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Letter to the Editor
Friday November 15
DriverShield Reports Third Quarter Loss
DriverShield Corp. has reported it had a net loss of $878,000, or $.08 per basic and diluted share, for the quarter ended September 30, 2002, versus a net loss of $136,000, or $.01 per share, in the third quarter of 2001. Excluding non-cash tax items of $490,000, or $.04 loss per share relating to its discontinued fleet operations, the loss from continuing operations was $387,000, or just under $.04 per share. These increased tax expenses will have no cash impact because of the Company's net operating loss carryforwards.In addition, the company also recorded accruals for one-time costs: $276,000 to be incurred for closing its New York operations by December 31, 2002, and $248,000 in increased selling expenses relating primarily to its CRM insurance-based business.
Revenues from continuing operations for the third quarter of 2002 were $1,183,000, versus $419,000 in the comparable period of 2001, an increase of 182 percent. Revenue from the Company's Internet-based collision repair services for auto insurers reached $928,000 for the quarter.
"The results from our CRM business are very disappointing," said Barry Siegel, Chairman and CEO of DriverShield. "Although revenues have grown each quarter, they continue to be substantially less than we expected. While our insurance customers all tell us they are extremely satisfied with the technological capabilities and user-friendliness of our system, the claims volume through-put, the one thing we cannot control, continues to be significantly less than they originally projected. As a result, we cannot predict the level of claims that will be directed toward the CRM website from existing or new customers, despite the apparent savings they are generating from its use.
"We are continuing to evaluate ways to improve the situation and reduce our losses, as well as to strengthen our prospects for building long-term shareholder value. We have already begun to take steps to diversify beyond our existing businesses. Meanwhile, we have a solid balance sheet; with $7.5 million in cash, investments and reserves, and no debt. That should enable us to affect changes necessary to make this a profitable and growing company."
For the first nine months of 2002, DriverShield recorded net income of $1,824,000, compared to a net loss of $347,000 in the 2001 period. Loss from continuing operations in the 2002 period was $932,000, versus a loss of $1,196,000 in 2001. Income from discontinued operations was $2,757,000 in the 2002 period, reflecting the net gain on the sale of the Company's fleet services business. That business generated income of $850,000 in the comparable period of 2001.
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