DropCar, Inc. (Nasdaq: DCAR) (“DropCar” or the “Company”), a provider of micro logistics technology, mobility services and cloud based software for both the automotive industry and consumers, today announced financial results for the period ended June 30, 2019 and provided an update on the results of initiatives implemented to conserve cash on hand while focusing the business on its most profitable clients and segments.
Spencer Richardson, DropCar’s Chief Executive Officer, stated, “We are excited about the opportunities in front of us for building shareholder value afforded by our continued advance towards profitability.”
During the past few months, DropCar has taken the following demonstrative actions to continue to reduce its cash burn and focus its business on the most profitable clients and segments:
(i) streamlined back end operations, while increasing overall field driver efficiency and eliminating loss driving services, resulting in the Company going from a gross loss of $654,784 for the quarter ended June 30, 2018 to a gross profit of $130,757 for the quarter ended June 30, 2019; and
(ii) increased growth in B2B managed services revenues by 42% for the quarter ended June 30, 2019, compared to the quarter ended June 30, 2018, which was primarily a result of the expansion of existing contracts and changes to the Company’s B2B pricing model.
“For the third quarter of 2019, we are continuing to evaluate every detail of our business to identify more areas for reducing our burn while also expanding on our efforts to identify the best opportunities for strategic growth,” added Mr. Richardson.
Financial Results for the Three Months Ended June 30, 2019 versus Three Months Ended June 30, 2018
Revenue for the three months ended June 30, 2019 decreased $627,000, or 33%, to $1,247,000, as compared to $1,874,000 for the same period in 2018, as DropCar subscription revenue decreased by $486,000, or 38%, due to (i) the discontinued “Steve” parking offering and (ii) a decrease in “Will” valet on-demand service revenue by $246,000, or 73%, to $93,000, compared to $339,000 for the three months ended June 30, 2018 due to the focusing of valet resources on higher margin B2B service revenue. As a result, the Company recognized an increase in B2B revenue of $105,000, or 42%, to $357,000, as compared to $252,000 for the three months ended June 30, 2018.
Cost of revenue during the three months ended June 30, 2019 totaled $1,116,000, a decrease of $1,413,000, or 56%, compared to $2,529,000 recorded for the three months ended June 30, 2018. This decrease was primarily due to a decrease in the Company’s valet workforce and attributable to decreases of $1,314,000 in wages and related expenses, $168,000 in repairs and damages, $100,000 in cost of gas, car wash and other service sold, partially offset by an increase of $169,000 in parking garage fees and insurance costs.
The Company’s $951,000 net loss for the three months ended June 30, 2019 was comprised of a $962,000 operating loss offset by $11,000 of other income. This compared to a net loss attributable to common stockholders of $4,309,000 for the same period in 2018, a reduction of 78%.
Financial Results for the Six Months Ended June 30, 2019 versus Six Months Ended June 30, 2018
Revenue for the six months ended June 30, 2019 decreased $1,220,000, or 34%, to $2,346,000, as compared to $3,566,000 for the six months ended June 30, 2018, due to (i) a decrease in DropCar subscription revenue of $1,181,000, or 45%, to $1,458,000, compared to $2,640,000 for the six months ended June 30, 2018 due to the discontinued “Steve” parking and valet on-demand service, and (ii) a decrease in “Will” valet on-demand service of $246,000, or 56%, to $195,000, compared to $441,000 for the six months ended June 30, 2018. This was offset by an increase in B2B revenue of $207,000, or 43%, to $692,000, compared to $485,000 for the six months ended June 30, 2018.
Cost of revenue during the six months ended June 30, 2019 totaled $2,243,000, a decrease of $2,582,000, or 54% compared to $4,825,000 recorded for the six months ended June 30, 2018. This decrease was primarily due to decreases of $2,383,000 in wages and related expenses, $290,000 in repairs and damages, $176,000 in cost of gas, car wash and other service sold, partially offset by an increase of $267,000 in parking garage fees and insurance costs.
