SOURCE: DecisionPoint Systems, Inc.

DecisionPoint Systems, Inc.

May 24, 2011 09:45 ET

DecisionPoint Systems Reports First Quarter 2011 Results

Q1 Revenue up 16% Year-Over-Year to $12.8 Million

FOOTHILL RANCH, CA--(Marketwire - May 24, 2011) - DecisionPoint Systems, Inc. (OTCBB: DNPI), a leading enterprise mobility and RFID systems integrator, reported financial results for the first quarter ended March 31, 2011.

Revenue in the first quarter of 2011 increased 15.6% to $12.8 million from $11.1 million in the same period a year ago. The year-over-year increase was primarily attributable to the revenue contribution from the CMAC acquisition, which closed on December 30, 2010.

Gross profit in the first quarter of 2011 increased 14.1% to $2.3 million from $2.0 million in the same period of 2010. Gross profit margin was 18.2% compared to 18.4% in the same period a year ago. Loss from operations in the first quarter increased to $1.2 million or 9.1% of revenue from $0.4 million or 3.6% of revenue for the same period a year ago.

Selling, general and administrative expenses in the first quarter of 2011 increased year-over-year to $3.5 million from $2.4 million in the same period a year ago. The $1.1 million year-over-year increase was primarily related to the acquisition and operation of CMAC. Interest expense of $0.3 million in the first quarter of 2011 was significantly lower than the $0.5 million in the same period a year ago due to prepayment expense related to the early repayment of our subordinated debt.

Net loss for the first quarter was $1.8 million or $(0.06) per share compared to a net loss of $1.2 million or $(0.05) per share in the same period a year ago.

Management Commentary

"We performed according to our plan in the first quarter," said Nicholas Toms, CEO of DecisionPoint Systems. "Growth in the first half of the year is historically seasonally slower than in the back half of the year. However, the imperative for mobile solutions continues to build robust pipeline and sales activity in our core business. The integration of our CMAC acquisition, which is on plan, is providing significant cross-selling opportunities, while its focus on professional services and software is expected to improve gross margin and drive our shift to a richer mix of software and service revenues. The team at CMAC will further provide us with additional resources to grow our current professional services revenue through its experienced staff of in-house consultants and database of contract professional services consultants."

Donald Rowley, CFO of DecisionPoint Systems, commented, "We have switched CMAC from a cash basis accounting to an accrual basis consistent with DecisionPoint's own accounting policies. As a result and as expected, this action will initially depress revenue and earnings in the early part of the year but will correct itself as the deferred revenue accrual starts dropping into recognized income in later periods."

"Our recently introduced Grapevine Push-to-Talk product, a cloud-based SaaS product that keeps workforces connected no matter how widely dispersed, will further shift our mix toward recurring revenues, as that product's high utility and competitive operating costs become more recognized in the marketplace. We continued to add well respected customers during the first quarter," continued Mr. Toms.

"We also recently received the required shareholder and regulatory approvals necessary to close our reverse merger with Comamtech, which is expected to take place by the end of this month. This merger, in addition to the just completed $4.0 million financing from a strategic private equity fund, will result in a stronger balance sheet for DecisionPoint, and both are the final building blocks that should be necessary for a successful Nasdaq Capital Market listing application. We're excited that the vision we have had for DecisionPoint is coming into view and we are confident that the demand for our products and services will carry us to our goal of reaching $100 million in revenue and sustained profitability in fiscal 2012."

Forward-Looking Statements

Under The Private Securities Litigation Reform Act of 1995: 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 achievement in the future to differ materially from forecasted results, performance, and achievement. These 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 these forward-looking statements that may be made to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events or changes in the Company's plans or expectation.

About DecisionPoint Systems, Inc.

DecisionPoint Systems, Inc. (OTCBB: DNPI) 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 the latest wireless, mobility, and RFID technologies. For more information on DecisionPoint Systems visit www.decisionpt.com/news.php.

