DecisionPoint Systems Reports Results For First Quarter Ended March 31, 2015

May 14, 2015, 16:01 ET from DecisionPoint Systems, Inc.

IRVINE, Calif., May 14, 2015 /PRNewswire/ -- DecisionPoint™ Systems, Inc. (OTCQB: DPSI and DPSIP), a leading provider and integrator of Enterprise Mobility and Wireless Applications solutions, today reported financial results for the first quarter ended March 31, 2015.  Sales were $11.7 million, down 29.7 percent from sales of $16.7 million in the first quarter of 2014.  The net loss was $580,000 compared to a net loss of $113,000 for the first quarter of 2014.  On an EPS basis, the loss per share was $0.08, compared to a $0.04 loss per share for the three months ended March 31, 2014.  Adjusted EBITDA (a non-GAAP measurement that management uses to measure progress) was $333,000 for the three-month period this year compared to $482,000 for the same period in 2014, a decrease of $149,000.

Interim CEO James DeSocio commented, "The first quarter is typically our weakest quarter, and this year's first quarter was hobbled by freakish weather, including record snowfalls in the Midwest and Northeast, and a general slackness in the US economy.  In addition, four individuals from our sales group left DecisionPoint and joined a competitor; our sales were lower in many of our accounts that they were servicing when they worked for us.  We have filed lawsuits for unfair competition and solicitation, breaches of confidentiality and loyalty, and other improper activities.  Hardware is our largest revenue category, and hardware sales were down sharply, from $11.5 million in the first quarter of 2014, to $6.9 million in the quarter we are reporting.   Professional services, which carry a better gross profit margin, were not down at all, but they were flat at $3.8 million.  Software sales were off at the same rate as hardware sales.

"It is not the first time we have had a poor first quarter, and it may not be the last, as it is typically our seasonably weakest quarter," Mr. DeSocio added, "but our annual performance is highly dependent every year on the steady progression of quarters, with the highest sales by far in the second half of the year.  We have a lot to make up, but our team is tough and we are capable of climbing back up and improving our trend, as we established last year."

CFO Michael Roe said, "Cash provided by operations in the first quarter of 2015 was $2.1 million, as compared to $0.6 million in the first quarter of 2014.  Overall indebtedness of $5.4 million was lower by an aggregate of almost $2.8 million from the December 31, 2014 balance of $8.2 million.  The gross profit margin for the quarter just ended was 22 percent, 60 basis points higher than in the first quarter of 2014; SG&A was down by 23.1 percent, or about $0.9 million, due to our continued emphasis on expense control.  Our aggressive cost cutting in 2013 has positioned us to better weather a weaker quarter.

"Interest expense was also lower, due to lower borrowings.  Our cash was $818,000 at March 31, 2015, compared to $1.6 million at December 31, 2014.  In the second quarter we intend to pay preferred dividends in kind for the first quarter, and will most likely do the same for the second quarter, preferred dividends payable in the third quarter, as we also intend to aggressively press the legal actions underway."

Conference Call:
The Company's management team will host a conference call to discuss its results for the first quarter ended March 31, 2015 on Thursday May 14, 2015, at 4:30 pm ET.

Participants should dial into the call ten minutes before the scheduled time using the following numbers: 1-888-348-3873 (USA) or +1-412-902-4234 (international) to access the call.

Audio Webcast:
There will also be a simultaneous live webcast through the Company's website, www.decisionpt.com and selecting the investor tab. Participants should register on the website approximately ten minutes prior to the start of the webcast.

Replay:
An audio replay of the conference call will be available for seven days and can be accessed by dialing 1-877-870-5176 (USA) or +1-858-384-5517 (international) and using passcode 10065939. For those unable to attend to the live webcast, it will be archived shortly following the event for 30 days in the Investors section of the Company's website.

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.

Contacts:

 

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

DresnerAllenCaron 
Rudy Barrio (investors)
r.barrio@allencaron.com
(212) 691-8087

-FINANCIAL TABLES FOLLOW-

 

 

 

DECISIONPOINT SYSTEMS, INC.

Unaudited Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

 
         

March 31,

 

December 31,

         

2015

 

2014

ASSETS

         

Current assets 

       
 

Cash 

   

$       818

 

$    1,616

 

Accounts receivable, net

 

5,782

 

11,497

 

Inventory, net

 

1,573

 

2,035

 

Deferred costs

 

3,020

 

3,177

 

Deferred tax assets

 

13

 

21

 

Prepaid expenses and other current assets

 

209

 

81

   

Total current assets 

 

11,415

 

18,427

               

Property and equipment, net

 

168

 

145

Other assets, net

 

116

 

124

Deferred costs, net of current portion

 

1,235

 

1,314

Goodwill

   

8,023

 

8,202

Intangible assets, net

 

1,660

 

2,045

   

Total assets

 

$  22,617

 

$  30,257

               

LIABILITIES AND STOCKHOLDERS' DEFICIT

       

Current liabilities 

       
 

Accounts payable

 

$    7,352

 

$  10,000

 

Accrued expenses and other current liabilities

 

2,150

 

2,755

 

Lines of credit

 

3,453

 

5,811

 

Current portion of debt

 

614

 

813

 

Due to related parties

 

107

 

73

 

Unearned revenue

 

6,266

 

6,918

   

Total current liabilities 

 

19,942

 

26,370

               

Long term liabilities

       
 

Unearned revenue, net of current portion

 

1,860

 

2,015

 

Debt, net of current portion and discount

 

1,373

 

1,580

 

Deferred tax liabilities

 

431

 

460

 

