Exhibit 99.1
Company Contacts: | Investor Relations: |
Roger Ward | Ron Both |
V.P. of Marketing & Investor Relations | Managing Director |
American Defense Systems, Inc. | Liolios Group, Inc. |
Tel 516-390-5300, x326 | Tel 949-574-3860 |
rward@adsiarmor.com | info@liolios.com |
American Defense Systems Reports First Quarter 2009 Financial Results
HICKSVILLE, N.Y. — May 13, 2009 — American Defense Systems, Inc. (ADSI) (AMEX: EAG), a leading provider of advanced transparent and opaque armor, architectural hardening and security products for Defense and Homeland Security, reported financial results for the first quarter ended March 31, 2009.
Q1 2009 Highlights
· Revenues total $9.5 million, up 9% vs. Q1 2008
· Produced income from operations vs. an operating loss in Q1 2008
· Contract Backlog reached a record $60 million
· Named a Tier 1 supplier by Caterpillar Inc.
Financial Results for Q1 2009
Revenues for the first quarter of 2009 were $9.5 million, an increase of 111% from $4.5 million in the previous quarter and an increase of 9% from the $8.7 million in the same period of 2008.
Gross margin as a percentage of revenue for the first quarter was 43%, as compared to 31% in the previous quarter and 39% for the first quarter of 2008. The increase in gross margin in the first quarter of 2009 was due primarily to a more favorable mix of armor products.
Income from operations totaled $40,000, as compared to a loss from operations of $121,400 in the same quarter a year ago.
Net loss totaled $1.3 million or $(0.03) per share, compared to a net loss of $1.7 million or $(0.04) per share in the same period of 2008. The net loss in the first quarter of 2009 is primarily attributable to $694,000 in the unrealized loss on adjustment of fair value Series A convertible stock which has been classified as a liability and $290,300 in interest expense, which compares to $1.4 million and $55,700, respectively, in the same period a year ago.
Contract backlog as of March 31, 2009 totaled $60 million, up 5% from $57 million at the end of the previous quarter and up 25% from $48 million as of March 31, 2008.
Q1 2009 Operational Highlights
ADSI advanced development in a number of areas during the first quarter of 2009, including:
· Awarded $6.2 million contract to provide physical hardening solutions to a large U.S. Military installation through the company’s physical security unit, American Physical Security Group, LLC (APSG). The order represented the largest single order for APSG and will be designed to provide a high level of protection and security for the U.S. Military at certain ammunition supply points.
· APSG also received a $850,000 order for blast-resistant windows at a major U.S. Military base in South Korea. This order marked the first major overseas military order for APSG.
· ADSI added additional enhancements to the physical security at a major U.S.-based stock exchange in order to better protect employees as well as important data operations.
· Received $750,000 extension of field service contracts for ADSI Crew Protection Kits installed on construction vehicles currently deployed overseas from U.S. Army TACOM Life Cycle Management Command (LCMC). The extensions comprise two contracts and cover periods through December 2009.
· Named by Caterpillar Inc. as a Tier 1 supplier of both transparent and opaque armor for various models of construction equipment under a four-year reset contract which the U.S. Army’s TACOM LCMC recently awarded to Caterpillar.
Management Commentary
“As we anticipated, the major government orders we had expected in the final part of 2008 are being realized in this first half of 2009 and are reflected in our Q1 results,” said Anthony J. Piscitelli, chairman and CEO of American Defense Systems. “Our first quarter also represented strong progress, with more than $7 million in new contracts awarded during the quarter, plus the work we accomplished in Q1 that led to the $30 million U.S. Marine Corp CPK contract awarded on April 1. This represented the largest contract we’ve received from the Marines to-date and second largest overall in our company history.”
“The schedule for the realization of revenue from this $30 million contract has been moved up since we made that announcement and we should now realize approximately half of this amount before the end of the current second quarter rather than by year’s end,” said Piscitelli. “Also in the current quarter, we have begun processing the first CPK orders from the world’s largest privately-owned producer of construction machinery, JCB Construction, in accordance with their contract with the U.S. Army. With this initial order, we’re more than a third of the way toward the $10 million revenue expectation we announced last November, and we plan to make delivery and recognize this initial revenue during the third quarter of this year.
“While the military armor segment of our business has continued to win major contracts, we expect our new American Physical Security Group subsidiary to begin realizing its backlog of more than $8.0 million in architectural security-related orders. Overall progress year-to-date keeps us well on track to exceeding our 2009 revenue goal of more than $52 million.”
Conference Call and Webcast
The company will hold a conference call today at 4:30 p.m. Eastern time to discuss the quarter. Members of ADSI’s executive management team will host the presentation, followed by a question and answer period.
