TERADYON, Israel–(BUSINESS WIRE)–Nov. 29, 2005–B.O.S. Better Online Solutions Ltd. (the “Company” or “BOS”) (NASDAQ: BOSC – News); (TASE: BOSC) reported today its results for the quarter ended September 30, 2005.
Highlights for the 3rd quarter:
Revenues for the third quarter of 2005 were $6.2M, an increase of 326% as compared to $1.5M for the third quarter of 2004. Our revenues increased mainly due to the consolidation of Odem Electronic Technologies 1992 Ltd. (“Odem”) (related to the Electronic Component operating segment), acquired in November 2004, and Quasar Telecom (2004) Ltd. (related to the Communications operating segment), which began operating on October 1, 2004.
Gross profit for the third quarter of 2005 increased 137% to $1.8M, compared to $766,000 for the third quarter of 2004.
Operating loss for the third quarter of 2005 was $356,000, compared to an operating loss of $431,000 for the second quarter of 2005, and an operating loss of $326,000 for the third quarter of 2004.
Loss from continuing operations for the third quarter of 2005, including an equity loss of $1.5M (mainly related to the impairment of an investment in Surf Communication Solutions Ltd. (“Surf”), an affiliated company(, and other income in the amount of $273,000 (related to the Company’s sale of its PrintBOS activities), was $1.7M (or -$0.28 per share) compared to a loss of $466,000 (or -$0.11 per share), for the third quarter of 2004.
Highlights for the 9 months:
Revenues for the nine months ended September 30, 2005, amounted to $20.8 M, an increase of 414% as compared to $4M for the nine months ended September 30, 2004. Loss from continuing operations for such period amounted to $3.6M (or -$0.69 per share) compared to a net loss of $1.4M (or -$0.34 per share) for the nine months ended September 30, 2004. The loss from continuing operations for the nine months ended September 30, 2005, includes equity losses in the amount of $1.5M (mainly related to the impairment of an investment in Surf(, and other income in the amount of $273,000 (related to the Company’s sale of its PrintBOS activities).
As of September 30, 2005, the Company’s balance sheet shows financial resources (cash, cash equivalents and marketable securities) of $6.6M and loans (long and short term) of $3.9M.
In September 2005, BOS acquired an additional 23.9% of the outstanding shares of Odem, a subsidiary of the Company, from a minority shareholder, thus increasing its holdings in Odem from 63.6% in December 31, 2004, to 87.7% in September 30, 2005. In consideration for Odem’s shares, the Company issued 232,603 Ordinary Shares and made a cash payment in the amount of $716,000. On November 1, 2005, BOS announced its acquisition of the remaining shares of Odem in consideration for a cash payment in the amount of $554,105 and Odem became a wholly-owned subsidiary of the Company.
On October 27, 2005, BOS entered into a definitive agreement with Qualmax Inc., a US VoIP service and equipment provider, for the sale of the assets of its Communications Division to Qualmax. The consideration payable to BOS is approximately 4,150,000 Qualmax shares and 4% royalties from future revenues Qualmax generates from the sold business, up to $800,000. One quarter of the Qualmax shares to be received by BOS in the transaction, shall be deposited in escrow and shall be released to BOS at the end of four consecutive fiscal quarters following the closing of the transaction, contingent upon Qualmax generating by then certain revenues from the sold business. The closing of the transaction is subject to certain closing conditions, including Qualmax completing a merger into a US publicly traded company.
Adiv Baruch , BOS’ CEO stated: “We are continuing to implement our strategy as was defined in 2004. We have increased our holdings in Odem and turned it into our wholly owned subsidiary, while in parallel, we are spinning off and realizing non-core activities.”
Edouard Cukierman, Chairman of BOS commented: “Since it was acquired, Odem has become one of the main growth engines of the Company, reflecting the increased demand for RFID products.”
About BOS
B.O.S. Better Online Solutions Ltd. (the “Company” or “BOS”) (NASDAQ:BOSC; TASE: BOSC) was established in 1990. Through its wholly owned subsidiaries, BOS activities are focused on two divisions:
Connectivity division, with products marketed under the BOS?NOVA brand name. These products deliver instant and transparent connectivity from IBM iSeries computers to personal computers, thin clients and browsers.
Electronic Components division, based on Odem Electronic Technologies 1992 Ltd., providing solutions in RFID, semiconductors, electronic components, CCD, imaging, networking, telecom and automation.
An additional focus has been on the Communications division, providing easy to install and affordable VoIP and cellular gateways solutions for businesses. The Company entered into a definitive agreement for the sale of the Communications Division’s assets in October 2005.
BOS, www.boscorporate.com is traded on NASDAQ (NASDAQ: BOSC – News) and on the Tel-Aviv stock exchange (TASE: BOSC).
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, including, but not limited to, those risks and uncertainties detailed in BOS’ periodic reports and registration statements filed with the U.S. Securities 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.
