-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AB3GHFZ6o4OmbBFp4RVL/uAUWspvf0fkr6wjE1gWCsC0+JWkrYk06eESLc70D8DM Bbn+1os+YPvvmwn2pprdkQ== 0001157523-06-011247.txt : 20061113 0001157523-06-011247.hdr.sgml : 20061110 20061113163601 ACCESSION NUMBER: 0001157523-06-011247 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20061113 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20061113 DATE AS OF CHANGE: 20061113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DPAC TECHNOLOGIES CORP CENTRAL INDEX KEY: 0000784770 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 330033759 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-14843 FILM NUMBER: 061209422 BUSINESS ADDRESS: STREET 1: 7321 LINCOLN WAY CITY: GARDEN GROVE STATE: CA ZIP: 92641 BUSINESS PHONE: 7148980007 MAIL ADDRESS: STREET 1: 7321 LINCOLN WAY CITY: GARDEN GROVE STATE: CA ZIP: 92641 FORMER COMPANY: FORMER CONFORMED NAME: DENSE PAC MICROSYSTEMS INC DATE OF NAME CHANGE: 19920703 8-K 1 a5272393.txt DPAC TECHNOLOGIES, INC. 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------ FORM 8-K ------------------ CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): November 13, 2006 ------------------ DPAC Technologies Corp. (Exact name of registrant as specified in its charter) ------------------ California 0-14843 33-0033759 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 5675 Hudson Industrial Parkway Hudson, Ohio 44236 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (800) 553-1170 Not applicable (Former name or former address, if changed since last report) ------------------ Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition. The following information is furnished pursuant to Item 2.02, "Results of Operations and Financial Condition." DPAC Technologies Corp. issued a press release on November 13, 2006 announcing its 2006 third quarter results. A copy of the press release is attached to this Form 8-K as Exhibit 99.1. Item 9.01 Financial Statements and Exhibits. (c) Exhibit. Exhibit 99.1 Press release of DPAC Technologies Corp. dated November 13, 2006. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. DPAC TECHNOLOGIES CORP. By: /s/ Stephen J. Vukadinovich ---------------------------------- Stephen J. Vukadinovich Chief Financial Officer Dated: November 13, 2006 Exhibit Index Exhibit No. Description - ------------- ----------- Exhibit 99.1 Press release of DPAC Technologies Corp. dated November 13, 2006. EX-99.1 2 a5272393ex99-1.txt EXHIBIT 99.1 Exhibit 99.1 DPAC Technologies Reports Financial Results for the Third Quarter of Fiscal Year 2006 HUDSON, Ohio--(BUSINESS WIRE)--Nov. 13, 2006--DPAC Technologies Corp. (OTCBB:DPAC), a leader in device networking and connectivity solutions, today reported results for its third quarter ended September 30, 2006. These results include the combined operations of DPAC Technologies Corp. and QuaTech, Inc., which combined on February 28, 2006 as previously announced. As a result of the merger, QuaTech has become a wholly-owned subsidiary of DPAC. For accounting purposes, the transaction is considered a "reverse merger" under which QuaTech is considered the acquirer of DPAC. Accordingly, the purchase price was allocated among the fair values of the assets and liabilities of DPAC, while the historical results of QuaTech are reflected in the results of the combined company (the "Company"). The results of operations are those of QuaTech prior to the merger date, and combined QuaTech and DPAC after the merger date of February 28, 2006. Third Quarter Operating Results For the third quarter of 2006, net sales were $3.9 million, up 32% from net sales of $2.9 million in the third quarter of 2005, and up 11% from net sales of $3.5 million in the second quarter of 2006. Net sales related to the Company's Device Connectivity products increased by $117,000, or 4.4%, and net sales related to the Company's Device Networking products, including the Airborne wireless product line, increased by $818,000, or 315% over the quarter ended September 30, 2005. The Company reported an operating profit of $347,000 as compared to $219,000 for the third quarter of 2005 and an operating profit of $97,000 for the second quarter of 2006. The Company reported a net profit for the