Exhibit 99.1
DPAC Technologies Reports Results for Second Quarter of Fiscal Year 2005
GARDEN GROVE, Calif.--(BUSINESS WIRE)--Oct. 14, 2004--
- -- Memory Stacking and IDA operations closed, presented as discontinued
operations.
- -- Reports $670,000 gain on sale of discontinued operations and
$488,000 restructuring charge to continuing operations.
- -- Airborne products backlog increased to $230,000 at August 31,
2004.
DPAC Technologies Corp. (Nasdaq:DPAC), a technology company that provides
embedded wireless networking and connectivity products, today reported results
for its fiscal year 2005 second quarter, ended August 31, 2004. The Company's
financial statements have been re-formatted to present the memory stacking
product line and the industrial, defense and aerospace ("IDA") product line as
discontinued operations.
Operating Results
For the second fiscal quarter, revenue from continuing operations was
$223,000 as compared to revenue of $0 for the second quarter of the previous
year, a period in which the wireless product line, which now constitutes the
continuing operations of the Company, was still under development. The Company's
net loss from continuing operations totaled $2.2 million, or $(0.09) per share,
compared to a net loss from continuing operations for the prior year's second
quarter of $0.8 million, or $(0.04) per share. The second quarter's operating
results include a restructuring charge of $488,000, primarily related to
severance of a former corporate officer and other overhead reductions. The
previous year's net loss for the second quarter included a $498,000 income tax
benefit, while the current quarter has no income tax expense or benefit.
Discontinued operations realized a gain of $449,000, or $0.02 per share, on
revenue of $2.6 million for the second quarter of fiscal year 2005. The gain
from discontinued operations resulted primarily from a $670,000 gain on the sale
of the intellectual property and inventory related to the Company's historical
memory stacking operations, which were discontinued in August 2004. In the prior
year's second quarter, the loss from discontinued operations totaled $278,000,
or $(0.01) per share, on revenue of $4.4 million.
For the six-month period ended August 31, 2004, revenues from continuing
operations totaled $623,000 as compared to $0 for the comparable prior-year
period, a period in which the wireless product line was still under development.
The net loss from continuing operations for the six-month period ended August
31, 2004 was $3.6 million, or $(0.16) per share, compared to a net loss of $1.5
million, or $(0.07) per share, for the same period a year ago. The net loss in
the prior-year period included a $904,000 income tax benefit, while the current
year's six-month period includes $573,000 in restructuring charges, primarily
for severance costs, and includes no income tax expense or benefit. After taking
into account the changes in restructuring costs and tax effects, the remaining
$0.6 million increase in net loss from continuing operations for the second
quarter and six-month periods of fiscal year 2005 compared to the comparable
prior year periods, is mostly a result of increases in spending on sales and
marketing efforts to launch the Airborne(TM) wireless product line as well as
recruiting costs to obtain the management, sales and engineering personnel
utilized in the Airborne(TM) operations. Since the Airborne(TM) product line is
in the early stages of introduction to the OEM wireless connectivity market,
revenues are currently composed primarily of development kits, prototype orders,
pre-production quantities and non-recurring engineering fees.
The net loss from discontinued operations for the six months period ended
August 31, 2004 was $506,000, or $(0.02) per share, compared to a net loss of
$548,000, or $(0.03) per share for the comparable prior-year period. The results
for the current year period include the gain of $721,000 on the sale of assets
for both the memory stacking and IDA product lines.
Balance Sheet Summary
At August 31, 2004, DPAC had total assets of $11.5 million, including cash
and cash equivalents of $4.6 million and assets related to discontinued
operations of $1.2 million. This compares to total assets of $13.1 million at
the Company's February 29, 2004 year-end, with $4.5 million in cash and cash
equivalents and assets related to discontinued operations of $3.0 million at
that date. Working capital at August 31, 2004 was $3.7 million compared to $4.3
million at February 29, 2004.
Comment and Outlook
Kim Early, DPAC's Chief Executive Officer stated, "This quarter marked
continued progress in expanding the customer base for our Airborne(TM) product.
