SOURCE: American Defense Systems, Inc.

American Defense Systems, Inc.

April 15, 2009 16:05 ET

American Defense Systems Reports Fiscal 2008 Results

HICKSVILLE, NY--(Marketwire - April 15, 2009) - American Defense Systems, Inc. (ADSI) (AMEX: EAG), a leading provider of advanced transparent and opaque armor, architectural hardening and security products for Defense and Homeland Security, reported financial results for the year ended December 31, 2008.

Financial Results for Full-Year 2008

For the full-year 2008, revenues totaled $35.6 million, a decrease of 2% from $36.3 million in 2007. The decrease is primarily attributed to approximately $10.0 million in orders delayed by the federal government until the first half of 2009 and the elimination of approximately $1.3 million from operations discontinued in the fourth quarter.

Income from continuing operations in 2008 was $511,000 or $0.01 per basic and diluted share, compared to income from continuing operations in 2007 of $3.1 million, or $0.08 per basic and diluted share.

Income from continuing operations in 2008 included a $996,000 income tax benefit, as compared to a tax provision of $362,000 in 2007. Before tax, the company had a loss from continuing operations of $485,000 in 2008 versus income from continuing operations of $3.5 million in 2007. The loss before taxes in 2008 reflects a 50% year-over-year increase in general and administrative expenses and salaries, which is due to increasing the infrastructure of the company's headquarters and facilities, and expanding staff to handle future growth. In addition to the general and administrative expenses, the loss from continuing operations in 2008 included $866,000 in interest expense, a $2.9 million unrealized gain on the adjustment of fair value Series A convertible preferred stock classified as a liability, and a $1.5 million unrealized gain on investor warrant liabilities.

Contract backlog at the end of 2008 was approximately $57.0 million, versus approximately $48.0 million at the end of 2007.

Fourth Quarter 2008 Operational Highlights

ADSI advanced development in a number of areas during the fourth quarter of 2008, including:

--  Received $4.4 million of follow-on orders from the U.S. Army Tank-
    Automotive and Armaments Command (TACOM) for Crew Protection Kits (CPKs) to
    be installed on construction vehicles overseas.
    
--  Reported an expected increase in CPK orders from the world's largest
    privately-owned producer of construction machinery, JCB Construction
    Equipment, in fulfillment of a new major U.S. Army contract announced by
    JCB. ADSI forecasts total CPK orders from this agreement to generate more
    than $10 million through 2010.
    
--  Appointed Nicole L. Prush as director of armor solutions, responsible
    for the development, marketing and sale of ADSI's line of unique opaque and
    transparent armor solutions used by the US Military, government agencies,
    private security and law enforcement.
    

Management Commentary

"Our results in 2008 represent good progress in our first year as a publicly traded company and put us on a strong course in 2009," said Anthony J. Piscitelli, chairman and CEO of American Defense Systems. "While we were disappointed to not achieve our revenue target for 2008, the major government orders we needed to reach our target were not lost but simply delayed and are currently being realized in this first half of 2009."

"2008 was also a building year for ADSI. We made significant investments in infrastructure, new staff and product development in order to address our large order backlog and the some $37 million in new contract awards we signed in the first quarter of 2009 -- with more anticipated to follow. We expect to realize more than $21 million in 2009 from these newly signed contracts, which is in addition to order flow stemming from our new Tier 1 supplier arrangement with Caterpillar and our ongoing relationship with JCB Construction Equipment."

"While the military segment of our business has continued to win major contracts, our new American Physical Security Group (APSG) subsidiary also did very well in 2008, with some $2.0 million in revenues in its first year of introduction. APSG has already secured an additional $8.0 million in architectural security-related orders to be realized in 2009. Our T2 tactical training division is also nearing completion of its first major sale, and we anticipate this segment of our business will likely comprise about 10% of revenue in 2009. This across-the-board progress places us well on course to exceeding our 2009 revenue goal of more than $52.0 million, along with substantial profitability."

Financial Guidance

Based on current business conditions and expectations, ADSI expects revenues for the fiscal year ending December 30, 2009 to exceed $52 million, which would represent an increase of more than 46% over 2008. The company also expects to operate profitably in the first half and full year of 2009, and management expects gross margins to range between 33% and 36%. This forecast is supported by a number of factors, including a strong order flow resulting in a contract backlog of approximately $57.0 million at December 31, 2008.

Conference Call and Webcast

The company will hold a conference call today at 4:30 p.m. Eastern time to discuss the result for the fiscal year 2008. Members of ADSI's executive management team will host the presentation, followed by a question and answer period.

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization and ask you to wait until the call begins. If you have any difficulty connecting with the conference call, please contact the Liolios Group at 949-574-3860.

