DecisionPoint Systems Reports Results For Third Quarter, Nine Months Ended September 30, 2015

13 Nov, 2015, 16:44 ET from DecisionPoint Systems, Inc.

IRVINE, Calif., Nov. 13, 2015 /PRNewswire/ -- DecisionPoint™ Systems, Inc. (OTCQB: DPSI and DPSIP), a leading provider and integrator of Enterprise Mobility and Wireless Application solutions, today reported financial results for the third quarter and nine months ended September 30, 2015.  During the quarter, the Company further reduced its expenses as it continued to right-size for the reduced revenue levels resulting from the discontinuation and disposition of its former CMAC subsidiary.  CMAC results have been eliminated from both the current periods being reported, and from the previous-year periods shown for comparison purposes. 

Sales for the third quarter of 2015 were $8.2 million, down 29.0% from sales of $11.6 million in the third quarter of 2014.  Net income for the third quarter from continuing operations was $229,000, versus net income of $133,000 in the previous-year period.  The third quarter net loss attributable to common shareholders, including continuing operations and discontinued operations, was $252,000 or $0.02 loss per share, down from a net loss of $897,000 or $0.07 loss per share for the third quarter of 2014, which included a loss from discontinued operations of $696,000 or $0.05 loss per share.  Gross profit margins for the third quarter of 2015 were 20.4%, down modestly from 20.7% in the third quarter of 2014.  Selling, general & administrative expenses declined 28.5% to $1.7 million versus $2.4 million in the third quarter of the previous year, in line with the reduction in revenues.

Sales for the nine months ended September 30, 2015 – again adjusted to eliminate discontinued operations at CMAC – were $27.4 million, down 27.5% from the sales of $37.8 million in the nine months of 2014.  The net loss for the nine months was $3.6 million from continuing operations, or $5.1 million attributable to common shareholders including both continuing operations and discontinued operations.  This loss includes a $3.0 million write-off of goodwill and intangible assets relating to the Apex operations which had been recognized in our results for the second quarter ended June 30, 2015.  That compares to a net loss in the first nine months of 2014 of $226,000 from continuing operations, or $1.7 million attributable to common shareholders including both continuing operations and discontinued operations.  This represents a $0.41 loss per share in the first nine months of 2015 compared to a $0.14 loss per share in the first nine months of 2014.  Gross profit margin for the first nine months of 2015 decreased to 20.3% from 21.4% in last year's comparable period.  Adjusted EBITDA (a non-GAAP measurement that management uses to measure progress) was $220,000 for the first nine months of this year compared to $1,106,000 for the same period in 2014, a decrease of $886,000.1

CEO Greg Henry commented, "The year to date has been tough, but there are some bright points.  We improved quarterly profit from continuing operations from $133,000 to $229,000 year-to-year, due in large part to our proactive commitment to control expenses and right-size company operations to the lower revenues we are reporting following the divestiture of CMAC, the write-down of assets relating to Apex and other factors.  We started the year with the defection of a group of employees from our sales force; those individuals showed up immediately in the employment of a direct competitor.  As we have said before, we have filed lawsuits for breaches of confidentiality and breach of fiduciary duty.  Gross profit margins are stabilizing at a level not very different from the like periods in 2014.  And we believe that the rate of decrease in revenue may moderate during the fourth quarter of this year.

"Importantly, our term debt stands at $1.6 million, down from the $2.4 million in term debt as of December 31, 2014.  During this period we have been running the business on cash flow, and have not raised any new funds through the sale of securities.  We believe the core business remaining at DecisionPoint represents a platform company in mobile computing services and software.  The Company welcomes the challenge of growing the core business and building shareholder value.

"Last year was our first year of profitability in quite a while, and we hoped to perform a repeat.  However, with our focus on the future, we are still investing in the people and services to support our customers and the mobile computing market at large." 

CFO Michael Roe said, "Cash provided by operations in the first nine months of 2015 was $1.7 million, as compared to $2.2 million in the comparable period of 2014.  Overall term bank debt is lower by nearly $800,000 than it was at the beginning of the year.  SG&A from continuing operations has remained right-sized for our revenues, and some components of that measurement constitute a smaller portion of revenues than in the past, in part due to our continued emphasis on streamlining our operations and controlling expenses.  Our aggressive cost cutting has helped us in this difficult year.

"Interest expense was also lower, due to lower borrowings.  Our cash was $260,000 at September 30, 2015, compared to $1.6 million at December 31, 2014.  We have elected to issue our preferred stock dividends for 2015 in payment-in-kind shares in order to further conserve cash.  We intend to continue to aggressively seek legal recourse against Tolt Solutions Inc., a direct competitor and the current employer of some members of the sales group that left DecisionPoint in the first quarter, and others involved in that matter."

About DecisionPoint™ Systems, Inc.
DecisionPoint Systems, Inc. delivers improved productivity and operational advantages to its clients by helping them move their business decision points closer to their customers.  They do this by making enterprise software applications accessible to the front-line worker anytime, anywhere.  DecisionPoint utilizes all the latest wireless, mobility, and RFID technologies.

