B.O.S Better Online Solutions Reports First Quarter 2007 Financial
Results
• Quarterly non – GAAP operational breakeven
• RFID revenues ramped up: reaching a quarterly record of $420 thousand
RISHON LEZION, Israel, May 8 /PRNewswire-FirstCall/ — B.O.S. Better Online Solutions Ltd.
(the “Company” or “BOS”) (NASDAQ: BOSC; TASE: BOSC) reported today its results for the
first quarter ended March 31, 2007.
First – Quarter 2007 Financial Highlights:
- Revenues of $5.4 million, up 5.5% from $5.1M in the first quarter of 2006
- Supply Chain solutions division revenues grew by 10.7% to $5.0 million from $4.5 million
in the first quarter of 2006 - Quarterly non–GAAP operating results show breakeven, with GAAP operating loss of
$169 thousand. - Quarterly GAAP net loss of $326 thousand, or $(0.05) per share
- Backlog increased by 7% to $6.5 million as of March 31, 2007 from $6.1 million in December
2006
Revenues for the first quarter of 2007 amounted to $5.4 million, a 5.5% increase over the
revenues in the first quarter of 2006. Our backlog as of March 31, 2007 amounted to $6.5
million, reflecting a 7% increase over backlog of $6.1 million in December 31, 2006.
Operating results show breakeven on a non – GAAP basis (excluding option compensation
and amortization of intangible assets) in the first quarter of the year 2007 as compared to a non – GAAP operating income of $130 thousands in first quarter of the year 2006. Operating
loss in the first quarter of the year 2007, on a GAAP basis, was $169 thousand as compared to a loss of $43 thousand in first quarter of the year 2006.
Information with respect to stock-based compensation and amortization expenses for the first quarter of 2007 and 2006 is included in a table setting forth non-GAAP information that accompanies the condensed financial statements in this release.
Financial expenses in the first quarter of 2007 were $195 thousand, as compared to $78 thousand in the first quarter of 2006. The increase is attributed mainly to the raise of an additional $1.5 million of convertible note during August 2006. The principal balance of the convertible note as of March 2007 was $2.4 million, with conversion prices of $2.97 and $3.78. Conversion of the convertible note could significantly reduce the Company’s financial expenses. Net loss for the first quarter of 2007 amounted to $326 thousand (or $0.05 per share) as compared to net loss of $160 thousand (or $0.03 per share) in the first quarter of 2006 (excluding a gain of $297 thousand from discontinued operations).
Cash reserves, as of March 31, 2007, totalled $2.6 million. The Company’s balance sheet also shows short term loans of $5.1 million and long term loans of $1.9 million. During the first quarter of 2007, we converted $1.4 million of our short term bank loan into long term bank loans. In rights offering completed in April 2007, we raised gross proceeds of approximately $4.4 million, which strengthen our cash and equity position.
Edouard Cukierman, Chairman of the Board of Directors, said: “we are very pleased with the execution of BOS’s strategic plan and are looking forward to take the Company to the next level.” Shmuel Koren, BOS’s President and CEO, added:” There are clear signs that our organic growth engines are gaining momentum as reflected in the 11% growth we achieved in our Supply Chain Solutions division. We continued to win new non – Israeli customers, expanded distribution agreements and, in particular, managed to ramp up our RFID revenues to a new quarterly record of $420,000. With a much strengthened balance sheet following a successful raise of approximately $4.4 million through a rights offering, we are well positioned to continue to enhance our company’s growth and exploit lucrative opportunities in our space. “
About BOS
B.O.S Better Online Solutions Ltd. (“BOS”) was established in 1990. Through its wholly owned subsidiaries, BOS’s
activities are focused on two segments:
Supply-Chain Solutions segment, based on Odem Electronic Technologies 1992 Ltd., providing solutions in the RFID,
semiconductors, electronic components, CCD, imaging, networking, telecom and automation fields.
Software Solutions segment, with products marketed under the BOSaNOVA brand name. These products deliver
instant and transparent connectivity from IBM iSeries computers to personal computers, thin clients and browsers.
BOS is traded on NASDAQ (BOSC) and on the Tel-Aviv Stock Exchange (BOSC). BOS’s website address is
www.boscorporate.com.
