Provides Guidance on Progress of New
Developments Including Improvements to Profit Margins and
Liquidity
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.
DropCar, Inc. and Subsidiaries Consolidated
Balance Sheets Data September 30,
December 31, 2018 2017
(unaudited) 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 For the Nine Months Ended
September 30, September 30, 2018
2017 2018
2017 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
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version on businesswire.com: https://www.businesswire.com/news/home/20181114005915/en/
Investor RelationsSpencer Richardsonir@DropCar.com(646)
916-4595
DropCar (NASDAQ:DCAR)
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