The Company’s $2,927,000 net loss for the six months ended June 30, 2019 was comprised of a $2,939,000 operating loss offset by $13,000 of other income. This compared to a net loss attributable to common stockholders of $8,790,000 for the six months ended June 30, 2018.
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.
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DropCar, Inc. and Subsidiaries |
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Consolidated Balance Sheets Data |
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June 30, |
December 31, |
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2019 |
2018 |
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(unaudited) |
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ASSETS |
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|
||||
|
|
|
|
||||
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CURRENT ASSETS: |
|
|
||||
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Cash |
$ |
|
3,448,501 |
$ |
|
4,303,480 |
|
Accounts receivable, net |
|
395,146 |
|
295,626 |
||
|
Prepaid expenses and other current assets |
|
367,068 |
|
328,612 |
||
|
Total current assets |
|
4,210,715 |
|
4,927,718 |
||
|
|
|
|
||||
|
Property and equipment, net |
|
30,787 |
|
39,821 |
||
|
Capitalized software costs, net |
|
548,652 |
|
659,092 |
||
|
Operating lease right-of-use asset |
|
6,619 |
|
– |
||
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Other assets |
|
3,525 |
|
3,525 |
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|
|
|
|
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TOTAL ASSETS |
$ |
|
4,800,298 |
$ |
|
5,630,156 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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CURRENT LIABILITIES: |
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|
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Accounts payable and accrued expenses |
$ |
|
2,028,818 |
$ |
|
2,338,560 |
|
Deferred income |
|
303,744 |
|
253,200 |
||
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Lease liability |
|
960 |
|
– |
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Total current liabilities |
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2,333,522 |
|
2,591,760 |
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||||
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|
|
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TOTAL STOCKHOLDERS’ EQUITY |
|
2,466,776 |
|
3,038,396 |
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|
|
|
|
||||
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ |
|
4,800,298 |
$ |
|
5,630,156 |
|
DropCar, Inc. and Subsidiaries |
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Consolidated Statements of Operations Data |
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(unaudited) |
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For the Three Months Ended June 30, |
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2019 |
2018 |
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(Restated) |
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SERVICE REVENUES |
$ |
|
1,246,544 |
|
$ |
|
1,873,997 |
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|
|
|
|
|||||||
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COST OF REVENUES |
|
1,115,787 |
|
|
2,528,781 |
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|
|
|
|||||||
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GROSS PROFIT (LOSS) |
|
130,757 |
|
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(654,784 |
) |
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OPERATING EXPENSES |
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Research and development |
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48,330 |
|
|
63,971 |
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|||
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Selling, general and administrative expenses |
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945,388 |
|
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3,341,601 |
|
|||
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Depreciation and amortization |
|
98,967 |
|
|
84,177 |
|
|||
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TOTAL OPERATING EXPENSES |
|
1,092,685 |
|
|
3,489,749 |
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OPERATING LOSS |
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(961,928 |
) |
|
(4,144,533 |
) |
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|
|
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Other income (expense), net |
