EX-99.1 2 exhibit_99-1.htm EXHIBIT 99.1 exhibit_99-1.htm


Exhibit 99.1
 
B.O.S. Announces Financial Results for Third Quarter of 2011
 
RISHON LEZION, Israel, November 30, 2011 (GLOBE NEWSWIRE) - B.O.S Better Online Solutions Ltd. (the "Company", "BOS") (Nasdaq: BOSC), a leading Israeli provider of RFID and Supply Chain solutions to global enterprises, today reported its financial results for the three and nine months ended September 30, 2011.
 
On a GAAP basis, the Company had a net loss of $826,000, for the three months ended September 30, 2011 as compared to net income of $10,000 in the three months ended September 30, 2010 (and a net loss of $324,000 in the three months ended June 30, 2011.) The Company had a net loss of $1,113,000 in the nine months ended September 30, 2011, as compared to net income of $25,000 in the nine months ended September 30, 2010.

On a non GAAP basis, the Company had a net loss of $381,000 for the three months ended September 30, 2011, as compared to net income of $288,000 for the three months ended September 30, 2010. The Company had a net loss of $20,000 for the nine months ended September 30, 2011, as compared to net income of $869,000 in the nine months of 2010.
 
The increase in loss on a GAAP basis in the third quarter resulted mainly from: (a) a reduction in the gross margin of the Supply Chain division (from 18.9% to 15%, or $200,000) due to increased competition, and  (b) a $150,000 loss related to currency hedging contracts.  The gross margin of our RFID & Mobile Solutions division increased from 21% in the second quarter to 23% in the third quarter, due to improved results of the software activity.
 
Yuval Viner, BOS CEO, stated: "We are continuing to invest in our software solutions, which are our strategic growth engine for the coming years. In the recent months we have made significant progress toward our goal to turn our software activity into a profitable business.

We have implemented cost reductions, which we expect will lower our expenses by $100,000 in the fourth quarter of 2011, and by an additional $70,000 in the first quarter of 2012. The cost reductions include non-cash savings in the amount of $20,000 per quarter, due to the voluntary waiver by our senior management of all of its unvested options, reflecting management's commitment to the Company's profitability targets.

In light of the financial results, we are updating our forecast for 2011, as follows:
 
 
·
Revenue forecast remains unchanged: we expect revenues to exceed $33 million.
 
·
EBITDA forecast is reduced to $0.8 million, from our latest forecast of $1.4 million.
 
·
Net profit, on a non-GAAP basis, will reflect a minor loss."
 
Eyal Cohen, BOS CFO, said: “The previously announced conversion of our debt at a premium of 36% over the current share price, which is subject to shareholders’ approval, will result in: (a) a reduction in our short term liabilities by $3 million, (b) an increase in our equity by $2.5 million, (c) a reduction in our annual finance expense that amounted to $360,000 in the first nine months of 2011, and (d) an expected $1.5 million non cash expense in the fourth quarter of 2011, due to the reduced conversion share price.
 
Mr. Cohen added: “The cost reductions and the conversion will lower our expenses by approximately $1 million in 2012, and allow us to allocate additional funds for further development of our business.”
 
 
 

 
 
Conference Call
 
BOS will host a conference call on Thursday, December 1, 2011 at 10:00 a.m. Eastern Standard Time / 5:00 p.m. Israel Time. A question-and-answer session will follow management's presentation. Interested parties may participate in the conference call by dialing the following numbers approximately five to ten minutes before the call start time:
 
North America + 1-888-668-9141
Israel + 03-9180644
International + 972-3-9180644
 
For those unable to listen to the live call, a replay of the call will be available from the day after the call on BOS's website, at: http://www.boscorporate.com
 
Contact:
B.O.S. Better Online Solutions Ltd.
Mr. Eyal Cohen, CFO
+972-54-2525925
eyalc@boscom.com

About BOS
 
B.O.S. Better Online Solutions Ltd. (Nasdaq:BOSC - News) is a leading provider of RFID and Supply Chain solutions to global enterprises. BOS' RFID and mobile division offers both turnkey integration services as well as stand-alone products, including best-of-breed RFID and AIDC hardware and communications equipment, BOS middleware and industry-specific software applications. The Company's supply chain division provides electronic components consolidation services to the aerospace, defense, medical and telecommunications industries as well as to enterprise customers worldwide.
 
For more information, please visit: www.boscom.com
 
 
 

 
 
Use of Non-GAAP Financial Information
 
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.
 
Safe Harbor Regarding Forward-Looking Statements
 
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 few major customers, the uncertainty of BOS 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, the effect of exchange rate fluctuations, general worldwide economic conditions and continued availability of financing for working capital purposes and to refinance outstanding indebtedness; and additional risks and uncertainties detailed in BOS's 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.
 
