EX-99.1 2 a09-10235_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

 

 

Company Contacts:

 

Investor Relations:

Roger Ward

 

Ron Both

V.P. of Marketing & Investor Relations

 

Managing Director

American Defense Systems, Inc.

 

Liolios Group, Inc.

Tel 516-390-5300, x326

 

Tel 949-574-3860

rward@adsiarmor.com

 

info@liolios.com

 

American Defense Systems Reports Fiscal 2008 Results

 

HICKSVILLE, N.Y., April 15, 2009 American Defense Systems, Inc. (ADSI) (AMEX: EAG), a leading provider of advanced transparent and opaque armor, architectural hardening and security products for Defense and Homeland Security, reported financial results for the year ended December 31, 2008.

 

Financial Results for Full-Year 2008

 

For the full-year 2008, revenues totaled $35.6 million, a decrease of 2% from $36.3 million in 2007. The decrease is primarily attributed to approximately $10.0 million in orders delayed by the federal government until the first half of 2009 and the elimination of approximately $1.3 million from operations discontinued in the fourth quarter.

 

Income from continuing operations in 2008 was $511,000 or $0.01 per basic and diluted share, compared to income from continuing operations in 2007 of $3.1 million, or $0.08 per basic and diluted share.

 

Income from continuing operations in 2008 included a $996,000 income tax benefit, as compared to a tax provision of $362,000 in 2007. Before tax, the company had a loss from continuing operations of $485,000 in 2008 versus income from continuing operations of $3.5 million in 2007. The loss before taxes in 2008 reflects a 50% year-over-year increase in general and administrative expenses and salaries, which is due to increasing the infrastructure of the company’s headquarters and facilities and expanding staff to handle future growth. In addition to the general and administrative expenses, the loss from continuing operations in 2008 included $866,000 in interest expense, a $2.9 million unrealized gain on the adjustment of fair value Series A convertible preferred stock classified as a liability, and a $1.5 million unrealized gain on investor warrant liabilities.

 

Contract backlog at the end of 2008 was approximately $57.0 million, versus approximately $48.0 million at the end of 2007.

 

Fourth Quarter 2008 Operational Highlights

 

ADSI advanced development in a number of areas during the fourth quarter of 2008, including:

 

·                  Received $4.4 million of follow-on orders from the U.S. Army Tank-Automotive and Armaments Command (TACOM) for Crew Protection Kits (CPKs) to be installed on construction vehicles overseas.

 

·                  Reported an expected increase in CPK orders from the world’s largest privately-owned producer of construction machinery, JCB Construction Equipment, in fulfillment of a new major U.S. Army contract announced by JCB. ADSI forecasts total CPK orders from this agreement to generate more than $10 million through 2010.

 

·                  Appointed Nicole L. Prush as director of armor solutions, responsible for the development, marketing and sale of ADSI’s line of unique opaque and transparent armor solutions used by the US Military, government agencies, private security and law enforcement.

 

Management Commentary

 

“Our results in 2008 represent good progress in our first year as a publicly traded company and put us on a strong course in 2009,” said Anthony J. Piscitelli, chairman and CEO of American Defense Systems. “While we were disappointed to not achieve our revenue target for 2008, the major government orders we needed to reach our target were not lost but simply delayed and are currently being realized in this first half of 2009.”

 



 

“2008 was also a building year for ADSI. We made significant investments in infrastructure, new staff and product development in order to address our large order backlog and the some $37 million in new contract awards we signed in the first quarter of 2009 — with more anticipated to follow. We expect to realize more than $21 million in 2009 from these newly signed contracts, which is in addition to order flow stemming from our new Tier 1 supplier arrangement with Caterpillar and our ongoing relationship with JCB Construction Equipment.”

 

“While the military segment of our business has continued to win major contracts, our new American Physical Security Group (APSG) subsidiary also did very well in 2008, with some $2.0 million in revenues in its first year of introduction. APSG has already secured an additional $8.0 million in architectural security-related orders to be realized in 2009. Our T2 tactical training division is also nearing completion of its first major sale, and we anticipate this segment of our business will likely comprise about 10% of revenue in 2009. This across-the-board progress places us well on course to exceeding our 2009 revenue goal of more than $52.0 million, along with substantial profitability.”

 

Financial Guidance

 

Based on current business conditions and expectations, ADSI expects revenues for the fiscal year ending December 30, 2009 to exceed $52 million, which would represent an increase of more than 46% over 2008. The company also expects to operate profitably in the first half and full year of 2009, and management expects gross margins to range between 33% and 36%. This forecast is supported by a number of factors, including a strong order flow resulting in a contract backlog of approximately $57.0 million at December 31, 2008.

