conversion.
Loss from operations in the second quarter was $(0.8) million, compared to operating income of $43,000 for the same period a year ago. Net loss for the second quarter of 2011 was $(3.9) million, or $(0.83) per share, compared to a net loss of $(0.9) million, or $(0.27) per share, in the same period a year ago. Included in the net loss for the second quarter of 2011 was a one-time, non-cash expense for debt extinguishment of $(2.6) million.
Revenue for the six months ended June 30, 2011 was $26.0 million, compared to $24.4 million in the year ago period. Gross profit was $5.0 million for the six months ended June 30, 2011, compared to $4.6 million for the six months ended June 30, 2010. Gross profit margin was 19.2%, compared to 18.7% in the same period a year ago. Selling, general and administrative expenses were $7.0 million for the six months ended June 30, 2011, compared to $4.9 million for the six months ended June 30, 2010. Net loss for the first six months of 2011 was $(5.5) million, or $(1.23) per share, compared to a net loss of $(2.1) million, or $(0.67) per share, in the same period a year ago. Included in the net loss for the first six months of 2011 was a one-time, non-cash expense for debt extinguishment of $(2.6) million.
"With the completion of both the reverse merger and equity conversion during the quarter, our capital structure has been greatly improved and our equity base strengthened, providing us with a solid foundation from which to pursue our strategic goals," said Nicholas Toms, CEO of DecisionPoint.
"During the second quarter, growth in our field mobility vertical was masked by order delays in our retail division as customers slowed down their approval processes in response to uncertain economic conditions. In addition, revenue growth for the second quarter was held back by temporary equipment shortages and the ongoing transition in CMAC's revenue recognition to accrual accounting from cash accounting," added Toms. "Since the start of the third quarter the equipment shortages have abated and we have begun fulfilling orders held back in the second quarter. We also expect the full benefit of the CMAC acquisition to be realized in the third quarter as we complete the change in revenue recognition.
"Our Grapevine 'Always On' worldwide push-to-talk system continues to gain traction in the marketplace and we're pleased with the pace of recurring revenue generation. Grapevine version 1.2 was released during the second quarter, which builds on the user experience by providing reduced wireless data usage and battery consumption while idle, faster status updates and compatibility with upcoming BlackBerry and Android releases. During the quarter we also released a series of new products including a state-of-the-art product providing a complete long haul trucking management system.
"At the half-way mark of the year, bookings are running ahead of last year and we are rapidly expanding our pipeline of opportunities in the field mobility and logistics verticals where demand for customized enterprise mobile solutions remains strong. As a result we expect to achieve revenue for the seasonally stronger second half of 2011 that is substantially greater than the first half and to remain cash flow positive for the rest of the year. Increasing traction in field mobility along with new product introductions support our conviction that we that we will reach $100 million in revenue and sustained profitability in 2012."
Forward-Looking Statements
Under The Private Securities Litigation Reform Act of 1995: Except for historical information contained herein, the statements in this news release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause a company's actual results, performance and achievement in the future to differ materially from forecasted results, performance, and achievement. These risks and uncertainties are described in the Company's periodic filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events or changes in the Company's plans or expectation.
About DecisionPoint Systems, Inc.
DecisionPoint Systems, Inc. (OTCBB: DPSI) delivers improved productivity and operational advantages to its clients by helping them move their business decision points closer to their customers. They do this by making enterprise software applications accessible to the front-line worker anytime, anywhere. DecisionPoint utilizes the latest wireless, mobility, and RFID technologies. For more information on DecisionPoint Systems visit www.decisionpt.com/news.php.