Date: Wednesday, May 13, 2009
Time: 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time)
Dial-In Number: 1-800-895-0198
International: 1-785-424-1053
Conference ID#: 7DEFENSE
The conference call will be broadcast simultaneously and available for replay via the investor section of the company’s Web site at www.adsiarmor.com.
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization and ask you to wait until the call begins. If you have any difficulty connecting with the conference call, please contact the Liolios Group at 949-574-3860.
A replay of the call will be available after 7:30 p.m. Eastern time on the same day and until June 13, 2009:
Toll-free replay number: 1-800-388-5895
International replay number: 1-402-220-1110
(No passcode required)
About American Defense Systems, Inc.
American Defense Systems, Inc. (“ADSI”) offers advanced solutions in the design, fabrication, and installation of transparent and opaque armor, security doors, windows and curtain wall systems for use by military, law enforcement, homeland defense and corporate customers. ADSI engineers also specialize in developing innovative, functional and aesthetically pleasing security applications for the mobile and fixed infrastructure physical security industry. For more information, visit the ADSI corporate Web site at www.adsiarmor.com.
Some of the statements made by American Defense Systems, Inc. (“ADSI”) in this press release, including, without limitation, statements regarding ADSI’s anticipated future growth, are forward-looking in nature. ADSI intends that any forward-looking statements shall be covered by the safe harbor provisions for such statements contained in the Private Securities Litigation Reform Act of 1995. Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” “predicts,” “potential,” “continues” and similar expressions are forward-looking statements. ADSI cautions you that forward-looking statements are not guarantees of performance. ADSI undertakes no obligation and disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Forward-looking statements involve known and unknown risks and uncertainties that may cause ADSI’s actual future results to differ materially from those projected or contemplated in the forward-looking statements. ADSI believes that these risks include, but are not limited to: ADSI’s reliance on the U.S. government for a substantial amount of its sales and growth; decreases in U.S. government defense spending; ADSI’s ability to contract further with the U.S. Department of Defense; ADSI’s ability to comply with complex procurement laws and regulations; competition and other risks associated with the U.S. government bidding process; changes in the U.S. government’s procurement practices; ADSI’s ability to obtain and maintain required security clearances; ADSI’s ability to realize the full amount of revenues reflected in its backlog; the redemption of ADSI’s series A convertible preferred stock at the election of the holders of such stock at a time when ADSI does not have sufficient funds to consummate the redemption; restrictions on ADSI’s ability to draw on its bank line of credit; ADSI’s reliance on certain suppliers; and intense competition and other risks associated with the defense industry in general and the security-related defense sector in particular.
There also can be no assurance that ADSI will obtain a sufficient number of orders from JCB to generate more than $10 million in revenue or that such orders will be placed during the two year period referenced in the ADSI press release announced on November 8, 2008. Accordingly, ADSI revenues in connection with the matters referenced herein could be significantly less than the $10 million and may not be realized during such two year period.
Additional information concerning these and other important risk factors can be found under the heading “Risk Factors” in ADSI’s filings with the Securities and Exchange Commission, including, without limitation, its most recent annual report on Form 10-K. Statements in this press release should be evaluated in light of these important factors.
American Defense Systems, Inc. and Subsidiaries
Consolidated Balance Sheets
| | March 31, | | December 31, | |
| | 2009 | | 2008 | |
| | (Unaudited) | | (Audited) | |
ASSETS | | | | | |
| | | | | |
CURRENT ASSETS | | | | | |
Cash | | $ | 83,826 | | $ | 374,457 | |
Accounts receivable, net | | 6,434,888 | | 4,981,150 | |
Inventory | | 844,139 | | 621,048 | |
Prepaid expenses and other current assets | | 3,539,842 | | 3,144,601 | |