Warrant liability

 

597

 

519

 

Other long term liabilities

 

206

 

226

   

Total liabilities 

 

24,409

 

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 $2,322 and $2,295, and with a liquidation preference of  $13,775 and $13,640 at March 31, 2015 and December 31, 2014, respectively

 

 

12,849

 

 

12,822

 

Common stock, $0.001 par value, 100,000,000 shares authorized, 12,883,446 issued and 12,729,563 outstanding as of March 31, 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

 

(31,259)

 

(30,292)

 

Unearned ESOP shares

 

(446)

 

(484)

 

Accumulated other comprehensive income

 

(1)

 

(19)

   

Total stockholders' deficit

 

(1,792)

 

(913)

     

Total liabilities and stockholders' deficit

 

$  22,617

 

$  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 March 31,

       

2015

 

2014

             
             

Net sales 

 

$     11,749

 

$     16,709

             

Cost of sales 

 

9,167

 

13,135

             

Gross profit 

 

2,582

 

3,574

             

Selling, general and administrative expense

 

2,857

 

3,717

             

Operating loss

 

(275)

 

(143)

             

Other (income) expense:

       
 

Interest expense

 

184

 

207

 

Fair market value adjustment of warrant liability

 

78

 

(251)

 

Other (income) expense, net

 

64

 

(8)

   

Total other (income) expense

 

326

 

(52)

             

Loss before income taxes 

 

(601)

 

(91)

             

(Benefit) provision for income taxes

 

(21)

 

22

             

Net loss

 

(580)

 

(113)

             

Cumulative and imputed dividends on Series A and B preferred stock

 

(27)

 

(27)

Cash and imputed dividends on Series D and E preferred stock

 

-

 

(302)

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

 

(360)

 

-

             

Net loss attributable to common shareholders

 

$        (967)

 

$        (442)

             

Net loss per common share:

       
 

Basic and diluted

 

$       (0.08)

 

$       (0.04)

             

Weighted average common shares outstanding:

       
 

Basic and diluted

 

12,425,182

 

12,314,498

             
             

Other comprehensive loss, net of tax

       
 

Net loss

 

$        (580)

 

$        (113)

 

Foreign currency translation adjustment

 

18

 

(24)

             

Comprehensive loss

 

$        (562)

 

$        (138)

 

 

 

DECISIONPOINT SYSTEMS, INC.

Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands)

 
         

Three Months ended March 31,

         

2015

 

2014

Cash flows from operating activities:

       

Net loss

   

$   (580)

 

$  (113)

Adjustments to reconcile net loss to net cash provided by operating activities:

       
   

Depreciation and amortization

 

282

 

451

   

Amortization of deferred financing costs and note discount

 

35

 

65

   

Employee and Director stock-based compensation

 

33

 

10

   

Change in fair value of warrants

 

78

 

(251)

   

ESOP compensation expense

 

10

 

14

   

Allowance for doubtful accounts

 

16

 

(6)

   

Deferred taxes, net

 

7

 

-

   

Changes in operating assets and liabilities:

       
     

Accounts receivable

 

5,665

 

925

     

Inventory, net

 

462

 

46

     

Deferred costs

 

233

 

(51)

     

Prepaid expenses and other current assets

 

(54)

 

-

     

Other assets, net

 

-

 

(25)

     

Accounts payable

 

(2,640)

 

(486)

     

Accrued expenses and other current liabilities

 

(715)

 

(116)

     

Due to related parties

 

33

 

89

     

Unearned revenue

 

(757)

 

8

Net cash provided by operating activities

 

2,108

 

560

               

Cash flows from investing activities

       
 

Purchases of property and equipment

 

(33)

 

(19)

Net cash used in investing activities

 

(33)

 

(19)

               

Cash flows from financing activities

       
 

Repayments from lines of credit, net

 

(2,353)

 

(182)

 

Repayment of debt

 

(249)

 

(271)

 

Dividends paid

 

(252)

 

-

 

Paid financing costs

 

(100)

 

(100)

Net cash used in financing activities

 

(2,954)

 

(553)

 

Effect on cash of foreign currency translation

 

81

 

(17)

Net decrease in cash

 

(798)

 

(29)

Cash at beginning of period

 

1,616

 

641

Cash at end of period

 

$     818

 

$    612

               

Supplemental disclosures of cash flow information:

       
 

Interest paid

 

$     249

 

$    269

 

Income taxes paid

 

54

 

-

               

Supplemental disclosure of non-cash financing activities:

       
 

Accrued and imputed dividends on preferred stock

 

$       27

 

$    329

 

Accrued PIK dividends on Series D and Series E preferred stock

 

360

 

-

 

 

 

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:

 

     

Three months ended March 31,

     

2015

 

2014

EBITDA Calculation:

       
           

Net loss

   

$  (580)

 

$  (113)

Depreciation and amortization

 

282

 

451

Interest expense

 

184

 

207

Income tax provision(benefit)

 

(21)

 

22

 

EBITDA

 

$  (135)

 

$    567

           
           

Adjusted EBITDA Calculation:

       
           

EBITDA

   

$  (135)

 

$    567

Stock compensation

 

33

 

10

ESOP compensation

 

10

 

14

Deferred taxes

 

7

 

-

Fair market value adjustment of warrant liability

 

78

 

(251)

Restructuring costs

 

-

 

142

Non-recurring legal

 

340

 

-

 

Adjusted EBITDA

 

$    333

 

$    482

 

 

 

SOURCE DecisionPoint Systems, Inc.



RELATED LINKS

http://www.decisionpt.com