DynTek Announces Results for Fiscal Year 2010

Company Achieves Net Income and EBITDA Growth in the Fourth Quarter and the Fiscal Year


NEWPORT BEACH, CA--(Marketwire - October 26, 2010) - DynTek, Inc. (PINKSHEETS: DYNE), a leading provider of professional technology services, today announced results for its fourth fiscal quarter and fiscal year ended June 30, 2010.

Fiscal Year Results
DynTek reported revenues of $85,589,000 for the fiscal year ended June 30, 2010, an increase of $715,000 from $84,874,000 in fiscal year 2009. Gross profit increased to $16,606,000 for the fiscal year ended June 30, 2010, an increase of $246,000 from $16,360,000 for the prior fiscal year. Total operating expenses decreased to $14,280,000 in the fiscal year ended June 30, 2010 compared to $19,788,000 in the prior fiscal year. This decrease in operating expenses is primarily due to a fourth quarter 2009 impairment of goodwill and intangibles charge of $4,436,000, but also contributing is a year over year decrease to general and administrative expenses of $740,000. 

DynTek reported positive EBITDA of $2,778,000 for the fiscal year ended June 30, 2010, an increase of $520,000 or 23% from $2,258,000 for the fiscal year ended June 30, 2009. Net income was $181,000 for fiscal year 2010, as compared to a net loss of $9,023,000 for the year ended June 30, 2009. The 2010 audited consolidated financial statements and notes thereto are available under DYNE.PK.

"Delivering net income this fiscal year is a significant milestone for the company, and an irrefutable indicator that our efforts over the past 10 quarters are working," said Ron Ben-Yishay, DynTek's chief executive officer. "We have invested our time and resources in a strategic group of technology solutions and partners that deliver the greatest customer demand, healthy margins and reciprocal investment. As a result, we have a more predictable and controlled revenue model and a laser-like internal focus for our sales and technical teams."

Fourth Quarter Results
DynTek reported revenues of $23,411,000 for the fourth fiscal quarter ended June 30, 2010, a decrease of $2,190,000 from $25,601,000 in the fourth fiscal quarter of 2009; however, gross profit increased to $4,762,000 for the fourth fiscal quarter ended June 30, 2010, an increase of $519,000 or 12% from $4,243,000 for the prior fourth fiscal quarter. Total operating expenses decreased to $4,155,000 in the fourth fiscal quarter ended June 30, 2010 compared to $9,067,000 in the prior fourth fiscal quarter. This decrease in operating expenses is primarily due to a fourth quarter 2009 impairment of goodwill and intangibles charge of $4,436,000, but also contributing is a quarter over quarter decrease to general and administrative expenses of $330,000. 

DynTek reported positive EBITDA of $839,000 for the fourth fiscal quarter ended June 30, 2010, an increase of $223,000 or 36% from $616,000 for the fourth fiscal quarter of 2009. Net income was $76,000 for the fourth fiscal quarter of 2010, as compared to a net loss of $5,865,000 for the fourth fiscal quarter of 2009. 

EBITDA
The Company defines EBITDA as net income (loss) from operations before interest, taxes, depreciation and amortization, stock-based compensation, and goodwill impairment charges. Other companies may calculate EBITDA differently. Although EBITDA is a widely used financial indicator of a company's ability to service debt, it is not a recognized measure for financial statement presentation under generally accepted accounting procedures (GAAP). EBITDA should not be considered in isolation or as superior or as an alternative to net income (loss) or to cash flows from operating activities as determined in accordance with GAAP. Nonetheless, the Company believes that EBITDA provides useful supplemental information for investors and others to measure operating performance, especially in situations where a company has significant non-cash operating expenses that are not indicative of core business operating results. EBITDA is widely used in the IT services industry to analyze comparable company performance, and management of the Company also uses EBITDA, in addition to GAAP information, as a measure of operating performance for assessing its business units.

About DynTek

DynTek is a leading provider of professional technology services to mid-market companies, such as state and local governments, educational institutions and commercial entities in the largest IT markets nationwide. From virtualization and cloud computing to unified communications and collaboration, DynTek provides professional technology solutions across the three core areas of our customers' technical environment: Infrastructure/Data Center, Application Platforms and End Point Computing. DynTek's multidisciplinary approach allows our clients to turn to a single source for their most critical technology requirements. For more information, visit http://www.dyntek.com.

