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DropCar Announces Financial Results for the Three Months Ended June 30, 2019

NEW YORK--(BUSINESS WIRE)--

120% Increase in Gross Margin and 42% Increase in B2B Revenue vs. Q2 Year Prior as Company Continues Evaluating Strategic Opportunities

DropCar, Inc. (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.

 

DropCar, Inc. and Subsidiaries

Consolidated Balance Sheets Data

 

 

 

 

 

June 30,

December 31,

 

2019

2018

 

(unaudited)

 

ASSETS

 

 

 

 

 

CURRENT ASSETS:

 

 

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

 

-

Other assets

 

3,525

 

3,525

 

 

 

TOTAL ASSETS

$

 

4,800,298

$

 

5,630,156

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

CURRENT LIABILITIES:

 

 

Accounts payable and accrued expenses

$

 

2,028,818

$

 

2,338,560

Deferred income

 

303,744

 

253,200

Lease liability

 

960

 

-

Total current liabilities

 

2,333,522

 

2,591,760

 

 

 

 

 

 

TOTAL STOCKHOLDERS' EQUITY

 

2,466,776

 

3,038,396

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

 

4,800,298

$

 

5,630,156

   

DropCar, Inc. and Subsidiaries

Consolidated Statements of Operations Data

(unaudited)


 

For the Three Months Ended June 30,

 

2019

 

2018

 

 

 

(Restated)

 

 

 

 

SERVICE REVENUES

$

 

1,246,544

 

 

$

 

1,873,997

 

 

 

 

 

COST OF REVENUES

 

1,115,787

 

 

 

2,528,781

 

 

 

 

 

GROSS PROFIT (LOSS)

 

130,757

 

 

 

(654,784

)

   

OPERATING EXPENSES

 

 

 

Research and development

 

48,330

 

 

 

63,971

 

Selling, general and administrative expenses

 

945,388

 

 

 

3,341,601

 

Depreciation and amortization

 

98,967

 

 

 

84,177

 

TOTAL OPERATING EXPENSES

 

1,092,685

 

 

 

3,489,749

 

 

 

 

 

OPERATING LOSS

 

(961,928

)

 

 

(4,144,533

)

 

 

 

 

Other income (expense), net

 

10,973

 

 

 

718

 

 

 

 

 

LOSS FROM CONTINUING OPERATIONS

 

(950,955

)

 

 

(4,143,815

)

 

 

 

 

DISCONTINUED OPERATIONS

 

 

 

 

Income from operations of discontinued component

 

-

 

 

 

151,565

 

LOSS FROM DISCONTINUED OPERATIONS

 

-

 

 

 

151,565

 

 

 

 

 

Income taxes

 

-

 

 

 

-

 

   

NET LOSS

$

 

(950,955

)

 

$

 

(3,992,250

)

   

Deemed dividend on exchange of warrants

 

-

 

 

 

(316,861

)

   

NET LOSS ATTRIBUTABLE TO COMMON
STOCKHOLDERS

$

 

(950,955

)

 

$

 

(4,309,111

)

 

 

 

 

LOSS PER SHARE FROM CONTINUING OPERATIONS:

 

 

 

Basic

$

 

(0.24

)

 

$

 

(3.12

)

Diluted

$

 

(0.24

)

 

$

 

(3.12

)

EARNINGS PER SHARE FROM DISCONTINUED
OPERATIONS:

 

 

 

Basic

$

 

-

 

 

$

 

0.11

 

Diluted

$

 

-

 

 

$

 

0.11

 

NET LOSS PER SHARE:

 

 

 

Basic

$

 

(0.24

)

 

$

 

(3.24

)

Diluted

$

 

(0.24

)

 

$

 

(3.24

)

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING

 

 

 

Basic

 

3,954,152

 

 

 

1,328,654

 

Diluted

 

3,954,152

 

 

 

1,328,654

 

 

DropCar, Inc. and Subsidiaries

Consolidated Statements of Operations Data

(unaudited)


 

For the Six Months Ended June 30,

 

2019

2018

 

 

(Restated)

 

 

 

 

 

 

SERVICE REVENUES

$

2,345,987

 

$

3,566,072

 

 

 

 

COST OF REVENUES

 

2,242,832

 

 

4,824,562

 

 

 

 

GROSS PROFIT (LOSS)

 

103,155

 

 

(1,258,490

)

 

 

 

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

 

TOTAL OPERATING EXPENSES

 

3,042,513

 

 

6,593,939

 

 

 

 

OPERATING LOSS

 

(2,939,358

)

 

(7,852,429

)

 

 

 

Other income (expense), net

 

12,697

 

 

(1,081,499

)

 

 

 

LOSS FROM CONTINUING OPERATIONS

 

(2,926,661

)

 

(8,933,928

)

 

 

 

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
STOCKHOLDERS

$

(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
OPERATIONS:

 

 

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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