Business News
B.O.S. Better Online Solutions Reports Fourth Quarter and Year 2007 Financial Results
Friday 28. March 2008 - Outlook for 2008 - Growth of 123% in Proforma revenues to $55 million and EBITDA over $2 million
B.O.S. Better Online Solutions Ltd. (“BOS” or the “Company”) (NASDAQ:BOSC), a leading provider of comprehensive Mobile and RFID solutions and Supply Chain solutions for the enterprise, reported today its results for the fourth quarter and the year ended December 31, 2007.
Shmuel Koren, BOS’ President & CEO said: “2007, which was my first year with the Company, was a very intensive year for us, as we focused on building the Company for 2008 and onwards. We consummated two important acquisitions: first of Summit Radio Corp. in the United States, and recently we closed the Dimex acquisition in Israel. In addition, we have upgraded our Research & Development and Sales & Marketing teams, and as a result can now offer more comprehensive solutions, mainly in the field of Mobile & RFID. With these in place, we are, for the first time, providing the market with forecasts relating to our operational business in 2008. I look forward to a challenging and prosperous 2008 “
Highlights
— Outlook for 2008 – Proforma revenues of $55 million and EBITDA over
$2 million (giving effect to the acquisitions of Dimex, as if it had
occurred on January 1, 2008).
— Net Loss from continuing operations for the year 2007 was $8.6
million, $7.3 million of which resulted from:
* $5.6 million loss in BOS’s holdings in New World Brands Inc. (OTC
Bulletin Board: NWBD) and Qualmax Inc. (Pink Sheets: QMXI.PK), due
to a decrease in the share price of these companies as of December
31, 2007. The Company received its holdings in New World Brands
and Qualmax in the years 2005 and 2006 as consideration for
selling its communication division and the results of these
companies have no effect on our business or our cash flow
planning;
* $611 thousands, non cash expenses related to conversion of
convertible notes into equity during June 2007;
* $1.1 million related to amortizations and options compensation.
— Record revenues in the fourth quarter of $7.2 million and record back
log of $12.9 million as of December 31, 2007.
— Net loss on a non-GAAP basis for the year 2007 was $1 million and for
the fourth quarter of year 2007 was $671 thousands
Revenues for the fourth quarter of 2007 amounted to $7.2 million, an 18.7% increase over the revenues in the comparable quarter in 2006. Revenues for the year ended 2007 amounted to $23.8 million, a 13.6% increase over the revenues in 2006.
Our backlog as of December 31, 2007 amounted to a record number of $12.9 million, compared to $6.1 million at the end of 2006.
Gross profit for the fourth quarter of 2007 amounted to $1.1 million, compared to $1.3 million in the fourth quarter of 2006. On a non GAAP basis (i.e. excluding amortization of intangible assets and inventory write off), the gross profit of the fourth quarter of 2007 was $1.46 million compared to $1.3 million in the fourth quarter of 2006. Gross profit for the year 2007 amounted to $4.7 million which is the same amount as was in 2006. On a non GAAP basis (i.e. excluding amortization of intangible assets and inventory write off), the gross profit of the year 2007 was $5.0 million, compared to $4.7 million in the year 2006.
Operating loss in the fourth quarter of 2007 amounted to $1.3 million, compared to operating loss of $283 thousands in the fourth quarter of 2006. On a non GAAP basis (i.e. excluding amortization of intangible assets and inventory write off and options compensation), the operating loss for the fourth quarter of 2007 was $640 thousands compared to a loss of $81 thousands in the fourth quarter of 2006.
The increase in operating loss is attributed mainly to:
(a) Extensive investments in expanding our direct and indirect sales
channels worldwide, especially in the Americas. In addition, we
made investments in technology to expand our product offerings,
mainly by developing an RFID platform that supports a variety of
solutions. This combination of investment in sales channels and
significantly strengthening our technological offerings is expected
to be our growth engine for the year 2008.