Date: Wednesday, April 15, 2009
Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time)
Dial-In Number: 1-800-894-5910
International: 1-785-424-1052
Conference ID#: 7DEFENSE

The conference call will be broadcast simultaneously and available for replay via the investor section of the company's Web site at www.adsiarmor.com. A telephone replay of the call will be available after 7:30 p.m. Eastern time on the same day and until May 15, 2009, by calling toll-free, 1-800-283-4595 or 1-402-220-0873.

About American Defense Systems, Inc.

American Defense Systems, Inc. ("ADSI") offers advanced solutions in the design, fabrication, and installation of transparent and opaque armor, security doors, windows and curtain wall systems for use by military, law enforcement, homeland defense and corporate customers. ADSI engineers also specialize in developing innovative, functional and aesthetically pleasing security applications for the mobile and fixed infrastructure physical security industry. For more information, visit the ADSI corporate Web site at www.adsiarmor.com.

Some of the statements made by American Defense Systems, Inc. ("ADSI") in this press release, including, without limitation, statements regarding ADSI's anticipated future growth, are forward-looking in nature. ADSI intends that any forward-looking statements shall be covered by the safe harbor provisions for such statements contained in the Private Securities Litigation Reform Act of 1995. Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as "may," "will," "should," "expects," "projects," "anticipates," "intends," "plans," "believes," "estimates," "predicts," "potential," "forecasts," "continues" and similar expressions are forward-looking statements. ADSI cautions you that forward-looking statements are not guarantees of performance. ADSI undertakes no obligation and disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Forward-looking statements involve known and unknown risks and uncertainties that may cause ADSI's actual future results to differ materially from those projected or contemplated in the forward-looking statements. ADSI believes that these risks include, but are not limited to: ADSI's reliance on the U.S. government for a substantial amount of its sales and growth; decreases in U.S. government defense spending; ADSI's ability to contract further with the U.S. Department of Defense; ADSI's ability to comply with complex procurement laws and regulations; competition and other risks associated with the U.S. government bidding process; changes in the U.S. government's procurement practices; ADSI's ability to obtain and maintain required security clearances; the inability to effect the redemption of ADSI's Series A Convertible Preferred Stock because of insufficient funds available for that purpose; ADSI's ability to realize the full amount of revenues reflected in its backlog; ADSI's reliance on certain suppliers; and intense competition and other risks associated with the defense industry in general and the security-related defense sector in particular. There also can be no assurance that ADSI will obtain a sufficient number of orders under the JCB contract, if any at all, to generate more than $10 million in revenue or that such orders will be placed during the two year period referenced in this press release. Accordingly, ADSI revenues in connection with the matters referenced herein could be significantly less than the $10 million and may not be realized during such two year period.

Additional information concerning these and other important risk factors can be found under the heading "Risk Factors" in ADSI's filings with the Securities and Exchange Commission, including, without limitation, its most recent registration statement on Form 10 and its most recent annual report on Form 10-K filed on or about the date of this press release. Statements in this press release should be evaluated in light of these important factors.

              AMERICAN DEFENSE SYSTEMS, INC. and SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF OPERATIONS

                                                       Year Ended
                                                       December 31,
                                                    2008          2007
                                                ------------  ------------
CONTRACT REVENUES EARNED                        $ 35,588,849  $ 36,316,994
COST OF REVENUES EARNED                           24,702,714    22,342,582
                                                ------------  ------------

GROSS PROFIT                                      10,886,135    13,974,412
                                                ------------  ------------
OPERATING EXPENSES
    General and administrative expenses            5,789,681     3,874,749
    General and administrative salaries            4,758,968     3,170,250
    Marketing                                      2,722,224     1,976,538
    Research and development                         788,100       612,547
    Settlement of litigation                          57,377       469,488
    Depreciation                                     842,532       392,115
    Loss on disposal of fixed assets                       -           136
                                                ------------  ------------
      Total operating expenses                    14,958,882    10,495,823
                                                ------------  ------------
INCOME (LOSS) FROM OPERATIONS                     (4,072,747)    3,478,589
                                                ------------  ------------

OTHER INCOME (EXPENSE)
    Unrealized gain on adjustment of fair value
     Series A convertible preferred stock
      classified as a liability                    2,900,799             -
    Unrealized gain on investor warrant
     liability                                     1,450,117             -
    Other income (expense)                             8,551       (51,658)
    Interest expense                                (866,484)      (39,111)
    Interest income                                  117,312       101,955
    Finance charge                                   (22,598)            -
                                                ------------  ------------
      Total other income (expense)                 3,587,697        11,186
                                                ------------  ------------

