DropCar Announces Financial Results for
Three and Nine
Months Ended September 30, 2018
Provides Guidance on Progress of New Developments
Including Improvements to Profit Margins and Liquidity
NEW YORK – November 14, 2018 (Business Wire) –
DropCar,
Inc. (Nasdaq: DCAR) (“DropCar” or the
“Company”), a leading provider of “last
mile” logistics technology, mobility services and cloud based
software for both the automotive industry and consumers, today
announced its fiscal 2018 third
quarter and financial results for the period ended September 30,
2018 and provided an update on a series of initiatives to improve
operating margins and liquidity.
Spencer Richardson, DropCar’s Chief Executive Officer,
stated, "We are extremely encouraged by the current state of our
business, as a result of a series of measures we began implementing
in late August 2018 to dramatically improve both our business to
consumer (“B2C”) and business to business
(“B2B”) business models, new business opportunities,
and, more recently, two updates that we expect will improve the
Company’s financial position. As a result, while these
positive developments are not fully reflected in the last quarter
or year-to-date historical results, we believe they set the stage
for substantive progress in the quarters ahead.”
The Company is pleased to announce two new developments that
management believes will solidify its short-term liquidity as it
continues working towards building top-line revenue and improving
operating margins:
(i)
the completion of an offering of approximately $1,000,000 of
Pre-Funded Warrants to purchase Common Stock at a cumulative
purchase price per Warrant of $0.60 per share of Common Stock;
and
(ii)
the progress made towards the execution of a definitive agreement
to sell the Company’s WPCS International - Suisun City, Inc.
subsidiary for $3.5 million, which sale management believes is
likely to close during the fourth quarter of 2018.
During the past few months, DropCar has taken the following
demonstrative actions to reduce its cash burn and revamp its
business models to ensure positive gross profit
margins:
(i)
converted its B2C business model creating positive margins and
revamping its pricing structure to a self-park model. Results have
been an immediate improvement from a negative gross profit margin
to a positive gross profit margin for self-park model of
approximately 35%;
(ii)
revised its B2B managed services pricing model that management
believes will improve its B2B gross profit margin and labor
efficiency; and
(iii)
reduced annual operating and corporate overhead expenses by over
$650,000 per month in September primarily through reductions in
valet driver and operations staffing attributable to its former
consumer model, corporate payroll and certain outside
services.
Not only did the Company achieve profitable gross margins with
self-park immediately upon making the change, but its pipeline of
new B2B opportunities has begun to accelerate, as evidenced by the
growing demand for professional third-party logistical services
from original equipment manufacturer customers
(“OEMs”), car-sharing companies, fleets and other
automotive industry related businesses, which if and when finalized
would be under the new, higher-margin B2B revenue
model.
In addition to the Company’s recent expansion into Washington
DC, San Francisco, Los Angeles and Baltimore, fueled by the
Company’s partnership with General Motors’ Maven brand
car sharing program, the Company:
(i)
has recently expanded its logistic and fleet mobility services with
an OEM;
(ii)
is in advanced discussions with several name brand automotive
partners in the vehicle subscription, peer-to-peer and car share
space to provide SaaS technology and/or DropCar managed services
that it expects to formally announce soon;
(iii)
will be potentially launching new pilot programs through one of the
largest fleet organizations in the country.
“We believe that our managed services and Mobility Cloud
technology has not only placed us in the enviable position as a
“last-mile” solution for top-tier automotive partners
but has also led to deeper discussions on how our mobility
technology platform can further support the next generation of last
mile logistics concepts they are presently investing in,”
added Richardson.
Financial Results for the Three Months Ended September 30, 2018 (in
000s)
Revenue for the three months ended September 30, 2018 increased
approximately $3,342, or 263%, to $4,612 as compared to $1,270 for
the same period in 2017, as: (i) DropCar Operating revenue
increased by $120, or nine percent, due to an increase in on-demand
services of $63, and an increase in subscription revenue of $56 and
(ii) WPCS revenue increased $3,223, or 100%, as there was no
comparative information reported for the prior period.
The Company's approximate $3,329 net loss for the three months
ended September 30, 2018 was comprised of the $84 net loss from
WPCS and a net loss of $3,245 from DropCar Operating. This compared
to a net loss of $2,903 for the same period in 2017.
Meanwhile, the net loss attributable to common stockholders for the
three-month period totaled approximately $4,348, due to the $3,329
net loss and $1,019 of deemed dividends on the exchange of
warrants.
Financial Results for the Nine Months Ended September 30, 2018 (in
000s)
Revenue for the nine months ended September 30, 2018 increased
$13,030, or 466%, to $15,827 as compared to $2,797 for the same
period in 2017, as: (i) DropCar Operating revenue increased by
$2,158, or 77%, due to increases in subscription revenue of $1,593
and on-demand service revenue of $565 and (ii) WPCS revenue
increased $10,872, or 100%, as there was no comparative information
reported for the prior period.
The Company's approximate $10,682 net loss for the nine months
ended September 30, 2018 was comprised of the $377 net income from
WPCS offset by the $11,060 net loss from DropCar Operating. This
compared to a net loss of $5,088 for the same period in
2017.
Net loss attributable to common stockholders for the nine-month
period totaled $12,018, due to the $10,682 net loss and $1,336 of
deemed dividends on the exchange of warrants.
Conference Call with DropCar CEO and CFO
DropCar will host a conference call on November 15, 2018 at 8:30 AM
Eastern Time (ET) featuring remarks by, and Q&A with, CEO
Spencer Richardson and CFO Paul Commons. The dial-in number for the
conference call is toll-free: 877-407-0782 (U.S. domestic) or +1
(201) 689-8567 (international). Please make sure to call at least
five minutes before the scheduled start time.
