Arel Communications and Software Ltd. Reports First Quarter 2005 Results.ATLANTA Atlanta (ətlăn`tə, ăt–), city (1990 pop. 394,017), state capital and seat of Fulton co., NW Ga., on the Chattahoochee R. and Peachtree Creek, near the Appalachian foothills; inc. 1847. -- Arel Communications and Software Ltd. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : ARLC ARLC Automatic Revolving Letter of Credit ), a technology leader in universal voice, video and data communications data communications, application of telecommunications technology to the problem of transmitting data, especially to, from, or between computers. In popular usage, it is said that data communications make it possible for one computer to "talk" with another. for interactive conferencing See teleconferencing. , collaboration Working together on a project. See collaborative software. and training applications, reported results for the first quarter ended March 31, 2005. Revenue for the fourth quarter was $754,000 versus $555,000 in the fourth quarter of 2004 and $1.0 million in the first quarter of 2004. Net loss for the quarter was $(1.6) million, or $(0.12) per share, versus $(2.1) million, or $(0.16) per share in the fourth quarter of 2004 and $(1.0) million, or $(0.08) per share, in the first quarter of 2004. Philippe Szwarc, chief executive officer of Arel, stated, "We are pleased that our first quarter results improved sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen from Q4, although they remain modest as is typical of nascent nascent /nas·cent/ (nas´ent) (na´sent) 1. being born; just coming into existence. 2. just liberated from a chemical combination, and hence more reactive because uncombined. technologies in emerging markets. Through new business wins, new strategic alliances and a growing pipeline of new business, we are proving both the strength and superiority of the Arel's Spotlight Spotlight can refer to at least three types of lighting:
Mr. Szwarc concluded, "Arel remains in the nascent stage of the rich-media conferencing and collaboration market's development as this technology, by its disruptive disruptive /dis·rup·tive/ (-tiv) 1. bursting apart; rending. 2. causing confusion or disorder. nature, gains acceptance. Our focus this year remains on winning new customers through our highly active multi-pronged sales approach, the addition of new channel partnerships, and continued development of our managed service option, all supported by unrelenting demonstration of the benefits of our unparalleled collaboration solution. Further, we are carefully managing expenses and conserving con·serve v. con·served, con·serv·ing, con·serves v.tr. 1. a. To protect from loss or harm; preserve: cash while making selected investments in R&D and sales to sustain our competitive lead. Our objective is to create, over time, a more consistent revenue stream, but remain subject in the near term to the quarter-to-quarter volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the that early stage development companies often experience. However, all indications are that industry sources and existing and prospective customers endorse To sign a paper or document, thereby making it possible for the rights represented therein to pass to another individual. Also spelled indorse. endorse (indorse) v. Arel's Spotlight(TM) solution as pioneering the development of this large addressable Reachable. When something is addressable, it can be identified and manipulated independently of its surroundings. For example, screen pixels and RAM memory are addressable. Each of the screen's picture elements can be individually turned on and off, and each of the memory's bytes can be market through superior performance, seamless integration An addition of a new application, routine or device that works smoothly with the existing system. It implies that the new feature or program can be installed and used without problems. Contrast with "transparent," which implies that there is no discernible change after installation. , and rich media capability. Arel remains focused capturing our emerging opportunity as rapidly as possible, on building a lengthening lengthening (lengkˑ·the·ning), n the use of various massage or muscle energy techniques to relax and stretch muscle and connective tissue. chain of opportunities, and on delivering the financial proof of our success over time." Conference Call Arel's management will host a conference call at 10:00 a.m. ET today to discuss earnings and corporate activity. Please call the following dial-in numbers to participate: United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. (888) 527-1593 International Participants (706) 679-7685 Conference ID: 6468725 The public is invited to listen to the live webcast of the conference call. For details, visit Arel's website at www.arelcom.com. An archive (1) A file that contains one or more compressed files. Most archive formats are also capable of storing folders in order to reconstruct the file/folder relationship when decompressed. See archive formats. of the on-line broadcast will be available on the website. About Arel Communications and Software: Arel Communications and Software, a technology leader in interactive web communications, develops, markets and sells a universal conferencing software solution for enterprise-wide deployment Installing, setting up, testing and running. This military term, which means the placement of troops and equipment in the field, is widely used with computers as an alternate to the word "implementation. of integrated voice, video and data web conferencing/collaboration and training applications. Designed around Arel's Integrated Conferencing Platform(TM) (ICP (1) (Internet Cache Protocol) A protocol used by one proxy server to query another for a cached Web page without having to go to the Internet to retrieve it. See CARP and proxy server. ) core software, the Arel Spotlight(TM) application suite facilitates collaboration for key business processes such as corporate and marketing communications Marketing communications (or marcom) are messages and related media used to communicate with a market. Those who practice advertising, branding, direct marketing, graphic design, marketing, packaging, promotion, publicity, sponsorship, public relations, sales, sales , distance learning, product development, customer relationship management, and supply chain management by allowing dispersed dis·perse v. dis·persed, dis·pers·ing, dis·pers·es v.tr. 1. a. To drive off or scatter in different directions: The police dispersed the crowd. b. enterprise users to collaborate in real time with synchronized syn·chro·nize v. syn·chro·nized, syn·chro·niz·ing, syn·chro·niz·es v.intr. 1. To occur at the same time; be simultaneous. 2. To operate in unison. v.tr. 1. voice, video and data. Arel's scalable, secure, and network-friendly universal conferencing solution is becoming the solution of choice for large enterprises moving from 'off-network' pay per usage services to 'on-network' solutions for greater control, cost-savings and integration with internal systems. For additional information, please visit www.arelcom.com. Certain statements made herein that are not historical are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. The words "estimate", "project", "intend", "expect", "believe", "hopeful" and similar expressions are intended to identify forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . These forward-looking statements involve known and unknown risks and uncertainties. Many factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements that may be expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such forward-looking statements, including, among others, changes in general economic and business conditions, inability to maintain market acceptance to the Company's products, inability to timely develop and introduce new technologies, products and applications, rapid changes in the market for the Company's products, loss of market share and pressure on prices resulting from competition, introduction of competing products by other companies, inability to manage growth and expansion, loss of key partners, inability to attract and retain qualified personnel, inability to protect the Company's proprietary technology and risks associated with the Company's international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. and its location in Israel Israel, in the Bible Israel (ĭz`rēəl, ĭz`rāəl) [as understood by Hebrews,=he strives with God], according to the book of Genesis, name given to Jacob as eponymous ancestor of the Hebrews, the chosen people of God. . For additional information regarding these and other risks and uncertainties associated with the Company's business, reference is made to the Company's reports filed from time to time with the Securities and Exchange Commission. All trademarks recognized.
