PR Newswire | May 17, 2021 04:02PM EDT

05/17 15:01 CDT

DecisionPoint Systems Announces First Quarter 2021 ResultsStrengthened Balance Sheet with Reduced Debt by $2.4 million IRVINE, Calif., May 17, 2021

IRVINE, Calif., May 17, 2021 /PRNewswire/ --DecisionPoint Systems, Inc. (OTCQB: DPSI), today announced financial results for the first quarter of 2021.

First Quarter 2021 Highlights

* Sales for the first quarter of 2021 were $16.1 million, a decrease of $2.2 million, or 12.1% from the first quarter of 2020. The decrease was driven by lower hardware sales, partially offset by sales of $2.8 million for the first quarter of 2021 related to the ExtenData acquisition. * Overall gross margin increased 30 basis points due to a shift in mix of net sales to professional services that generate a significantly higher gross margin. Sales of professional services increased 30% for the first quarter of 2021 and represented 26% of total net sales versus 17% of total net sales in the same prior year period. * Net income for the first quarter of 2021 was $1.3 million, or $0.08 per diluted share, compared with net income of $1.0 million, or $0.07 per diluted share in the first quarter of 2020. The increase in net income was due to recognition of a gain on extinguishment of debt of $1.2 million, partially offset by lower hardware sales. * EBITDA increased 10.7% to $1.9 million for the first quarter of 2021 versus the first quarter of 2020.

DecisionPoint Systems Announces First Quarter 2021 Results "Any comparison to Q1 of 2020, the best quarter in our company's recent history, would be a challenging one. That said, we are seeing meaningful sales growth in our expansion of professional service offerings and have gained momentum from the acquisition of ExtenData to establish our geographic presence into new markets," said Steve Smith, Chief Executive Officer. "We plan to continue to pursue acquisitions to further expand and develop into new regions, which also creates opportunities for significant revenue synergies. As we look forward, I am excited by the organic and inorganic growth opportunities that we are pursuing and am confident we will continue to grow our business and enhance our position as a valued partner for our customers."

Balance Sheet and Liquidity

Our cash and accounts receivable were $12.4 million at March 31, 2021, compared to $18.4 million at December 31, 2020. Cash provided by operations in the first quarter of 2021 was $1.3 million, as compared to $4.2 million in the first quarter of 2020. Overall debt is lower by $2.4 million than it was at the beginning of the year. At March 31, 2021, we had no borrowings under the $10 million line of credit.

About DecisionPoint Systems

DecisionPoint Systems Inc. delivers mobility-first managed service and integration solutions to healthcare, supply chain, and retail customers, enabling them to make better and faster decisions in the moments that matter-the decision points. Our mission is to help businesses consistently deliver on those moments-accelerating growth, improving worker productivity, and lowering risks and costs.

For more information about DecisionPoint Systems, Inc., visit www.decisionpt.com.

Forward-Looking Statements

This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 that are based on management's beliefs and assumptions and on information currently available to management. These statements involve risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by forward-looking statements. Forward-looking statements in this press release may include statements about our plans to obtain funding for our current and proposed operations and potential acquisition and expansion efforts; the ultimate impact of the COVID-19 pandemic, or any other health epidemic, on our business, our clientele or the global economy as a whole; debt obligations of the Company; our general history of operating losses; our ability to compete with companies producing products and services; the scope of protection we are able to establish and maintain for intellectual property rights covering our products and technology; the accuracy of our estimates regarding expenses, future revenue, capital requirements and needs for additional financing; our ability to develop and maintain our corporate infrastructure, including our internal controls; our ability to develop innovative new products; and our financial performance. In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this press release, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. We qualify all of our forward-looking statements by these cautionary statements. Forward-looking statements speak only as of the date they are made, and we do not undertake to update these statements other than as required by law. You are advised, however, to review any further disclosures we make on related subjects in our periodic filings with the Securities and Exchange Commission.

Investor Relations Contact:Carol Arakakiir@decisionpt.com

DecisionPoint Systems, Inc.Unaudited Condensed Consolidated Balance Sheets(in thousands, except per share data)

March 31, December 31,

2021 2020

ASSETS

Current assets:

Cash $ 1,816 $ 2,005

Accounts receivable, net 10,591 16,438

Inventory, net 1,005 884

Deferred costs 2,108 1,744

Prepaid expenses and other current assets 381 67

Total current assets 15,901 21,138

Operating lease assets 520 583

Property and equipment, net 741 751

Deferred costs, net of current portion 1,911 2,097

Deferred tax assets 1,930 1,973

Intangible assets, net 4,386 4,663

Goodwill 8,128 8,128

Other assets 22 22

Total assets $ 33,539 $ 39,355

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable $ 8,156 $ 12,852

Accrued expenses and other current liabilities 2,555 2,807

Deferred revenue 4,970 4,617

Line of credit - 1,206

Due to related parties 52 34

Current portion of operating lease liabilities 265 261

Total current liabilities 15,998 21,777

Deferred revenue, net of current portion 3,042 3,140

Long-term debt 150 1,361

Noncurrent portion of operating lease liabilities 271 340

Other liabilities 846 873

Total liabilities 20,307 27,491

Commitments and contingencies

Stockholders' equity:

