DropCar, Inc. (Nasdaq: DCAR) (“DropCar” or the “Company”), a provider of last mile logistics technology, mobility services and cloud based software for both the automotive industry and consumers, today announced financial results and the filing of its Form 10-K for the period ended December 31, 2018 and provided an update on the results of initiatives implemented in August 2018 while outlining a series of new business developments.
Spencer Richardson, DropCar’s Chief Executive Officer, stated, “We believe that between the significant improvements we have made to our operating business and overall cash position, we are well-positioned to continue aggressively exploring additional strategic opportunities to maximize shareholder value including, but not limited to, business combinations.”
"The fourth quarter of 2018 was a transformational period for our business, with benefits that have continued to proliferate into the first quarter of 2019. The transition of our consumer business (“B2C”) in August 2018, from a valet parking focused “Steve” subscription offering, to the significantly less labor intensive “Self-Park” model turned a major generator of losses into a gross margin accretive business for us in Q4. Moreover, advancements to our own logistics technology have enabled us to increase the efficiency and productivity of our ground operations across the board, enabling us to improve our margins for our business to business (“B2B”) operations as well,” Mr. Richardson added.
In addition to the Company’s expansion into Washington DC, San Francisco, Los Angeles, New Jersey and Baltimore, fueled primarily by the Company’s partnership with General Motors’ Maven brand car sharing program, the Company:
(i) has recently added a major Tier-1 electric vehicle manufacturer to its B2B client base in multiple existing markets;
(ii) has recently expanded its footprint in the peer-to-peer car sharing space by adding Turo, one of the largest such peer-to-peer car sharing networks, to the DropCar Mobility Cloud logistics platform; and
(iii) is actively exploring synergies between the DropCar Mobility Cloud platform and autonomous vehicle solutions, as supported by the recent partnership with STEER-Technologies.
Mr. Richardson noted, “Beyond the new clients we have already recently onboarded, we are excited to continue advancing discussions with several other name brand automotive partners in the vehicle subscription, peer-to-peer and car sharing spaces to provide SaaS technology and/or DropCar managed services. This includes discussions with major fleet organizations serving clients across a variety of industries including: retail, e-hailing, ride-sharing, car rentals, as well as business and residential services.”
During the past few months, DropCar has also completed the following transactions to improve its liquidity as it continues working towards building top-line revenue and improving operating margins:
(i) the completion of the sale of the Company’s WPCS operations for $3.5 million in cash; and
(ii) the completion on March 28, 2019, of an offering of common stock at an offering price of $4.18 per share with gross proceeds of approximately $2.0 million.
Financial Results for the Quarter Ended December 31, 2018
Revenue of B2B service for the quarter ended December 31, 2018 increased approximately $197,000, or 130%, to approximately $348,000 compared to approximately $151,000 for the same period in 2017. Revenue of our “Will” on-demand service for the quarter ended December 31, 2018 increased approximately $36,000, or 48%, to approximately $112,000 as compared to approximately $75,000 for the same period in 2017. While DropCar Operating’s “Steve” service was discontinued after August 2018, its “Self-Park” replacement generated approximately $665,000 in Q4 2018, bringing total revenue for the quarter ended December 31, 2018 to approximately $1,122,000 as compared to the approximately $1,488,000 for the quarter ended December 31, 2017.
DropCar Operating reduced negative gross margin by approximately $272,000 or 68%, from a gross loss of approximately $400,000 for the quarter ended September 30, 2018 to $128,000 for the quarter ended December 31, 2018. In addition, DropCar Operating reduced negative gross margin by approximately $58,000, or 31%, from a gross loss of approximately $185,000 for the quarter ended December 31, 2017. DropCar Operating had its first month with positive gross margin of approximately $27,000 in December 2018.
The Company's approximately $6,570,000 net loss for the quarter ended December 31, 2018 was comprised of approximately $2,715,000 net loss from continuing operations and a net loss of approximately $3,855,000 from the sale of the Company’s WPCS business in December 2018. This compared to a net loss of approximately $2,552,000 for the same period in 2017.
Net loss attributable to common stockholders for the three-month period totaled approximately $6,634,000 due to the approximately $6,570,000 net loss and approximately $64,000 of deemed dividends on the exchange of warrants.
Financial Results for the year Ended December 31, 2018
Revenue for the year ended December 31, 2018 increased approximately $1,792,000, or 42%, to approximately $6,078,000 as compared to approximately $4,286,000 for the same period in 2017, as a result of (i) an increase of DropCar Operating B2B revenue of approximately $603,000, or 132%, due to the expansion of DropCar Operating’s operations to San Francisco, Los Angeles, Washington DC, New Jersey and Baltimore, as well as a change in the pricing structure, (ii) an increase in DropCar Operating consumer recurring “Steve” service and “Self-Park” space revenue of approximately $962,000 to $4,409,000, an increase of approximately 28% as compared to 2017 consumer recurring revenue of approximately $3,447,000, and (iii) an increase in DropCar Operating “Will” on-demand services of approximately $99,000, or 43%, as compared to 2017 “Will” service revenue of approximately $231,000.
The Company's approximate $18,749,000 net loss for the year ended December 31, 2018 was comprised of the approximately $14,895,000 net loss from continuing operations and a net loss of approximately $3,854,000 from the WPCS discontinued operations. This compared to a net loss of approximately $7,641,000 for the same period in 2017.