(b) As a result of the sharp devaluation of the dollar against the NIS,
in the rate of 9.9% during the year 2007, our payroll costs, which
are quoted in NIS and translated into dollars for reporting
purposes, increased by approximately $240 thousands in the year 2007
and by $60 thousand in the fourth quarter of 2007. We are in process
of adjusting our pricing model, in order to reduce the effect of the
devaluation of the dollar against the NIS on the year 2008 results.
(c) During the year 2007 we explored several merger and acquisition
opportunities, which did not mature into a transaction but resulted
in an increase in our operating expenses.
Financial expenses in the fourth quarter of 2007 amounted to $47 thousands, as compared to $224 thousands in the fourth quarter of 2006. Financial expenses in the year 2007 amounted to $469 thousands, compared to $626 thousands in the year 2006. The reduction is related to the conversion of convertible notes in June 2007.
Other expenses in the fourth quarter of 2007 and for the year 2007 include a $5.6 million loss in BOS’s holdings in New World Brands Inc. (OTC Bulletin Board: NWBD) and Qualmax Inc. (Pink Sheets: QMXI.PK), due to a decrease in the share price of these companies as of December 31, 2007. The Company received its holdings in New World Brands and Qualmax in the years 2005 and 2006 as consideration for selling its communication division and the results of these companies have no effect on our business or our cash flows planning.
On June 21, 2007, the holder of our convertible notes converted the entire outstanding principal amount of the notes, of approximately $ 2.2 million, into BOS Ordinary Shares. As a result of the conversion, the Company recorded a one-time non-cash expense in the second quarter of 2007, in the amount of $611 thousands.
Loss from continuing operations for the fourth quarter of 2007 amounted to $6.8 million, compared to loss of $445 thousands in the fourth quarter of 2006. On a non GAAP basis (i.e. excluding amortization of intangible assets, inventory write off, options compensation, loss related to holdings in New World Brands Inc. and Qualmax Inc., and expenses related to conversion of debt), the operating loss for the fourth quarter of 2007 was $671 thousands, compared to a loss of $308 thousands in the fourth quarter of 2006.
Loss from continuing operations for the year 2007 amounted to $8.6 million, compared to loss of $1.6 million in the year 2006. On a non GAAP basis (i.e. excluding amortization of intangible assets, inventory write off, options compensation, loss related to holding in New World Brands Inc. and Qualmax Inc. and expenses related to conversion of debt), the loss from continuing operations for year 2007 was $1.3 million compared to loss of $723 thousands in year 2006.
On November 21, 2007, we purchased 100% of the outstanding shares of Summit Radio Corp. This acquisition is an important addition to our international activities, especially in the United States. We believe that Summit’s business is highly synergetic with the business of our supply-chain division. Summit’s reputation, built over 50 years of operations, allows us to expand our supply-chain sales to major international aviation and aerospace manufacturers, as well as offer our RFID and enterprise software solutions to the US market.
On March 12, 2008, we completed the acquisition of the assets and activities of Dimex Systems Ltd. (“Dimex”). Dimex, Israeli private company incorporated in 1988, is an integrator of AIDC (Automatic Identification and Data Collection) solutions based on RFID and Barcode technology. We have already begun to leverage the substantial synergy between BOS and Dimex and offer integrated solutions that are very well received by the market and are leading us to becoming a significant player in the Mobile & RFID market.
Information with respect to non-GAAP reconciliation to GAAP accompanies the condensed financial statements in this release.
Liquidity and capital resources
Our cash and cash equivalents increased to $4.3 million as of December 31, 2007, from $2 million as of December 31, 2006. Shareholders equity increased to $14.4 million as of December 31, 2007 from $12.3 million as of December 31, 2006. Our liabilities increased to $16.7 million as of December 31, 2007 from $12.2 million as of December 31, 2006.
Edouard Cukierman BOS’ Chairman of the Board added: “With the acquisitions of Summit and of Dimex, and the Company’s increasing presence in the RFID market, we look forward to a positive impact on our results in the year 2008.”