 
 

 
 
CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands, except per share data

   
Nine months ended
 September 30,
   
Three months ended
 September 30,
 
   
2011
   
2010
   
2011
 
2010
 
   
(Unaudited)
   
(Unaudited)
 
                         
Revenues
  $ 25,735     $ 22,373     $ 8,199     $ 7,166  
Write off (reversal) of slow moving inventory
    134       (92 )     87       -  
Cost of revenues
    20,282       16,903       6,649       5,334  
Gross profit
    5,319       5,562       1,463       1,832  
                                 
Operating costs and expenses:
                               
Research and development
    335       275       115       93  
    Sales and marketing
    3,259       2,955       997       905  
    General and administrative
    1,643       1,337       554       361  
Total operating costs and expenses
    5,237       4,567       1,666       1,359  
                                 
Operating profit (loss)
    82       995       (203 )     473  
Financial expenses, net
    (1,008 )     (787 )     (512 )     (237 )
Other expenses, net
    (172 )     (108 )     (76 )     -  
Profit (loss) before taxes
    (1,098 )     100       (791 )     236  
taxes on income
    (15 )     (4 )     (35 )     -  
Profit (loss)  from continuing operations
    (1,113 )     96       (826 )     236  
Loss related to discontinued operations
    -       (71 )     -       (226 )
Net income (loss)
  $ (1,113 )   $ 25     $ (826 )   $ 10  
                                 
Basic and diluted net loss per share from continuing operations
  $ (0.40 )   $ 0.04     $ (0.30 )   $ 0.089  
Basic and diluted net profit per share from discontinued operations
  $ -     $ (0.03 )   $ -     $ (0.085 )
Basic and diluted net profit (loss) per share
  $ (0.40 )   $ 0.01     $ (0.30 )   $ 0.004  
                                 
Weighted average number of shares used in computing basic net earnings per share
    2,767,809       2,632,611       2,785,959       2,643,728  
Weighted average number of shares used in computing diluted net earnings per share
    2,767,809       2,730,834       2,785,959       2,732,703  
 
 
 

 

CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands, except per share amounts)

   
September 30, 2011
   
December 31, 2010
 
   
(Unaudited)
   
(Audited)
 
             
ASSETS
           
             
CURRENT ASSETS:
           
Cash and cash equivalents
  $ 121     $ 703  
Trade receivables
    8,785       7,719  
Other accounts receivable and prepaid expenses
    867       1,183  
Inventories
    4,762       5,125  
                 
Total current assets
    14,535       14,730  
                 
LONG-TERM ASSETS:
               
Severance pay fund
    42       47  
Investment in other companies
    68       107  
Other assets
    24       161  
                 
Total long-term assets
    134       315  
                 
PROPERTY, PLANT AND EQUIPMENT, NET
    1,233       1,135  
                 
OTHER INTANGIBLE ASSETS, NET
    1,203       1,512  
                 
GOODWILL
    4,243       4,438  
                 
    $ 21,348     $ 22,130  
 
 
 

 

CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands, except share and per share data
 
   
September 30, 2011
   
December 31, 2010
 
   
(Unaudited)
   
(Audited)
 
             
LIABILITIES AND SHAREHOLDERS' EQUITY
           
             
CURRENT LIABILITIES:
           
Short-term bank loans and current maturities
  $ 7,944     $ 7,778  
Trade payables
    4,800       4,317  
Employees and payroll accruals
    594       735  
Deferred revenues
    610       474  
Convertible note
    2,617       -  
Accrued expenses and other liabilities
    966       1,040  
                 
Total current liabilities
    17,531       14,344  
                 
LONG-TERM LIABILITIES:
               
Long-term bank loans, net of current maturities
    118       394  
Income tax accruals
    446       488  
Accrued severance pay
    168       167  
Convertible note
    186       2,460  
Other long-term liabilities
    349       564  
                 
Total long-term liabilities
    1,267       4,073  
                 
COMMITMENTS AND CONTINGENT LIABILITIES
               
                 
SHAREHOLDERS' EQUITY:
               
Share capital
    14,154       13,959  
Additional paid-in capital
    56,743       56,805  
Accumulated other comprehensive profit
    (127 )     52  
Accumulated deficit
    (68,220 )     (67,103 )
                 
Total shareholders' equity
    2,550       3,713  
                 
Total liabilities and shareholders' equity
  $ 21,348     $ 22,130  

 
 

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

   
Nine months
ended
 September 30,
 
Three months
ended
 September 30,
 
   
2011
   
2011
 
   
(Unaudited)
 
             
Cash flows  used in operating activities
    (94 )     (188 )
                 
Net cash used in investing activities
    (537 )     (105 )
 
               
Net cash provided by (used in)financing activities
    49       (569 )
                 
Decrease in cash and cash equivalents
    (582 )     (862 )
                 
Cash and  equivalents at the beginning of the period
    703       983  
                 
Cash and cash equivalents at the end of the period
  $ 121     $ 121  

 
 

 
 
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(U.S. dollars in thousands, except per share amounts)
 
   
Three months ended September 30,
 
   
2011
   
2010
 
   
GAAP
(as reported)
   
