SOURCE: Remote Dynamics, Inc.

August 14, 2008 12:07 ET

Remote Dynamics Reports Q2 2008 Financial Results

PLANO, TX--(Marketwire - August 14, 2008) - Remote Dynamics (OTCBB: RMTD) (www.remotedynamics.com), a provider of asset tracking and fleet management solutions, reports its financial results for the second quarter ended June 30, 2008.

Gary Hallgren, CEO of Remote Dynamics, commented, "We continued our momentum from the first quarter with an excellent second quarter. We had positive adjusted EBITDA of $58,000 and continued growth of our subscriber base."

Highlights for the quarter included:

-- REDIview subscriber base increased 9.4% in the first half of 2008 and
   13.4% on a year-over-year basis since June 30, 2007.

                    June 30, September 30,  December 31, March 31, June 30,
                      2007       2007           2007       2008      2008
                    -------- ------------- ------------- --------  --------
Ending REDIview
 units                 9,226         9,057         9,560   10,182    10,462

-- Total revenue for the second quarter of 2008 was $1.27 million up from
   $1.19 million during the second quarter of 2007.  The 7.0% increase in
   revenue was primarily the result of REDIview unit sales growth.
   Service revenue only increased 0.6% reflecting the discontinuation of
   our VMI service offering.  Excluding the VMI service revenue, REDIview
   service revenue increased 7.9% over the comparable period in the prior
   year.

-- Total gross profit margin was 61% for the second quarter 2008 compared
   to 59% for the second quarter of 2007.  Reduced costs of airtime and
   mapping costs were the primary reasons for the increase in gross
   margins. Of the 61% gross profit margin, 5 percentage points represents
   amortization of the deferred performance obligation of our installed
   base related to the reverse merger transaction on December 4, 2006.
   We expect gross profit margins of greater than 55% to continue through
   2008.

-- Interest expense totaled $0.3 million for the second quarter of 2008
   compared to $1.4 million for the same period during 2007.  The current
   period interest expense primarily consists of the accretion of our
   series B secured convertible notes.  The $1,130,000 decrease in
   interest expense from the comparable period in 2007 primarily reflects
   the fact that our series A secured convertible notes became fully
   accreted in February 2008.  The accretion of the series A notes was $0
   for the second quarter of 2008 compared to $0.7 million for the second
   quarter of 2007.  Additionally, default interest and liquidated
   damages on the series A and series B notes totaled $408,000 for Q2
   2007 versus $40,000 for Q2 2008.

-- Adjusted EBITDA was positive $58,000 for the second quarter of 2008
   compared to negative $133,000 for the same period in 2007.  The return
   to positive EBITDA is attributable to our efforts to reduce operating
   expenses and improve gross margins.

Other Highlights for 2008 include:

--  Through the first six months of 2008, we issued 218,515,365 shares
    (546,288 shares post-reverse split, as discussed below) of common stock as
    partial principal payments on our series A notes in satisfaction of
    $428,641 of obligations due under the notes.  Additionally, we issued
    81,485,361 shares (203,713 shares post-reverse split) of common stock as
    partial payments on our series B notes in satisfaction of $201,021 of
    obligations due under the notes.  We expect to issue additional shares of
    our common stock in payment of amounts due under the notes during the
    remainder of 2008 and thereafter.  In general, the shares issued are
    available for immediate resale by the holders in accordance with Rule 144
    under the Securities Act of 1933, as amended.
    
--  On August 8, 2008, we amended our Amended and Restated Certificate of
    Incorporation to (i) effect a one-for-four hundred reverse stock split of
    our common stock and (ii) authorize (after giving effect to the reverse
    stock split) 5,000,000,000 authorized shares of our common stock having a
    par value of $0.0001 per share.  These actions were required for us to
    comply with the terms of our existing financing and other contractual
    arrangements. Following completion of the reverse stock split we had
    1,872,788 shares of our common stock outstanding.
    

Non-GAAP Financial Measures

See Adjusted EBITDA Presentation below for a definition of Adjusted EBITDA and reconciliation to the most comparable GAAP financial measure.

About Remote Dynamics, Inc.

Remote Dynamics, Inc. markets, sells and supports a state-of-the-art asset tracking and fleet management solution that contributes to higher customer revenues, enhanced operator efficiency and improved cost control. Combining the technologies of the global positioning system (GPS) and wireless technologies, the company's solution improves our customers' operating efficiencies through real-time status information, exception-based reporting, and historical analysis. The company is based in Plano, Texas. More information about Remote Dynamics is available online at http://www.remotedynamics.com.