In addition, the net loss attributable to common stockholders for the 12-month period totaled approximately $20,149,000 due to the approximately $18,749,000 net loss and approximately $1,400,000 of deemed dividends on the exchange of warrants.
On March 29, 2019, the Company concluded that a non-cash adjustment related to the incorrect characterization of approximately $1,000,000 of non-cash expenses as equity in the first quarter of 2018 would require a restatement of the unaudited interim condensed consolidated financial statements included in each of the Quarterly Reports on Form 10-Q for the quarters ended March 31, 2018, June 30, 2018, and September 30, 2018 (the “Quarterly Reports”). The adjustment, which has no impact on cash flows, impacts all future quarter cumulative earnings and, as such, the Company anticipates that it will file an amendment to each of the Quarterly Reports in order to amend and restate financial results for the affected periods as soon as practicable. The Company’s Annual report on Form 10-K for the year ended December 31, 2018 already reflects this adjustment.
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 | ||||||||
| December 31, | December 31, | |||||||
| 2018 | 2017 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash | $4,303,480 | $372,011 | ||||||
| Accounts receivable, net | 295,626 | 187,659 | ||||||
| Prepaid expenses and other current assets | 328,612 | 51,532 | ||||||
| Total current assets | 4,927,718 | 611,202 | ||||||
| Property and equipment, net | 39,821 | 5,981 | ||||||
| Capitalized software costs, net | 659,092 | 589,584 | ||||||
| Other assets | 3,525 | 3,000 | ||||||
| TOTAL ASSETS | $5,630,156 | $1,209,767 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable and accrued expenses | $2,338,560 | $1,820,731 | ||||||
| Deferred income | 253,200 | 236,433 | ||||||
| Accrued interest | - | 135,715 | ||||||
| Total current liabilities | 2,591,760 | 2,192,879 | ||||||
| Convertible note payable, net of debt discount | - | 3,506,502 | ||||||
| TOTAL LIABILITIES | 2,591,760 | 5,699,381 | ||||||
| TOTAL STOCKHOLDERS' EQUITY (DEFICIT) | 3,038,396 | (4,489,614) | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $5,630,156 | $1,209,767 | ||||||
DropCar, Inc. and Subsidiaries Consolidated Statements of Operations Data | ||||||||||||||
For the Quarter Ended | For the Year Ended | |||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||
| (unaudited) | ||||||||||||||
| NET REVENUES | $1,122,461 | $1,488,106 | $6,077,667 | $4,285,514 | ||||||||||
| COST OF REVENUES | 1,250,090 | 1,673,461 | 7,863,673 | 4,543,456 | ||||||||||
| GROSS LOSS | (127,629) | (185,355) | (1,786,006) | (257,942) | ||||||||||
| OPERATING EXPENSES | ||||||||||||||
Research and development | 56,901 | 90,075 | 322,269 | 90,075 | ||||||||||
| Selling, general and administrative expenses | 2,430,623 | 1,577,523 | 11,350,406 | 5,747,969 | ||||||||||
| Depreciation and amortization | 100,549 | 82,257 | 354,657 | 218,660 | ||||||||||
| TOTAL OPERATING EXPENSES | 2,588,073 | 1,749,855 | 12,027,332 | 6,056,704 | ||||||||||
| OPERATING LOSS | (2,715,702) | (1,935,211) | (13,813,338) | (6,314,646) | ||||||||||
| Interest income (expense), net | 103 | (617,170) | (1,081,226) | (1,326,160) | ||||||||||
| LOSS FROM CONTINUING OPERATIONS | (2,715,599) | (2,552,381) | (14,894,564) | (7,640,806) | ||||||||||
| DISCONTINUED OPERATIONS | ||||||||||||||
| Income from operations of discontinued component | 315,119 | - | 315,119 | - | ||||||||||
| Loss on sale of component | (4,169,718) | - | (4,169,718) | - | ||||||||||
| LOSS FROM DISCONTINUED OPERATIONS | (3,854,599) | - | (3,854,599) | - | ||||||||||
NET LOSS | (6,570,198) | (2,552,381) | (18,749,163) | (7,640,806) | ||||||||||
| Deemed dividend on exchange of warrants | (63,760) | - | (1,399,661) | - | ||||||||||
| NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | $(6,633,958) | $(2,552,381) | $(20,148,824) | $(7,640,806) | ||||||||||
| AMOUNTS ATTRIBUTABLE TO COMMON STOCKHOLDERS | ||||||||||||||
| Loss from continuing operations | (2,779,359) | (2,552,381) | (16,294,225) | (7,640,806) | ||||||||||
| Loss from discontinued operations | (3,854,599) | - | (3,854,599) | - | ||||||||||
| NET LOSS | (6,633,958) | (2,552,381) | (20,148,824) | (7,640,806) | ||||||||||
| NET LOSS PER COMMON SHARE, BASIC AND DILUTED | ||||||||||||||
| Continuing operations | $(1.71) | $(6.82) | $(12.04) | $(23.61) | ||||||||||
| Discontinued operations | (2.38) | - | (2.85) | - | ||||||||||
| NET LOSS PER COMMON SHARE, BASIC AND DILUTED | (4.09) | (6.82) | (14.89) | (23.61) | ||||||||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES | 1,621,130 | 374,285 | 1,352,826 | 323,633 | ||||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20190403005298/en/
Contacts:
Spencer
Richardson
ir@DropCar.com
(646)
916-4595