Adjustments
   
Non-GAAP
   
Non-GAAP
 
       
                         
Revenues
  $ 8,199     $ -     $ 8,199     $ 7,165  
Gross profit
    1,463       87 a     1,550       1,846  
                                 
Operating costs and expenses:
                               
Research and development
    115       -       115       93  
Sales and marketing
    997       (95 )b     902       802  
General and administrative
    554       (39 )c     515       311  
Total operating costs and expenses
    1,666       (134 )     1,532       1,206  
                                 
Operating  profit (loss)
    (203 )     221       18       640  
Financial expenses, net
    (512 )     63e , 69     (380 )     (126 )
Other income (expenses), net
    (76 )     92 f     16       -  
Profit (loss) before taxes on income
    (791 )     445       (346 )     514  
Taxes on income
    (35 )     -       (35 )     -  
Profit (loss) from continuing operations
  $ (826 )   $ 445     $ (381 )   $ 514  
Loss related to discontinued operations
    -       -       -       (226 )
Net income (loss)
  $ (826 )   $ 445     $ (381 )   $ 288  

Notes to the reconciliation:
a – Write off of slow moving inventory
b - Amortization of intangible assets.
c - Stock based compensation.
d - Depreciation of prepaid expenses and value of warrants attached to Convertible note.
e– Interest related to 83.4% of Convertible note which might be converted subject to shareholders' approval.
f - Impairment in related with investment in Companies.

 
 

 

 
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(U.S. dollars in thousands, except per share amounts)
 
   
Nine months ended September 30,
 
   
2011
   
2010
 
   
GAAP
(as reported)
   
Adjustments
   
Non-GAAP
   
Non-GAAP
 
       
                         
Revenues
    25,735     $ -     $ 25,735     $ 22,373  
Gross profit
    5,319       134 a     5,453       5,509  
                                 
Operating costs and expenses:
                               
Research and development
    335       -       335       275  
Sales and marketing
    3,259      
(283)b , (3)
    2,973       2,646  
General and administrative
    1,643       (129 )c     1,514       1,189  
Total operating costs and expenses
    5,237       (415 )     4,822       4,110  
                                 
Operating profit
    82       549       631       1,399  
Financial expenses, net
    (1,008 )     148e ,208     (652 )     (455 )
Other income (expenses), net
    (172 )     188 f     16       -  
Profit (loss) before taxes on income
    (1,098 )     1,093       (5 )     944  
Taxes on income
    (15 )     -       (15 )     (4 )
Profit (loss) from continuing operations
  $ (1,113 )   $ 1,093     $ (20 )   $ 940  
Loss) related to discontinued operations
    -       -       -       (71 )
Net income (loss)
  $ (1,113 )   $ 1,093     $ (20 )   $ 869  
 
Notes to the reconciliation:
a – Write off of slow moving inventory
b - Amortization of intangible assets.
c - Stock based compensation.
d- Depreciation of prepaid expenses and value of warrants attached to Convertible note.
e – Interest related to 83.4% of Convertible note which might be converted subject to shareholders' approval.
f - Impairment in related with investment in Companies.

 
 

 
 
CONDENSED CONSOLIDATED EBITDA
 (U.S. dollars in thousands)
 
   
Nine months ended
 September 30,
   
Three months ended
 September 30,
 
   
2011
   
2010
   
2011
 
2010
 
   
(Unaudited)
   
(Unaudited)
 
                         
Operating Profit (loss) from continuing operations
  $ 82     $ 995       (203 )   $ 473  
  Add:
                               
Amortization of intangible assets
    283       275       95       93  
Stock based compensation
    132       182       39       61  
Depreciation
    208       181       69       60  
EBITDA
  $ 705     $ 1,633     $ 0     $ 687  
 
   
RFID and Mobile Solutions
   
Supply
Chain Solutions
   
Intercompany
   
Consolidated
   
RFID and Mobile Solutions
   
Supply
Chain Solutions
   
Intercompany
   
Consolidated
 
   
Nine months ended September 30,
 2011
   
Three months ended September 30,
 2011
 
                                                 
Revenues
  $ 9,867     $ 16,463     $ (595 )   $ 25,735     $ 2,771     $ 5,506     $ (78 )   $ 8,199  
                                                                 
Gross profit
  $ 2,331     $ 2,988     $ -     $ 5,319     $ 639     $ 824     $ -     $ 1,463  

   
RFID and Mobile Solutions
   
Supply
Chain Solutions
   
Intercompany
   
Consolidated
   
RFID and Mobile Solutions
   
Supply
Chain Solutions
   
Intercompany
   
Consolidated
 
   
Nine months ended September 30,
 2010
   
Three months ended September 30,
 2010
 
                                                 
Revenues
  $ 8,828     $ 14,106     $ (561 )   $ 22,373     $ 2,869     $ 4,598     $ (301 )   $ 7,166  
                                                                 
Gross profit
  $ 2,984     $ 2,578     $ -     $ 5,562     $ 976     $ 856     $ -     $ 1,832