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RISHON LE ZION, Israel, Aug. 26, 2020 (GLOBE NEWSWIRE) — BOS Better Online Solutions Ltd. (“BOS” or the “Company”) (NASDAQ: BOSC), a global provider of intelligent systems and services for production and logistics, reported its financial results for the second quarter and six months ended June 30, 2020.

Eyal Cohen, BOS CEO, stated: “Despite the outstanding performance of our Supply Chain and RFID divisions, we had a net loss of $1.4 million in the first half of the year. The loss was primarily derived from a write off of the entire intangible assets of the Robotics business and an impairment of its inventory, in a total amount of $1.7 million.”

Operational Profit (loss) by divisions
(U.S. dollars in thousands)
 
Six months ended June 30,
2020 2019
Supply Chain 613 568
RFID 354 (284)
Intelligent Robotics (2,215) 41
Operating profit (loss) $ (1,248) $ 325

Eyal Cohen added: “We are effecting a turnaround process in our Robotics business, which is longer and deeper than initially anticipated. We are at the final stages of restructuring the operational side of the Robotics business to improve our competitive advantage. We have significantly reduced the cost of materials for our products and our operational expenses, and implemented additional controls to prevent future losses due to underestimated costs of projects.

“The COVID 19 pandemic has made it much more difficult for the Robotics business to penetrate the U.S. market, which we have targeted as a key market for this business. In response, we are making personnel changes in the U.S. sales team and are adjusting the U.S. marketing activity. Also, we believe that our success in reducing the cost of materials improves our chances of growing the revenues of our Robotics business line in the rest of the world. Consequently, we have decided to work extensively towards increasing our network of distributors outside of the United States.

“Historically, BOS has been able to overcome challenges presented in connection with other acquisitions such as of the Supply Chain division and the RFID divisions, which experienced substantial operating losses before becoming profitable.

“There is no doubt that the Robotics business is the toughest challenge we have faced to date. However, with a clear plan for action in the near-term and a firm commitment of BOS’ employees and management to success, we believe that the Robotics business will reach an operational breakeven point in the fourth quarter of this year.”

Outlook for the second half of the year 2020
“Revenues for the first six months of year 2020 amounted to $14.9 million compared to $16.5 million in the comparable period last year. The decrease was primarily attributable to the effects of the Covid 19 pandemic on sales of all of the Company’s operating businesses. We expect that we will make up for this shortfall in the second half of year 2020 so that the year 2020 revenues will remain the same as in the year 2019.

“Based on the strong relative performance of our Supply Chain and RFID divisions in the first half of the year and the restructuring of the Robotics business operations, we further anticipate that BOS will return to a net profit in the third quarter of this year.”  

Conference Call Details
BOS will host a conference call on Wednesday, August 26, 2020 at 10:00 a.m. EDT – 5:00 p.m., Israel Time. A question-and-answer session will follow management’s presentation. To access the conference call, please dial one of the following numbers:
US: +1-888-281-1167, International: +972-3-9180644.

For those unable to listen to the live call, a replay of the call will be available the next day on the BOS website: www.boscom.com

About BOS

BOS is a global provider of intelligent systems and services for production and logistics. BOS’ Robotics and RFID Division, offers intelligent robotics and RFID systems for industrial and logistics processes and retail store management. BOS’ Supply Chain Division provides electronic components, mainly for the aerospace, defense, and other industries worldwide. Its services include the consolidation of electronic components from a vast number of suppliers, long term scheduling, and kitting.
For more information, please visit:
www.boscom.com | Robotics at www.imdecol.com | RFID at www.dimex.co.il | Supply Chain at www.Odem.co.il

Company Contact:
Eyal Cohen, BOS’ CEO
+972-542525925 | [email protected]

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, failure to successfully integrate and achieve the potential benefits of the acquisition of the business operations of Imdecol Ltd. (the Robotics business line), 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, the impact of the COVID-19 virus and continued availability of financing for working capital purposes and to refinance outstanding indebtedness; and additional risks and uncertainties detailed in BOS’ periodic reports and registration statements filed with the U.S. Securities and 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
 
  Six months ended
June 30,
  Three months ended
June 30,
  2020   2019*   2020  2019*
  (Unaudited)   (Unaudited)
       
Revenues $ 14,946     $ 16,549     $ 7,478     $ 8,786  
Cost of revenues   11,718       13,167       6,048       7,054  
Inventory Impairment   671             552        
Gross profit   2,557       3,382       878       1,732  
               
Operating costs and expenses:              
Research and development   21             3        
Sales and marketing   1,953       1,899       846       998  
General and administrative   843       1,158       394       585  
Impairment of Goodwill and intangible assets   988             988        
Total operating costs and expenses   3,805       3,057       2,231       1,583  
               
Operating income (loss)   (1,248 )     325       (1,353 )     149  
Financial expenses, net   (137 )     (129 )     (81 )     (127 )
Income before taxes on income (loss)   (1,385 )     196       (1,434 )     22  
Taxes on income         20             2  
Net income (loss) $ (1,385 )   $ 176     $ (1,434 )   $ 20  
               
Basic and diluted net income (loss) per share $ (0.32 )   $ 0.05     $ (0.34 )   $ 0.00  
Weighted average number of shares used in computing basic net income per share   4,265       3,845       4,273     4,040  
Weighted average number of shares used in computing diluted net income per share   4,265       3,847       4,273     4,042  
               