For more information about DecisionPoint Systems, Inc., visit www.decisionpt.com.

Forward-Looking Statements
Except for historical information contained herein, the statements in this news release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Act of 1995.  Forward-looking statements involve known and unknown risks and uncertainties, which may cause a company's actual results, performance and achievements in the future to differ materially from forecasted results, performance, and achievements.  Known risks and uncertainties are described in the Company's periodic filings with the Securities and Exchange Commission.  The Company undertakes no obligation to publicly release the results of any revisions to its forward-looking statements to reflect events or circumstances after the date hereof, including without limitation unanticipated events or changes in the Company's plans or expectations, except as may be required by law.

Contacts:

DecisionPoint™ Systems, Inc.
Michael Roe
Chief Financial Officer
(949) 465-0065

DresnerAllenCaron 
Rudy Barrio (investors)
rbarrio@dresnerallencaron.com
(212) 691-8087

-FINANCIAL TABLES FOLLOW-

 


DECISIONPOINT SYSTEMS, INC.

Unaudited Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)







September 30,


December 31,






2015


2014

ASSETS





(Restated)

Current assets 






Cash 



$               260


$            1,616


Accounts receivable, net


4,907


10,354


Inventory, net


208


1,998


Deferred costs


2,104


2,532


Deferred tax assets


-


19


Prepaid expenses and other current assets

148


79


Assets of discontinued operations

-


1,829



Total current assets 


7,627


18,427









Property and equipment, net


189


145

Other assets, net


33


109

Deferred costs, net of current portion

951


1,004

Goodwill



5,304


7,524

Intangible assets, net


-


1,414

Assets of discontinued operations

-


1,634



Total assets


$          14,104


$          30,257









LIABILITIES AND STOCKHOLDERS' DEFICIT




Current liabilities 






Accounts payable


$            7,018


$            9,736


Accrued expenses and other current liabilities

2,528


2,028


Lines of credit


3,329


5,811


Current portion of debt


1,626


813


Due to related parties


170


73


Unearned revenue


3,273


5,915


Liabilities related to discontinued operations

-


1,993



Total current liabilities 

17,944


26,369









Long term liabilities






Unearned revenue, net of current portion

1,320


1,560


Debt, net of current portion and discount

-


1,580


Deferred tax liabilities


88


461


Warrant liability


82


519


Other long term liabilities


166


194


Liabilities related to discontinued operations

-


487



Total liabilities 


19,600


31,170









Commitments and contingencies

-


-









STOCKHOLDERS' DEFICIT






Cumulative Convertible Preferred stock, $0.001 par value, 10,000,000 shares authorized, 1,547,845 shares issued and outstanding, including cumulative and imputed preferred dividends of $2,376 and $2,295, and with a liquidation preference of  $14,663and $13,640 at September 30, 2015 and December 31, 2014, respectively

12,903


12,822


Common stock, $0.001 par value, 100,000,000 shares authorized, 12,883,446 issued and 12,729,563 outstanding as of September 30, 2015, and as of December 31, 2014

13


13


Additional paid-in capital


17,257


17,252


Treasury stock, 153,883 shares of common stock

(205)


(205)


Accumulated deficit


(35,367)


(30,292)


Unearned ESOP shares


(369)


(484)


Accumulated other comprehensive income

272


(19)



Total stockholders' deficit

(5,496)


(913)




Total liabilities and stockholders' deficit

$          14,104


$          30,257

 


DECISIONPOINT SYSTEMS, INC. 

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share data)







Three Months Ended September 30,


Nine Months Ended September 30,






2015


2014


2015


2014








(Restated)




(Restated)













Net sales 



$                 8,240


$               11,608


$           27,410


$             37,809













Cost of sales 



6,562


9,205


21,848


29,724













Gross profit 



1,678


2,403


5,562


8,085













Selling, general and administrative expense

1,730


2,419


6,160


8,246

Goodwill and intangible asset impairment

-


-


3,047


-













Operating loss



(52)


(16)


(3,645)


(161)













Other expense:











Interest expense



178


229


580


658


Fair market value adjustment of warrant liabilities

(205)


(88)


(437)


(254)


Other (income) expense, net


58


17


106


(12)



Total other (income) expense

31


158


249


392













Net loss from continuing operations, before income taxes  

(83)


(174)


(3,894)


(553)













Benefit for income taxes from continuing operations

(312)


(307)


(277)


(327)













Net (loss) income from continuing operations

229


133


(3,617)


(226)













Discontinued operations:










Loss on sale of discontinued operations, net of tax

-


-


(89)


-


(Loss) income from discontinued operations, net of tax

-


(696)


(94)


(469)

Net (loss) income



229


(563)


(3,800)


(695)













Cumulative and imputed dividends on Series A and B preferred stock

(27)


(27)


(81)


(81)

Cash and imputed dividends on Series D and E preferred stock

-


(307)


-


(921)

Accrued paid-in-kind dividends on Series D and Series E preferred stock

(454)


-


(1,194)


-













Net loss attributable to common shareholders

$                   (252)


$                  (897)


$           (5,075)


$             (1,697)