To listen online, please click: http://www.investorcalendar.com/event/39723
For interested individuals unable to join the live event, a replay
will be available until November 22, 2018 (08:30 AM EDT). To access
the recording, dial toll-free (domestic) 877-481-4010 or
(internationally) 919-882-2331. The replay passcode is
39723.
About DropCar
Founded and launched in New York City in 2015, DropCar's mission is
to power the next generation of mobility by bringing the automotive
industry's products and services to everyone's front door.
DropCar's core Mobility Cloud platform, and integrated mobile apps
help consumers and automotive-related companies reduce the cost,
hassles and inefficiencies of owning a car, or fleet of cars, in
urban centers. Dealerships, fleet owners, OEMs and shared mobility
companies use DropCar's last mile logistics platform to reduce
costs, streamline logistics and deepen relationships with
customers. More information is available at
https://drop.car/
Forward-Looking Statements
This press release contains “forward-looking
statements” that involve substantial risks and uncertainties
for purposes of the safe harbor provided by the Private Securities
Litigation Reform Act of 1995. All statements, other than
statements of historical facts, included in this press release
regarding strategy, future operations, future financial position,
future revenue, projected expenses, prospects, plans and objectives
of management are forward-looking statements. Such statements are
based on management’s current expectations and involve risks
and uncertainties. Actual results and performance could differ
materially from those projected in the forward-looking statements
as a result of many factors, including, without limitation, the
ability to project future cash utilization and reserves needed for
contingent future liabilities and business operations, the
availability of sufficient resources of the company to meet its
business objectives and operational requirements and the impact of
competitive products and services and technological changes. The
foregoing review of important factors that could cause actual
events to differ from expectations should not be construed as
exhaustive and should be read in conjunction with statements that
are included herein and elsewhere, including the risk factors under
the heading “Risk Factors” in DropCar’s filings
with the Securities and Exchange Commission. Except as required by
applicable law, DropCar undertakes no obligation to revise or
update any forward-looking statement, or to make any other
forward-looking statements, whether as a result of new information,
future events or otherwise.
Contact Investor Relations
ir@DropCar.com
(646) 916-4595
DropCar, Inc. and Subsidiaries
|
Consolidated Balance Sheets Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
Cash
|
$1,960,553
|
$372,011
|
|
Accounts
receivable, net
|
4,096,228
|
187,659
|
|
Contract
assets
|
427,480
|
-
|
|
Prepaid
expenses and other current assets
|
431,186
|
51,532
|
|
Total
current assets
|
6,915,447
|
611,202
|
|
|
|
|
|
Property
and equipment, net
|
323,463
|
5,981
|
|
Capitalized
software costs, net
|
679,304
|
589,584
|
|
Intangible
assets, net
|
1,680,000
|
-
|
|
Goodwill
|
3,410,000
|
-
|
|
Other
assets
|
14,484
|
3,000
|
|
|
|
|
|
TOTAL ASSETS
|
$13,022,698
|
$1,209,767
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
Accounts
payable and accrued expenses
|
$3,330,456
|
$1,820,731
|
|
Deferred
income
|
23,215
|
236,433
|
|
Accrued
interest
|
-
|
135,715
|
|
Current
portion of loans payable
|
52,515
|
-
|
|
Contract
liabilities
|
1,961,758
|
-
|
|
Total
current liabilities
|
5,367,944
|
2,192,879
|
|
|
|
|
|
Loans
payable, net of current portion
|
69,373
|
-
|
|
Convertible
note payable, net of debt discount
|
-
|
3,506,502
|
|
TOTAL LIABILITIES
|
5,437,317
|
5,699,381
|
|
|
|
|
|
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)
|
7,585,381
|
(4,489,614)
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
$13,022,698
|
$1,209,767
|
|
DropCar, Inc. and Subsidiaries
|
|
Consolidated Statements of Operations Data
|
|
(Unaudited)
|
|
|
For the
Three Months Ended September 30,
|
For the
Nine Months Ended September 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET REVENUES
|
$4,612,062
|
$1,269,556
|
$15,826,983
|
$2,797,409
|
|
|
|
|
|
|
|
COST OF REVENUES, excluding depreciation and
amortization
|
4,438,189
|
1,426,874
|
15,190,430
|
2,869,995
|
|
|
|
|
|
|
|
GROSS PROFIT (LOSS)
|
173,873
|
(157,318)
|
636,553
|
(72,586)
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
Selling,
general and administrative expenses
|
3,324,874
|
2,319,433
|
10,426,604
|
4,170,450
|
|
Depreciation
and amortization
|
174,650
|
45,576
|
479,337
|
136,403
|
|
TOTAL OPERATING EXPENSES
|
3,499,524
|
2,365,009
|
10,905,941
|
4,306,853
|
|
|
|
|
|
|
|
OPERATING LOSS
|
(3,325,650)
|
(2,522,327)
|
(10,269,388)
|
(4,379,439)
|
|
|
|
|
|
|
|
Interest
income (expense), net
|
(3,123)
|
(380,598)
|
(413,076)
|
(708,991)
|
|
|
|
|
|
|
|
NET LOSS
|
(3,328,774)
|
(2,902,925)
|
(10,682,464)
|
(5,088,430)
|
|
Deemed
dividend on exchange of warrants
|
(1,019,040)
|
-
|
(1,335,901)
|
-
|
|
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
$(4,347,814)
|
$(2,902,925)
|
$(12,018,365)
|
$(5,088,430)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
LOSS PER COMMON SHARE, BASIC AND DILUTED
|
$(0.50)
|
$(1.38)
|
$(1.59)
|
$(2.77)
|
|
WEIGHTED
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND
DILUTED
|
8,609,778
|
2,106,799
|
7,574,452
|
1,839,379
|