BALANCE SHEETS
----------------------------------------------------------------------
U.S. dollars in thousands
September December
30, 31,
2005 2004
--------- --------
Unaudited
---------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $4,464 $2,578
Short-term marketable securities 1,093 2,324
Trade receivables 5,405 4,557
Other accounts receivable and prepaid expenses 1,080 722
Inventories 4,514 3,086
--------- --------
Total current assets 16,556 13,267
--------- --------
LONG-TERM INVESTMENTS:
Long-term marketable securities 1,053 757
Severance pay funds 1,119 1,143
Investment in an affiliated company 752 2,472
Other assets - 395
--------- --------
Total long-term investments 2,924 4,767
--------- --------
PROPERTY AND EQUIPMENT, NET 971 1,019
--------- --------
INTANGIBLE ASSETS:
Goodwill 1,717 1,569
Customer list 1,800 1,389
Other intangible assets 403 471
--------- --------
Total intangible assets 3,920 3,429
--------- --------
ASSETS RELATED TO DISCONTINUED SEGMENT - 3
--------- --------
Total assets $24,371 $22,485
========= ========
BALANCE SHEETS
----------------------------------------------------------------------
U.S. dollars in thousands
September December
30, 31,
2005 2004
---------- --------
Unaudited
----------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short term loans from banks $2,624 $1,354
Current maturities of long-term convertible note
and bank loans 217 643
Trade payables 3,905 3,845
Employees and payroll accruals 788 664
Deferred revenues 371 364
Accrued expenses and other liabilities 1,854 1,141
---------- --------
Total current liabilities 9,759 8,011
---------- --------
LONG-TERM LIABILITIES:
Long-term convertible note 1,064 1,151
Bank loans (net of current maturities) 21 54
Deferred taxes 397 348
Put option issued to minority shareholders in a
subsidiary 42 359
Accrued severance pay 1,350 1,468
---------- --------
Total long-term liabilities 2,874 3,380
---------- --------
MINORITY INTEREST IN A SUBSIDIARY 346 809
---------- --------
LIABILITIES RELATED TO DISCONTINUED SEGMENT 237 237
---------- --------
SHAREHOLDERS' EQUITY 11,155 10,048
---------- --------
Total liabilities and shareholders' equity $24,371 $22,485
========== ========
CONSOLIDATED STATEMENTS OF OPERATIONS
----------------------------------------------------------------------
U.S. dollars in thousands, except share and per share data
Year ended
Nine months ended Three months ended December
September 30, September 30, 31,
----------------------------------------
2004 2005 2004 2005 2004
--------------------------------------------------
Unaudited
----------------------------------------
Revenues $4,043 $20,801 $1,457 $6,208 $8,282
Cost of revenues 1,927 14,984 691 4,386 4,608
--------------------------------------------------
Gross profit 2,116 5,817 766 1,822 3,674
--------------------------------------------------
Operating expenses:
Research and
development 1,559 2,084 618 627 2,296
Less - grants
and
participation (370) (217) (159) (84) (492)
Selling and
marketing 933 2,715 296 797 1,706
General and
administrative 1,152 2,555 337 838 1,705
--------------------------------------------------
Total operating
expenses 3,274 7,137 1,092 2,178 5,215
--------------------------------------------------
Operating loss (1,158) (1,320) (326) (356) (1,541)
Financial expenses,
net (51) (360) (59) (38) (158)
Other income - 300 - 273 -
--------------------------------------------------
Loss before taxes on
income and equity
in losses of an
affiliated company (1,209) (1,380) (385) (121) (1,699)
Taxes on income - (297) - (63) (20)
Equity in losses of
an affiliated
company (215) (1,720) (81) (1,480) (308)
Minority interest in
earnings of a
subsidiary - (230) - (80) (17)
--------------------------------------------------
Net loss from
continuing
operations (1,424) (3,627) (466) (1,744) (2,044)
Net loss related to
discontinued
operations (18) - - - (9)
--------------------------------------------------
Net loss $(1,442) $(3,627) $(466) $(1,744) $(2,053)
==================================================
Basic and diluted
net loss per share
from continuing
operations $(0.34) $(0.69) $(0.11) $(0.28) $(0.44)
==================================================
Basic and diluted
net loss per share
from discontinued
operations $(0.01) $- $- $- $(0.00)
==================================================
Basic and diluted
net loss of NIS
4.00 par value per
share $(0.35) $(0.69) $(0.11) $(0.28) $(0.44)
==================================================
Weighted average
number of shares
used in computing
basic and diluted
net loss per share 4,163,166 5,287,886 4,165,224 6,261,105 4,631,106
==================================================
U.S. dollars in thousands
SEGMENTS AND GEOGRAPHIC INFORMATION
Revenues, gross profit and operating profit (loss) for operating
segments for the nine and three month ending September 2005 and for
the year ended 2004 were as follow:
Nine month ended September 30, 2005
-------------------------------------------------------------
Adjustment
Electronics and Consolidated
Connectivity Communication components eliminations
-------------------------------------------------------------
Revenues $3,306 $2,274 $15,301 $(80) $20,801
=============================================================
Gross
profit $1,946 $575 $3,296 $- $5,817
=============================================================
Operating
profit
(loss) $97 $(1,855) $1,023 $(583) $(1,320)
=============================================================
Three month ended September 30, 2005
-------------------------------------------------------------
Adjustment
Electronics and Consolidated
Connectivity Communication components eliminations
-------------------------------------------------------------
Revenues $745 $486 $5,002 $(25) $6,208
=============================================================
Gross
profit $491 $44 $1,287 $- $1,822
=============================================================
Operating
profit
(loss) $24 $(709) $318 $11 $(356)
=============================================================
Year ended December 31, 2004
-------------------------------------------------------------
Adjustment
Electronics and Consolidated
Connectivity Communication components eliminations
-------------------------------------------------------------
Revenues $5,011 $1,363 $1,908 $- $8,282
=============================================================
Gross
profit $2,933 $414 $327 $- $3,674
=============================================================
Operating
profit
(loss) $1,009 $(1,846) $66 $(770) $(1,541)
=============================================================