Safe Harbor Statement

Some of the information in this letter may contain projections or other forward-looking statements regarding future events or the future financial performance of the Company. We wish to caution you that these statements involve risks and uncertainties and actual events or results may differ materially. Among the important factors which could cause actual results to differ materially from those in the forward-looking statements are general market conditions, unfavorable economic conditions, our ability to execute our business strategy, the effectiveness of our sales team and approach, our ability to target, analyze and forecast the revenue to be derived from a client and the costs associated with providing services to that client, the date during the course of a calendar year that a new client is acquired, the length of the integration cycle for new clients and the timing of revenues and costs associated therewith, potential competition in the marketplace, the ability to attract and retain employees, our ability to maintain our existing technology platform and to deploy new technology, our ability to sign new clients and control expenses, and other factors detailed in the Company's filings with the Securities and Exchange Commission, including our recent filings on Forms 10-KSB and 10-QSB.

--Financial Tables Follow--

                  REMOTE DYNAMICS, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                 (In thousands, except per share amounts)

                                    Three months ended   Six months ended
                                         June 30,            June 30,
                                      2008      2007      2008      2007
                                    --------  --------  --------  --------
Revenues
  Service                           $    850  $    845  $  1,654  $  1,580
  Ratable product                        356       277       692       744
  Product                                 68        69       133       131
                                    --------  --------  --------  --------
     Total revenues                    1,274     1,191     2,479     2,455
                                    --------  --------  --------  --------

Cost of revenues
  Service                                334       393       689       774
  Ratable product                        122        75       235       141
  Product                                 42        24        55       123
                                    --------  --------  --------  --------
    Total cost of revenues               498       492       979     1,038
                                    --------  --------  --------  --------
Gross profit                             776       699     1,500     1,417
                                    --------  --------  --------  --------
Expenses:
  General and administrative             370       483       771     1,103
  Sales and marketing                    165       192       350       392
  Customer operations                     64        70       140       146
  Engineering                            118       118       268       163
  Depreciation and amortization          205       260       408       522
                                    --------  --------  --------  --------
    Total expenses                       922     1,123     1,937     2,326
                                    --------  --------  --------  --------
    Operating loss                      (146)     (424)     (437)     (909)

Other income (expenses):

Interest income                           11        25        26        54
Interest expense                        (274)   (1,404)   (1,099)   (2,858)
Other income                              (1)       31        (1)      374
Loss on extinguishment of debt             -      (107)        -      (341)
Loss on extinguishment of
 redeemable preferred stock                -         -         -      (363)
                                    --------  --------  --------  --------
    Total other income (expenses)       (264)   (1,455)   (1,074)   (3,134)
                                    --------  --------  --------  --------
    Loss before income taxes            (410)   (1,879)   (1,511)   (4,043)
Income tax benefit                         -         -         -         -
                                    --------  --------  --------  --------
    Net loss                            (410)   (1,879)   (1,511)   (4,043)
                                    ========  ========  ========  ========

Net loss per common share - basic
 and diluted                        $  (0.00) $  (1.45) $  (0.01) $  (3.13)
                                    ========  ========  ========  ========
Weighted average number of common
 shares outstanding:
   Basic and diluted                 287,488     1,300   146,607     1,293
                                    ========  ========  ========  ========
The accompanying notes are an integral part of these consolidated financial
statements.



                  REMOTE DYNAMICS, INC. AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
                   (in thousands, except share amounts)

                                                    June 30,   December 31,
                                                      2008         2007
                                                  (unaudited)
                                                  -----------  -----------
                           ASSETS
Current assets:
  Cash and cash equivalents                       $         8  $       228
  Accounts receivable, net of allowance for
   doubtful accounts of $48 and $54,
   respectively                                           681          526
  Due from related parties                                  -           71
  Inventories, net of reserve for obsolescence of
   $3 and $7, respectively                                180          158
  Deferred product costs - current portion                454          352
  Lease receivables and other current assets, net         442          466

                                                  -----------  -----------
     Total current assets                               1,765        1,801

Property and equipment, net of accumulated
 depreciation and amortization of $191
 and $154, respectively                                   131          157
Deferred product costs - non-current portion              325          336
Goodwill                                                  616          616
Customer Lists, net                                     1,886        2,162
Software, net                                             588          674
Tradenames, net                                            51           59
Deferred financing fees, net                              190          191
Lease receivables and other assets, net                    66          135

                                                  -----------  -----------
     Total assets                                 $     5,618  $     6,131
                                                  ===========  ===========


        LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
  Accounts payable                                $     1,540  $     1,550
  Accounts payable - related parties                       20           55
  Deferred product revenues - current portion           1,091        1,197
  Series A convertible notes payable (net of
   discount of $0 and $392, respectively)               3,765        3,801
  Series B convertible notes payable (net of
   discount of $1,066 and $1,543, respectively)         5,005        5,007
  Note payable - related parties                          250          250
  Accrued expenses and other current liabilities        1,908        1,770
  Accrued expenses and other current liabilities
   - related parties                                       87           60