INCOME (LOSS) FROM CONTINUING OPERATIONS
 BEFORE INCOME TAXES                                (485,051)    3,489,775

INCOME TAX PROVISION (BENEFIT)                      (996,000)      362,481
                                                ------------  ------------
INCOME FROM CONTINUING OPERATIONS                    510,949     3,127,294

INCOME (LOSS) FROM DISCONTINUED
 OPERATIONS, NET OF TAXES
    Income (loss) from operations of
     discontinued division                          (230,834)       12,721
    Loss from disposal of discontinued division   (1,804,875)            -
                                                ------------  ------------
                                                  (2,035,709)       12,721
                                                ------------  ------------

NET INCOME (LOSS)                                 (1,524,760)    3,140,015
PREFERRED STOCK DIVIDENDS                         (1,081,801)            -
                                                ------------  ------------

NET INCOME (LOSS) ALLOCATED TO
 COMMON SHAREHOLDERS                            $ (2,606,561) $  3,140,015
                                                ============  ============

Basic and Fully Diluted Net Loss Per Share      $     (0.066) $      0.081
                                                ============  ============

Weighted Average Shares Outstanding               39,416,278    38,801,840
                                                ============  ============

EARNINGS PER SHARE - Basic
 Income from continuing operations              $       0.01  $       0.08
                                                ============  ============
 (Loss) from discontinued operations            $      (0.05) $       0.00
                                                ============  ============
  Net  income (loss)                            $      (0.07) $       0.08
                                                ============  ============





              AMERICAN DEFENSE SYSTEMS, INC. and SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS

                                                        December 31,
                                                      2008         2007
                                                  ------------ ------------
                 ASSETS
                 ------
CURRENT ASSETS
    Cash                                          $    374,457 $  1,434,373
    Accounts receivable, net                         4,981,150    6,711,161
    Inventory                                          621,048      436,379
    Prepaid expenses and other current assets        3,144,601    1,856,063
    Costs in excess of billings on uncompleted
     contracts                                       7,143,089    5,011,974
    Deferred tax asset, net                                  -    4,136,982
    Deposits                                           437,496      608,020
                                                  ------------ ------------
TOTAL CURRENT ASSETS                                16,701,841   20,194,952

PROPERTY and EQUIPMENT, net                          3,743,936    1,125,028
DEFERRED FINANCING COSTS                             1,277,833            -
NOTES RECEIVABLE                                       925,000            -
GOODWILL                                               450,000    1,680,361
ADVANCES for FUTURE ACQUISITIONS                       159,560      138,000
DEFERRED TAX ASSET                                   1,167,832            -
ASSETS of DISCONTINUED OPERATIONS                      736,613      416,414
                                                  ------------ ------------
TOTAL ASSETS                                      $ 25,162,615 $ 23,554,755
                                                  ============ ============

   LIABILITIES AND SHAREHOLDERS' EQUITY
   ------------------------------------
CURRENT LIABILITIES
    Accounts payable                              $  2,480,652 $  4,350,741
    Accrued expenses                                   755,615      804,486
    Line of credit and short term debt                  76,832       49,950
    Billings in excess of cost on uncompleted
     contracts                                               -            -
    Due to related party                                     -       12,741
    Due to Tactical Applications Group                       -    1,000,000
    Deferred tax liability                                   -    3,965,150
                                                  ------------ ------------

TOTAL CURRENT LIABILITIES                            3,313,099   10,183,068

LONG TERM LIABILITIES
    Preferred stock, $.001 par value, 5,000,000
     shares authorized, 15,000 shares designated
     as mandatorily redeemable Series A Convertible
     Preferred Stock (cumulative), 15,000 shares
     issued and outstanding                         10,981,577            -
    Investor warrant liability                          90,409            -
    Liabilities of discontinued operations             625,585       73,859
                                                  ------------ ------------
TOTAL LIABILITIES                                   15,010,670   10,256,927
                                                  ------------ ------------

COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
    Common Stock, $.001 par value:  100,000,000
     shares authorized, 39,585,960 and 39,207,950
     shares issued and outstanding as of December
     31, 2008 and 2007, respectively                    39,586       39,208
    Additional paid in capital                       9,534,616   10,274,602
    Retained earnings                                  577,743    2,984,018
                                                  ------------ ------------
TOTAL SHAREHOLDERS' EQUITY                          10,151,945   13,297,828
                                                  ------------ ------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY        $ 25,162,615 $ 23,554,755
                                                  ============ ============

Contact Information

  • Company Contacts:
    Roger Ward
    V.P. of Marketing & Investor Relations
    American Defense Systems, Inc.
    Tel 516-390-5300, x326
    Email Contact

    Investor Relations:
    Ron Both
    Managing Director
    Liolios Group, Inc.
    Tel 949-574-3860
    Email Contact