DynTek Announces Results for First Fiscal Quarter 2011

Company Achieves Increased Revenues, EBITDA, and Net Income in the First Quarter

NEWPORT BEACH, CA--(Marketwire - October 28, 2010) -  DynTek, Inc. (PINKSHEETS: DYNE), a leading provider of professional technology services, today announced results for its first fiscal quarter ended September 30, 2010.

DynTek reported revenues of $28,684,000 for the first fiscal quarter ended September 30, 2010, an increase of $4,955,000 or 21% from $23,729,000 in the first fiscal quarter of 2010. Gross profit increased to $4,538,000 for the first fiscal quarter ended September 30, 2010, an increase of $291,000 from $4,247,000 for the prior first fiscal quarter. Total operating expenses increased to $3,674,000 in the first fiscal quarter ended September 30, 2010 compared to $3,397,000 in the prior first fiscal quarter, largely due to an increase of $211,000 in selling expenses related to commissions on the increased revenue levels.

DynTek reported positive EBITDA of $919,000 for the first fiscal quarter ended September 30, 2010 as compared to $930,000 for the first fiscal quarter of 2010. Net income was $381,000 for the first fiscal quarter of 2011, as compared to net income of $282,000 for the first fiscal quarter of 2010. 

"We had a strong start to our fiscal year, realizing significant improvements across all of our key performance indicators, from revenue to record net income," said Ron Ben-Yishay, DynTek's chief executive officer. "We have seen strong growth in contracts that generate a recurring revenue stream, which offer DynTek additional momentum to sustain our double digit growth throughout the fiscal year."

The Company defines EBITDA as net income (loss) from operations before interest, taxes, depreciation and amortization, and stock-based compensation. Other companies may calculate EBITDA differently. Although EBITDA is a widely used financial indicator of a company's ability to service debt, it is not a recognized measure for financial statement presentation under generally accepted accounting procedures (GAAP). EBITDA should not be considered in isolation or as superior or as an alternative to net income (loss) or to cash flows from operating activities as determined in accordance with GAAP. Nonetheless, the Company believes that EBITDA provides useful supplemental information for investors and others to measure operating performance, especially in situations where a company has significant non-cash operating expenses that are not indicative of core business operating results. EBITDA is widely used in the IT services industry to analyze comparable company performance, and management of the Company also uses EBITDA, in addition to GAAP information, as a measure of operating performance for assessing its business units.

About DynTek
DynTek is a leading provider of professional technology services to mid-market companies, such as state and local governments, educational institutions and commercial entities in the largest IT markets nationwide. From virtualization and cloud computing to unified communications and collaboration, DynTek provides professional technology solutions across the three core areas of our customers' technical environment: Infrastructure/Data Center, Application Platforms and End Point Computing. DynTek's multidisciplinary approach allows our clients to turn to a single source for their most critical technology requirements. For more information, visit http://www.dyntek.com.

Forward Looking Statements
This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Investors are cautioned that certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and involve known and unknown risks, uncertainties and other factors. Such uncertainties and risks include, among others, success in reaching target markets for services and products in a highly competitive market and the ability to maintain existing and attract future customers; our ability to finance and sustain operations, including our ability to comply with the terms of working capital facilities and/or other term indebtedness of DynTek, and to extend such obligations when they become due, or to replace them with alternative financing; our ability to raise equity capital in the future; our ability to achieve profitability despite historical losses from operations; our ability to maintain business relationships with IT product vendors and our ability to procure products as necessary; the size and timing of additional significant orders and their fulfillment; the continuing desire of and available budgets for state and local governments to outsource to private contractors; our ability to successfully identify and integrate acquisitions; the retention of skilled professional staff and certain key executives; the performance of DynTek's government and commercial technology services; the continuation of general economic and business conditions that are conducive to outsourcing of IT services; and such other risks and uncertainties included in our Annual Report on Form 10-K filed on October 29, 2007, our Quarterly Report on Form 10-Q filed on November 19, 2007 and other SEC filings. DynTek has no obligation to publicly revise any forward-looking statements to reflect anticipated or unanticipated events or circumstances occurring after the date of such statements.

(Unaudited, in thousands)  
  For the Quarter Ended September 30, 2010     For the Quarter Ended September 30, 2009  
  Product revenues $ 21,469     $ 15,624  
  Service revenues   7,214       8,106  
  TOTAL REVENUES   28,684       23,729  
COST OF REVENUES              
  Cost of products   18,355       13,659  
  Cost of services   5,791       5,823  
  TOTAL COST OF REVENUES   24,146       19,482  
GROSS PROFIT   4,538       4,247  
  Selling   2,542       2,331  
  General and administrative   1,095       1,016  
  Depreciation and amortization   37       50  
  TOTAL OPERATING EXPENSES   3,674       3,397  
INCOME FROM OPERATIONS   864       850  
OTHER INCOME (EXPENSE):              
Interest expense   (450 )     (570 )
Other income (expense), net   -       -  
  TOTAL OTHER EXPENSE   (450 )     (570 )
  414       280  
Income tax provision   33       -  
  Income (loss) on discontinued operations, net of tax   -       2  
NET INCOME $ 381     $ 282  

Contact Information:

For more information, contact:
Linda Ford
DynTek, Inc.