                                                  -----------  -----------
     Total current liabilities                         13,666       13,690
Deferred product revenues - non-current portion           574          590
Capital leases, less current portion                        -           11
  Series B convertible notes payable - long-term
   (net of discount of $725 and $0, respectively)         401            -
Other non-current liabilities                             100           99

                                                  -----------  -----------
     Total liabilities                                 14,741       14,390
                                                  -----------  -----------
Commitments and contingencies
Redeemable Preferred Stock - Series B (3% when
 declared, $10,000 stated value, 650 shares
 authorized, 522 shares issued and outstanding at
 June 30, 2008 and December 31, 2007, respectively
 (redeemable in liquidation at an aggregate of
 $5,220,000 at June 30, 2008))                            134          134
Redeemable Preferred Stock - Series C (8%
 cumulative, $1,000 stated value, 10,000 shares
 authorized, 5,285 shares issued and outstanding at
 June 30, 2008; 5,202 shares issued and outstanding
 at December 31, 2007 (redeemable in liquidation at
 an aggregate of $5,285,000 at June 30, 2008))              -            -
Stockholders' deficit:
 Common stock, $0.01 par value, 750,000,000 shares
  authorized, 601,861,878 shares issued and 601,843,279
  outstanding at June 30, 2008, retroactively restated;
  750,000,0000  shares authorized, 1,393,231 shares
  issued and 1,374,632 outstanding at December 31,
  2007, retroactively restated                          6,018           14
 Treasury stock, 18,599 shares at June 30, 2008
  and December 31, 2007, respectively, at cost              -            -
 Additional paid-in capital                            (4,460)         897
 Accumulated deficit                                  (10,815)      (9,304)

                                                  -----------  -----------
     Total stockholders' deficit                       (9,257)      (8,393)

                                                  -----------  -----------
     Total liabilities and stockholders' deficit  $     5,618  $     6,131
                                                  ===========  ===========
The accompanying notes are an integral part of these consolidated financial
statements.

Adjusted EBITDA Presentation

EBITDA represents net income (loss) before interest, taxes, depreciation and amortization, and in the case of Adjusted EBITDA, before goodwill impairment, gains or losses on the extinguishment of debt and preferred stock, restructuring charges and other non-operating costs. EBITDA is not a measurement of financial performance under GAAP. However, we have included data with respect to EBITDA because we evaluate and project the performance of our business using several measures, including EBITDA. The computations of Adjusted EBITDA the respective quarters are as follows.

                                    Three Months Ended
                  March     June    September December    March     June
                   31,       30,       30,       31,       31,       30,
                  2007      2007      2007      2007      2008      2008
                --------  --------  --------  --------  --------  --------
Net loss        $ (2,164) $ (1,879) $ (1,597) $   (581) $ (1,101) $   (410)
Add non-EBITDA
 items included
 in net results:
Depreciation
 and amortization    262       260       213       214       203       205
Interest
 expense, net      1,425     1,379     1,357       491       810       263
Non-recurring
 reversal of
 legal accrual      (230)        -         -         -         -         -
Loss on debt
 extinguishment      234       107         -         -         -         -
Loss on redeemable
 preferred stock
 extinguishment      363         -         -         -         -         -
                --------  --------  --------  --------  --------  --------

Adjusted EBITDA $   (110) $   (133) $    (27) $    124  $    (88) $     58
                --------  --------  --------  --------  --------  --------

The company considers adjusted EBITDA to be an important supplemental indicator of its operating performance, particularly as compared to the operating performance of its competitors, because this measure eliminates many differences among companies in financial, capitalization and tax structures, capital investment cycles and ages of related assets, as well as certain recurring non-cash and non-operating items. It believes that consideration of EBITDA should be supplemental, because EBITDA has limitations as an analytical financial measure. These limitations include the following: EBITDA does not reflect its cash expenditures, or future requirements for capital expenditures or contractual commitments; EBITDA does not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on its indebtedness; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; EBITDA does not reflect the effect of earnings or charges resulting from matters it considers not to be indicative of its ongoing operations; and not all of the companies in its industry may calculate EBITDA in the same manner in which it calculates EBITDA, which limits its usefulness as a comparative measure.

Management compensates for these limitations by relying primarily on its GAAP results to evaluate its operating performance and by considering independently the economic effects of the foregoing items that are not reflected in EBITDA. As a result of these limitations, EBITDA should not be considered as an alternative to net income (loss), as calculated in accordance with generally accepted accounting principles, as a measure of operating performance, nor should it be considered as an alternative to cash flows as a measure of liquidity.

Contact Information

  • Contact:
    Gary Hallgren
    CEO

    Remote Dynamics, Inc.
    200 Chisholm Place Suite 120
    Plano, Texas 75075

    Phone 214-440-5210
    Fax 214-440-5208