DOCUMENT CAPTURE TECHNOLOGIES INC 
By Second Quarter Financial Highlights
-- GAAP net income available to shareholders increased to
-- Operating income swung
-- Total operating expenses for the second quarter of 2008 decreased 60%
to
-- Strengthened balance sheet through tight inventory control and debt
reduction; shareholders' equity increased to
Subsequent Highlight
--
Net sales for the second quarter ended
Mr. Clark continued, "During the three and six months ended
Cost of sales for the second quarter of 2008 were
Total operating expenses for the second quarter of 2008 were
Operating income for the second quarter of 2008 was
On a non-GAAP* basis, net income available to stockholders in the second
quarter of 2008 was
Net sales for the six months ended
GAAP net income for the six months ended
The Company had cash and cash equivalents of
Mr. Clark concluded, "Subsequent to the end of the quarter, there were
some important changes to our Board, highlighted by the Board's unanimous
consent naming
*In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, DCT uses non-GAAP measures of net income (loss) and income (loss) per share, which are adjustments from results based on GAAP to exclude non-cash stock-based compensation costs in accordance with SFAS 123R and the non-cash accounting for derivative financial instruments. DCT's management believes the non-GAAP financial information provided in this release is useful to investors' understanding and assessment of DCT's ongoing core operations and prospects for the future. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Management uses both GAAP and non-GAAP information in evaluating and operating business internally and as such deemed it important to provide all this information to investors.
Conference Call on
Management will host a conference call today to discuss the results at
The call will also be available live by webcast over the Internet and accessible at the company's corporate website at http://www.docucap.com.
About Document Capture Technologies, Inc.
Document Capture Technologies, Inc. (OTCBB: DCMT.OB), headquartered in
Forward-Looking Statements
Statements contained in this press release, which are not historical facts, are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based largely on current expectations and are subject to a number of known and unknown risks, uncertainties and other factors beyond the Company's control that could cause actual events and results to differ materially from these statements. These risks include, without limitation, that there can be no assurance that any strategic opportunities will be available to the Company and that any strategic opportunities may only be available on terms not acceptable to the Company. These statements are not guarantees of future performance, and readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. Document Capture undertakes no obligation to update publicly any forward-looking statements.
Company Contact:
Document Capture Technologies, Inc.
David P. Clark
(408)-213-3701
dclark@docucap.com
Investor Contact:
Hayden Communications, Inc.
Peter Seltzberg
(212) 946-2849
peter@haydenir.com
tables follow
DOCUMENT CAPTURE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
2008 2007
ASSETS (Unaudited) (Audited)
Current assets:
Cash and cash equivalents $1,150 $1,770
Trade receivables 1,838 2,464
Inventories, net 989 1,400
Prepaid expenses and other current assets 56 32
Total current assets 4,033 5,666
Fixed assets, net 101 127
Total assets $4,134 $5,793
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Notes payable and related warrant liability $806 $1,239
Trade payables to related parties 668 578
Trade payables and other current liabilities 276 658
Deferred revenue 213 -
Accrued dividends on Series A 5% cumulative
convertible preferred stock - 178
Total current liabilities 1,963 2,653
Long-term bank line of credit 534 2,021
Liability under derivative contracts 144 255
Total liabilities 2,641 4,929
Convertible preferred stock, $.001 par value,
2,000 authorized:
Series A 5% cumulative convertible preferred
stock, 0 and 11.5 shares issued and outstanding
at June 30, 2008 and December 31, 2007,
respectively; liquidation value of $0 and
$1,150 at June 30, 2008 and December 31, 2007,
respectively - 1,074
Series B convertible preferred stock, 1.5 shares
issued and outstanding at June 30, 2008 and
December 31, 2007; liquidation value of $150 at