Forward Looking Statements
This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Investors are cautioned that certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and involve known and unknown risks, uncertainties and other factors. Such uncertainties and risks include, among others, success in reaching target markets for services and products in a highly competitive market and the ability to maintain existing and attract future customers; our ability to finance and sustain operations, including our ability to comply with the terms of working capital facilities and/or other term indebtedness of DynTek, and to extend such obligations when they become due, or to replace them with alternative financing; our ability to raise equity capital in the future; our ability to achieve profitability despite historical losses from operations; our ability to maintain business relationships with IT product vendors and our ability to procure products as necessary; the size and timing of additional significant orders and their fulfillment; the continuing desire of and available budgets for state and local governments to outsource to private contractors; our ability to successfully identify and integrate acquisitions; the retention of skilled professional staff and certain key executives; the performance of DynTek's government and commercial technology services; the continuation of general economic and business conditions that are conducive to outsourcing of IT services; and such other risks and uncertainties included in our Annual Report on Form 10-K filed on October 29, 2007, our Quarterly Report on Form 10-Q filed on November 19, 2007 and other SEC filings. DynTek has no obligation to publicly revise any forward-looking statements to reflect anticipated or unanticipated events or circumstances occurring after the date of such statements.

 
 
DYNTEK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(EBITDA presentation, unaudited, in thousands)
 
    Years Ended June 30,
    2010   2009
REVENUES        
  Product revenues   $ 53,895   $ 56,233
  Service revenues   31,694   28,641
  TOTAL REVENUES   85,589   84,874
COST OF REVENUES        
  Cost of products   45,391   46,858
  Cost of services   23,592   21,656
  TOTAL COST OF REVENUES   68,983   68,514
GROSS PROFIT   16,606   16,360
OPERATING EXPENSES:        
  Selling   10,262   10,368
  General and administrative   3,825   4,565
  Depreciation and amortization   193   419
  Impairment of goodwill and intangibles   -   4,436
  TOTAL OPERATING EXPENSES   14,280   19,788
INCOME (LOSS) FROM OPERATIONS   2,326   (3,428)
         
EBITDA   2,778   2,258
         
OTHER INCOME (EXPENSE)        
Interest expense   (2,047)   (5,030)
Interest income   -   -
Other income (expense), net   (24)   (27)
  TOTAL OTHER EXPENSE   (2,071)   (5,057)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES   255   (8,485)
INCOME TAX PROVISION (BENEFIT)   54   -
INCOME (LOSS) FROM CONTINUING OPERATIONS   201   (8,485)
DISCONTINUED OPERATIONS        
  Loss on discontinued operations, net of tax   (20)   (538)
TOTAL LOSS FROM DISCONTINUED OPERATIONS   (20)   (538)
NET INCOME (LOSS)   $ 181   $ (9,023)
         
         
 
 
CONSOLIDATED STATEMENTS OF OPERATIONS
(EBITDA presentation, unaudited, in thousands)
         
    Three Months Ended June 30,
    2010   2009
REVENUES        
  Product revenues   $ 14,891   $ 18,322
  Service revenues   8,520   7,279
  TOTAL REVENUES   23,411   25,601
COST OF REVENUES        
  Cost of products   12,395   15,494
  Cost of services   6,254   5,864
  TOTAL COST OF REVENUES   18,649   21,358
GROSS PROFIT   4,762   4,243
OPERATING EXPENSES:        
  Selling   2,852   2,887
  General and administrative   1,241   1,571
  Depreciation and amortization   62   173
  Impairment of goodwill and intangibles   -   4,436
  TOTAL OPERATING EXPENSES   4,155   9,067
INCOME (LOSS) FROM OPERATIONS   608   (4,824)
         
EBITDA   839   616
         
OTHER INCOME (EXPENSE)        
Interest expense   (478)   (613)
Interest income   -   0
Other income (expense), net   -   3
  TOTAL OTHER EXPENSE   (478)   (610)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES   130   (5,434)
INCOME TAX PROVISION (BENEFIT)   54   -
INCOME (LOSS) FROM CONTINUING OPERATIONS   76   (5,434)
DISCONTINUED OPERATIONS        
  Loss on discontinued operations, net of tax   -   (431)
TOTAL LOSS FROM DISCONTINUED OPERATIONS   -   (431)
NET INCOME (LOSS)   $ 76   $ (5,865)

Contact Information:

For more information, contact:
Linda Ford
DynTek, Inc.
949-271-6705