SOURCE: Remote Dynamics, Inc.

November 14, 2008 15:53 ET

Remote Dynamics Reports Q3 2008 Financial Results

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

Gary Hallgren, CEO of Remote Dynamics, commented, "We continued our momentum from the second quarter with an excellent third quarter. We had positive adjusted EBITDA of $121,000 during the third quarter and continued growth of our subscriber base. Despite the tough economic conditions, we have been successful in continuing to demonstrate value to our customers by delivering a quick return on investment. We are also continuing to expand our product offerings to satisfy customer demand."

Highlights for the quarter included:

--  REDIview subscriber base increased 12.8% in the first nine months of
    2008 and 19.1% on a year-over -year basis since September 30, 2007.
    


                       September  December                       September
                          30,        31,     March 31, June 30,     30,
                         2007       2007       2008      2008      2008
                       ---------- ---------- -------- ---------- ----------

Ending REDIview units       9,057      9,560   10,182     10,462     10,787


--  Total revenue for the three months ended September 30, 2008 was $1.38
    million compared to $1.16 million during the three months ended September
    30, 2007.  The 19.3% increase in revenue from the comparable period in 2007
    is primarily attributable to REDIview unit growth.
    
--  Total gross profit margin was 66% for the third quarter 2008 compared
    to 56% for the third quarter of 2007.  Reduced costs of airtime and mapping
    costs were the primary reasons for the increase in gross margins.  Of the
    66% gross profit margin, 4 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.
    
--  Total operating expenses totaled $989,000 for the three months ended
    September 30, 2008 compared to $904,000 for the three months ended
    September 30, 2007.  This $85,000 or 9.4% increase is primarily
    attributable to increased bad debt expense and payroll expenses.
    
--  Interest expense totaled $0.3 million for the three months ended
    September 30, 2008 compared to $1.4  million for the same period during
    2007.  The current period interest expense primarily relates to the
    accretion of the Series B Notes in the amount of $248,000.  The $1,017,000
    decrease in interest expense since the comparable period in 2007 can be
    primarily attributed to the fact that the Series A Notes were fully
    accreted in February 2008.  The accretion of the Series A Notes was $0 for
    the three months ended September 30, 2008 compared to $0.7 million for the
    three months ended September 30, 2007.  Additionally, default interest and
    liquidated damages on the Series A and Series B Notes totaled $513,000 for
    the three months ended September 30, 2007 versus $50,000 for the three
    months ended September 30, 2008.
    
--  Adjusted EBITDA was positive $121,000 for the third quarter of 2008
    compared to negative $27,000 for the same period in 2007.  Adjusted year to
    date EBITDA was positive $91,000 for the nine months ended September 30,
    2008 compared to negative $279,000 for the same period in 2007.  The return
    to positive EBITDA is attributable to continued sales growth as well as our
    efforts to reduce operating expenses and improve gross margins.
    

Other Highlights for 2008 include:

--  Through the first nine months of 2008, we issued 2,601,382 shares of
    common stock as partial principal payments on our series A notes in
    satisfaction of $495,156 of obligations due under the notes.  Additionally,
    we issued 1,240,060 shares of common stock as partial payments on our
    series B notes in satisfaction of $246,897 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. As of September 30, 2008,  we had 4,596,531 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         Nine months ended
                              September 30,             September 30,
                            2008         2007         2008         2007
                        -----------  -----------  -----------  -----------
Revenues
  Service               $       901  $       817  $     2,555  $     2,397
  Ratable product               433          345        1,125        1,089
  Product                        50           (2)         183          129
                        -----------  -----------  -----------  -----------
     Total revenues           1,384        1,160        3,863        3,615
                        -----------  -----------  -----------  -----------

Cost of revenues
  Service                       306          385          995        1,159
  Ratable product               164           92          399          233
  Product                         5           29           60          152
                        -----------  -----------  -----------  -----------
    Total cost of
     revenues                   475          506        1,454        1,544
                        -----------  -----------  -----------  -----------
Gross profit                    909          654        2,409        2,071
                        -----------  -----------  -----------  -----------
Expenses:
  General and
   administrative               423          351        1,194        1,463
  Sales and marketing           165          165          515          557
  Customer operations            86           71          226          217
  Engineering                   114          104          382          267
  Depreciation and
   amortization                 201          213          609          735
                        -----------  -----------  -----------  -----------
    Total expenses              989          904        2,926        3,239
                        -----------  -----------  -----------  -----------
    Operating loss              (80)        (250)        (517)      (1,168)
Other income
 (expenses):
Interest income                  10           31           36           85
Interest expense               (340)      (1,388)      (1,439)      (4,246)
Other income                      -           10           (1)         384
Loss on extinguishment
 of debt                          -            -            -         (341)
Loss on extinguishment
 of redeemable
 preferred stock                  -            -            -         (363)
                        -----------  -----------  -----------  -----------
    Total other income
     (expenses)                (330)      (1,347)      (1,404)      (4,481)
                        -----------  -----------  -----------  -----------
    Loss before income
     taxes                     (410)      (1,597)      (1,921)      (5,649)
Income tax benefit                -            -            -            -
                        -----------  -----------  -----------  -----------
    Net loss                   (410)      (1,597)      (1,921)      (5,649)
                        ===========  ===========  ===========  ===========