June 30, 2008 and December 31, 2007 95 70
Stockholders' equity (deficit):
Common stock $.001 par value, 50,000 authorized,
18,444 shares issued and outstanding at June 30,
2008 and 15,904 shares issued and 15,404
outstanding at December 31, 2007 (500 shares
held in escrow) 18 15
Additional paid-in capital 32,065 30,323
Accumulated deficit (30,685) (30,618)
Total stockholders' equity (deficit) 1,398 (280)
Total liabilities and stockholders'
equity (deficit) $4,134 $5,793
DOCUMENT CAPTURE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share amounts)
Three Months Ended June 30, Six Months Ended June 30,
2008 2007 2008 2007
Net sales $3,003 $3,696 $5,541 $7,823
Cost of sales 2,020 2,150 3,825 4,634
Gross profit 983 1,546 1,716 3,189
Operating expenses:
Selling, general and
administrative 511 974 1,472 2,289
Research and development 170 749 373 1,526
Total operating expenses 681 1,723 1,845 3,815
Operating income (loss) 302 (177) (129) (626)
Other income (expense)
Change in fair value of
derivative instruments 425 330 111 (38)
Gain on sale of assets 150 - 550 -
Other (119) 11 (252) 20
Total other income (expense) 456 341 409 (18)
Net income (loss) before
income taxes 758 164 280 (644)
Provision for income taxes - 2 2 2
Net income (loss) 758 162 278 (646)
Dividend on Series A and
accretion of Series A and
Series B preferred stock
redemption value (12) (243) (114) (484)
Deemed dividend on Series A
preferred stock maturity and
Conversion - - (231) -
Net income (loss) available
to common stockholders $746 $(81) $(67) $(1,130)
Basic income (loss) per
common share $0.04 $0.00 $0.00 $(0.05)
Diluted income (loss) per
common share $0.04 $0.00 $0.00 $(0.05)
Weighted average common
shares outstanding 18,444 21,805 17,488 22,815
Weighted average common
shares outstanding,
assuming dilution 20,784 21,805 17,488 22,815
DOCUMENT CAPTURE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Six Months Ended
June 30,
2008 2007
Operating activities
Net loss available to common stockholders $(67) $(1,130)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation expense 26 21
Stock-based compensation cost - options 214 1,080
Fair value of warrants issued for services rendered 51 8
Interest expense attributable to amortization of
debt issuance costs 167 -
Change in fair value of derivative instruments (111) 38
Accretion of Series A and Series B preferred stock
redemption value 101 440
Deemed dividend on Series A preferred stock 231 -
Changes in operating assets and liabilities:
Trade receivables 626 (1,099)
Inventories 411 165
Prepaid expenses and other current assets (24) (44)
Accrued dividends on Series A 5% cumulative
convertible stock 13 44
Trade payables to related parties 90 (588)
Deferred revenue 213 -
Trade payables and other current liabilities (382) 71
Cash provided (used) by operating activities 1,559 (994)
Investing activities
Capital expenditures - (67)
Cash used by investing activities - (67)
Financing activities
Net (payments) advances on bank line of credit (1,487) 500
Payments on notes payable (700) -
Proceeds from exercise of employee stock options 8 -
Cash (used) provided by financing activities (2,179) 500
Net decrease in cash and cash equivalents (620) (561)
Cash and cash equivalents at beginning of period 1,770 1,333
Cash and cash equivalents at end of period $1,150 $772
Non-cash investing and financing activities:
Restricted common stock acquired from related
party $- $2
Conversion of convertible preferred stock to
common stock $1,339 $26
Increase to the warrant liability of common
stock warrants in connection with debt
financing $100 $-
DOCUMENT CAPTURE TECHNOLOGIES, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
(in thousands, except per share amounts)
Three Months Ended June 30, Six Months Ended June 30,
2008 2007 2008 2007
Net income (loss)
available to common
stockholders (GAAP) $746 $(81) $(67) $(1,130)
Stock-based
compensation cost -
options 104 266 214 1,080
Fair value of warrants
issued for services
rendered 17 4 51 8
Interest expense
attributable to
amortization of debt
issuance costs 83 - 167 -
Change in fair value of
derivative instruments (425) (330) (111) 38
Accretion of Series A
and Series B preferred
stock redemption value 12 220 101 440
Deemed dividend on Series
A preferred stock - - 231 -
Net income available to
common stockholders
(Non-GAAP) $537 $79 $586 $436
SOURCE Document Capture Technologies, Inc.
