15 Nov 2004 - PowerLinx, Inc. Reports Third Quarter Results Ending September 30, 2004
Company Ships Digital Powerline Surveillance Systems As Initial Fulfillment Of UGC Contract
TIERRA VERDE, Fla.--(BUSINESS WIRE)--Nov. 15, 2004--PowerLinx, Inc. (OTCBB: PWLX - News), the leader in power line communication products, reported results for the quarter ended September 30, 2004. The Company reported $196,538 in sales for the third quarter of 2004 versus $422,219 for the third quarter of 2003 which represents a -53.5% sales loss and is the first quarterly comparative sales loss in the last nine quarters. For the trailing four quarters, the Company has generated sales of $1,436,310 versus $1,229,510 for the comparable four quarters which is a 16.8% sales gain. The Company reported $66,626 in gross profit for the third quarter of 2004 versus $110,792 for the third quarter of 2003 which represents a -39.9% gross profit loss. However, as a percent of net revenue, gross profit improved by 8 percentage points to 34% versus 26% for the comparative three month period. It continues the effects of an improved cost structure generated from the Company's overseas sourcing.
The following table sets forth selected information from the statement of operations for the three months and six months ended September 30, 2004 and 2003.
Selected Statement Of Operations Information
Three Months Ended Three Months Ended
September 30, 2004 September 30, 2003
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Net Revenues $ 196,538 $ 422,219
Operating Expenses $ 1,627,811 $ 773,519
Net Income (Loss) $ (1,561,185) $ (1,062,295)
Nine Months Ended Nine Months Ended
September 30, 2004 September 30, 2003
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Net Revenues $ 1,107,450 $ 1,043,184
Operating Expenses $ 3,825,312 $ 2,201,415
Net Income (Loss) $ (3,435,482) $ (2,993,415)
The complete statement of Company results may be found in the quarterly 10-QSB report which may be accessed via the Company Web site, www.power-linx.com, using the "SEC filings" link in the investor relations section.
Commenting on these results, George S. Bernardich III, PowerLinx's Chairman & CEO stated, "While the Company experienced a sales setback for the quarter, annual sales growth remains positive and future sales growth is expected to regain traction as a result of recent contracts and distribution arrangements. The team is committed to successfully implementing its business plan which is focused on growth, profitability, and technological innovation. The quarterly results were significantly affected by the six weeks of hurricane weather in the Company's home sate of Florida which directly affected both internal sales operations and the operations of many of our customers. Significant air time for some of our security products was lost through evacuation and other asset protection activities by some of our direct television retailers causing reduced inventory sell-through of product purchased late in the 2nd quarter. The Company is also transitioning the consumer security product line to the PLVS Plus(TM) home monitoring suite of products. In the transportation division, the prospective customers continue to validate the strong appeal of using video safety systems for loss savings in the trucking industry. However, action on closing of these proposals are being delayed and/or postponed for a number of reasons which the Company believes is not related to the product pricing or performance. As with security products, some localized Florida installations were delayed due to the hurricane activity in the state. In addition, our current and potential customers are experiencing budgetary limitations as a result of the effects of new overtime laws for drivers and the increase in fuel prices. However, continued revenue growth from the hospitality and MDU division continued in the quarter. Finally, the Company made a shipment of twenty digital powerline surveillance systems as initial fulfillment of our UGC contract. We expect the Company to continue to achieve new milestones on a regular basis over the coming quarters as we become an established worldwide leader in the manufacturing and distribution of PowerLine products to consumer, commercial and industrial markets."
Significant highlights of Company achievements for the 3rd quarter 2004 and early 4th quarter 2004 include:
PowerLinx, Inc. executed private placements to certain institutional investors, accredited investors, and directors. The private placements totaled $3.5M, including warrants that would bring an additional $1.9M of capital, if exercised. The Company intends to use the funds to: expand our sales force internally and externally, launch and market the new SecureView® PLVS Plus home monitoring system, complete commercialization of digital powerline products, expand direct television marketing, increase advertising and marketing expenditures in appropriate markets and product segments, begin the process of certifications to allow distribution in international markets, and for general and administrative expenses.
PowerLinx, Inc. has engaged Bob Circosta, a legend in Direct Response Retailing, as Spokesperson and On-Air talent for our powerline home monitoring products which include SecureView®, the "camera in a light bulb."
PowerLinx, Inc. and On2 Technologies, Inc., The Duck Corporation launched several strategic initiatives aimed at the surveillance, security, and video-on-demand (VOD) markets.
PowerLinx, Inc. enlisted the services of LaunchPower, www.launchpower.com, to supplement our sales and marketing efforts in the government sector. LaunchPower joins our government relations agency, Alcalde & Fay, in bringing the Company powerline product solutions to the forefront in this very important market segment. LaunchPower's President & CEO, Col. (Retired) James Opfer, and his team expect to focus on selling PowerLinx security systems while building awareness for our PLVS safety systems and connectivity products which all use patented powerline technologies.
PowerLinx, Inc. executed a purchase agreement with Universal General Corporation (UGC) to purchase PowerLinx's patented digital powerline surveillance systems. The contract calls for the purchase of 10,000 digital powerline surveillance base systems with the ability to purchase as needed add-on digital powerline cameras based on UGC's installation site needs. The digital powerline base systems are offered in three grades of camera quality which include a PowerLinx produced camera and two other outsourced cameras.
PowerLinx, Inc. announced the hiring of Marvin D. Scaff as Director of Software & Information Technology. Mr. Scaff brings extensive experience and expertise to the Company and is well respected in the industry. He has been very involved in the development of the Company's new home monitoring systems and new digital security systems. He joins our current Director of Digital Engineering, Steven R. Rumbaugh in leading our product engineering group.
PowerLinx, Inc. launched a wholly owned subsidiary LinxComm, LLC. LinxComm, through agreements with various Local Exchange Carriers and Competitive Local Exchange Carriers, expects to build a portfolio of Telecommunications products that will meet the specific needs of our customers especially in the hospitality market where PowerLinx currently sells powerline internet connectivity products. LinxComm allows PowerLinx to provide a one-stop shopping service to hotel and multiple dwelling unit property by providing telecom, internal broadband connectivity, digital video-on-demand, and powerline security products and services.
PowerLinx, Inc. enlisted the services of Asymmetric Communications, Ltd., to provide product certification services and to develop distribution channels in the European Union. PowerLinx intends to develop international markets following the successful launch of the United States version of SecureView family of products for home monitoring systems, PLVS Plus, followed by the other product lines. To prepare to launch this product range within the European and other markets, PowerLinx is required to ensure that the products meet the needs of the EU and to obtain the mandatory CE approvals and marks along with other approvals for counties outside of the EU and USA.
PowerLinx, Inc. signed up WinTron Technologies, www.wintrontech.com, to market and distribute PowerLinx security and transportation vision systems. Initially, WinTron will offer the SecureView(TM), "camera in a light bulb" and PowerLine Vision Systems(TM) (PLVS) to its customers.
About PowerLinx, Inc.:
PowerLinx, Inc., www.power-linx.com, develops, manufactures, and markets, among other devices, products, and applications developed to transmit voice, video, audio and data either individually or any and all combinations over power lines, twisted pair wires and coax in AC and DC power environments, on any and all power grids. The Company has also developed, manufactured, and marketed different kinds of underwater video cameras, lights and accessories for the marine, commercial and consumer retail markets.