DecisionPoint Systems Reports Results For The Quarter Ended September 30, 2016

Includes discussion of September 30, 2016 recapitalization

IRVINE, Calif., Nov. 30, 2016 /PRNewswire/ -- DecisionPoint™ Systems, Inc. (Other OTC: DPSI), a leading provider and integrator of Enterprise Mobility and Wireless Applications solutions, today reported its unaudited financial results for the third quarter and nine months ended September 30, 2016. The third quarter and nine month results are reported for continuing operations only, as the recapitalization which was approved by stockholders September 30, 2016 created a new equity structure that eliminated significant preferred stock overhang, preferred stock dividend obligations and other expenses and obligations. Condensed tables reporting operating results for the first quarter ended March 31, 2016 and the second quarter ended June 30, 2016 are appended to this announcement as well.

For the three months ended September 30, 2016, revenues were $8.0 million with net income from continuing operations of $136,000, as compared to revenues of $8.0 million and net income from continuing operations of $53,000 in the comparable quarter of 2015. Gross profit margin ticked up to 20.2% for the quarter, as compared to 19.1% in the third quarter of the previous year. Adjusted EBITDA for the quarter ended September 30, 2016 was $223,000, as compared to $77,000 for the same period of the prior year.

For the nine months ended September 30, 2016, revenue was $22.4 million with net income from continuing operations of $339,000, as compared to revenue of $26.5 million and a net loss from continuing operations of $405,000 in the comparable nine months of 2015, an improvement year-to-year of almost $750,000. Adjusted EBITDA for the nine months ended September 30, 2016 was $658,000, as compared to $84,000 for the same quarter of the prior year. A reconciliation of EBITDA and adjusted EBITDA to our GAAP financial measures is provided in the tables appended to this announcement.

CEO Steve Smith commented, "We were pleased with our results in the third quarter, both on the top and bottom line. This was a breakthrough quarter for DecisionPoint, as our profitability picture continues to improve. Going forward, we anticipate that an expanding top line, coupled with the culmination of our recapitalization efforts, will improve operating results in the year ending 2016 and on into 2017. It was good to see the gross profit margin inch up this quarter after several quarters of tightening. Most of all, it is good to see our new balance sheet and clean capital structure. We have shed a heavy burden of expense that affected the holders of our common stock, including about $10 million per year of dividends due on the four series of our old preferred stock, which have now been completely converted into common stock.

"I am pleased to say that our customer base is solid, due to our quality products and services and the excellent relationships that our team has developed with our customers. We believe we have the best mobility solutions in the business," Mr. Smith added.

CFO Michael Roe commented, "Our dramatically simplified, recapitalized balance sheet as of September 30, 2016 reflects the previously outstanding preferred stock offerings which have been converted into common stock. At September 30, 2016 there are 6,006,980 shares of common stock issued and outstanding. Importantly, our cash on hand at September 30, 2016 was $2.6 million, compared to $821,000 as of December 31, 2015. Starting on October 1, 2016, we are out from under the preferred stock dividend obligations which had put us in the position of further diluting our shareholder base through payment-in-kind (or "PIK") dividends.

"We have also eliminated our convertible debt. The remaining term debt on the balance sheet is from our new revolving credit line, which carries much more favorable terms than our previous credit line, and restructured term debt from a Canadian bank. For the most part, our cash flow now follows our EBITDA which, although it is not a GAAP measurement, is very useful in managing the company's cash flow. We are confident that between our cash on hand, our ability to generate operating cash flow, and our availability on the revolving credit line, we have the liquidity we need to support our organic growth for the foreseeable future. Our EBITDA has been improving over the last several quarters, and we expect that trend to continue, however we are planning on making investments in our sales and marketing departments, which we expect will drive growth in future years," Mr. Roe said.

About DecisionPoint Systems, Inc.

DecisionPoint Systems, Inc. delivers improved productivity and operational advantages to its clients by helping them move their business decision points closer to their customers. We do this by making enterprise software applications accessible to the front-line worker anytime, anywhere. DecisionPoint utilizes all the latest wireless, mobility, and RFID technologies. For more information about DecisionPoint Systems, Inc., visit www.decisionpt.com.