Number of outstanding shares as of June 30, 2020 and  2019   4,318       4,258       4,318     4,258  
 

*   The Intelligent Robotics division has been consolidated since June 1, 2019

 

 
        CONSOLIDATED BALANCE SHEETS        
(U.S. dollars in thousands)
 
  June 30, 2020
    December 31, 2019
  (Unaudited)
  (Audited)
ASSETS    
     
CURRENT ASSETS:    
Cash and cash equivalents $ 447   $ 339
Restricted bank deposits   175     240
Trade receivables   8,726     10,063
Other accounts receivable and prepaid expenses   1,533     1,273
Inventories (includes inventory in process in the amounts of $1,199 and $576 as of June 30, 2020, and December 31, 2019, respectively)   5,972     5,407
       
Total current assets   16,853     17,322
       
LONG-TERM ASSETS   126     155
       
PROPERTY AND EQUIPMENT, NET   1,155     1,257
       
OPERATING LEASE RIGHT-OF-USE ASSETS, NET   1,043     720
       
OTHER INTANGIBLE ASSETS, NET   50     598
       
GOODWILL   4,676     5,147
       
Total assets $ 23,903   $ 25,199

 
        CONSOLIDATED BALANCE SHEETS        
(U.S. dollars in thousands)
 
  June 30, 2020    December 31, 2019
  (Unaudited)   (Audited)
LIABILITIES AND SHAREHOLDERS’ EQUITY      
       
CURRENT LIABILITIES:      
Short term loans and current maturities of long term loans $ 1,062   $ 664
Operating lease liabilities, current   478     551
Trade payables   6,205     6,503
Employees and payroll accruals   812     1,007
Deferred revenues   845     836
Advances net of inventory in progress   56     29
Accrued expenses and other liabilities   240     419
       
Total current liabilities   9,698     10,009
       
LONG-TERM LIABILITIES:      
Long-term loans, net of current maturities   1,893     2,041
Operating lease liabilities, non-current   654     289
Accrued severance pay   313     303
       
Total long-term liabilities   2,860     2,633
       
SHAREHOLDERS’ EQUITY   11,345     12,557
       
       
Total liabilities and shareholders’ equity $ 23,903   $ 25,199

 
        CONDENSED CONSOLIDATED EBITDA        
(U.S. dollars in thousands)
 
  Six months ended
June 30,
  Three months ended
June 30,
  2020   2019   2020   2019
               
Operating income (loss) $ (1,248 )   $ 325   $ (1,353 )   $ 149
Add:              
Impairment of Goodwill and other intangible assets   988           988      
Amortization of intangible assets   32       19     6       14
Stock based compensation   39       39     18       20
Depreciation   142       134     71       69
EBITDA $ (47 )   $ 517   $ (270 )   $ 252
 
 




        SEGMENT INFORMATION        
(U.S. dollars in thousands) 
     
         
  RFID Supply Chain Solutions Intelligent Robotics Consolidated
         
  Six months ended June 30, 2020
         
Revenues $ 5,669 $ 8,976 $ 301   $ 14,946  
         
Inventory Impairment $ $ $ (671 ) $ (671 )
         
Gross profit (loss) $ 1,474 $ 1,869 $ (786 ) $ 2,557  
         
Impairment of Goodwill and intangible assets $ $ $ (988 ) $ (988 )
         
Operating Income (loss) $ 354 $ 613 $ (2,215 ) $ (1,248 )
         
Balance of Goodwill and other intangible assets related to segment $ 4,726 $ $   $ 4,726  

 

         
  RFID Supply Chain Solutions Intelligent Robotics Consolidated
         
  Six months ended June 30, 2019
         
Revenues $ 6,697   $ 9,616 $ 236 $ 16,549
         
Gross profit $ 1,338   $ 1,978 $ 66 $ 3,382
         
Operating Income (loss) $ (284 ) $ 568 $ 41 $ 325
         
Balance of Goodwill and other intangible assets related to segment $ 4,746   $ $ 1,416 $ 6,162
         

 

        SEGMENT INFORMATION        
(U.S. dollars in thousands)
         
         
         
  RFID Supply Chain Solutions Intelligent Robotics Consolidated
         
         
         
Revenues $ 2,385 $ 4,895 $ 198   $ 7,478  
         
Inventory Impairment $ $ $ (552 ) $ (552 )
         
Gross profit (loss) $ 534 $ 1.01 $ (665 ) $ 878  
         
Impairment of Goodwill and intangible assets $ $ $ (988 ) $ (988 )
         
Operating Income (loss) $ 33 $ 429 $ (1,815 ) $ (1,353 )
         
Balance of Goodwill and other intangible assets related to segment $ 4,726 $ $   $ 4,726  

 

         
  RFID Supply Chain Solutions  Intelligent Robotics  Consolidated
         
         
Revenues $ 2,973   $ 5,577 $ 236 $ 8,786
         
Gross profit $ 538   $ 1,128 $ 66 $ 1,732
         
Operating Income (loss) $ (268 ) $ 376 $ 41 $ 149
         
Balance of Goodwill and other intangible assets related to segment $ 4,746   $ $ 1,416 $ 6,162

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