Digital Power Corporation (NYSE:DPW), a company seeking to increase revenues through acquisitions and organic growth, issued an investor update today stating that gross revenues for the quarter ended September 30, 2017 for Digital Power Corp. and its subsidiaries will exceed $3M, an increase of over 67% from the quarter ended June 30, 2017.
The Company said this included $50,000 in revenues from the $50M purchase order issued by MTIX, Ltd. in the first quarter of 2017 to manufacture, install and service laser-based, proprietary textile treatment systems while it will record $1.25M in deferred revenue from the manufacturing of machines using the MLSE® technology. The Company noted that it anticipates recognizing this deferred revenue during the first quarter of 2018.
The Company also stated that it projects it will record approximately $3M in deferred revenue for the fourth quarter of 2017, dependent upon its completion and delivery of the first machines currently in production. This deferred income is anticipated to be recognized as well during the first quarter of 2018, bringing the total revenue from MTIX, Ltd. to $4.25M. Microphase Corporation, the Connecticut based majority controlled subsidiary, will report gross revenue for the period ended September 30, 2017 of $1.3M. The Company was also pleased to report a milestone for Microphase Corporation, which recently received two new purchase orders valued at $1.3M, one of which is in conjunction with the newly awarded multimillion-dollar long-term contract from the U.S. Air Force.
Brian Kelly, General Manager of Microphase Corporation, said, “We received a strategic contract from the U.S. Air Force along with a new purchase order from another customer. This award from the U.S. Air Force can be strategic to solidifying our revenue base over the coming years. The initial purchase order from the U.S. Air Force is for $863K.” Mr. Kelly continued, “I am proud we have achieved this milestone and secured these two purchase orders. These two new orders affirm the world class quality of product and service we consistently provide to our customers and that our company continues to be a regarded and trusted source of service and solutions. We look forward to further cultivating these two new relationships and leveraging these orders as we further stabilize our production cycle and efficiencies and grow sales over the coming quarters.” The Company could not disclose further details about each of the new purchase orders due to non-disclosure restrictions with each customer.
The Company provided investors and its shareholders revised guidance on revenues for the remainder of 2017 and for 2018, forecasting more growth quarter over quarter starting with the current period ending December 31, 2017.
The Company announced its estimate of gross revenues for the following periods:
- Quarter ending December 31, 2017: Between $4.2M to $4.9M
- Year ending December 31, 2018: Between $23.5M to 25.0M
The Company reminded shareholders and investors that the projected increase in revenues for 2018 is based on its ability to fully recognize revenue from its operations and all acquisitions completed in 2017. The Company cautions that these forecasts for Q3 and Q4 of 2017 do not fully include anticipated revenues from the MTIX, Ltd. $50M purchase order to comply with U.S. GAAP revenue recognition policies and protocols. The Company reminds readers that recognition of revenues from the contract for manufacturing services being provided to MTIX, Ltd. are complex for various reasons including the fact production of the machines is multinational, being conducted in both England, Germany, Italy and the United States, thus making regulatory compliance follow varying sets of governing laws, regulations and practices from government and industry agencies. The Company adheres to the “best of practice” in policies and procedure as its standard protocol as advised by its legal counsel, contracted consultants and industry experts.
Amos Kohn, President and CEO of Digital Power Corporation, stated, “We are focusing our growth objectives by primarily targeting firms that provide advanced technology for applications that serve our primary three market sectors including defense and aerospace, industrial and medical/health for acquisition. We continue to develop, execute and refine our cohesive strategy that seeks to leverage our manufacturing size and capacity for competitive advantage in conjunction with the added value proposition Coolisys Technologies provides through its mission critical applications. In this past quarter, we began to centralize certain corporate functions and management talents to provide better coordination and efficiencies including reduced costs. By managing our portfolio companies this way, we have enabled each of the subsidiaries to focus on doing what they do best while positioning selected management the ability to develop strategies to explore and expand in fast-growth markets and new fields such as industrial technology for textile surface enhancement.”