Press release

DropCar Announces Financial Results for the Three Months Ended March 31, 2019

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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 period ended
March 31, 2019 and provided an update on the results of initiatives
implemented to conserve cash on hand while focusing the business on its
most profitable clients and segments.

Spencer Richardson, DropCar’s Chief Executive Officer, stated, “We
remain focused on accelerating our business towards profitability, as
evidenced by the last two quarters. These quarters have seen the
streamlining of our back end operations, coupled with major gains to our
overall field driver efficiency lead to significant improvement in gross
margins compared to prior quarters.”

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

(i) completed the conversion of its B2C business to a self-park model,
which has shifted from a significant driver of losses to now a growing
positive gross margin business for the quarter ended ending March 31,
2019, compared to the prior quarter ended March 31; and

(ii) increased growth in B2B managed services revenues by 44% for the
quarter ended March 31, 2019, compared to the quarter ended March 31,
2018, which was primarily a result of the expansion of existing
contracts and changes to the Company’s B2B pricing model.

“For the second quarter of 2019, we are continuing our efforts to focus
our resources on reducing expenses while shepherding strategic growth to
enable the company to help maximize opportunities for enhancing
shareholder value,” added Mr. Richardson.

Financial Results for the Three Months Ended March 31, 2019 versus
Three Months Ended March 31, 2018

Revenue for the three months ended March 31, 2019 decreased $593,000, or
35%, to $1,099,000, as compared to $1,692,000 for the same period in
2018, as DropCar Operating revenue decreased by $695,000, or 51%, due to
the discontinued “Steve” parking and valet on-demand service. This was
partially offset by an increase in B2B revenue of $101,915, or 44%, to
$335,000, as compared to $234,000 for the three months ended March 31,
2018, and an increase in “Will” valet on-demand service revenue of
$35,000, or 52%, to $102,000, compared to $67,000 for the three months
ended March 31, 2018.

Cost of revenue during the three months ended March 31, 2019 totaled
$1,127,000, a decrease of $1,169,000, or 51%, compared to $2,296,000
recorded for the three months ended March 31, 2018. This decrease was
primarily due to a decrease in the Company’s valet workforce and
attributable to decreases of $1,011,000 in wages and related expenses,
$123,000 in repairs and damages, $75,000 in travel and $51,000 in cost
of gas and other service sold, partially offset by an increase of
$98,000 in parking garage fees and insurance costs.

The Company’s $1,976,000 net loss for the three months ended March 31,
2019 was comprised of $1,977,000 operating loss from DropCar Operations
and offset by $1,700 of interest income. This compared to a net loss of
$4,481,000 for the same period in 2018, a reduction of 56%.

Financial Results for the Three Months Ended March 31, 2019 versus
Three Months Ended December 31, 2018

Revenue for the three months ended March 31, 2019 decreased $23,000, or
2%, to $1,099,000, as compared to $1,122,000 for the three months ended
December 31, 2018, as DropCar Operating B2B revenue decreased by
$13,000, or 4% and Consumer Non Recurring revenue decreased $21,000, or
17%. This was offset by an increase in monthly subscription revenue of
$11,000, or 2%.

Cost of revenue during the three months ended March 31, 2019 totaled
$1,127,000, a decrease of $123,000, or 10% compared to $1,250,000
recorded for the three months ended December 31, 2018. This decrease was
primarily due to $43,000 in wages and related expenses, $45,000 in
damages, $15,000 in travel, $36,000 in other service cost, partially
offset by increase of $17,000 in parking garage fees, insurance and gas
expenses.

The Company’s $1,976,000 net loss for the three months ended March 31,
2019 was comprised of $1,977,000 operating loss from DropCar Operations
and offset by $1,700 of interest income. This compared to a net loss of
$6,634,000 for the three months ended December 31, 2018.

