Exhibit 99.1
DPAC Technologies Reports Financial Results for the First Quarter of
Fiscal Year 2007
HUDSON, Ohio--(BUSINESS WIRE)--May 14, 2007--DPAC Technologies
Corp. (OTCBB:DPAC), a leader in device networking and connectivity
solutions, today reported results for its first quarter ended March
31, 2007.
These results include the combined operations of DPAC Technologies
Corp. and QuaTech, Inc., which combined on February 28, 2006 as
previously announced. As a result of the merger, QuaTech has become a
wholly-owned subsidiary of DPAC. For accounting purposes, the
transaction is considered a "reverse merger" under which QuaTech is
considered the acquirer of DPAC. Accordingly, the purchase price was
allocated among the fair values of the assets and liabilities of DPAC,
while the historical results of QuaTech are reflected in the results
of the combined company (the "Company"). The results of operations are
those of QuaTech prior to the merger date, and consolidated QuaTech
and DPAC after the merger date of February 28, 2006.
First Quarter Operating Results
Net sales of $2.8 million for the first quarter of 2007 were down
11% from net sales of $3.2 million in the first quarter of 2006 and
$3.2 million in the fourth quarter of 2006. The Company reported an
operating loss of $162,000 as compared to an operating loss of $52,000
for the first quarter of 2006 and an operating loss of $165,000 for
the fourth quarter of 2006. The Company reported a net loss for the
current year first quarter of $539,000 as compared to a net loss of
$246,000 for the prior year's first quarter, and a net loss of
$498,000 for the fourth quarter of 2006. Total operating expenses
incurred in the first quarter of 2007 of $1.35 million decreased by
$157,000 or 10% from the previous year first quarter period. The
decrease was due primarily to decreases in sales and marketing
expenses of $180,000 and G&A expenses of $23,000. Amortization expense
for intangible assets of $123,000 increased by $82,000 over the prior
year period which included only one month of amortization expense as
compared to three months for the current year period. The prior year
period included $78,000 of restructuring charges, of which none were
incurred in the current year period. An income tax benefit of $139,000
was recorded in the first quarter of 2006 and no income tax benefit
was recorded in the current year period as a full valuation allowance
was recorded against deferred tax assets in the fourth quarter of
2006.
Balance Sheet Summary
At March 31, 2007, DPAC had total assets of $12.1 million,
including cash and cash equivalents of $4,000. This compares to total
assets of $12.1 million at December 31, 2006, which included $38,000
in cash and cash equivalents. As a result of the merger on February
28, 2006, the Company recorded goodwill and intangible assets of
approximately $5.1 million.
Comments
Chief Executive Officer and President Steve Runkel commented, "Our
first quarter results were impacted by softness in our Device
Connectivity product line offset by continued growth in our Device
Networking products. Our Device Connectivity revenue was down 18%
sequentially and down 29% on a year over year basis. This revenue
shortfall was primarily due to decreased shipments to several of our
traditional OEM customers that utilize our serial port connectivity
products."
Mr. Runkel continued: "Our Device Networking products generated
revenue growth of 8% sequentially and growth of 91% on a year over
year basis, reflecting our continued success in this market.
"Additionally, we continued to reduce our spending levels as we
complete the integration initiatives from the merger in Q1, 2006. Our
spending in Sales and Marketing decreased by 30% on a year over year
basis, as a result of integrating the two sales teams."
About DPAC Technologies
DPAC Technologies provides embedded wireless networking products
for machine-to-machine communication applications. DPAC's Airborne(TM)
and AirborneDirect(TM) 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. DPAC Technologies is based in Hudson, OH.
The Company's web site address is www.dpactech.com. Information
concerning DPAC is filed by DPAC with the SEC and is available on the
SEC website, www.sec.gov.
About QuaTech
QuaTech, Inc., a wholly-owned subsidiary of DPAC, delivers high
performance device networking & connectivity solutions to help
companies improve their bottom line performance. Quatech enables
reliable machine-to-machine (M2M) communications via secure 802.11
wireless or traditional wired networks with industrial grade
(hardened) embedded radios, modules, boards and external device
servers and bridges. For local and mobile connections, Quatech serial
adapters provide secure connectivity and port expansion via any
interface option. Satisfied customers rely on our unique combination
of performance and support to improve bottom line performance through
real-time remote monitoring & control, streamlined systems and lower
total cost of ownership (TCO). Quatech markets its products through a
global network of distributors, resellers, systems integrators and
original equipment manufacturers (OEMs). Founded in 1983, Quatech is
headquartered in Hudson, Ohio, and merged with DPAC Technologies, Inc.
in February 2006. www.quatech.com.
Forward-Looking Statements
This press release includes forward-looking statements. You can
identify these statements by their forward-looking words such as
"may," "will," "expect," "anticipate," "believe," "guidance,"
"estimate," "intend," predict," and "continue" or similar words or any
connection with any discussion of future events or circumstances or of
management's current estimates or beliefs. Forward-looking statements
are subject to risks and uncertainties, and therefore results may
differ materially from those set forth in those statements. 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 S-4, 10-K, 10-Q or 10-QSB 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 Consolidated Balance Sheet Information
(Unaudited)
(In 000's)
March 31, December 31,
2007 2006
--------- ------------
CURRENT ASSETS:
Cash and cash equivalents $4 $38
Accounts receivable, net 1,554 1,421
Inventories 1,540 1,500
Prepaid expenses and other current assets 115 43
--------- ------------
Total current assets 3,213 3,002
Property, net 391 413
Goodwill and intangible assets 8,419 8,578
Other assets 55 81
--------- ------------
TOTAL $12,078 $12,074
========= ============
CURRENT LIABILITIES:
Revolving credit facility and short term
notes $1,724 $1,361
Current portion of long-term debt 2,215 2,097
Accounts payable 1,639 1,488
Accrued restructuring costs - current 364 392
Other accrued liabilities 572 514
--------- ------------
Total current liabilities 6,514 5,852
Accrued restructuring costs 230 330
Long-term debt, net of current portion 2,747 2,770
Net stockholders' equity 2,587 3,122
--------- ------------
TOTAL $12,078 $12,074
========= ============
DPAC TECHNOLOGIES CORP.
Condensed Consolidated Statement of Income
(Unaudited)
(in 000's)
For the quarter ended:
March 31,
----------------------
2007 2006
----------- ----------
REVENUE $2,844 $3,194
COST OF GOODS SOLD 1,656 1,739
----------- ----------
GROSS PROFIT 1,188 1,455
OPERATING EXPENSES
Sales and marketing 423 603
Research and development 308 265
General and administrative 496 520
Amortization of intangible assets 123 41
Restructuring charges - 78
----------- ----------
Total operating expenses 1,350 1,507
INCOME FROM OPERATIONS (162) (52)
OTHER EXPENSES:
Interest expense 376 333
----------- ----------
INCOME (LOSS) BEFORE INCOME TAXES (538) (385)
INCOME TAX PROVISION (BENEFIT) 1 (139)
----------- ----------
NET INCOME (LOSS) $(539) $(246)
=========== ==========
NET INCOME (LOSS) PER SHARE:
Net Income (Loss) - Basic and diluted ($0.01) ($0.00)
=========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic and Diluted 92,821 73,760
=========== ==========
CONTACT: DPAC Technologies Corp.
Steve Vukadinovich, Chief Financial Officer, 330-655-9000
Steve.Vukadinovich@dpactech.com
or
Steve Runkel, Chief Executive Officer, 330-655-9000
Steve.Runkel@Quatech.com