                        DECISIONPOINT SYSTEMS, INC.
              Condensed Consolidated Statements of Operations
                                (Unaudited)



                                                    Three Months ended
                                                        March 31,
                                                   --------------------
                                                    2011          2010
                                                 -----------   -----------
                                                               (Restated)

Net sales                                       $ 12,800,958  $ 11,072,263

Cost of sales                                     10,477,349     9,035,968

Gross profit                                       2,323,609     2,036,295

Selling, general and administrative expense        3,492,975     2,435,365

Operating loss                                    (1,169,366)     (399,070)

Other expense:
    Interest expense, net                            281,596       469,811
    Other expense, net                               164,085       320,685
         Total other expense                         445,681       790,496

Net loss before income taxes                      (1,615,047)   (1,189,566)

Provision for income taxes                             7,628        41,475

Net loss                                          (1,622,675)   (1,231,041)

Cumulative preferred stock dividends                 (27,100)      (19,500)

Net loss attributable to common shareholders    $ (1,649,775) $ (1,250,541)

Net loss per share -
    Basic and diluted                           $      (0.05) $      (0.06)

Weighted average shares outstanding -
    Basic and diluted                             31,345,556    22,612,924





                       DECISIONPOINT SYSTEMS, INC.
                  Condensed Consolidated Balance Sheets
                              (Unaudited)

                                                  March 31,   December 31,
                                                    2011          2010
ASSETS                                                         (Restated)
                                                 -----------   -----------
Current assets
Cash and cash equivalents                       $    402,337  $    315,169
Accounts receivable, net                           9,423,947    12,575,597
Inventory, net                                     1,149,844       898,465
Deferred costs                                     3,452,895     3,562,654
Deferred tax assets                                   55,000        55,000
Prepaid expenses                                     192,752       457,863
      Total current assets                        14,676,775    17,864,748

  Property and equipment, net                        101,893       100,070
  Other assets, net                                  152,712       173,465
  Deferred costs, net of current portion           1,275,889     1,414,851
  Goodwill                                         5,538,466     5,508,864
  Intangible assets, net                           2,600,249     2,729,000
      Total assets                              $ 24,345,984  $ 27,790,998

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable                                $  9,869,568  $ 10,364,368
Accrued expenses and other current liabilities     2,834,260     5,368,060
Line of credit                                     4,875,326     4,364,221
Current portion of debt, net of discount           2,695,000     1,000,000
Unearned revenue                                   6,742,302     5,714,434
      Total current liabilities                   27,016,456    26,811,083

Long term liabilities
Unearned revenue, net of current portion           1,657,511     1,850,440
Debt, net of current portion and discount                  -     1,940,000
Interest payable                                      60,000        60,000
      Total liabilities                           28,733,967    30,661,523

Commitments and contingencies                              -             -

STOCKHOLDERS' DEFICIT
  Preferred stock, $0.001 par value, 10,000,000
   shares authorized, 10,000 designated Series A
   Cumulative Convertible Preferred, and 10,000
   designated Series B Cumulative Convertible
   Preferred, 1,355 shares issued and outstanding
   including preferred dividends of $157,838 and
   $130,738, respectively                          1,512,838     1,485,738
  Common stock, $0.001 par value, 100,000,000
   shares authorized, 36,749,286 shares issued
   and outstanding                                    36,749        36,749
  Additional paid-in capital                       8,150,615     8,076,588
  Accumulated deficit                            (13,095,812)  (11,446,037)
  Unearned ESOP shares                              (992,373)   (1,023,563)
    Total stockholders' deficit                   (4,387,983)   (2,870,525)

       Total liabilities and stockholders'
        deficit                                 $ 24,345,984  $ 27,790,998
                                                 ===========   ===========

Contact Information

  • Company Contact:
    Donald W. Rowley
    Chief Financial Officer
    DecisionPoint Systems, Inc.
    Tel 949-465-0065 x105

    Investor Relations Contacts:
    Stephanie Prince/Jody Burfening
    Lippert/Heilshorn & Associates
    T: 212-838-3777
    sprince@lhai.com