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
 
           
March 31, December 31,
2019       2018
(unaudited)
ASSETS
 
CURRENT ASSETS:
Cash $4,358,633 $4,303,480
Accounts receivable, net 413,413 295,626
Prepaid expenses and other current assets 359,193       328,612
Total current assets 5,131,239 4,927,718
 
Property and equipment, net 33,319 39,821
Capitalized software costs, net 626,599 659,092
Operating lease right-of-use asset 14,877
Other assets 3,525       3,525
 
TOTAL ASSETS $5,809,559       $5,630,156
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
CURRENT LIABILITIES:
Accounts payable and accrued expenses $1,972,376 $2,338,560
Deferred income 272,812 253,200
Lease liability 7,332      
Total current liabilities 2,252,520 2,591,760
 
Convertible note payable, net of debt discount      
TOTAL LIABILITIES 2,252,520 2,591,760
 
TOTAL STOCKHOLDERS’ EQUITY 3,557,039 3,038,396
         
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $5,809,559       $5,630,156
 
         

DropCar, Inc. and Subsidiaries

Consolidated Statements of Operations Data

(unaudited)

 
For the Quarter Ended March 31,
2019       2018
     

(Restated)

 
NET REVENUES $1,099,443 $1,692,075
 
COST OF REVENUES 1,127,045 2,295,781
         
GROSS LOSS (27,602) (603,706)
 

OPERATING EXPENSES

Research and development

68,982 114,161
Selling, general and administrative expenses 1,773,097 2,910,797
Depreciation and amortization 107,749       79,232
TOTAL OPERATING EXPENSES 1,949,828 3,104,190
         
OPERATING LOSS (1,977,430) (3,707,896)
 
Interest income (expense), net 1,724 (1,082,217)
         
LOSS FROM CONTINUING OPERATIONS (1,975,706) (4,790,113)
 
DISCONTINUED OPERATIONS
 
Income from operations of discontinued component       309,378
LOSS FROM DISCONTINUED OPERATIONS 309,378
 

NET LOSS

$(1,975,706)       $(4,480,735)
 
LOSS PER SHARE FROM CONTINUING OPERATIONS:
Basic $(0.93) $(4.75)
Diluted $(0.93) $(4.75)
(LOSS) EARNINGS PER SHARE FROM DISCONTINUED OPERATIONS:
Basic $(0.93) $0.31
Diluted $(0.93) $0.31
NET LOSS PER SHARE:
Basic $(0.93) $(4.44)
Diluted $(0.93) $(4.44)
 
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 2,117,688 1,008,058
Diluted 2,117,668 1,008,058
 
     

DropCar, Inc. and Subsidiaries

Consolidated Statements of Operations Data

(unaudited)

 
For the Three Months Ended
March 31, 2019       December 31, 2018
 
 
NET REVENUES $1,099,443 $1,122,461
 
COST OF REVENUES 1,127,045 1,250,090
   
GROSS LOSS (27,602) (127,629)
 

OPERATING EXPENSES

Research and development

68,982 56,901
Selling, general and administrative expenses 1,773,097 2,430,623
Depreciation and amortization 107,749 100,549
TOTAL OPERATING EXPENSES 1,949,828 2,588,073
   
OPERATING LOSS (1,977,430) (2,715,702)
 
Interest income (expense), net 1,724 103
   
LOSS FROM CONTINUING OPERATIONS (1,975,706) (2,715,599)
 
DISCONTINUED OPERATIONS
Income from operations of discontinued component 315,119
Loss on sale of component (4,169,718)
LOSS FROM DISCONTINUED OPERATIONS (3,854,599)
 

NET LOSS

$(1,975,706) $(6,570,198)
Deemed dividend on exchange of warrants (63,760)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS $(1,975,706) $(6,633,958)
 
AMOUNTS ATTRIBUTABLE TO COMMON STOCKHOLDERS
Loss from continuing operations (1,975,706) (2,779,359)
Loss from discontinued operations (3,854,599)
NET LOSS (1,975,706) (6,633,958)
 
LOSS PER SHARE FROM CONTINUING OPERATIONS:
Basic $(0.93) $(1.71)
Diluted $(0.93) $(1.71)
(LOSS) EARNINGS PER SHARE FROM DISCONTINUED OPERATIONS:
Basic $(0.93) $(2.38)
Diluted $(0.93) $(2.38)
NET LOSS PER SHARE:
Basic $(0.93) $(4.09)
Diluted $(0.93) $(4.09)
 
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 2,117,688 1,621,130
Diluted 2,117,668 1,621,130