AREL COMMUNICATIONS AND SOFTWARE LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31 December
----------------- 31,
2005 2004 2004
-------- -------- --------
(Unaudited) (Audited)
--------------------------
U.S. $ in thousands
--------------------------
Assets
CURRENT ASSETS:
Cash and cash equivalents 912 3,134 3,123
Short-term investments 678 4,195 704
Accounts receivable:
Trade 2,419 5,865 1,681
Other 358 502 484
Investment in ArelNet Ltd. 1,271 641 1,070
Inventories 777 809 791
-------- -------- --------
Total current assets 6,415 15,146 7,853
-------- -------- --------
SEVERANCE PAY FUNDS 439 554 601
-------- -------- --------
PROPERTY AND EQUIPMENT, NET 335 418 352
-------- -------- --------
OTHER ASSETS 82 686 86
-------- -------- --------
Total assets 7,271 16,804 8,892
======== ======== ========
Liabilities and shareholders' equity
CURRENT LIABILITIES:
Current maturities of long-term loans - 65 -
Accounts payable and accruals:
Trade 291 1,015 332
Deferred revenues 412 3,078 104
Employees related obligations 737 620 709
Other 1,156 3,019 1,894
-------- -------- --------
Total current liabilities 2,596 7,797 3,039
-------- -------- --------
LONG-TERM LIABILITIES:
Income tax payable 1,037 - 1,068
Accrued severance pay liability 699 947 840
-------- -------- --------
Total long-term liabilities 1,736 947 1,908
-------- -------- --------
Total liabilities 4,332 8,744 4,947
-------- -------- --------
SHAREHOLDERS' EQUITY:
Share capital 4 4 4
Additional paid-in capital 54,271 54,233 54,271
Accumulated other comprehensive income 1,146 516 945
Accumulated deficit (52,482) (46,693) (51,275)
-------- -------- --------
2,939 8,060 3,945
-------- -------- --------
7,271 16,804 8,892
======== ======== ========
AREL COMMUNICATIONS AND SOFTWARE LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended
March 31,
-------------------
2005 2004
--------- ---------
(Unaudited)
-------------------
U.S. $ in thousands
-------------------
Revenues:
Sales 195 286
Services 559 716
--------- ---------
754 1,002
Cost of sales and services 359 458
--------- ---------
Gross profit 395 544
Research and development expenses - net 607 583
Selling, general and administrative expenses 1,580 1,453
Income from settlement with W2COM - 411
--------- ---------
Operating loss (1,792) (1,081)
Financial income (expense) - net 1 35
--------- ---------
Net loss before income tax benfit (1,791) (1,046)
Income tax benfit 228 -
--------- ---------
Net loss for the period (1,563) (1,046)
========= =========
Basic and Diluted loss per share (0.12) (0.08)
========= =========
AREL COMMUNICATIONS AND SOFTWARE LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months
ended
March 31
---------------
2005 2004
------- -------
(Unaudited)
---------------
U.S. $ in
thousands
---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss for the period (1,563) (1,046)
Adjustments required to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization of property and
equipment 36 88
Capital loss on sale of property and equipment - -
Trading marketable securities, net 1 55
Allowance for doubtful accounts (173) (29)
Accrued employee rights upon retirement - net 21 2
Loss from decline in the value of short-term
investments 25 -
Other - net 2 1
Changes in operating asset and liability items:
Decrease (increase) in trade receivables (before
allowance for doubtful accounts) (565) (2,738)
Decrease in other accounts receivable 126 112
Decrease (increase) in inventories 14 (275)
Increase (decrease) in trade payables (41) 570
Increase (decrease) in deferred revenues 308 2,784
Increase in employees related obligations 28 14
Decrease in other liabilities (including long-
term) (413) (160)
------- -------
Net cash used in operating activities (2,194) (622)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Short-term bank deposits - net - (144)
Purchase of property, plant and equipment (19) (85)
Collection of long-term loan to an employee 2 2
Amounts carried to other assets - (6)
------- -------
Net cash provide by (used in) investing activities (17) (233)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term bank credit-net - 19
Issuance of share capital - 78
Exercises of options - -
Repayment of long-term loan - (5)
------- -------
Net cash provided by financing activities - 92
------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS (2,211) (763)
BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINING OF
PERIOD 3,123 3,897
------- -------
BALANCE OF CASH AND CASH EQUIVALENTS AT END OF
PERIOD 912 3,134
======= =======
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