current year third quarter of $39,000 as compared to net income of $29,000 for the prior year's third quarter, and a net loss of $296,000 for the second quarter of 2006. Total operating expenses incurred in the third quarter of 2006 of $1.4 million increased by $222,000 over the previous year period, due primarily to increases in G&A expenses of $89,000 and amortization expense of $118,000. Interest expense of $383,000 for third quarter of 2006 included non-cash charges of $94,000 for the accretion of success fees, $36,000 for the amortization of deferred financing costs, and $91,000 for the amortization of the discount on subordinated debt. Additionally, the company recorded a non-cash gain of $109,000 for the fair value adjustment of the liability for warrants. Nine Months Operating Results Net sales for the first nine months of 2006 were $10.6 million, up 41% from net sales of $7.5 million in the same period of 2005. Net sales related to the Company's Device Connectivity products increased $1.1 million, or 16%, and net sales related to the Company's Device Networking products, including the Airborne wireless product line, increased by $2.0 million, or 774% over the nine months ended September 30, 2005. The Company reported an operating profit of $392,000 as compared to $554,000 for the 2005 period. The Company's net loss for the current year period totaled $504,000 as compared to net income of $40,000 for the prior year period. Interest expense of $1.1 million for the first nine months of 2006 included non-cash charges totaling $614,000, for the amortization of deferred financing charges discounts, the accretion of success fees and amortization of the discount on the subordinated debt. Additionally, the company recorded a non-cash charge of $55,000 for the fair value adjustment of the liability for warrants. Balance Sheet Summary At September 30, 2006, DPAC had total assets of $12.8 million, including cash and cash equivalents of $91,000. This compares to total assets of $7.6 million at December 31, 2005, which included $11,000 in cash and cash equivalents. As a result of the merger, the Company recorded goodwill and intangible assets of approximately $5.1 million. Comments Chief Executive Officer and President Steve Runkel commented, "Our results for Q3 were in line with the objectives. I am pleased with the top line growth of 11% sequentially and 32% over the same period last year. I'm also pleased that we have been able to carefully manage our expenses, resulting in improved operating profit on both a sequential and year-over-year basis." Mr. Runkel continued: "Revenue from the Device Networking product revenue, which includes the Airborne 802.11 product line, continues to grow as our OEM customers release their products to the market. Within the quarter we announced important new relationships with Digi Key and Ingram Micro Canada as we continue to expand the channel for our products. This will increase the exposure for our product line and support our growth objectives." About DPAC Technologies DPAC Technologies provides embedded wireless networking products for machine-to-machine communication applications. DPAC's Airborne(TM) and AirborneDirect(TM) wireless products are used by major OEMs in the transportation, instrumentation and industrial control, homeland security, medical diagnostics and logistics markets to provide remote data collection and control. DPAC Technologies is based in Hudson, OH. The Company's web site address is www.dpactech.com. Information concerning DPAC is filed by DPAC with the SEC and is available on the SEC website, www.sec.gov. About QuaTech QuaTech, Inc., a wholly-owned subsidiary of DPAC, delivers high performance device networking & connectivity solutions to help companies improve their bottom line performance. QuaTech enables reliable machine-to-machine (M2M) communications via secure 802.11 wireless or traditional wired networks with industrial grade (hardened) embedded radios, modules, boards and external device servers and bridges. For local and mobile connections, QuaTech serial adapters provide secure connectivity and port expansion via any interface option. Satisfied customers rely on our unique combination of performance and support to