 

Conference Call and Webcast

 

The company will hold a conference call today at 4:30 p.m. Eastern time to discuss the result for the fiscal year 2008. Members of ADSI’s executive management team will host the presentation, followed by a question and answer period.

 

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization and ask you to wait until the call begins. If you have any difficulty connecting with the conference call, please contact the Liolios Group at 949-574-3860.

 

Date: Wednesday, April 15, 2009

Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time)

Dial-In Number: 1-800-894-5910

International: 1-785-424-1052

Conference ID#: 7DEFENSE

 

The conference call will be broadcast simultaneously and available for replay via the investor section of the company’s Web site at www.adsiarmor.com.  A telephone replay of the call will be available after 7:30 p.m. Eastern time on the same day and until May 15, 2009, by calling toll-free, 1-800-283-4595 or 1-402-220-0873.

 

About American Defense Systems, Inc.

 

American Defense Systems, Inc. (“ADSI”) offers advanced solutions in the design, fabrication, and installation of transparent and opaque armor, security doors, windows and curtain wall systems for use by military, law enforcement, homeland defense and corporate customers. ADSI engineers also specialize in developing innovative, functional and aesthetically pleasing security applications for the mobile and fixed infrastructure physical security industry. For more information, visit the ADSI corporate Web site at www.adsiarmor.com.

 

Some of the statements made by American Defense Systems, Inc. (“ADSI”) in this press release, including, without limitation, statements regarding ADSI’s anticipated future growth, are forward-looking in nature. ADSI intends that any forward-looking statements shall be covered by the safe harbor provisions for such statements contained in the Private Securities Litigation Reform Act of 1995. Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “expects,” “projects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,”

 



 

“predicts,” “potential,” “forecasts,” “continues” and similar expressions are forward-looking statements. ADSI cautions you that forward-looking statements are not guarantees of performance. ADSI undertakes no obligation and disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Forward-looking statements involve known and unknown risks and uncertainties that may cause ADSI’s actual future results to differ materially from those projected or contemplated in the forward-looking statements. ADSI believes that these risks include, but are not limited to: ADSI’s reliance on the U.S. government for a substantial amount of its sales and growth; decreases in U.S. government defense spending; ADSI’s ability to contract further with the U.S. Department of Defense; ADSI’s ability to comply with complex procurement laws and regulations; competition and other risks associated with the U.S. government bidding process; changes in the U.S. government’s procurement practices; ADSI’s ability to obtain and maintain required security clearances; the inability to effect the redemption of ADSI’s Series A Convertible Preferred Stock because of insufficient funds available for that purpose; ADSI’s ability to realize the full amount of revenues reflected in its backlog; ADSI’s reliance on certain suppliers; and intense competition and other risks associated with the defense industry in general and the security-related defense sector in particular. There also can be no assurance that ADSI will obtain a sufficient number of orders under the JCB contract, if any at all, to generate more than $10 million in revenue or that such orders will be placed during the two year period referenced in this press release. Accordingly, ADSI revenues in connection with the matters referenced herein could be significantly less than the $10 million and may not be realized during such two year period.

 

Additional information concerning these and other important risk factors can be found under the heading “Risk Factors” in ADSI’s filings with the Securities and Exchange Commission, including, without limitation, its most recent registration statement on Form 10 and its most recent annual report on Form 10-K filed on or about the date of this press release. Statements in this press release should be evaluated in light of these important factors.

 



 

AMERICAN DEFENSE SYSTEMS, INC. and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

Year Ended

 

 

 

December 31,

 

 

 

2008

 

2007

 

CONTRACT REVENUES EARNED

 

$

35,588,849

 

$

36,316,994

 

COST OF REVENUES EARNED

 

24,702,714

 

22,342,582

 

 

 

 

 

 

 

GROSS PROFIT

 

10,886,135

 

13,974,412

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

General and administrative expenses

 

5,789,681

 

3,874,749

 

General and administrative salaries

 

4,758,968

 

3,170,250

 

Marketing

 

2,722,224

 

1,976,538

 

Research and development

 

788,100

 

612,547

 

Settlement of litigation

 

57,377

 

469,488

 

Depreciation

 

842,532

 

392,115

 

Loss on disposal of fixed assets

 

 

136

 

Total operating expenses

 

14,958,882

 

10,495,823

 

 

 

 

 

 

 

INCOME (LOSS) FROM OPERATIONS

 

(4,072,747

)

3,478,589

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

Unrealized gain on adjustment of fair value Series A convertible preferred stock classified as a liability

 

2,900,799

 

 

Unrealized gain on investor warrant liability

 

1,450,117

 

 