Forward-Looking Statements

Except for historical information contained herein, the statements in this news release are forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties, which may cause a company's actual results, performance and achievements in the future to differ materially from forecasted results, performance, and achievements. The Company undertakes no obligation to publicly release the results of any revisions to its forward-looking statements to reflect events or circumstances after the date hereof, including without limitation unanticipated events or changes in the Company's plans or expectations.

DecisionPoint™ Systems, Inc.
Michael Roe
Chief Financial Officer
(949) 465-0065

DresnerAllenCaron
Joe Allen
212-691-8087
jallen@dresnerallencaron.com

DECISIONPOINT SYSTEMS, INC. Unaudited Condensed Consolidated Balance Sheets (In thousands, except share and per share data)

			September 30,	December 31,
			2016	2015
ASSETS

Current assets
	Cash		$ 2,635	$ 821
	Accounts receivable, net		4,633	4,751
	Inventory, net		321	307
	Deferred costs		1,997	2,234
	Prepaid expenses and other current assets		189	28
	Assets of business unit held for sale		-	32

		Total current assets	9,774	8,173

Property and equipment, net			153	169
Other assets, net			22	22
Deferred costs, net of current portion			744	970
Goodwill			5,304	5,304
Assets of business unit held for sale			-	6

		Total assets	$ 15,997	$ 14,644


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities
	Accounts payable		$ 5,151	$ 7,019
	Accrued expenses and other current liabilities		1,162	1,690
	Lines of credit		2,987	3,154
	Current portion of debt		371	379
	Due to related parties		116	215
	Unearned revenue		2,970	3,102
	Liabilities related to business unit held for sale		62	1,880

		Total current liabilities	$ 12,820	$ 17,439

DECISIONPOINT SYSTEMS, INC. Unaudited Condensed Consolidated Balance Sheets (In thousands, except share and per share data)

			September 30,	December 31,
			2016	2015

Long-term liabilities
	Unearned revenue, net of current portion		963	1,355
	Debt, net of current portion and discount		1,179	-
	Deferred tax liabilities		25	29
	Warrant liability		-	78
	Other long-term liabilities		-	6
	Liabilities related to business unit held for sale		153	152

		Total liabilities	15,141	19,059

STOCKHOLDERS' EQUITY (DEFICIT)

	Cumulative Convertible Preferred stock, $0.001 par value, 10,000,000 shares authorized, 0 and 2,236,571 shares issued and outstanding, including cumulative and imputed preferred dividends of $0 and $2,403 and with a liquidation preference of $0 and $19,710, at September 30, 2016 and December 31, 2015, respectively		-	14,123
	Common stock, $0.001 par value, 100,000,000 shares authorized, 6,006,980 and 12,883,446 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively

			6	13
	Additional paid-in capital		34,717	17,262
	Treasury stock, 153,883 shares of common stock		-	(205)
	Accumulated deficit		(34,154)	(35,646)
	Unearned ESOP shares		-	(331)
	Accumulated other comprehensive income (loss)		287	369

		Total stockholders' equity (deficit)	856	(4,415)

		Total liabilities and stockholders' equity	$ 15,997	$ 14,644

DECISIONPOINT SYSTEMS, INC. Unaudited Condensed Consolidated Statements of Operations (In thousands, except share and per share data)

			Three months ended March 31,		Three months ended June 30,
			2016	2015	2016	2015


Net sales			$ 6,277	$ 9,393	$ 8,124	$ 9,109

Cost of sales			5,040	7,415	6,523	7,340

Gross profit			1,237	1,978	1,601	1,768

Selling, general and administrative expense			1,379	2,215	1,084	1,940

Operating (loss) income			(142)	(237)	517	(171)

Other expense (income):
	Interest expense		86	108	137	106
	Fair market value adjustment of warrant liability		(63)	79	18	(311)
	Other expense (income), net		60	(6)	(66)	(6)
		Total other expense (income)	83	180	89	(211)

(Loss) income from continuing operations, before income taxes			(225)	(417)	428	40

Provision for income taxes			-	17	-	63

Net (loss) income from continuing operations			(225)	(434)	428	(23)