Net loss per common
 share - basic and
 diluted                $     (0.00) $   (532.33) $     (0.00) $ (1,883.00)
                        ===========  ===========  ===========  ===========
Weighted average number
 of common shares
 outstanding:
   Basic and diluted      2,493,401            3    1,078,648            3
                        ===========  ===========  ===========  ===========


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)


                                              September 30,  December 31,
                                                  2008           2007
                                               (unaudited)
                                              -------------  -------------
                      ASSETS
Current assets:
  Cash and cash equivalents                   $           -  $         228
  Accounts receivable, net of allowance for
   doubtful accounts of $92 and $54,
   respectively                                         727            526
  Due from related parties                                -             71
  Inventories, net of reserve for
   obsolescence of $3 and $7, respectively              194            158
  Deferred product costs - current portion              498            352
  Lease receivables and other current assets,
   net                                                  238            466
                                              -------------  -------------
     Total current assets                             1,657          1,801

Property and equipment, net of accumulated
 depreciation and amortization of $207 and $154,
 respectively                                           118            157
Deferred product costs - non-current portion            336            336
Goodwill                                                616            616
Customer Lists, net                                   1,748          2,162
Software, net                                           545            674
Tradenames, net                                          48             59
Deferred financing fees, net                            162            191
Lease receivables and other assets, net                  39            135
                                              -------------  -------------
     Total assets                             $       5,269  $       6,131
                                              =============  =============

     LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
  Accounts payable                            $       1,391  $       1,550
  Accounts payable - related parties                     26             55
  Deferred product revenues - current portion           997          1,197
  Series A convertible notes payable (net of
   discount of $0 and $392, respectively)             3,699          3,801
  Series B convertible notes payable (net of
   discount of $822 and $1,543, respectively)         5,203          5,007
  Note payable - related parties                        250            250
  Accrued expenses and other current
   liabilities                                        1,990          1,770
  Accrued expenses and other current
   liabilities - related parties                        101             60
                                              -------------  -------------
     Total current liabilities                       13,657         13,690

Deferred product revenues - non-current
 portion                                                577            590
Capital leases, less current portion                      -             11
  Series B convertible notes payable -
   long-term (net of discount of $712 and $0,
   respectively)                                        414              -
Other non-current liabilities                            39             99
                                              -------------  -------------
     Total liabilities                               14,687         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 September 30, 2008 and
 December 31, 2007, respectively (redeemable
 in liquidation at an aggregate of $5,220,000
 at September 30, 2008)                                 134            134
Redeemable Preferred Stock - Series C (8%
 cumulative, $1,000 stated value,
 10,000 shares authorized, 5,391 shares
 issued and outstanding at September 30, 2008;
 5,202 shares issued and outstanding at
 December 31, 2007 (redeemable in liquidation
 at an aggregate of $5,391,000 at September 30, 2008)     -              -
Stockholders' deficit:
  Common stock, $0.0001 par value,
   5,000,000,000 shares authorized, 4,596,578
   shares issued and 4,596,531 outstanding
   at September 30, 2008, retroactively
   restated; 1,875,000 shares authorized, 3,484
   shares issued and 3,437 outstanding at
   December 31, 2007, retroactively restated              -             14
  Treasury stock, 47 shares at September 30,
   2008 and December 31, 2007, respectively,
   at cost                                                -              -
  Additional paid-in capital                          1,673            897
  Accumulated deficit                               (11,225)        (9,304)
                                              -------------  -------------
     Total stockholders' deficit                     (9,552)        (8,393)
                                              -------------  -------------
     Total liabilities and stockholders'
      deficit                                 $       5,269  $       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
                             December                           September
                                31,     March 31,    June 30,       30,
                               2007        2008        2008        2008
                            ----------  ----------  ----------  ----------
Net loss                    $     (581) $   (1,101) $     (410) $     (410)
Add non-EBITDA items
 included in net results:
Depreciation and
 amortization                      214         203         205         201
Interest expense, net              491         810         263         330
Non-recurring reversal of
 legal accrual                       -           -           -           -
Loss on debt extinguishment          -           -           -           -
Loss on redeemable
 preferred stock
 extinguishment                      -           -           -           -
                            ----------  ----------  ----------  ----------

Adjusted EBITDA             $      124  $      (88) $       58  $      121
                            ----------  ----------  ----------  ----------

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 Info:

    Gary Hallgren
    CEO
    949-412-2836