The forward-looking statements contained herein reflect management’s current views with respect to future events and
financial performance. These forward-looking statements are subject to certain risks and uncertainties that could cause the actual results to differ materially from those in the forward-looking statements, all of which are difficult to
predict and many of which are beyond the control of BOS. These risk factors and uncertainties include, amongst others, the dependency of sales being generated from one or a few major customers, the uncertainty of our being able
to maintain current gross profit margins, inability to keep up or ahead of technology and to succeed in a highly competitive industry, inability to maintain marketing and distribution arrangements and to expand our overseas markets, uncertainty with respect to the prospects of legal claims against BOS; and additional risks and uncertainties detailed in BOS’s periodic reports and registration statements filed with the U.S. Securities and Exchange Commission. BOS undertakes no obligation to publicly update or revise any such forward-looking statements to reflect any change in its expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except per share data
Three months ended
March 31
Year ended
December
31,
2007 2006 2006
(Unaudited)
Revenues $ 5,383 $ 5,102 $ 20,917
Cost of revenues 4,249 3,898 16,200
Gross profit 1,134 1,204 4,717
Operating costs and expenses:
Research and development 127 148 486
Sales and marketing 589 524 2,019
General and administrative (includes share based
compensation in the amount of $123, $121 and $727 in
the three months ended March 31, 2007, March 31,
2006 and for the year ended December 31, 2006,
respectively) 587 575 3,268
Total operating costs and expenses 1,303 1,247 5,773
Operating loss (169) (43) (1,056)
Financial expenses, net (195) (78) (626)
Other income, net 11 (39) –
loss before taxes on income (353) (160) (1,682)
Taxes on income 27 – 89
Net loss after taxes (326) (160) (1,593)
Loss from continuing operations (326) (160) (1,593)
Income related to discontinued operations – 297 1,685
Net income (loss) $ (326) $ 137 $ 92
Basic and diluted net loss per share from continuing
operations $ (0.05) $ (0.03) $ (0.24)
Basic and diluted net earnings per share from
discontinued operations $ – $ 0.05 $ 0.25
Basic and diluted net earnings (loss) per share $ (0.05) $ 0.02 $ 0.01
5
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands, except per share data
March 31,
2007
December
31, 2006
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,579 $ 2,033
Trade receivables 5,728 5,632
Other accounts receivable and prepaid expenses 939 858
Inventories 4,053 4,017
Total current assets 13,299 12,540
LONG-TERM ASSETS:
Severance pay fund 747 741
Investment in other companies 8,082 8,082
Other 44 65
Total long-term assets 8,873 8,888
PROPERTY, PLANT AND EQUIPMENT, NET 543 520
CUSTOMER LIST, NET 1,578 1,629
GOODWILL 952 952
$ 25,245 $ 24,529
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Short term loans from banks $ 3,469 $ 2,931
Current maturities of long-term bank loans and convertible note 1,660 1,157
Trade payables 2,968 3,844
Employees and payroll accruals 429 460
Deferred revenues 119 103
Accrued expenses and other liabilities 1,013 999
Total current liabilities 9,658 9,494
LONG-TERM LIABILITIES:
Bank loans (net of current maturities) 963 –
Convertible note (net of current maturities) 968 1,171
Deferred taxes 347 362
Accrued severance pay 908 916
Other long-term liabilities 237 237
Total long-term liabilities 3,423 2,686
SHAREHOLDERS’ EQUITY 12,164 12,349
Total liabilities and shareholder’s equity $ 25,245 $ 24,529
6
Reconciliation of Non-GAAP Financial Measures in Accordance with SEC Regulation G
BOS reports financial results in accordance with U.S. GAAP and herein provides some non-GAAP measures.
These non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures. These
non-GAAP measures are intended to supplement the Company’s presentation of its financial results that are
prepared in accordance with GAAP. The Company uses the non-GAAP measures presented to evaluate and
manage the Company’s operations internally. The Company is also providing this information to assist investors
in performing additional financial analysis that is consistent with financial models developed by research
analysts who follow the Company.
The reconciliation set forth below is provided in accordance with Regulation G and reconciles the non-GAAP
financial measures with the most directly comparable GAAP financial measures.
Reconciliation of GAAP to Non-GAAP Operating Margin by segments (U.S. dollars in thousands):
Three months ended March 31, 2007
Software
Solutions
Supply Chain
Solutions
Not
allocated Consolidated
Revenues 363 5,020 – 5,383
Gross profit 304 830 – 1,134
GAAP Operating income (loss) 15 126 (310) (169)
Non-GAAP adjustment:
Share based compensation and
amortization of intangible assets 3 106 65 174
Adjusted Non-GAAP operating
income (loss) on non-GAAP basis 18 232 (245) 5
Three months ended March 31, 2006
Software
Solutions
Supply Chain
Solutions
Not
allocated Consolidated
Revenues 567 4,535 – 5,102
Gross profit 418 786 – 1,204
GAAP Operating income (loss) 75 176 (294) (43)
Non-GAAP adjustment:
Share based compensation and
amortization of intangible assets – 69 104 173
Adjusted Non-GAAP operating
income (loss) on non-GAAP basis 75 245 (190) 130
7
Year ended December 31, 2006
Software
Solutions
Supply Chain
Solutions
Not
allocated Consolidated
Revenues 2,058 18,859 – 20,917
Gross profit 1,341 3,376 – 4,717
GAAP Operating income (loss) 66 701 (1,823) (1,056)
Non-GAAP adjustment:
Share based compensation and
amortization of intangible assets – 377 558 935
Adjusted Non-GAAP operating
income (loss) on non-GAAP basis 66 1,078 (1,265) (121)