Exhibit 99.1
DPAC Technologies Reports Results
for First Quarter of Fiscal Year 2005
GARDEN GROVE, Calif.--(BUSINESS WIRE)--June 29, 2004--DPAC
Technologies Corp. (Nasdaq:DPAC)
-- Cash at end of quarter ended May 31, 2004 stands at $5.7
million
-- Results include restructuring charge of $800,000 related to
down-sizing of memory stacking operations
-- DPAC enters final phase of refocusing the company on wireless
products through sale of memory stacking patents subsequent to
quarter end
DPAC Technologies Corp. (Nasdaq:DPAC), a technology company that
provides embedded wireless networking and connectivity products, today
reported results for its first quarter of fiscal year 2005, ended May
31, 2004.
First Quarter Operating Results
For the first fiscal quarter ended May 31, 2004, revenue was $2.3
million as compared to revenue of $5.2 million for the first quarter
of the previous year. The first quarter revenues for fiscal year 2005
include $400,000 in revenues related to the Airborne(TM) wireless
product line, as compared to $96,000 shipped in fiscal year 2004. The
remainder of the revenues resulted from memory stacking and industrial
and defense revenue. The decrease in revenue for the quarter is
principally attributed to the continuing reduction in volume of memory
stacking. Subsequent to the end of the quarter, the Company announced
the sale of all of its patents related to memory stacking and it
intends to cease providing memory stacking in August of 2004. Included
in the first quarter is $.8 million in restructuring charges
associated with the down-sizing of the memory stacking operations. The
loss for the quarter was $2.4 million or $(0.11) per share, as
compared to a loss of $0.9 million or $(0.04) per share for the prior
year's first quarter.
Gross margin for the first quarter of fiscal 2005 was negligible,
compared with 23.0 percent for the fiscal first quarter of 2004. The
decrease in gross margin is a result of the fixed costs of
manufacturing being spread over a lower volume of stacking units.
Fiscal 2005 first quarter selling, general and administrative
expenses (SG&A) were $1.2 million compared with $1.2 million in the
first quarter of fiscal 2004. There was an increase in sales and
marketing expenses related to the introduction of the Airborne(TM)
product line with an offsetting decrease in legal expense. Fiscal 2005
first quarter research and development expenses were $0.4 million or
17.0 percent of sales, compared to $0.8 million or 15.0 percent of
sales for the first quarter of fiscal 2004, due to the shift of the
Airborne product line to a production environment. Research and
development costs for 2005 reflect the Company's continued development
of new wireless products.
Balance Sheet Summary
At May 31, 2004, DPAC had total assets of $12.7 million, including
cash and cash equivalents of $5.7 million. The Company used cash
during the quarter, principally for the support of operations. Current
assets were $6.8 million. The Company's current ratio is approximately
3.0-to-1, and its long-term liabilities are $.9 million.
Comment and Outlook
"DPAC has entered the final phase of our plan to re-direct the
company to focus on the wireless marketplace and the opportunities
that we have seen in this technology. As we exit the stacking market
with the sale of the patent portfolio, we are starting to see the
acceptance of our wireless product line from a new base of customers,"
stated Kim Early, DPAC's chief executive officer. "To ensure the
future growth of DPAC, we have continued to add to our capable team as
we execute our strategy to generate new technology and products for
wireless connectivity solutions for instrumentation and equipment.
During the first fiscal quarter of 2005, we announced that we had
reached 35 design wins for the wireless product, validating the value
proposition offered by our design, including quicker time-to-market,
at reduced risks and costs to the customer's product development
cycle. And though these development cycles can be quite long before
resulting in production volumes, we're pleased with the increasing
number of customers who are including DPAC in their future products."
Mr. Early continued, "This quarter, we took positive steps toward
our future with the announced sale of the industrial, defense and
aerospace product line for cash and future considerations and
additionally announced the sale of the stacking patent portfolio for
cash. These sales and the additional cash received as the result of a
private placement has DPAC well positioned to continue the product and
market development efforts we envision to aggressively grow the
business. Our progress thus far indicates that we have the right team
in place to successfully execute our strategy."
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 the first quarter fiscal year
2005 operating performance. The conference call will feature Chief
Executive Officer Kim Early, and Chief Financial Officer William
Stowell. To participate on the live call, please dial 866-238-0826. A
phone replay will be available for 48 hours (beginning two hours after
the completion of the conference call by dialing 888-266-2081 and
entering the passcode 502588.
About DPAC Technologies
Located in Garden Grove, California, 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
and industrial control, homeland security, medical diagnostics and
logistics markets to provide remote data collection and control. The
Company's web site address is www.dpactech.com.
Forward-Looking Statements
This press release includes forward-looking statements, including
statements regarding management's current beliefs concerning the
Company's market, technology development, expansion and business
plans, the use of its technology in industrial and military programs,
relationships in price parity of existing technology with future
technology, and the need for various present and future products,
which are subject to change, uncertainties and risks. Every statement
herein that is not historic in nature is a forward-looking statement
for purposes of the Safe Harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such statements involve 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, the success of patented products,
future business opportunities with products, the semiconductor market,
protection of technology or proprietary rights, risks of litigation,
and general market and economic conditions. 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
Form 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.
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DPAC TECHNOLOGIES CORP.
Condensed Consolidated Balance Sheet Information
(unaudited)
(In 000's)
May 31, February 28,
2004 2004
--------------- ---------------
Cash $5,683 $4,477
Total current assets 6,766 6,615
Property, net 996 1,538
Goodwill 4,529 4,529
Total assets $12,698 $13,088
Current liabilities $2,260 $2,338
Long-term liabilities 879 689
Shareholders' equity 9,559 10,061
Total liabilities and
shareholders' equity $12,698 $13,088
DPAC TECHNOLOGIES CORP.
Condensed Statement of Income
(Unaudited)
(in 000's)
For the three months
ended May 31,
---------------------
2004 2003
---------- ----------
Sales $2,260 $5,163
Cost of sales 2,227 3,973
---------- ----------
Gross profit 33 1,190
---------- ----------
Selling, general & administrative costs 1,226 1,176
Research and development 383 776
Restructuring charges 799 -
Reserve for litigation - 750
---------- ----------
Total operating costs 2,408 2,702
---------- ----------
Loss from operations (2,375) (1,512)
Other income - 8
---------- ----------
Loss before income taxes (2,375) (1,504)
---------- ----------
Income tax benefit - 571
---------- ----------
Net loss $(2,375) $(933)
========== ==========
Loss per share -- Basic ($0.11) ($0.04)
Loss per share -- Diluted ($0.11) ($0.04)
Basic shares 22,076 20,988
Diluted shares 22,076 20,988
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CONTACT: DPAC Technologies Corp.
William M. Stowell, 714-898-0007
Chief Financial Officer
William.Stowell@dpactech.com
Kim Early, 714-898-0007
Chief Executive Officer
Kim.Early@dpactech.com