Costs in excess of billings on uncompleted contracts | | 6,562,903 | | 7,143,089 | |
Deposits | | 437,496 | | 437,496 | |
| | | | | |
TOTAL CURRENT ASSETS | | 17,819,268 | | 16,701,841 | |
| | | | | |
PROPERTY and EQUIPMENT, net | | 3,569,232 | | 3,743,936 | |
DEFERRED FINANCING COSTS, net | | 1,130,409 | | 1,277,833 | |
NOTES RECEIVABLE | | 925,000 | | 925,000 | |
GOODWILL | | 450,000 | | 450,000 | |
ADVANCES for FUTURE ACQUISITIONS | | 159,559 | | 159,560 | |
DEFERRED TAX ASSET | | 1,167,832 | | 1,167,832 | |
ASSETS of DISCONTINUED OPERATIONS | | — | | 736,613 | |
| | | | | |
TOTAL ASSETS | | $ | 25,221,300 | | $ | 25,162,615 | |
| | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | |
| | | | | |
CURRENT LIABILITIES | | | | | |
Accounts payable | | $ | 3,097,297 | | $ | 2,480,652 | |
Accrued payroll | | 409,852 | | — | |
Accrued expenses | | 386,447 | | 755,615 | |
Line of credit | | 659,422 | | 76,832 | |
| | | | | |
TOTAL CURRENT LIABILITIES | | 4,553,018 | | 3,313,099 | |
| | | | | |
LONG TERM LIABILITIES | | | | | |
Preferred stock, $.001 par value, 5,000,000 shares authorized, 15,000 shares designated as mandatorily redeemable Series A Convertible Preferred Stock (cumulative), 15,000 shares issued and outstanding | | 11,809,196 | | 10,981,577 | |
Investor warrant liability | | 115,275 | | 90,409 | |
Liabilities of discontinued operations | | — | | 736,613 | |
| | | | | |
TOTAL LIABILITIES | | 16,477,489 | | 15,121,698 | |
| | | | | |
COMMITMENTS AND CONTINGENCIES | | | | | |
| | | | | |
SHAREHOLDERS’ EQUITY | | | | | |
Common Stock, $.001 par value: 100,000,000 shares authorized, 39,585,960 and 39,585,960 shares issued and outstanding as of March 31, 2009 and December 31, 2008, respectively | | 39,587 | | 39,586 | |
Additional paid in capital | | 9,534,616 | | 9,534,616 | |
Retained earnings (accumulated deficit) | | (830,392 | ) | 466,715 | |
| | | | | |
TOTAL SHAREHOLDERS’ EQUITY | | 8,743,811 | | 10,040,917 | |
| | | | | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 25,221,300 | | $ | 25,162,615 | |
American Defense Systems, Inc. and Subsidiaries
Consolidated Statement of Operations
| | Three Months Ended | |
| | March 31, | |
| | 2009 | | 2008 | |
| | (Unaudited) | |
CONTRACT REVENUES EARNED | | $ | 9,489,702 | | $ | 8,734,909 | |
| | | | | |
COST OF REVENUES EARNED | | 5,453,109 | | 5,335,036 | |
| | | | | |
GROSS PROFIT | | 4,036,593 | | 3,399,873 | |
| | | | | |
OPERATING EXPENSES | | | | | |
General and administrative expenses | | 1,648,478 | | 1,395,059 | |
General and administrative salaries | | 1,073,037 | | 1,136,596 | |
Marketing | | 733,794 | | 632,307 | |
T2 expenses | | 113,602 | | — | |
Research and development | | 186,386 | | 165,196 | |
Settlement of litigation | | — | | 57,377 | |
Depreciation | | 241,329 | | 134,769 | |
Total operating expenses | | 3,996,626 | | 3,521,304 | |
| | | | | |
INCOME (LOSS) FROM OPERATIONS | | 39,967 | | (121,431 | ) |
| | | | | |
OTHER INCOME (EXPENSE) | | | | | |
Unrealized gain (loss) on adjustment of fair value Series A convertible preferred stock classified as a liability | | (694,454 | ) | (1,428,665 | ) |
Unrealized gain (loss) on investor warrant liability | | 14,054 | | (107,589 | ) |
Other income (expense) | | — | | (9,046 | ) |
Interest expense | | (290,320 | ) | (55,737 | ) |
Interest income | | 8,646 | | 31,123 | |
Finance charge | | — | | (4,536 | ) |
Total other income (expense) | | (962,074 | ) | (1,574,450 | ) |
| | | | | |
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | | (922,107 | ) | (1,695,881 | ) |
| | | | | |
INCOME TAX PROVISION (BENEFIT) | | — | | — | |
| | | | | |
LOSS FROM CONTINUING OPERATIONS | | (922,107 | ) | (1,695,881 | ) |
| | | | | |
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAXES | | | | | |
Loss from operations of discontinued division | | — | | (489 | ) |
Loss from disposal of discontinued division | | — | | — | |
| | — | | (489 | ) |
| | | | | |
NET LOSS | | (922,107 | ) | (1,696,370 | ) |
| | | | | |
PREFERRED STOCK DIVIDENDS ACCRUED | | (375,000 | ) | — | |
| | | | | |
NET LOSS ALLOCATED TO COMMON SHAREHOLDERS | | $ | (1,297,107 | ) | $ | (1,696,370 | ) |
| | | | | |
Basic and Fully Diluted Net Loss Per Share | | $ | (0.033 | ) | $ | (0.043 | ) |
| | | | | |
Weighted Average Shares Outstanding | | 39,585,960 | | 39,124,616 | |
| | | | | |
EARNINGS PER SHARE - Basic Income from continuing operations | | $ | (0.02 | ) | $ | (0.04 | ) |
(Loss) from discontinued operations | | $ | — | | $ | (0.00 | ) |
Net income (loss) | | $ | (0.03 | ) | $ | (0.04 | ) |