|
10,973 |
|
|
718 |
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|||
|
|
|
|
|||||||
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LOSS FROM CONTINUING OPERATIONS |
|
(950,955 |
) |
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(4,143,815 |
) |
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|
|
|
|||||||
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DISCONTINUED OPERATIONS |
|
|
|||||||
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Income from operations of discontinued component |
|
– |
|
|
151,565 |
|
|||
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LOSS FROM DISCONTINUED OPERATIONS |
|
– |
|
|
151,565 |
|
|||
|
|
|
|
|||||||
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Income taxes |
|
– |
|
|
– |
|
|||
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NET LOSS |
$ |
|
(950,955 |
) |
$ |
|
(3,992,250 |
) |
|
|
Deemed dividend on exchange of warrants |
|
– |
|
|
(316,861 |
) |
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NET LOSS ATTRIBUTABLE TO COMMON |
$ |
|
(950,955 |
) |
$ |
|
(4,309,111 |
) |
|
|
|
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LOSS PER SHARE FROM CONTINUING OPERATIONS: |
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|
Basic |
$ |
|
(0.24 |
) |
$ |
|
(3.12 |
) |
|
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Diluted |
$ |
|
(0.24 |
) |
$ |
|
(3.12 |
) |
|
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EARNINGS PER SHARE FROM DISCONTINUED |
|
|
|||||||
|
Basic |
$ |
|
– |
|
$ |
|
0.11 |
|
|
|
Diluted |
$ |
|
– |
|
$ |
|
0.11 |
|
|
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NET LOSS PER SHARE: |
|
|
|||||||
|
Basic |
$ |
|
(0.24 |
) |
$ |
|
(3.24 |
) |
|
|
Diluted |
$ |
|
(0.24 |
) |
$ |
|
(3.24 |
) |
|
|
|
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WEIGHTED AVERAGE SHARES OUTSTANDING |
|
|
|||||||
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Basic |
|
3,954,152 |
|
|
1,328,654 |
|
|||
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Diluted |
|
3,954,152 |
|
|
1,328,654 |
|
|||
|
DropCar, Inc. and Subsidiaries |
||||||
|
Consolidated Statements of Operations Data |
||||||
|
(unaudited) |
||||||
|
|
For the Six Months Ended June 30, |
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|
|
2019 |
2018 |
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(Restated) |
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SERVICE REVENUES |
$ |
2,345,987 |
|
$ |
3,566,072 |
|
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COST OF REVENUES |
|
2,242,832 |
|
|
4,824,562 |
|
|
|
|
|
||||
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GROSS PROFIT (LOSS) |
|
103,155 |
|
|
(1,258,490 |
) |
|
|
|
|
||||
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OPERATING EXPENSES |
||||||
|
Research and development |
|
117,312 |
|
|
178,132 |
|
|
Selling, general and administrative expenses |
|
2,718,485 |
|
|
6,252,398 |
|
|
Depreciation and amortization |
|
206,716 |
|
|
163,409 |
|
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TOTAL OPERATING EXPENSES |
|
3,042,513 |
|
|
6,593,939 |
|
|
|
|
|
||||
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OPERATING LOSS |
|
(2,939,358 |
) |
|
(7,852,429 |
) |
|
|
|
|
||||
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Other income (expense), net |
|
12,697 |
|
|
(1,081,499 |
) |
|
|
|
|
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LOSS FROM CONTINUING OPERATIONS |
|
(2,926,661 |
) |
|
(8,933,928 |
) |
|
|
|
|
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DISCONTINUED OPERATIONS |
|
|
||||
|
Income from operations of discontinued component |
|
– |
|
|
460,943 |
|
|
LOSS FROM DISCONTINUED OPERATIONS |
|
– |
|
|
460,943 |
|
|
|
|
|
||||
|
Income taxes |
|
– |
|
|
– |
|
|
NET LOSS |
$ |
(2,926,661 |
) |
$ |
(8,472,985 |
) |
|
Deemed dividend on exchange of warrants |
|
– |
|
|
(316,861 |
) |
|
NET LOSS ATTRIBUTABLE TO COMMON |
$ |
(2,926,661 |
) |
$ |
(8,789,846 |
) |
|
|
|
|
||||
|
|
|
|
||||
|
LOSS PER SHARE FROM CONTINUING OPERATIONS: |
|
|
||||
|
Basic |
$ |
(0.96 |
) |
$ |
(7.65 |
) |
|
Diluted |
$ |
(0.96 |
) |
$ |
(7.65 |
) |
|
EARNINGS PER SHARE FROM DISCONTINUED |
|
|
||||
|
Basic |
$ |
– |
|
$ |
0.39 |
|
|
Diluted |
$ |
– |
|
$ |
0.39 |
|
|
NET LOSS PER SHARE: |
|
|
||||
|
Basic |
$ |
(0.96 |
) |
$ |
(7.53 |
) |
|
Diluted |
$ |
(0.96 |
) |
$ |
(7.53 |
) |
|
|
|
|
||||
|
WEIGHTED AVERAGE SHARES OUTSTANDING |
|
|
||||
|
Basic |
|
3,040,993 |
|
|
1,167,432 |
|
|
Diluted |
|
3,040,993 |
|
|
1,167,432 |
|
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