DropCar Announces Financial Results for the Three and Nine Months Ended September 30, 2019

Q3 Shows 133% Increase in Gross Profit and 83% Decrease in Net Loss Versus Prior Year as Company Continues Evaluating Strategic Opportunities

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 and the filing of its Form 10-Q for the three and nine months ended September 30, 2019, including an update on the results of initiatives implemented to conserve cash on hand, while focusing on its most profitable business segments.

Spencer Richardson, DropCar’s Chief Executive Officer, stated, “Our plan is to continue to focus on our most profitable business segments which has translated into continued improvements to our gross margin. These improvements have also afforded the Company the opportunity to thoroughly explore the best options for strategic growth and alternatives.”

During the past few months, DropCar has taken the following actions to continue to reduce its cash burn and focus on the most profitable segments of its business:

(i) leverage improvements to its in-house technology and data analysis to refine labor scheduling and service pricing models, resulting in the Company transitioning from a gross loss of $399,887 for the quarter ended September 30, 2018 to a gross profit of $131,628, or 133% increase for the quarter ended September 30, 2019; and

(ii) improving efficiency of overall backend and driver field operations while reducing low margin services, resulting in the Company transitioning from a gross loss of $1,658,377 for the nine months ended September 30, 2018 to a gross profit of $234,783, or 114% increase for the nine months ended September 30, 2019.

Financial Results for the Three Months Ended September 30, 2019 versus Three Months Ended September 30, 2018

Revenue for the three months ended September 30, 2019 decreased $294,000, or 21%, to $1,095,000, as compared to $1,389,000 for the same period in 2018, as DropCar Operating revenue decreased by $329,000, or 29%, due to the discontinued “Steve” parking offering. This was partially offset by an increase in “Will” valet on-demand service and DropCar 360 service revenue of $25,000, or 54%, to $71,000, compared to $46,000 for the three months ended September 30, 2018 primarily due to the cancellation of the tip payment to NY valets, as well as an increase in B2B service revenue of $9,000, or 4%, to $234,000 as compared to $225,000 for the three months ended September 30, 2018.

Cost of revenue during the three months ended September 30, 2019 totaled $964,000, a decrease of $825,000, or 46%, compared to $1,789,000 recorded for the three months ended September 30, 2018. This decrease was primarily due to a decrease of $825,000 in the Company’s valet and field support workforce.

The Company's $750,000 net loss for the three months ended September 30, 2019 was comprised of $753,000 operating loss from DropCar Operations and offset by $3,000 of interest income. This compared to a net loss of $4,348,000 for the same period in 2018, a reduction of 83%.

Financial Results for the Nine Months Ended September 30, 2019 versus Nine Months Ended September 30, 2018

Revenue for the nine months ended September 30, 2019 decreased $1,514,000, or 31%, to $3,441,000, as compared to $4,955,000 for the nine months ended September 30, 2018, as (i) DropCar Operating subscription service revenue decreased by $1,510,000, or 40% due to the discontinued “Steve” parking and valet on-demand service, and (ii) a decrease in “Will” valet on-demand service and DropCar 360 service revenue of $220,000, or 45%, to $267,000, compared to $487,000 for the nine months ended September 30th 2018. This decrease was offset by an increase in B2B revenue of $216,000, or 30%, to $926,000, compared to $710,000 for the nine months ended September 30, 2018.

Cost of revenue during the nine months ended September 30, 2019 totaled $3,207,000, a decrease of $3,407,000, or 52% compared to $6,614,000 recorded for the nine months ended September 30, 2018. This decrease was primarily due to $3,207,000 in wages and related expenses, $432,000 in repairs and damages, $197,000 in cost of gas, car wash and other service sold, partially offset by increase of $429,000 in parking garage fees and insurance costs.

The Company's $3,677,000 net loss for the nine months ended September 30, 2019 was comprised of $3,693,000 operating loss from DropCar Operations and offset by $16,000 of interest income. This compared to a net loss of $11,802,000 for the nine months ended September 30, 2018, a reduction of 69%.