improve bottom line performance through real-time remote monitoring & control, streamlined systems and lower total cost of ownership (TCO). QuaTech markets its products through a global network of distributors, resellers, systems integrators and original equipment manufacturers (OEMs). Founded in 1983, QuaTech is headquartered in Hudson, Ohio, and merged with DPAC Technologies, Inc. in February 2006. www.quatech.com. Forward-Looking Statements This press release includes forward-looking statements. You can identify these statements by their forward-looking words such as "may," "will," "expect," "anticipate," "believe," "guidance," "estimate," "intend," predict," and "continue" or similar words or any connection with any discussion of future events or circumstances or of management's current estimates or beliefs. Forward-looking statements are subject to risks and uncertainties, and therefore results may differ materially from those set forth in those statements. More information about the risks and challenges faced by DPAC Technologies Corp. is contained in the Securities and Exchange Commission filings made by the Company on Form S-4, 10-K, 10-Q or 10-QSB and 8-K. DPAC Technologies Corp. specifically disclaims any obligation to update or revise any forward-looking statements whether as a result of new information, future developments or otherwise. DPAC TECHNOLOGIES CORP. Condensed Consolidated Balance Sheet Information (Unaudited) (In 000's) September 30, December 31, 2006 2005 ------------- ------------ CURRENT ASSETS: Cash and cash equivalents $91 $11 Accounts receivable, net 1,608 1,330 Inventories 1,662 1,633 Prepaid expenses and other current assets 160 119 ------------- ------------ Total current assets 3,521 3,093 Property, net 441 282 Goodwill and intangible assets 8,737 4,196 Other assets 56 - ------------- ------------ TOTAL $12,755 $7,571 ============= ============ CURRENT LIABILITIES: Notes payable $19 $- Revolving credit facility 1,393 1,175 Current portion of long-term debt 2,006 1,125 Accounts payable 1,541 1,284 Accrued restructuring costs - current 473 - Other accrued liabilities 409 591 ------------- ------------ Total current liabilities 5,841 4,175 Deferred tax liability 65 324 Accrued restructuring costs 385 - Long-term debt, net of current portion 2,844 1,773 Net stockholders' equity 3,620 1,299 ------------- ------------ TOTAL $12,755 $7,571 ============= ============ DPAC TECHNOLOGIES CORP. Condensed Consolidated Statement of Income (Unaudited) (in 000's) For the For the quarter ended: nine months ended: September 30, September 30, ------------------- ------------------- 2006 2005 2006 2005 --------- --------- --------- --------- REVENUE $3,866 $2,936 $10,556 $7,474 COST OF GOODS SOLD 2,129 1,549 5,797 3,997 --------- --------- --------- --------- GROSS PROFIT 1,737 1,387 4,759 3,477 OPERATING EXPENSES Sales and marketing 534 530 1,680 1,315 Research and development 233 220 759 533 General and administrative 500 414 1,564 1,043 Amortization of intangible assets 123 4 286 32 Restructuring charges - - 78 - --------- --------- --------- --------- Total operating expenses 1,390 1,168 4,367 2,923 INCOME FROM OPERATIONS 347 219 392 554 OTHER (INCOME) EXPENSES: Interest expense 383 146 1,098 436 Fair Value adjustment for warrant liability (109) - 55 - Miscellaneous expense - 13 - 41 --------- --------- --------- --------- TOTAL OTHER EXPENSES 274 159 1,153 477 --------- --------- --------- --------- INCOME (LOSS) BEFORE INCOME TAXES 73 60 (761) 77 INCOME TAX (PROVISION) BENEFIT (34) (31) 257 (37) --------- --------- --------- --------- NET INCOME (LOSS) $39 $29 $(504) $40 ========= ========= ========= ========= NET INCOME (LOSS) PER SHARE: Net Income (Loss) - Basic and diluted $0.00 $0.00 ($0.01) $0.00 ========= ========= ========= ========= WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 92,775 42,016 87,135 42,016 ========= ========= ========= ========= Diluted 97,512 65,339 87,135 65,339 ========= ========= ========= ========= CONTACT: DPAC TECHNOLOGIES Steve Vukadinovich, Chief Financial Officer, 714-898-0007 Steve.Vukadinovich@dpactech.com or Steve Runkel, Chief Executive Officer, 330-655-9000 Steve.Runkel@Quatech.com -----END PRIVACY-ENHANCED MESSAGE-----