Exhibit 99.1
DPAC Technologies Reports Results for Third Quarter of Fiscal Year 2005
GARDEN GROVE, Calif.--(BUSINESS WIRE)--Jan. 13, 2005--
- -- Airborne wireless products revenue increases 50% sequentially over
second quarter.
- -- Airborne products backlog increased to $900,000 at November
30, 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 third quarter, ended November 30, 2004. The Company's
financial statements have been reclassified to present the memory stacking
product line and the industrial, defense and aerospace ("IDA") product line as
discontinued operations.
Operating Results
For the third fiscal quarter, revenue from continuing operations was
$334,000 as compared to revenues of $22,000 for the third quarter of the
previous year, a period in which the wireless product line, which now
constitutes the continuing operations of the Company, was still primarily under
development. The Company's net loss from continuing operations totaled $1.4
million, or $(0.06) per share, compared to a net loss from continuing operations
for the prior year's third quarter of $7.0 million, or $(0.33) per share. The
previous year's net loss for the third quarter included a $5.7 million income
tax provision, while the current quarter has no income tax expense or benefit.
Discontinued operations realized a gain of $508,000, or $0.02 per share, on
revenues of $869,000 for the third quarter of fiscal year 2005. This resulted
from final close out shipments of stacking products and royalties. In the prior
year's third quarter, the loss from discontinued operations totaled $446,000, or
$(0.02) per share, on revenues of $4.3 million.
For the nine-month period ended November 30, 2004, revenues from continuing
operations totaled $957,000 as compared to $22,000 for the comparable prior-year
period, a period in which the wireless product line was primarily still under
development. The net loss from continuing operations for the nine-month period
ended November 30, 2004 was $5.0 million, or $(0.22) per share, compared to a
net loss of $8.4 million, or $(0.40) per share, for the same period a year ago.
The net loss in the prior-year period included a $4.8 million income tax
provision, while the current year's nine-month period includes $573,000 in
restructuring charges, primarily for severance costs, and includes no income tax
expense or benefit. Selling, general and administrative expenses increased by
$1.0 million to $3.6 million for the nine-month period ended November 30, 2004
as compared to the same prior year period. The increase was 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 gain from discontinued operations for the nine-month period ended
November 30, 2004 was $1,000, or $0.00 per share, compared to a net loss of
$994,000, or $(0.05) 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 November 30, 2004, DPAC had total assets of $9.8 million, including cash
and cash equivalents of $4.0 million and assets related to discontinued
operations of $92,000. 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 November 30, 2004 was $2.6 million compared to
$4.3 million at February 29, 2004.
Comment and Outlook
Kim Early, DPAC's Chief Executive Officer stated, "The 50% revenue increase
from the second to the third quarter confirms the on-going progression of our
customers through their product design cycles. During the third quarter, we
increased our design wins to more than 60 customers who are in various stages of
designing and utilizing our Airborne products. Our progress was also reflected
in the substantial increase of our order backlog to $900,000 from $230,000 at
the end of the previous quarter, though $600,000 of our backlog is not
deliverable until the second half of calendar 2005. This kind of delivery
timetable reflects the characteristic profile of an initial launch quantity for
our customers' new products, anticipated to be followed by a demand for
additional shipments as their products begin to obtain market acceptance."
Mr. Early continued, "We're proud of the progress we are making in building
our customer base and helping our customers through their design and
certification processes and into initial production. The receipt of initial
production orders from an increasing number of customers confirms our belief in
the validity of the Airborne design and our value proposition. These events
represent another significant milestone in the transformation of DPAC into a
leader in machine-to-machine wireless communications."
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 third
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) 814-1914 toll free. A phone replay will be
available for 48 hours (beginning two hours after the completion of the
conference call) by dialing (888) 266-2081 or (703) 925-2533 and entering the
Passcode 625937.
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 Forms 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.
DPAC Technologies Corp.
Condensed Balance Sheets
(Unaudited)
(in 000's)
November 30, February 29,
2004 2004
CURRENT ASSETS:
Cash and cash equivalents $4,001 $4,477
Accounts receivable, net 147 31
Inventories 207 37
Prepaid expenses 148 323
Current assets of discontinued operations 92 1,747
Total current assets 4,595 6,615
Property, net 273 264
Goodwill 4,529 4,529
Other assets 374 406
Non-current assets of discontinued operations - 1,274
TOTAL $9,771 $13,088
CURRENT LIABILITIES:
Accounts payable $327 $336
Accrued compensation 172 217
Accrued restructuring costs - current 580 489
Other accrued liabilities 279 104
Current liabilities of discontinued
operations 639 1,192
Total current liabilities 1,997 2,338
Accrued restructuring costs 384 328
Non-current liabilities of discontinued
operations 546 361
Net stockholders' equity 6,844 10,061
TOTAL $9,771 $13,088
DPAC TECHNOLOGIES CORP.
Condensed Statement of Income
(Unaudited)
(in 000's)
For the quarter For the nine
ended: months ended:
November 30, November 30,
2004 2003 2004 2003
Net Sales - Continuing Operations $334 $22 $957 $22
Cost of sales 221 19 780 19
Gross profit 113 3 177 3
COSTS AND EXPENSES:
Selling, general and
administrative 1,174 845 3,569 2,524
Research and development 388 477 1,086 1,208
Restructuring charges - - 573 -
Total costs and expenses 1,562 1,322 5,228 3,732
LOSS FROM OPERATIONS (1,449) (1,319) (5,051) (3,729)
INTEREST INCOME 10 16 25 46
LOSS BEFORE INCOME TAX BENEFIT (1,439) (1,303) (5,026) (3,683)
INCOME TAX PROVISION - 5,668 - 4,764
LOSS FROM CONTINUING OPERATIONS $(1,439) $(6,971) $(5,026) $(8,447)
GAIN (LOSS) FROM DISCONTINUED
OPERATIONS 508 (446) 1 (994)
NET LOSS $(931) $(7,417) $(5,025) $(9,441)
NET GAIN (LOSS) PER SHARE:
Continuing Operations - Basic and
diluted ($0.06) ($0.33) ($0.22) ($0.40)
Discontinued Operations - Basic
and diluted $0.02 ($0.02) ($0.00) ($0.05)
Net Loss - Basic and diluted ($0.04) ($0.35) ($0.22) ($0.45)
Basic and diluted shares 23,732 21,170 23,180 21,073
CONTACT: DPAC Technologies
Stephen Vukadinovich, 714-898-0007
Steve.Vukadinovich@dpactech.com
or
Kim Early, 714-898-0007
Kim.Early@dpactech.com