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 Info: Gary Hallgren CEO 949-412-2836
Remote Dynamics (CE) (USOTC:RMTD)
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