B.O.S. Better Online Solutions Ltd. Reports Results for the Third Quarter of 2006.TERADYON, Israel -- B.O.S. Better Online Solutions Ltd. (the "Company" or "BOS") (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 :BOSC) (TASE TASE Tel Aviv Stock Exchange TASE The All Seeing Eye TASE Tactical Air Support Element TASE Thrust Assessment Support Environment TASE Telecontrol Application Service Elements (IEC communications protocol) :BOSC) reported today its results for the third quarter of 2006. For the convenience of comparing the Revenues and Gross Profit of the third and second quarters of 2006 to the third quarter of 2005, the following table and related discussion refers to these results, on a non-GAAP basis, after excluding the Communication segment and Software Utilities product line, that were sold during 2005: [TABLE OMITTED] Revenues for the third quarter of 2006 reflected a 19% growth to $5.3 million, from $4.5 million in the second quarter of 2006 and were lower by 6% from the revenues of the third quarter of 2005 that amounted to $5.7 million. Gross profit for the third quarter of 2006 was $1.1 million (gross margin of 20%), compared to $1.1 million in the second quarter of 2006 (gross margin of 25%) and $1.8 million (gross margin of 31%) in the third quarter of the year 2005. The decrease in the gross margin in comparison to 2005 is attributed mainly to a change in the mix of sold products, in favor of products with lower gross margins from our Electronic Components segment. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the third quarter of 2006 were reduced to $1.4 million compared to $1.6 million in the second quarter of 2006 and $2.2 million in the third quarter of the year 2005. Operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. for the third quarter of 2006 was reduced to $273 thousand, compared to $457 thousands in the second quarter of 2006 and an income of $356 thousands in the third quarter of 2005. Financial expenses for the third quarter of 2006 increased to $196 thousands from $128 thousands in the second quarter of 2006 and $38 thousand in the third quarter of the year 2005, which increase is attributed to an increase in the Company's loans. Other income net, for the third quarter of 2006, amounted to $32 thousands compared to $609 thousands in the second quarter of 2006, both due to gains attributed to the sales of the Communication segment, and compared to $273 thousands in the third quarter of year 2005, which was attributed to capital gain from the sale of Software Utilities product line. Equity losses of an affiliated company for the three months ended September 2005 in the amount of $1.5 million, refers to the Company's investment in Surf Communication Solutions Surf Communication Solutions develops a suite of hardware and software products that drives a wide variety of applications whose common goal is high-capacity distribution of voice and video. Ltd. ("Surf"). Commencing the fourth quarter of year 2005, the Company ceased to have the ability to exercise significant influence over Surf and, accordingly, the adjusted carrying amount of the investment is accounted for based on the cost accounting method. Net loss for the third quarter of 2006 amounted to $394 thousands (or -$0.06 basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. loss per share), compared to net income of $37 thousands (or $0.01 basic and diluted profit per share) in the second quarter of 2006 and to net loss of $1,744 thousands (or -$0.28 basic and diluted loss per share) in the third quarter of 2005. Net loss for the nine months ended September 30 2006, amounted to $220 thousand (or $0.03 basic and diluted profit per share) compared to net loss of $3.6 million (or -$0.69 basic and diluted loss per share) in the nine months ended September 30, 2005. As of September 30, 2006, the Company's balance sheet shows financial resources (cash and cash equivalents) of $2.8 million and loans (long and short term) of $5.8 million. Shmuel Koren, who assumed the role of BOS' President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. on November 1st, stated: "We are moving ahead with our contemplated rights offering, which will support our efforts to expand our divisions and consummate To carry into completion; to fulfill; to accomplish. A Common-Law Marriage is consummated when the parties live in a manner intended to bring about public recognition of their relationship as Husband and Wife. acquisition opportunities. I am optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op regarding our prospects and look forward to leading the execution of the Company's strategy towards enhancing shareholders' value." Edouard Cukierman, Chairman of the Board of Directors, added: "Our guidance for the full year of 2006, given in May 2006, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. which we expect revenues to exceed $20 million, remains unchanged. We anticipate the 2006 results to reflect that the Company has neared break even (exclusive of M&A transactions that may transpire)." 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 Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , BOS activities are focused on two segments: Electronic Components segment, based on Odem Electronic Technologies 1992 Ltd., providing solutions in RFID (Radio Frequency IDentification) A data collection technology that uses electronic tags for storing data. The tag, also known as an "electronic label," "transponder" or "code plate," is made up of an RFID chip attached to an antenna. , semiconductors, electronic components, CCD CCD in full charge-coupled device Semiconductor device in which the individual semiconductor components are connected so that the electrical charge at the output of one device provides the input to the next device. , imaging, networking, telecom and automation fields. Connectivity segment, with products marketed under the BOSaNOVA brand name. These products deliver instant and transparent connectivity from IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) iSeries computers to personal computers, thin clients and browsers. BOS, www.boscorporate.com is traded on NASDAQ and on the Tel-Aviv stock exchange. The 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. 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 our being able to maintain current gross profit margins Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. , 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' 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. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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