DECISIONPOINT SYSTEMS, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
June 30, December 31,
2011 2010
------------ ------------
ASSETS (Restated)
Current assets
Cash $ 232,399 $ 315,169
Accounts receivable, net 8,149,116 12,575,597
Note receivable 100,000 -
Other receivable 1,491,789 -
Inventory, net 794,616 898,465
Deferred costs 3,195,037 3,562,654
Deferred tax assets 55,000 55,000
Prepaid expenses 625,136 457,863
------------ ------------
Total current assets 14,643,093 17,864,748
Property and equipment, net 102,173 100,070
Other assets, net 244,754 173,465
Deferred costs, net of current portion 1,156,233 1,414,851
Goodwill 5,538,466 5,508,864
Intangible assets, net 2,471,500 2,729,000
------------ ------------
Total assets $ 24,156,219 $ 27,790,998
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable $ 8,038,394 $ 10,364,368
Accrued expenses and other current liabilities 3,126,111 5,368,060
Line of credit 843,797 4,364,221
Current portion of debt, net of discount 2,453,030 1,000,000
Unearned revenue 5,906,292 5,714,434
------------ ------------
Total current liabilities 20,367,624 26,811,083
Long term liabilities
Unearned revenue, net of current portion 1,564,448 1,850,440
Debt, net of current portion and discount - 1,940,000
Interest payable 60,000 60,000
------------ ------------
Total liabilities 21,992,072 30,661,523
------------ ------------
Commitments and contingencies
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $0.001 par value, 10,000,000
shares authorized, 500,000 designated Series
A Cumulative Convertible Preferred, 500,000
designated Series B Cumulative Convertible
Preferred and 5,000,000 designated Series C
Cumulative Convertible Preferred, 1,816,289
and 400,955 shares issued and outstanding,
including cumulative preferred dividends of
$184,938 and $130,738, and with a liquidation
preference of $10,598,052 and $1,485,738,
respectively 6,069,003 1,485,738
Common stock, $0.001 par value, 100,000,000
shares authorized, 8,039,784 and 5,080,970
shares issued and outstanding, respectively 8,040 5,081
Additional paid-in capital 14,181,035 8,238,995
Accumulated deficit (17,132,748) (11,576,776)
Unearned ESOP shares (961,183) (1,023,563)
------------ ------------
Total stockholders' equity (deficit) 2,164,147 (2,870,525)
------------ ------------
Total liabilities and stockholders' equity
(deficit) $ 24,156,219 $ 27,790,998
============ ============
DECISIONPOINT SYSTEMS, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months ended Six Months ended
June 30, June 30,
------------------------ ------------------------
2011 2010 2011 2010
----------- ----------- ----------- -----------
(Restated) (Restated)
Net sales $13,223,806 $13,288,041 $26,024,764 $24,360,304
Cost of sales 10,558,355 10,760,615 21,035,704 19,796,583
----------- ----------- ----------- -----------
Gross profit 2,665,451 2,527,426 4,989,060 4,563,721
Selling, general and
administrative expense 3,499,674 2,484,501 6,992,649 4,919,866
----------- ----------- ----------- -----------
Operating income (loss) (834,223) 42,925 (2,003,589) (356,145)
----------- ----------- ----------- -----------
Other expense:
Interest expense, net 477,049 493,588 772,616 963,398
Loss on debt
extinguishment 2,641,059 - 2,641,059 -
Other expense
(income), net (73,328) 388,294 76,786 708,979
----------- ----------- ----------- -----------
Total other expense 3,044,780 881,882 3,490,461 1,672,377
----------- ----------- ----------- -----------
Net loss before income
taxes (3,879,003) (838,957) (5,494,050) (2,028,522)
Provision for income
taxes 94 11,091 7,722 52,567
----------- ----------- ----------- -----------
Net loss (3,879,097) (850,048) (5,501,772) (2,081,089)
Cumulative preferred
stock dividends (27,100) (19,500) (54,200) (39,000)
----------- ----------- ----------- -----------
Net loss attributable to
common shareholders $(3,906,197) $ (869,548) $(5,555,972) $(2,120,089)
=========== =========== =========== ===========
Net loss per share -
Basic and diluted $ (0.83) $ (0.27) $ (1.23) $ (0.67)
=========== =========== =========== ===========
Weighted average shares
outstanding -
Basic and diluted 4,698,460 3,213,497 4,517,238 3,184,217
=========== =========== =========== ===========
Company Contact: Donald W. Rowley Chief Financial Officer DecisionPoint Systems, Inc. Tel 949-465-0065 x105 Investor Relations Contacts: Stephanie Prince/Jody Burfening Lippert/Heilshorn & Associates T: 212-838-3777 sprince@lhai.com
Source: DecisionPoint Systems, Inc.
Released August 23, 2011