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

 

 

September 30,

December 31,

 

2019

2018

 

(unaudited)

 

ASSETS

 

 

 

 

 

CURRENT ASSETS:

 

 

Cash

$2,594,888

$4,303,480

Accounts receivable, net

176,328

295,626

Prepaid expenses and other current assets

311,567

328,612

Total current assets

3,082,783

4,927,718

 

 

 

Property and equipment, net

28,255

39,821

Capitalized software costs, net

478,129

659,092

Operating lease right-of-use asset

3,772

-

Other assets

3,525

3,525

 

 

 

TOTAL ASSETS

$3,596,464

$5,630,156

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

CURRENT LIABILITIES:

 

 

Accounts payable and accrued expenses

$1,528,797

$2,338,560

Deferred income

304,683

253,200

Total current liabilities

1,833,480

2,591,760

 

 

 

 

 

 

TOTAL STOCKHOLDERS' EQUITY

1,762,984

3,038,396

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$3,596,464

$5,630,156

DropCar, Inc. and Subsidiaries

Consolidated Statements of Operations Data

(unaudited)

For the Three Months Ended September 30,

 

2019

2018

 

(Restated)

 

 

 

SERVICE REVENUES

$1,095,320

$1,389,134

 

 

 

COST OF REVENUES

963,692

1,789,021

 

 

 

GROSS PROFIT (LOSS)

131,628

(399,887)

 

 

 

OPERATING EXPENSES

Research and development

43,690

60,299

Selling, general and administrative expenses

745,827

2,690,991

Depreciation and amortization

95,360

94,031

TOTAL OPERATING EXPENSES

884,877

2,845,321

 

 

 

OPERATING LOSS

(753,249)

(3,245,208)

 

 

 

Interest income (expense), net

3,240

171

 

 

 

LOSS FROM CONTINUING OPERATIONS

(750,009)

(3,245,037)

 

 

 

DISCONTINUED OPERATIONS

 

 

 

Loss from operations of discontinued component

-

(83,736)

LOSS FROM DISCONTINUED OPERATIONS

-

(83,736)

 

NET LOSS

$(750,009)

$(3,328,773)

 

Deemed dividend on exchange of warrants

-

(1,019,040)

 

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS

$(750,009)

$(4,347,813)

 

 

 

LOSS PER SHARE FROM CONTINUING OPERATIONS:

 

 

Basic

$(0.19)

$(2.26)

Diluted

$(0.19)

$(2.26)

LOSS PER SHARE FROM DISCONTINUED OPERATIONS:

 

 

Basic

-

$(0.06)

Diluted

-

$(0.06)

NET LOSS PER SHARE:

 

 

Basic

$(0.19)

$(3.03)

Diluted

$(0.19)

$(3.03)

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING

 

 

Basic

4,050,006

1,434,963

Diluted

4,050,006

1,434,963

DropCar, Inc. and Subsidiaries

Consolidated Statements of Operations Data

(unaudited)

For the Nine Months Ended September 30,

 

2019

2018

 

 

(Restated)

 

 

 

 

 

SERVICE REVENUES

$3,441,307

$4,955,206

 

 

 

COST OF REVENUES

3,206,524

6,613,583

 

 

 

GROSS PROFIT (LOSS)

234,783

(1,658,377)

 

 

 

OPERATING EXPENSES

Research and development

161,002

238,431

Selling, general and administrative expenses

3,464,312

8,943,389

Depreciation and amortization

302,076

257,440

TOTAL OPERATING EXPENSES

3,927,390

9,439,260

 

 

 

OPERATING LOSS

(3,692,607)

(11,097,637)

 

 

 

Interest income (expense), net

15,937

(1,081,328)

 

 

 

LOSS FROM CONTINUING OPERATIONS

(3,676,670)

(12,178,965)

 

 

 

DISCONTINUED OPERATIONS

 

 

Income from operations of discontinued component

-

377,207

INCOME FROM DISCONTINUED OPERATIONS

-

377,207

 

NET LOSS

$(3,676,670)

$(11,801,758)

 

Deemed dividend on exchange of warrants

-

(1,335,901)

 

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS

$(3,676,670)

$(13,137,659)

 

 

 

 

 

 

LOSS PER SHARE FROM CONTINUING OPERATIONS:

 

 

Basic

$(1.09)

$(9.65)

Diluted

$(1.09)

$(9.65)

EARNINGS PER SHARE FROM DISCONTINUED OPERATIONS:

 

 

Basic

-

$0.30

Diluted

-

$0.30

NET LOSS PER SHARE:

 

 

Basic

$(1.09)

$(10.41)

Diluted

$(1.09)

$(10.41)

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING

 

 

Basic

3,381,026

1,262,409

Diluted

3,381,026

1,262,409

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20191114005894/en/

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