Discontinued operations:
	Income on sale of business unit held for sale, net of tax		472	-	-	-
	Loss on sale of discontinued operations, net of tax		-	-	-	(89)
	Income (loss) from business unit held for sale, net of tax		27	(107)	(2)	(3,288)
	Loss from discontinued operations, net of tax		-	(38)	-	(48)
		Net (loss) income	275	(580)	426	(3,448)

Cumulative and imputed Series A and B preferred stock dividends			(27)	(27)	(27)	(27)
Cash and imputed dividends on Series D and Series E preferred stock			(803)	(360)	(2,097)	(380)

Net loss attributable to common shareholders			$ (555)	$ (967)	$ (1,698)	$ (3,855)

Net loss per share -
	Basic and diluted		$ (0.04)	$ (0.08)	$ (0.14)	$ (0.31)

Weighted-average common shares outstanding -
	Basic and diluted		12,466,954	12,425,182	12,466,954	12,452,853

DECISIONPOINT SYSTEMS, INC. Unaudited Condensed Consolidated Statements of Operations (In thousands, except share and per share data)

			Three months ended September 30,		Nine months ended September 30,
			2016	2015	2016	2015


Net sales			$ 7,961	$ 8,023	$ 22,362	$ 26,524

Cost of sales			6,353	6,492	17,916	21,247

Gross profit			1,608	1,531	4,447	5,278

Selling, general and administrative expense			1,414	1,604	3,877	5,758

Operating income (loss)			194	(72)	570	(481)

Other expense (income):
	Interest expense		70	86	293	299
	Fair market value adjustment of warrant liability		(33)	(205)	(78)	(437)
	Other expense (income), net		0	(6)	(5)	(19)
		Total other expense (income)	37	(125)	209	(156)

Income (loss) from continuing operations, before income taxes			158	53	361	(324)

Provision for income taxes			22	-	22	81

Net income (loss) from continuing operations			136	53	339	(405)

Non-GAAP Financial Measures:

To supplement the Company's consolidated financial statements presented on a GAAP basis, the Company has provided non-GAAP financial information, namely earnings before interest, taxes, depreciation and amortization (EBITDA) and adjusted EBITDA. The Company's management believes that these non-GAAP measures provide investors with a better understanding of how the Company's results relate to the Company's historical performance, and reflect the essential operating activities of the Company. Non-GAAP information is not meant to be considered in isolation from, or as a substitute for GAAP information. A reconciliation of our GAAP financial measures to our non-GAAP financial measures appears below:

		Three months ended March 31,		Three months ended June 30,
		2016	2015	2016	2015
EBITDA Calculation:

Net income (loss) from continuing operations		$ (225)	$ (434)	$ 428	$ (23)
Depreciation and amortization		8	9	8	9
Interest expense		86	108	137	106
Income tax provision (benefit)		-	17	-	63
	EBITDA	$ (131)	$ (300)	$ 573	$ 155


Adjusted EBITDA Calculation:

EBITDA		$ (131)	$ (300)	$ 573	$ 155
Stock compensation		40	33	(16)	37
ESOP compensation		11	7	3	7
Deferred taxes		-	7	-	(256)
Fair market value adjustment of warrant liability		(63)	79	18	(311)
Restructuring costs		-	-	-	21
Non-recurring legal		-	340	-	188
	Adjusted EBITDA	$ (143)	$ 166	$ 578	$ (159)


		Three months ended September 30,		Nine months ended September 30,
		2016	2015	2016	2015
EBITDA Calculation:

Net income (loss) from continuing operations		$ 136	$ 53	$ 339	$ (404)
Depreciation and amortization		9	10	25	28
Interest expense		70	86	293	299
Income tax provision (benefit)		22	-	22	81
	EBITDA	$ 237	$ 149	$ 679	$ 4


Adjusted EBITDA Calculation:

EBITDA		$ 237	$ 149	$ 679	$ 4
Stock compensation		12	31	36	101
ESOP compensation		7	3	21	17
Deferred taxes		-	(57)	-	(306)
Fair market value adjustment of warrant liability		(33)	(205)	(78)	(437)
Restructuring costs		-	95	-	116
Non-recurring legal		-	61	-	589
	Adjusted EBITDA	$ 223	$ 77	$ 658	$ 84

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SOURCE DecisionPoint Systems, Inc.

Released November 30, 2016