Other income (expense)

 

8,551

 

(51,658

)

Interest expense

 

(866,484

)

(39,111

)

Interest income

 

117,312

 

101,955

 

Finance charge

 

(22,598

)

 

Total other income (expense)

 

3,587,697

 

11,186

 

 

 

 

 

 

 

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

 

(485,051

)

3,489,775

 

 

 

 

 

 

 

INCOME TAX PROVISION (BENEFIT)

 

(996,000

)

362,481

 

 

 

 

 

 

 

INCOME FROM CONTINUING OPERATIONS

 

510,949

 

3,127,294

 

 

 

 

 

 

 

INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAXES

 

 

 

 

 

Income (loss) from operations of discontinued division

 

(230,834

)

12,721

 

Loss from disposal of discontinued division

 

(1,804,875

)

 

 

 

(2,035,709

)

12,721

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

(1,524,760

)

3,140,015

 

 

 

 

 

 

 

PREFERRED STOCK DIVIDENDS

 

(1,081,801

)

 

 

 

 

 

 

 

NET INCOME (LOSS) ALLOCATED TO COMMON SHAREHOLDERS

 

$

(2,606,561

)

$

3,140,015

 

 

 

 

 

 

 

Basic and Fully Diluted Net Loss Per Share

 

$

(0.066

)

$

0.081

 

 

 

 

 

 

 

Weighted Average Shares Outstanding

 

39,416,278

 

38,801,840

 

 

 

 

 

 

 

EARNINGS PER SHARE - Basic

 

 

 

 

 

Income from continuing operations

 

$

0.01

 

$

0.08

 

(Loss) from discontinued operations

 

$

(0.05

)

$

0.00

 

Net income (loss)

 

$

(0.07

)

$

0.08

 

 



 

AMERICAN DEFENSE SYSTEMS, INC. and SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

 

 

December 31,

 

 

 

2008

 

2007

 

ASSETS

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

Cash

 

$

374,457

 

$

1,434,373

 

Accounts receivable, net

 

4,981,150

 

6,711,161

 

Inventory

 

621,048

 

436,379

 

Prepaid expenses and other current assets

 

3,144,601

 

1,856,063

 

Costs in excess of billings on uncompleted contracts

 

7,143,089

 

5,011,974

 

Deferred tax asset, net

 

 

4,136,982

 

Deposits

 

437,496

 

608,020

 

 

 

 

 

 

 

TOTAL CURRENT ASSETS

 

16,701,841

 

20,194,952

 

 

 

 

 

 

 

PROPERTY and EQUIPMENT, net

 

3,743,936

 

1,125,028

 

DEFERRED FINANCING COSTS

 

1,277,833

 

 

NOTES RECEIVABLE

 

925,000

 

 

GOODWILL

 

450,000

 

1,680,361

 

ADVANCES for FUTURE ACQUISITIONS

 

159,560

 

138,000

 

DEFERRED TAX ASSET

 

1,167,832

 

 

ASSETS of DISCONTINUED OPERATIONS

 

736,613

 

416,414

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

25,162,615

 

$

23,554,755

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

Accounts payable

 

$

2,480,652

 

$

4,350,741

 

Accrued expenses

 

755,615

 

804,486

 

Line of credit and short term debt

 

76,832

 

49,950

 

Billings in excess of cost on uncompleted contracts

 

 

 

Due to related party

 

 

12,741

 

Due to Tactical Applications Group

 

 

1,000,000

 

Deferred tax liability

 

 

3,965,150

 

 

 

 

 

 

 

TOTAL CURRENT LIABILITIES

 

3,313,099

 

10,183,068

 

 

 

 

 

 

 

LONG TERM LIABILITIES

 

 

 

 

 

Preferred stock, $.001 par value, 5,000,000 shares authorized, 15,000 shares designated as mandatorily redeemable Series A Convertible Preferred Stock (cumulative), 15,000 shares issued and outstanding

 

10,981,577

 

 

Investor warrant liability

 

90,409

 

 

Liabilities of discontinued operations

 

625,585

 

73,859

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

15,010,670

 

10,256,927

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY

 

 

 

 

 

Common Stock, $.001 par value: 100,000,000 shares authorized, 39,585,960 and 39,207,950 shares issued and outstanding as of December 31, 2008 and 2007, respectively

 

39,586

 

39,208

 

Additional paid in capital

 

9,534,616

 

10,274,602

 

Retained earnings

 

577,743

 

2,984,018

 

 

 

 

 

 

 

TOTAL SHAREHOLDERS’ EQUITY

 

10,151,945

 

13,297,828

 

 

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

$

25,162,615

 

$

23,554,755