We enter our third fiscal quarter with a backlog of $230,000 in customer orders
for Airborne(TM) and an opportunity pool of more than 100 customers who have
purchased evaluation kits and expressed some level of interest in incorporating
our module into their products. Included in that pool are 46 customers which we
classify as 'design ins' or 'design wins', meaning they are actively engaged in
design efforts aimed at incorporating Airborne(TM) into their product offerings.
We are still in the phase of shipping evaluation kits and small prototype
quantities to most of our customers, but as and when their design processes move
through testing and product certification, we expect those customers to begin to
order initial production quantities to launch their new wirelessly-enabled
products," continued Early. "While these OEM product design cycles can be quite
long before resulting in production volumes, we're pleased with our progress of
increasing the number of customers who are including DPAC in their new product
designs. I am confident the customer activity to date demonstrates the need for
our module and the validity of our design as a foundation for future growth in
the machine-to-machine communications market."
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 DPAC's financial performance in the second
quarter of fiscal year 2005. The conference call will feature Chief Executive
Officer Kim Early and Chief Financial Officer Steve Vukadinovich. To participate
on the live call, please dial 866-835-8906. 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 568852.
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. 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 are subject to 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,
that our Airborne(TM) products are new, that we sell to original equipment
manufacturers for new product introductions by them, and that all of these are
subject to risks and uncertainties regarding new product introductions such as
uncertainty of market acceptance. Should revenues for our products increase more
slowly than we currently anticipate, we may require additional financing. Such
financing may not be available on favorable terms. 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.
- tables to follow -
DPAC TECHNOLOGIES CORP.
Condensed Balance Sheets
(Unaudited)
(in 000's)
August 31, February 29,
2004 2004
CURRENT ASSETS:
Cash and cash equivalents $4,601 $4,477
Accounts receivable, net 128 31
Inventories 79 37
Prepaid expenses 299 323
Current assets of discontinued operations 1,184 1,747
Total current assets 6,291 6,615
Property, net 248 264
Goodwill 4,529 4,529
Other assets 455 406
Non-current assets of discontinued
operations - 1,274
TOTAL $11,523 $13,088
CURRENT LIABILITIES:
Accounts payable $428 $336
Accrued compensation 277 217
Accrued restructuring costs - current 649 489
Other accrued liabilities 231 104
Current liabilities of discontinued
operations 1,005 1,192
Total current liabilities 2,590 2,338
Accrued restructuring costs 522 328
Non-current liabilities of discontinued
operations 639 361
Net stockholders' equity 7,772 10,061
TOTAL $11,523 $13,088
DPAC TECHNOLOGIES CORP.
Condensed Statement of Income
(Unaudited)
(in 000's)
For the quarter ended: For the six months ended:
August 31, August 31, August 31, August 31,
2004 2003 2004 2003
Net Sales - Continuing
Operations $223 $- $623 $-
Cost of sales 202 - 559 -
Gross profit 21 - 64 -
COSTS AND EXPENSES:
Selling, general and
administrative 1,324 909 2,395 1,679
Research and
development 384 415 698 731
Restructuring
charges 488 - 573 -
Total costs and
expenses 2,196 1,324 3,666 2,410
LOSS FROM OPERATIONS (2,175) (1,324) (3,602) (2,410)
INTEREST INCOME 8 13 15 30
LOSS BEFORE INCOME TAX
BENEFIT (2,167) (1,311) (3,587) (2,380)
INCOME TAX BENEFIT - 498 - 904
LOSS FROM CONTINUING
OPERATIONS $(2,167) $(813) $(3,587) $(1,476)
GAIN (LOSS) FROM
DISCONTINUED
OPERATIONS 449 (278) (506) (548)
NET LOSS $(1,718) $(1,091) $(4,093) $(2,024)
NET GAIN (LOSS) PER
SHARE:
Continuing Operations
- Basic and diluted ($0.09) ($0.04) ($0.16) ($0.07)
Discontinued
Operations - Basic
and diluted $0.02 ($0.01) ($0.02) ($0.03)
Net Loss - Basic and
diluted ($0.07) ($0.05) ($0.18) ($0.10)
Basic and diluted
shares 23,732 21,010 22,904 20,999
CONTACT: DPAC Technologies, Garden Grove
Stephen Vukadinovich or Kim Early, 714-898-0007
Steve.Vukadinovich@dpactech.com
Kim.Early@dpactech.com