Preferred stock, $0.001 par value; 10,000 shares authorized; no shares issuedor - -outstanding

Common stock, $0.001 par value; 50,000 shares authorized; 13,882 and 13,576shares 14 14issued and outstanding, respectively

Additional paid-in capital 38,264 38,229

Accumulated deficit (25,046) (26,379)

Total stockholders' equity 13,232 11,864

Total liabilities and stockholders' equity $ 33,539 $ 39,355

DecisionPoint Systems, Inc.Unaudited Condensed Consolidated Statements of Income and Comprehensive Income(in thousands, except per share data)

Three Months Ended

March 31,

2021 2020

Net sales:

Product $ 11,925 $ 15,095

Service 4,147 3,192

Net sales 16,072 18,287

Cost of sales:

Product 9,451 12,074

Service 2,783 1,895

Cost of sales 12,234 13,969

Gross profit 3,838 4,318

Operating expenses:

Sales and marketing expense 1,889 1,644

General and administrative expenses 1,620 1,148

Total operating expenses 3,509 2,792

Operating income 329 1,526

Interest expense (29) (99)

Gain on extinguishment of debt 1,211 -

Income before income taxes 1,511 1,427

Income tax expense 178 398

Net income and comprehensive income attributable to common shareholders $ 1,333 $ 1,029

Earnings per share attributable to common shareholders:

Basic $ 0.10 $ 0.08

Diluted $ 0.08 $ 0.07

Weighted average common shares outstanding

Basic 13,769 13,576

Diluted 15,788 15,642

DecisionPoint Systems, Inc.Unaudited Condensed Consolidated Statements of Cash Flows(in thousands)

Three Months Ended

March 31,

2021 2020

Cash flows from operating activities

Net income $ 1,333 $ 1,029

Adjustments to reconcile net income to net cash provided by operatingactivities:

Depreciation and amortization 360 190

Gain on extinguishment of debt (1,211) -

Amortization of deferred financing costs and note discount 17 33

Share-based compensation expense 33 23

Deferred income taxes, net 43 387

Provision for doubtful accounts - 7

Changes in operating assets and liabilities:

Accounts receivable 5,847 2,328

Inventory, net (121) 3,129

Deferred costs (178) 103

Prepaid expenses and other current assets (326) (51)

Other assets, net (5) (1)

Accounts payable (4,696) (3,647)

Accrued expenses and other current liabilities (109) 240

Due to related parties 18 (36)

Operating lease liabilities (2) (42)

Deferred revenue 255 512

Net cash provided by operating activities 1,258 4,204

Cash flows from investing activities

Cash paid for acquisitions (170) -

Purchases of property and equipment (73) (34)

Net cash used in investing activities (243) (34)

Cash flows from financing activities

Line of credit, net (1,206) (3,177)

Repayment of term debt - (62)

Debt issuance costs - (36)

Proceeds from exercise of stock options 2 -

Net cash used in financing activities (1,204) (3,239)

Change in cash (189) 931

Cash, beginning of period 2,005 2,620

Cash, end of period $ 1,816 $ 3,551

Non-GAAP Financial Measure:

This press release includes information relating to EBITDA which the Securities and Exchange Commission has defined as a "non-GAAP financial measure." EBITDA is defined as net income before interest expense, net, income tax expense, and depreciation and amortization (EBITDA). We believe EBITDA may provide investors with useful information of how our current primary operating results relate to our historical performance. The non-GAAP financial measure provided is not meant to be considered as a substitute for GAAP financials. We caution investors that amounts presented in accordance with our definitions of EBITDA may not be comparable to similar measures disclosed by other companies, because not all companies calculate EBITDA in the same manner.

The following is a reconciliation of net income to EBITDA (unaudited and in thousands):

Three Months Ended

March 31,

2021 2020

Reconciliation of Net Income to EBITDA

Net income $ 1,333 $ 1,029

Interest expense 29 99

Income tax expense 178 398

Depreciation and amortization (1) 360 190

EBITDA $ 1,900 $ 1,716

Recorded within general and administration expenses and cost of sales within(1) our Unaudited Condensed Consolidated Statements of Income and Comprehensive Income.

View original content to download multimedia: http://www.prnewswire.com/news-releases/decisionpoint-systems-announces-first-quarter-2021-results-301292875.html

SOURCE DecisionPoint Systems, Inc.