Basic and diluted net loss per common share:









Continuing operations


$                  (0.02)


$                 (0.02)


$             (0.39)


$               (0.10)


Discontinued operations


-


(0.05)


(0.02)


(0.04)


Net loss per share


$                  (0.02)


$                 (0.07)


$             (0.41)


$               (0.14)













Weighted average shares outstanding -









Basic and diluted


12,480,524


12,369,840


12,453,055


12,342,371

























Other comprehensive loss, net of tax









Net (loss) income


$                    229


$                  (563)


$           (3,800)


$                (695)


Foreign currency translation adjustment

272


-


291


(24)













Comprehensive (loss) income


$                    501


$                  (563)


$           (3,509)


$                (719)

 

DECISIONPOINT SYSTEMS, INC.

Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands)










Nine Months Ended September 30,









2015


2014

Cash flows from operating activities:





(Restated)

Net loss from continuing operations



$               (3,617)


$                     (226)

Net loss from discontinued operations



(183)


(469)

Adjustments to reconcile net loss to net cash






provided by operating activities:








Loss on sale of discontinued operations, net of tax


89


-



Depreciation and amortization



404


996



Amortization of deferred financing costs and note discount

46


117



Employee and Director stock-based compensation


101


89



Change in fair value of warrants



(437)


(254)



ESOP compensation expense



20


37



Gain/loss on disposal




(2)


2



Goodwill and intangible asset impairment charges


3,047


-



Allowance for doubtful accounts



1


(42)



Deferred taxes, net




(306)


(9)



Changes in operating assets and liabilities:








Accounts receivable




5,408


2,925




Due from related party




-


184




Inventory, net




1,790


581




Deferred costs




479


710




Prepaid expenses and other current assets


6


(308)




Other assets, net




62


10




Accounts payable




(2,701)


(1,314)




Accrued expenses and other current liabilities


(417)


164




Due to related parties




97


69




Unearned revenue




(2,826)


(2,177)




Operating activities from discontinued operations

616


1,126

Net cash provided by operating activities



1,677


2,211












Cash flows from investing activities







Purchases of property and equipment



(78)


(42)


Proceeds from the sale of CMAC



302


-

Net cash provided by (used in) investing activities


224


(42)












Cash flows from financing activities







(Repayments) borrowings from lines of credit, net


(2,467)


165


Repayment of debt




(527)


(819)


Paid financing costs




(100)


(100)


Dividends paid





(252)


(499)


Payments for contingent acquisition liability


-


(83)

Net cash used in financing activities



(3,346)


(1,336)


Effect on cash of foreign currency translation


89


(3)

Net (decrease) increase in cash




(1,356)


830

Cash at beginning of period




1,616


641

Cash at end of period




$                    260


$                   1,471












Supplemental disclosures of cash flow information:






Interest paid





$                    451


$                      634


Income taxes paid




67


32












Supplemental disclosure of non-cash financing activities:





Accrued and imputed dividends on preferred stock


$                      81


$                   1,002


Accrued PIK dividends on Series D and Series E preferred stock

1,194


-


Liabilities forgiven by CMAC purchaser



348


-

 

Non-GAAP Financial Measures:

To supplement the Company's consolidated financial statements presented on a GAAP basis, the Company has provided non-GAAP financial information; namely, earnings before interest, taxes, depreciation and amortization (EBITDA) and adjusted EBITDA.  The Company's management believes adjusted EBITDA provides investors with a better understanding of how the Company's current results relate to the Company's historical performance.  Management also believes that adjusted EBITDA reflects the essential operating activities of the Company. The non-GAAP financial measures provided are not meant to be considered in isolation or as a substitute for GAAP financials. A reconciliation of non-GAAP financial measures to GAAP measures appears below.

All amounts included in the table below are derived from continuing operations and do not include activity from discontinued operations, (unaudited and shown in thousands).

 





Three months ended September 30,


Nine months ended September 30,





2015


2014


2015


2014

EBITDA Calculation:





















Net income (loss) from continuing operations

$             229


$             133


$         (3,617)


$            (226)

Depreciation and amortization


14


308


404


996

Interest expense



178


229


580


658

Income tax provision (benefit)


(312)


(307)


(277)


(327)


EBITDA



$             109


$             363


$         (2,910)


$          1,101























Adjusted EBITDA Calculation:




















EBITDA




109


363


(2,910)


1,101

Goodwill and intangible asset impairment charges

-


-


3,047


-

Stock compensation



31


39


101


89

ESOP compensation



3


11


20


37

Deferred taxes



(57)


143


(306)


(9)

Fair market value adjustment of warrant liability

(205)


(88)


(437)


(254)

Restructuring costs



95


142


116


142

Non-recurring legal



61


-


589


-


Adjusted EBITDA


$               37


$             610


$             220


$          1,106

 

1 Adjusted EBITDA is a non-GAAP measurement that is commonly used in our industry to gauge performance.  A reconciliation to GAAP is provided in the tables that follow this report.

 

SOURCE DecisionPoint Systems, Inc.



RELATED LINKS

http://www.decisionpt.com